Rookie mistakes

[justakiwi]

Anyone regret anything they did or didn’t do, investment-wise, over the Covid/lockdown period? In hindsight, my one regret is that I stopped my regular weekly orders temporarily. It did mean I was able to pick up larger (for me) parcels of shares in a couple of holdings, but it also meant I missed out on the opportunity to add to my other holdings at very discounted prices. I should have kept my regular small orders going and used savings to buy the “extras”

Not a big deal in the grand scheme of things, but yeah, a missed opportunity.

Anyone else kicking yourself just a bit now? ;)

[BIRMANBOY]

Everyone, not just rookies, makes decisions that in hindsight, would be nice to replay differently. Most people on this forum are loathe to admit to these "lapses", which given the fragility of our egos lol is understandable. Logic should inform us that in investing in the market, given that the unknowns are well unknowable, it would be absolutely normal for "mistakes to happen". However, no-one sets out to make mistakes, they make decisions based on available information at the time. Time advances, more info occurs and whoops what started out as a well thought out theory has been gazumped by fresh data. This is constant, forever and ever amen. One way of avoiding this is make regular consistent moves that have the benefit of smoothing out the peaks and crevasses. An army of experienced investors, armed with PHD's in economics and statistical analysis have written books and devoted years of study and no-one yet has arrived at the point where they could say, finally, "i understand the share market and wont be making any more mistakes". Everyone has to find their own way that suits their personality and finances. Mistakes are part of investing but we learn from them and move on. I made the "mistake" of not buying more after the big drop as well...but at the time who was to know how quick the recovery would be. Theoretically they could have kept dropping so i hedged my bets by spending only 60 to 70% of cash available. Not a "mistake" but a conservative decision. Opportunities come, go and other opportunities come again. Look forward for the next one is easier than self flagellation over whats already passed. In any case I'm not flexible enough to kick myself lol...which is probably a good thing. :eek2:
Anyone regret anything they did or didn’t do, investment-wise, over the Covid/lockdown period? In hindsight, my one regret is that I stopped my regular weekly orders temporarily. It did mean I was able to pick up larger (for me) parcels of shares in a couple of holdings, but it also meant I missed out on the opportunity to add to my other holdings at very discounted prices. I should have kept my regular small orders going and used savings to buy the “extras”

Not a big deal in the grand scheme of things, but yeah, a missed opportunity.

Anyone else kicking yourself just a bit now? ;)

[Joshuatree]

Im still re 50% cash since my selldown on 4th Feb. I have had gains in goldies , my bear fund , my gentailers etc and divis. I have made a few opps into winners too, like MET and CVT and started buying a few aus micro caps and taken up some NZ andAus SPP's/ cap raises, most being winners atp. I have no regrets at all, ive slept easy at night knowing my decision back then was/is right for my portfolio and our estates portfolio. Protecting the great gains from a 10 year or so bull mkt is way more important to me /us as is minimising risk then chasing. Im now older then before:) and am not prepared to risk like i did earlier and this is a true global black swan event , caution prevails here big time.

Inflation is low so im not worrying about my cash sitting there. The road/risk ahead looks extremely rocky and although the mkt is generally forward looking i know our reporting season here in august for one is going to be terrible. If the mkts have more big downside dumps , i will look to add if they dont sa la vie. Its all about ones own risk/reward situ and one needs to tailor that for oneself.

[iceman]

Good posts BB & JT. Firstly I think it is far too early to say (in hindsight) if we made mistakes or not, simply because this is not over yet and many things can and will still happen. I completely changed my portfolio allocation by exiting sectors that I have been long (and happy) in for many years (banking + retail+ tourism) and went what some would call overweight in other sectors (primary production + healthcare + telcos + power Cos). Yes when I look back now I could easily find things that I could have done differently but as BB says, decisions are made with the info available to us at the time and I am overall pretty content with where I am at today.

