It’s easy to boast about wins. You might find a case in your portfolio that yielded over a hundred percent in a year, yet the overall return of your portfolio is below the index. When colleagues or relatives ask about stock market matters, it’s nice to throw out names like Talenom or Revenio.
Life is full of mistakes, and I feel sorry for anyone who doesn’t make them. It’s frustrating to put hard-earned money into a carefully selected stock whose price then rolls down the hill like a stone. Whatever the endeavor, be it poker or running a company, learning from mistakes can be key to success. In this thread, you can freely confess your investment blunders, especially the worst ones, come down from your cloud castles, reflect a bit, ponder what went wrong, how you could have avoided it, how you’ll act next time, and whether life has continued normally. Free discussion related to your own mistakes and those brought up by others. Perhaps someone can learn something from this, even the writer themselves.
Opening: what else but good old Martela, sold with a -54.88% return.
I joined sometime a year ago in the fall after a couple of price drops, and I was genuinely interested and quite confident in the company and its goals. I then sold it after the latest earnings release. When Inderes’ model portfolio withdrew from Martela, I think I still had a little hope for the company. However, the final selling decision was made by the weakening competitive position or tightening market, brought up in Q3, which I didn’t consider a good thing.
Briefly, why I sold and what I learned:
Tightening market, great distrust in management, I didn’t know where things really stood (did the company itself even know?), and missing the best market cycle, which Martela splendidly avoided. Office spaces are no longer being renovated or built as frequently, and Martela doesn’t feel like a good case for a while. When a turnaround company keeps giving negative news, and the company can’t/doesn’t want to explain why, and there’s no evidence of a turnaround, then it might be good to sell in time. The company constantly talked about a new ERP system, and was that always the reason why revenue and margin kept weakening and the Swedish market was in a complete downturn?
This case has probably been discussed quite a lot here, so there’s that ps. It was a really interesting roast!
Mistakes are a good thing, you can make and deal with them in so many ways. Basically, mistakes where a risk you’ve acknowledged beforehand materializes don’t bother me too much. No one gets through without those kinds of incidents. Anyone who claims otherwise is lying.
Then there are the mistakes that really bother you… For me, the first thing that comes to mind is holding onto a company even though you’ve lost faith and hope has taken its place. Thoughts like “I can’t sell with such a big loss,” “I’ll sell when it goes up a bit again,” “I’ll just watch for one more quarter” seem to be quite common, at least within my own investing circle. I’ve tried to learn to recognize when my own thinking starts to shift from belief to wishful thinking. That seems to be a good point to cut your losses. It feels dumber to lose more because of wishful thinking than to miss out on a new rally because of a decision that felt reasonable. Of course, you should do some fundamental analysis coolly and dispassionately, regardless of the situation, but I think losing faith in a company is a perfectly valid reason to sell, no matter what the numbers say.
My most annoying mistake isn’t the biggest financial loss, but the decision to break my principle of not investing in the construction or basic industry sectors in this bull cycle. So, Lehto got caught there after half a year of watching it slide, a few days before the second profit warning. It didn’t feel like a particularly good decision from the start, but it started to look so pessimistically priced that I jumped in. Well, then came the negative warning, and I thought for a few moments if I could justify staying in the position. I concluded I couldn’t, because two negative warnings so quickly in a row suggest that even the management doesn’t quite have things under control. A blessing in disguise, that by the end of the day, the stock had melted another 15%, so an even bigger financial loss would have been on offer. Now I got away with mostly idiot feelings and a moderate lightening of the wallet.
@Lampen, Yes. Good insights, more of these. The fact that you join something and know very well that the realization of this and this risk can eat into at least the short-term profits from this case, that’s perfectly fine if those risks materialize, because hopefully the investment is also proportionate (will Efecte’s growth investments yield results, will Ovaro succeed in its turnaround, etc.). You should also go through all scenarios and risks when buying a company, and not automatically consider it a sweet spot.
I must admit that with Martela, my belief in the goals*, or the success of the turnaround, had mostly turned into wishful thinking in the final stretch. Belief and hope are two different things. “I’ll watch for one more quarter,” how familiar a phrase for me from the Martela case. (*Okay, no one probably believed in 8% EBIT in -18 anymore).
The thought of not daring to sell (or at least if you intend to buy) a stock when it’s already ‘at rock bottom’ can be dangerous. Yes, the stock price can indeed fall - a one-euro share can fall to 50 cents and from there to a couple of cents. Look at Stockmann.
