Your three worst moves lately?

[fenders53]

(02-18-2020, 01:30 PM)Otter Wrote:

(02-18-2020, 01:21 PM)fenders53 Wrote:

(02-18-2020, 12:04 PM)Otter Wrote: If we are looking at long term capital losses (on paper, at least), BUD (purchased just before the dividend cut), F, and SKT have all been real dogs in my portfolio.

We are talking about at anything you care to share Otter.  You know I'm a social butterfly right?  The actual purpose is to start a useful conversation though.  If you invest for 40 years you are going to make some mistakes.  If you repeat them too often you should be in index funds.  Nobody wants to hear that including myself.  Might sound like I enjoy beating myself up but that's not really so.  I learned a hard lesson during the tech bubble and have never repeated that error because it was devasting and it's a wonder I didn't just give up on equities.      

These days yield traps are my weakness.  I don't think I am alone here.  I do it over and over.  There is investing for the longterm, and there is just not heeding the obvious warnings.  (ignoring debt, or worse yet ignoring the fact the old thesis is very wounded and it might be forever)  I can't count how many falling knives I've tried to catch.  Sometimes I catch myself living in the past.  The stock is half price so it has to be a good deal.  I believe this is the biggest pitfall for value and/or DGI investors.  But I can head on over to S.A. anytime for reinforcement of my wishful thinking.  

Big oil is a recent example.  Is oil completely dead? No of course not.  Is there any end in sight to the oversupply problem with OPEC-Russia trying to control production, and numerous big oil producing countries off the market due to sanctions?  No shortage of authors pretending like the market is just stupid and oil will rise 50% any day now.  It's just delusional.  Similar story with SKT cheerleading authors pretending like the companies struggles aren't obvious.  After a couple years the market probably isn't wrong.  I sold my SKT long ago before it halved yet again.  The Div wasn't ever going to justify my bad entry.

Thankfully, over the long term, in a well-diversified portfolio filled with quality DGI companies, winners should outnumber losers over those long time-horizons. Same is true for those holding index funds. I just prefer the DGI approach, as living off the income is preferable to me. 

Few (if any) people are going to invest over a lifetime and have 100% winners in a well-diversified portfolio, even if following a DGI approach and taking value into consideration when making a purchase decision. Statistically, the odds should be good that such an approach would at least match market returns. The long history of positive market returns over long holding periods is also reassuring. 

Sometimes I have seen a completely broken investment thesis and decided to sell (GE and KHC were in that category for me). I try to keep my fingers off the sell button, though.

It's inevitable we all make some bad calls.  We all know folks that never sell, and some that sell fast if they lose 5% or some other pre-determined number.  Both of those strategies are far too simplistic to me.  A bad entry in the short-term quickly reminds you how important management is.  I think I sometimes underestimate that at time of purchase.  CSCO might be a good example.  They are stuck in a rut, and I have confidence the CEO and his crew will work though it and restore growth.  The dividend is safe in the meantime, even if it fails to grow for now. SKT has good management and if they can work through the negative shopping trends there is a chance.  KHC?  I don't have any such optimism.  If there is any useful point, all this highlights the need to do better research before entry, or even adding shares.  Dividend investors seem naturally attracted to falling SPs and the high yield that accompanies it.  I need to spend much more time researching those decisions.  I guess that is my lesson of the past few years.