[blackcap]

Great posts, BB, JT and Iceman. Like you all I made changes when the covid pandemic hit and started going a bit longer on cash and less long equities (although for the last year prior I had not been reinvesting dividends as I thought equities were looking stretched). So yes I may have made a few decisions that I have regretted. I did sell equities in holdings that I was initially not planning to sell. However BB makes a very good point that it is so easy in hindsight and professionals (whatever that may mean) also make these mistakes. For everyone buying a stock there is someone selling it.
JT makes good points too that everyone is at different investment lifecycles. So for him the capital preservation is a strong motivator. The risk that covid disruptions bring are uncertain and so it is prudent in his situation to take some off the table. (Especially with low inflation as the cost of holding cash is negligible).
So yes I have made "rookie" mistakes too but I would not call them rookie mistakes. I would call them hindsight mistakes and even the best professionals make them.

[percy]

Are we there yet.?
If so, I have made mistakes.
If not, time will tell.
Current results season is for year ended 31st March,so they are basically include well over 90% before lockdown.
"Beginning at 11:59 pm on 25 March, the alert level was moved to level 4, putting the country into a nationwide lockdown."
Clarity will start to come when interim results are announced mid August onwards,while the full picture we will have to wait until early next year to see..
Surprises> Yes there will be the good,the bad and the ugly.
Interesting noting my portfolio is similar to Iceman's.Primary production/services,health supplements,telcos and power cos.
[and a large cash holding].

[justakiwi]

Great replies - thanks! :)

[peat]

decisions are made with the info available to us at the time

if thats the case then its hardly a mistake. its just the nature of investing, win some lose some , work to make the winners bigger.

I tend to repeat genuine mistakes though especially in forex trading which is a stupid failing which I pay for dearly.
For instance entering a trade before confirmation - it is really much safer to wait for a trend to clearly display itself and then fade the correction rather than anticipating a change with an early entry.

[bullfrog]

I’ve got into the habit of writing my reasons/assumptions for any buy or sell, so with hindsight I can test my reasons. I’m looking for an unconscious bias in my reasoning. Been balancing FOMO with primal fear of wtf is going on atm. Exciting times!

[SBQ]

I have some regrets but they were minimal in terms of my stock picks. Both of my 2 Canadian share holdings were a disaster. One being an oil related stock tied to the Trudeau's push for oil pipelines (for which I held for over 3 years) and the other being a REIT (again purchased 3 years ago and still holding) which is currently sitting at a loss of about 50%. The 2 investments probably represented maybe 1% of total equities I have invested. So what did I learn from this? Well, it just reconfirms one must not take take huge bets on something that may pay off immensely, while knowingly there are more safer bets.

As for the COVID19, we know the peak crash was 3rd week March. Those that can remember I made some posts in the beginning of the year in moving a large sum of $ over to the US and the hassles that were involved in getting those funds converted from NZD to USD (police checks, AML, CRS, the whole shebang). This was back in February and lord behold, the COVID19 broke out of hell. Timing could not of been more perfect that I even had to thank my personal bank manager for arranging me a competitive NZD:USD exchange rate. Anyways like in 2008 fashion, i've went through 80% of the funds that was sent across with purchases between mid March to April and 1 purchase in May.

comments for justakiwi:

I know we've crossed paths on different accounts and it would be fair to say you are not a fan of my point of view. However i'm asking if you remember a post long long ago where the discussion was, if it was better to do regular contributions into a investment fund vs just sitting aside and waiting and then make the purchase. My excuse was not so much that one makes consistent contributions but rather, one should consider at what state the equity market are in? I recall in conversation, the stock market has risen incredibly since the 2008 GFC and that "it was more likely a stock market would crash" than to assume the markets would just keep going on it's upward trajectory. Now that we've witness the crash and recovery, would I make that same recommendation? NOPE!