{“content”:“Good thread. I notice I’m quite forgiving; very few mistakes bother me. They’re part of the deal, as already mentioned.\n\nThe most self-flagellation comes from when there’s an opportunity within my capabilities, but laziness or something makes me turn a blind eye. Most recently, Ilkka before its price surge. It was repeatedly mentioned on this forum that it was cheap. Now I no longer consider it because the upside is so limited, but I don’t understand why the stock wasn’t on my radar earlier; what on earth was I thinking?”,“target_locale”:“en”}
Nordea: Realized approx. 20% losses and shifted weight to Sampo. I expect Nordea to still generate value through Sampo, and the dividend helps a bit. But this is a somewhat mysterious case, and I’m not kicking myself too much over it.
Caverion: Childish Herlin-following. I’m kicking myself for this because as a small investor, I couldn’t benefit from the directed issue, and a falling knife is a bad starting point in general. 20% losses realized this year, but I’m keeping the position because I still believe in a turnaround. However, will the share price rise enough to cover the losses?
Lehto: I was perhaps a little blinded by the immaculate track record and didn’t understand the risks and difficulties of renovation construction. Probably 30-40% losses from this, but I’m still keeping the position. We’ll see if we ever see >10€ prices again?
As a beginner and a complete amateur, “self-taught, self-listening, self-learning” (thanks to @Verneri_Pulkkinen and the Inderes team – I’ve learned a lot and surely will learn more in the future), I’ve noticed that it’s quite difficult to start investing when you don’t know anything about anything – friends are hardly going to brag about their investments (at least not among us 20-somethings). Tabloids just use clickbait headlines.
My most regrettable ‘mistake’ so far was selling Neste around 55€ after buying it around 45€. Another one was when I got a really good feeling from Talenom’s CEO interview when the stock was around 11-13€, and I didn’t buy. Well, the result is visible. However, if I were to just invest “on a whim,” I believe I’d take even harder losses.
Yes, I can honestly say that I’ve lost to the index 100-0, but that doesn’t really bother me since even it has been at a loss since the beginning of the year The main thing is that I’ve started investing! Nobody is a master born. I’ve managed to stay quite moderate in my opinion and haven’t gone selling into any -2% dips. I’m pretty much a basic ‘dividend’ investor. It certainly pays off when you see a little money coming into your account as dividends, and not just as salary and tax refunds.
I still have a long way to go and will surely encounter both joys and sorrows.
Yeah, as long as the building volumes don’t collapse. It would probably be optimal if they could make renovation profitable and stable, because it won’t run out; there’s an enormous backlog of renovations.
In my opinion, Lehto is still in a challenger position, and even if the construction cycle cools down, I hope Lehto can grow its market share and grow as an individual company in a slowing industry. And preferably with >10% profitability.
If you want to hear a big mistake, I can tell you that when I started, a few years went well and my portfolio was diversified. I even bought some Tekla from the stock exchange. Then, I, a young man, put everything into Nokia, and Nokia announced that they were moving to Lumias, which didn’t even exist yet, and that the current Symbian was total rubbish, so I took a pretty big hit… And I can’t even boast that I sold at that point, even though the alliance with Microsoft felt stupid… I think I spent a couple of years digesting that.
After that, fortunately, there have been a few good years of growth in between.
I did, by the way, vow then that I would definitely not buy Nokia again, but Nokia has been my biggest investment for some time now, representing exactly 14.8% of my holdings if you exclude unlisted investments.
I have! Or at least something similar. This week I doubled down on my Nokia position, even though it was already an oversized sector in my portfolio. I even sacrificed all my January rally money for it. Now, betting on three favorite horses represents about 75% of my investment capital. I feel that in my short investment career, the biggest mistake has been not following Aki Pyysing’s (and others’) advice: “don’t diversify away your returns.”
You either take a view, or if you don’t want to, then the smartest thing is just to buy that incredibly boring index (and watch in dismay as it sinks ).
Many seem to think that a losing investment would have automatically been a bad one. If you make a justified investment and later cannot say what went wrong with your investment decision based on the information available at the time, then the investment was good even if it yielded a loss.
However, you should be a bit cautious with Aki’s advice. Aki himself mainly invests in real estate and companies owning them, so his risks are quite moderate even if the portfolio is not particularly diverse. He also has quite a lot of investments outside of stocks. He also trades quite actively and reacts to news.
