My Investing Missteps And Blunders
Before I became a dedicated dividend growth investor, almost ten years ago I had my share of successes and failures in the stock market as I was lured by ultra cheap stock prices that could “easily” double my money if it went up only one or two dollars or lured by new trends in healthy foods that would revolutionize the way we consumed certain products or lured by the promise of some new technology that would change the way we communicate and interact with our real world.
This post is dedicated to all the missteps I have taken as a relative newbie to the investing world and I hope it can serve up a cautionary tale to those out there that seek to make the quick buck via risky stocks or otherwise excessively high yielding stocks. Sometimes it’s just better to buy into the boring slow growth, steady dividend payers and hold them over the long haul rather than risk significant funds on unproven technologies or ultra cheap stocks.
Back in 1994, I was reading and seeing on television a lot of news about a small company that promised to revolutionize the manner in which we communicate and interact with our real world. It was to change our own reality by offering us an alternative “virtual” reality. The company, appropriately named, which caught my attention, was Virtual Reality, Inc. To me, the technology and what this company offered was something straight out of science fiction and best of all it was public which meant I could invest my hard earned dollars and potentially profit from this new virtual reality product it was offering. So, on January 10, 1994 I bought 474 shares of VIRT at 1 13/16 for a total investment of $859.13.
For those younger readers, stock prices used to be quoted in fractions and not in decimals. For the next several weeks I saw the stock trade back and forth up and down an 1/8 or 1/16 of a point and steadily dropping, dropping and dropping. Of course, I thought to myself that I’d be swimming in cash if the stock simply rose one or two points not realizing that this was a huge percentage increase. I continued to believe in the company, stock and its technology as I bought another 840 shares on March 31, 1994 at $1 ½. If I liked it at $1 13/16 then I must surely love it at $1 ½. This second investment tranche totaled $1,260.00. In total, I was $2,119.13 deep into this mess of a stock that kept going lower and lower and lower. Today, as a result of reverse splits and mergers my VIRT now totals just 131 shares from 1314 at $0.0001 trading under the symbol STLB (Sterling Business Solutions Inc.) with a market value of $0.0131. How’s that for a great investment? I was able to turn over $2,000 into a little more than one penny! I told you this post would highlight my missteps.
Disclosure:Long KO, JNJ, PG, KMB, CL, MMM, AFL, PEP, MCD, BDX, ITW, STLB
Disclosure:Long KO, JNJ, PG, KMB, CL, MMM, AFL, PEP, MCD, BDX, ITW, STLBless