Some are saying to hold cash now because they think this bull rally is going to crash back to the low levels of March. IMO, that's wishful thinking. Even Warren Buffet was wrong about the recovery. He was also very wrong about how the US Fed has essentially taken control of the stock market with their unlimited printing presses. The fact being not a single 'elephant size' company had knocked on Buffet's door like so many did in 2008. Why? Because unlike in 2008, Trump had set out that pretty much ALL major US listed companies would get the money hand out from the gov't ; in essence, there was no way Berkshire's cash could compete against the deal that the US Fed was offering to all businesses (Buffet cited this in his 2020 annual meeting in May). and while all these businesses were getting the cheap $, the US equity market too was being backed by the US Fed. That is why the finance media has been saying this massive recovery has been the "Bull market rally that everyone hated" ; they hated it because they kept twiddling their fingers assuming the bull rally was a faux and kept assuming the market would crash back to March lows:

https://www.reuters.com/article/us-health-coronavirus-rally-analysis-idUSKBN2332WH

"While the benchmark S&P 500 index has surged 34% from its March lows and the Nasdaq Composite is just 6% short of record highs, investors are more bearish than they have been in years and key measures such as unemployment and gross domestic product are giving their worst readings since the Great Depression."

“The rally is unloved,” analysts at Goldman Sachs said in a note to clients earlier this month. Investors have “expressed varying degrees of concern about how swiftly the market rebounded from its low, the current level of valuation, and the forward return potential.”

justakiwi: don't dwell on your mistakes. The world's most successful investor Warren Buffet has made many and admits, he "will make" many more mistakes in the future. As a long time Berkshire shareholder I understand his approach, but I also understand not to keep all my eggs in his basket, and hence the reason for making wild purchases in recent months.

So what now? Again you don't have to take my advice and I don't express anyone should but consider the options: 1) hold cash earning 0% REAL returns? = NOPE 2) invest in junk bonds or gov't debt? = NOPE 3) buy NZ real estate? = Maybe if you have the cash 4) buy cryptocurrencies? = NOPE unless you enjoy gambling. Gee there's not a lot left to choose? So my advice, buy more shares before you miss more potential gains.

[justakiwi]

Didn't think this day would ever come but ... I agree with you. Guess there really is a first time for everything ;)



So what now? Again you don't have to take my advice and I don't express anyone should but consider the options: 1) hold cash earning 0% REAL returns? = NOPE 2) invest in junk bonds or gov't debt? = NOPE 3) buy NZ real estate? = Maybe if you have the cash 4) buy cryptocurrencies? = NOPE unless you enjoy gambling. Gee there's not a lot left to choose? So my advice, buy more shares before you miss more potential gains.

[Snoopy]

Anyone regret anything they did or didn’t do, investment-wise, over the Covid/lockdown period? In hindsight, my one regret is that I stopped my regular weekly orders temporarily. It did mean I was able to pick up larger (for me) parcels of shares in a couple of holdings, but it also meant I missed out on the opportunity to add to my other holdings at very discounted prices. I should have kept my regular small orders going and used savings to buy the “extras”


I think you did exactly the right thing Justakiwi. I bought a few shares in what appeared to be a dip, before it collapsed into a correction. My purchase prices I decided on two or three months previous to 'the dip'. So I thought I was getting a good deal. However, when the dip turned into a correction my purchases didn't look so clever.

The problem here is that businesses are designed to be capital efficient through a normal business cycle. But when you get what is described as a once in a generation event, what might have been adequate capital in a normal downturn can suddenly appear very inadequate. This situation can require a sudden capital raising to fix. And when share prices are down, that can mean a massive dilution of shares for existing shareholders. Suddenly those post crash all time low share prices can turn out to be not so cheap. I got around this purchase price dilemma by waiting until a company reported on the effects of Covid-19 before buying any more shares in that company. If you didn't do that, then as an investor you were really flying blind into a potentially catastrophic investment black hole.

With hindsight you can look at a share price tracing a squiggly line downwards before the worm turns and it squiggles back up again. You can then identify the low point as the price you should have bought your investment at. But at the time, the path of the share price worm could have gone either way. IOW you could not have identified what turned out to be the bottom at the time. So actually trying to pick the bottom in a super-crisis will involve a massive uncontrolled unfathomable risk of a sort that is far too great for an ordinary investor to take on. All of this risk is hidden and forgotten in a with hindsight share price graph. I would say you did exactly the right thing by halting your share purchases while the smoke from the mega market shock cleared.

