“How much – in percentage terms – has been your biggest ever booked loss in a stock? And which stock was that?”
While some have booked these losses, there are a few who are hopeful to get their money back. 🙂
Anyways, my friend Vidyanshu suggested that it might be a great exercise to get the learnings of a lot more people from their investment failures, which has resulted in me writing this post.
So here’s your chance to pour your heart out and confess to the tribe about that ‘one’ stock that has caused you the biggest grief in the past, and how did you get over that.
How to confess?
If you are willing, answer these five simple questions in the Comments sections below…
- Which stock has earned you the maximum loss ever?
- How much was that loss, in percentage terms?
- In hindsight, was it due to your mistake in picking up a bad business or did things go wrong with the company later that you had not assumed earlier?
- What was one lesson you learned from that loss/mistake?
- Have you booked the loss? If not, what are you waiting for?
Like here is how I answer these questions…
- Arvind Ltd.
- It was a big mistake on my part in picking up a business that was capital intensive and had zero pricing power. I just went by the company’s strong brands, but did not realize that they were not profitable. I had known how Warren Buffett hated the textile business for its poor economics (like airlines), but thought that “this time it was different”.
- Avoid businesses that don’t have pricing power and are highly capital intensive.
- Yes, I have booked my loss.
Why you must confess?
Contemplating death, as philosophers encourage, is a powerful tool to re-appreciate the present and remember what makes your life meaningful to you.
In the same way, when it comes to investing, recognizing your past mistakes, looking thoughtfully at them, and learning from them are great tools in helping you avoid similar mistakes in the present and future.
As Charlie Munger says, “All I want to know is where I’m going to die so I’ll never go there.”
So let the tribe know about that one stock that almost killed your portfolio, so that others don’t go there…or at least be very careful of going there.
Please don’t feel embarrassed or hesitant to confess, for there will always be someone else who went through a bigger grief than you…and this is your chance to learn vicariously from that.
So shoot your answers in the Comments section below. We are all ears.