Your choice does not sound like healthy risk management at all. Of course, it depends a bit on the portfolio size and whether investment capital includes, for example, an apartment. Taking a view on that scale makes no sense for an ordinary small investor. Only if you can reasonably explain why the expected return would be significantly higher in those three than in other possible investment targets, could it be considered a sensible solution. If you can find targets with a similar expected return, then diversification is only and solely sensible. Nokia is also such a closely followed company that you probably don’t have better information than the market. If I were you, I would reconsider your strategy and throw it in the trash.
Well, that’s just the current situation. I’ve sold off many slices throughout the fall, and almost every one of them has dropped in value during the autumn storms, so I’m happy with those decisions. I’ve correspondingly increased positions that I consider the best safe havens. And Nokia is indeed one of them; I’m not claiming to have better market knowledge than anyone else, I just think it’s a damn good investment right now. I don’t feel the same about Aki’s Citycon and Ovaro, however.
There’s no cash in the portfolio, but a second apartment in Espoo will be sold if necessary, which could double the portfolio. For example, in a proper crash, which I don’t consider a far-fetched alternative at all. Perhaps then I could also buy an index or suitable ETFs, which currently feel too expensive. Thanks for your concern, though
The same stock caused hindsight wisdom here too. I bought it around 2008 for 7,xx, but my nerve broke at the price of €35 and the shares were sold. In itself, it looks quite nice in percentages, but it could have looked a lot better if I had kept it. I can’t really even justify what logic was behind that sale, especially since the purchase price would have soon been fully covered by dividends…
I’ve also dipped my spoon into this, partly with that “if Herlin, then me too” thinking. However, the average price is low enough that there aren’t any bad losses, but I could have kept that money elsewhere during this time; now it’s tied up with zero/negative returns.
Nordea is also in my portfolio here, but it has been since 2008 and the dividends have covered the purchase price, so I have no desire to sell and the stock is very profitable, so I’m not going to remove it or consider it a mistake.
Remember that Herlin, Enrooths, and other wealthy families who invest directly/through their investment companies, are not looking for quick profits. They are long-term and patient owners - no wonder they have the cash and the dividend is also a return - not just the stock price increase/decrease
I don’t consider Caverion a lost cause, not at all. I’ll hold onto my shares. But it was perhaps childish to get involved this early. The Herlins, etc., more active strategic investors, buy enough to get on the board and steer the turnaround. A small investor should just follow the situation and strike when the bottom has been reached and a turnaround seems to be around the corner. Of course, perfect timing is difficult, but for example, with Caverion, it was 1-2 years too early to be on the move…
Honkarakenne.
The company makes really great products, and I strongly believe in their future growth. Of course, the current situation is cyclically weak.
But corporate communications.
Today, a profit warning, with the key point:
“The reason for the weaker-than-expected earnings performance is the decrease in the volume of trade with Russia and the weaker-than-expected profitability of domestic business.”
What is the reason for this decline in trade with Russia, is it permanent…? Why is business in Finland struggling, is it permanent???
Why aren’t these issues elaborated on more? Do owners have so little right to know about this company and its situation/future?
If I wasn’t so deeply in losses here, and in a way still believed in the future, I would sell. It’s that annoying.
However, I placed a limit order at 1.90, which it doesn’t seem to be sinking to now…
I bought the liquid for 14 € in 2013 and added a couple of times more around 30 €, but for some strange reason, I sold the whole lot last year for over 40 €. I still regret it, even though I made nice profits anyway.
I also bought Innofactor in 2013 for 0.70 € and at its best, I was nicely in profit when prices were around 1.70 €. I just couldn’t jump out in time, and eventually, the shares left my portfolio at a loss for 0.50 €. Now, looking at the price, I have to be happy that I managed to get rid of the share even then.
This year’s worst mistake, and at least proportionally my biggest loss ever, is the Norwegian XXL. In July, the share dipped due to weak sales, and I decided to jump in at 50 NOK. However, the decline continued, and today, a negative report caused a -40% drop to brighten the morning. Although the drop seemed exaggerated, I decided to sell everything at a loss of over 50%.
ps. It was a really interesting roast!
Basically, mistakes where a risk you’ve acknowledged beforehand materializes don’t bother me too much. No one gets through without those kinds of incidents. Anyone who claims otherwise is lying.
The main thing is that I’ve started investing! Nobody is a master born. I’ve managed to stay quite moderate in my opinion and haven’t gone selling into any -2% dips. I’m pretty much a basic ‘dividend’ investor. It certainly pays off when you see a little money coming into your account as dividends, and not just as salary and tax refunds.
and the dividend is also a return - not just the stock price increase/decrease