The only exceptions to my 'not to buy in a mega-crisis' rule would have been to buy 'basic needs' companies that carried very little debt at prices that were actually cheap on earnings metrics.

SNOOPY

[Joshuatree]

SBQ thanks for your thoughts. Briefly there is no right or wrong, black or white but a multitude of grays inbetween and i dont fit your investment strategy/risk/reward/timeframe etc etc etc and you sure dont fit mine.
My point is different strokes for different folks we all have our own unique needs and strategies that work for us. Im totally happy with my set up which is high in cash, atp protecting my gains is waaay more important then "having" to be in the mkt chasing gains at generally ridiculous PE's, thats a lemming like cliff recipe imo.
Sure but relative to what bonds can earn , justifies this if you like risk maybe. Zigging while others zag is fine with me.Your risk is not mine etc etc.

On top of this as winter approaches in USA etc what third and 4th waves maybe, an election that could have huge impact,Taxes going up and truly horrible reporting results reflecting the true financial costs of lockdowns. We will see how things pan out, good luck all every which way.

[Snow Leopard]

....In hindsight, my one regret is that I stopped my regular weekly orders temporarily....

Yes, that was a bad move.

The simpliest thing any long term share investor can do is to invest regularly in a range of shares (often via a fund or funds) independent of the state of the market.

A bit of Dollar Cost Averaging on a Diversified Portfolio is a good base on which to build.

[ynot]

[QUOTE=Snow Leopard;824685]Yes, that was a bad move.

The simpliest thing any long term share investor can do is to invest regularly in a range of shares (often via a fund or funds) independent of the state of the market.

A bit of Dollar Cost Averaging on a Diversified Portfolio is a good base on which to build.[/QUOTE
Normally good strategy. Just don't start today. These times are not normal.

[Snow Leopard]

Yes, that was a bad move.

The simpliest thing any long term share investor can do is to invest regularly in a range of shares (often via a fund or funds) independent of the state of the market.

A bit of Dollar Cost Averaging on a Diversified Portfolio is a good base on which to build.


Normally good strategy. Just don't start today. These times are not normal.

Some people can be remarkably slow on the uptake.

[justakiwi]

And you wonder why newbies get confused ;)

But seriously, I appreciate both your posts and points of view. I find it really interesting that seasoned, experienced investors frequently have significantly different perspectives on things. Knowing that actually makes me feel better/more confident as it shows that sometimes there are no black and white, rights and wrongs. Much of it is just calculated risk on the day.

Thanks for all the comments people :)


I think you did exactly the right thing Justakiwi.



Yes, that was a bad move.

[Snoopy]

And you wonder why newbies get confused ;)

But seriously, I appreciate both your posts and points of view. I find it really interesting that seasoned, experienced investors frequently have significantly different perspectives on things. Knowing that actually makes me feel better/more confident as it shows that sometimes there are no black and white, rights and wrongs. Much of it is just calculated risk on the day.


Actually I agree with Snowie as regards to dollar cost averaging into funds ( e.g. Kingfish) with a widespread shareholding in a correction. My caution was against buying a 'specific share' ( e.g. Heartland Group Holdings) in a time of major disruption without knowing the impact on the business outlook for that 'specific share'.

SNOOPY

[Joshuatree]

I agree, my comments have wandered somewhat from the heading "Rookie Mistakes". $ cost averaging through thick and thin is a winner long term.

[SBQ]

I agree, my comments have wandered somewhat from the heading "Rookie Mistakes". $ cost averaging through thick and thin is a winner long term.

While I agree $ Cost Avg works very well, it has not done well in the years from 1999 to 2009 (known as the lost decade). Hence my reaction to the new investors in recent years that waiting for the crash may of been a better approach.

We've seen a dip today in the US market and we will see many more. One thing about $ Cost Averaging is that you do get the benefit of staying invested in the market. Buffet has always said the odds are always against you if you stay out of the market and to time when to stay out is no different to gambling at the casino. Just buy the index ETF and forget about it in 20 or 40 years time (if you have that many years to wait).

[moka]

Anyone regret anything they did or didn’t do, investment-wise, over the Covid/lockdown period? In hindsight, my one regret is that I stopped my regular weekly orders temporarily. It did mean I was able to pick up larger (for me) parcels of shares in a couple of holdings, but it also meant I missed out on the opportunity to add to my other holdings at very discounted prices. I should have kept my regular small orders going and used savings to buy the “extras”

Not a big deal in the grand scheme of things, but yeah, a missed opportunity.

Anyone else kicking yourself just a bit now? ;)
Curtis Faith in his book Inside the Mind of The Turtles says judge the quality of decisions based on their inception rather than their outcome.
It would appear that you did not expect the market to recover so quickly and so you stopped your orders. With hindsight was it the right decision at the time based on the information and knowledge you had at the time, on your understanding of the market. As Birman Boy says at the time who was to know how quick the recovery would be. Mistakes are lessons.

[SBQ]

Curtis Faith in his book Inside the Mind of The Turtles says judge the quality of decisions based on their inception rather than their outcome.
It would appear that you did not expect the market to recover so quickly and so you stopped your orders. With hindsight was it the right decision at the time based on the information and knowledge you had at the time, on your understanding of the market. As Birman Boy says at the time who was to know how quick the recovery would be. Mistakes are lessons.

It's not how long you stay out of the market but how long you stay invested in the market that counts. Believe me, there are MANY that went to 100% cash in Feb and are still waiting today - assuming there will be a bigger crash to come. Who would be right and who knows where prices will be next month, next year, or in 5 years time?

[CKWJ]

It's not how long you stay out of the market but how long you stay invested in the market that counts. Believe me, there are MANY that went to 100% cash in Feb and are still waiting today - assuming there will be a bigger crash to come. Who would be right and who knows where prices will be next month, next year, or in 5 years time?

That's somewhat where I am right now. I keep my (modest) monthly orders going through all of this, and one of them went through during the lowest point, but I have a bit of cash waiting in the wings that I haven't used, and I'm just not sure what to do with it.

My internal dialogue tells me I have 3 options; 1. Keep the cash where it is and invest it all when (or if!) a crash comes. 2. Beef up my monthly orders and release it with dollar cost averaging over a longer period of time. 3. Invest it all into a long term hold in the near future and cast off my worries about volatility, as that's going to be the reality for the next little while.

[Ronnie]

I got excited and purchased shares in WHS when they announced (prematurely) that they would be open during lockdown. It was a complete departure from my plan (to invest monthly in ETFs this year), it wasn't a company I had any interest in before, but I was flustered and reading the news (I know, I know).

Managed to break even selling a few weeks later, but learnt a swift lesson about not letting emotions drive purchasing.

Other than that, I wish I had purchased some more A2M.

[macduffy]

Relax, Ronnie. Wishing you'd purchased more of a winning stock may be a regret but it's not a mistake. And we've all had that particular regret!


Other than that, I wish I had purchased some more A2M.

[Bev73]

I agree, mistakes are lessons.

While it is cheapest to learn from the mistakes of others, I have found that the many investment mistakes I have made myself are the ones I am most unlikely to repeat in future.

Errors made early in ones investing timeline, when funds invested are minimal, can save a colossal and very costly major mistake a few decades later.

[Joshuatree]

I reckon one of the hardest mistakes to learn is crystallising a loss. One has invested their funds and bought the story , back it up with biased(looked for only the pros no cons) research, searched and found others to support it and when the s/p keeps dropping throwing it in the bottom drawer in denial and hope it will come right one day. Been my biggest challenge anyways. Cut ones losses and move on is what i need to remind myself and my EGO.

[Ronnie]

I got excited and purchased shares in WHS when they announced (prematurely) that they would be open during lockdown. It was a complete departure from my plan (to invest monthly in ETFs this year), it wasn't a company I had any interest in before, but I was flustered and reading the news (I know, I know).

Managed to break even selling a few weeks later, but learnt a swift lesson about not letting emotions drive purchasing.

Other than that, I wish I had purchased some more A2M.

Lol, this has aged well.....