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Learn from my investing mistakes: 3 valuable lessons for success

Updated: Apr 5

In this blog, I will open up about some of my biggest investing mistakes. We all make errors, and unfortunately, I made these mistakes not just once, but twice! So, let us dive right into the lessons I learned from these experiences.

Lesson 1: DBS Group Holdings – A lesson in patience

Back in August 2011, as a university student, I purchased 1,000 shares of DBS Group Holdings, a leading provider of banking and financial services in Singapore, at SG$ 13.50. At that time, buying in smaller quantities was not an option due to regulations so owning 1,000 shares at that price seemed exciting, costing me around SG$ 13,500 or roughly $10,000.

However, Mr. Market quickly reminded me of its unpredictability. By December, the stock price dropped to SG$ 11.50, resulting in an unrealized loss of SG$ 2,000 in less than four months. As a full-time student and part-time tutor, that loss stung, equivalent to 100 hours of tutoring.

But that was not my mistake.

Surprisingly, within two months, the stock recovered and reached breakeven. It even went on a bull run, hitting $14.70 by August 2012, delivering around 10% returns in approximately one year. Feeling triumphant, I decided to cash in my $1,000 profit and congratulate myself on a job well done.

Little did I know that this decision would turn out to be the wrong move.

In the subsequent years, DBS Group Holdings continued to reach all-time highs. As the company expanded thoughtfully throughout Southeast Asia, Hong Kong, and the rest of China, its stock price soared. By August 2013, it was trading at $17.20, and by the end of 2014, it reached $20.50, offering a fantastic 50% return if I held on longer.

Regrettably, I did not learn my lesson well and repeated the same mistake with Meta Platforms (formerly Facebook).

DBS Group Holdings share price from 2011 to 2014.
Source: Yahoo Finance

Lesson 2: Meta Platforms (formerly Facebook) – Missing out on a social media boom

In mid-2014, I invested in Meta Platforms at $63.00, and by mid-2015, it had climbed to $96.00. Astonished by its growth, I assumed it could not possibly go any higher and decided to lock in my profit, feeling clever and wealthy.

Of course, as we all know now, Facebook's share price skyrocketed after that.

This experience taught me the valuable lesson that an investor should never sell based solely on the stock price. Hindsight is 20/20, and if I had held on, I would have seen even greater gains.

Key takeaways from my mistakes

You do not have to make the same mistakes I did. Here are three key lessons I learned from these experiences:

1. A Stock Represents Ownership in the Business: Remember, when you buy a stock, you are purchasing a piece of the business. The stock market provides an opportunity to invest in businesses that can significantly increase your wealth. Rather than viewing it as a mere piece of paper for quick profits, adopt the mindset of a business owner. This shift in perspective is crucial for the success of your portfolio.

2. Stock Analysis Extends Beyond Stock Price: Do not fall into the trap of judging stocks solely based on their share price. The analysis should delve deeper, considering factors such as cash flows, growth prospects, and the economic moat of the business. These critical aspects influence valuations more than the current share price alone.

3. Knowing When to Sell: Long-term investing goes beyond the idea of purchasing stocks and holding onto them indefinitely. It involves a continuous process of buying stocks and actively monitoring the fundamental aspects of the business. Three principles guide me when deciding to sell:

Firstly, if the business experiences irreversible deterioration, indicating lasting performance decline.

Secondly, if more promising investment opportunities emerge that offer greater potential.

Lastly, if my initial investment thesis proves to be incorrect or no longer valid due to changes in circumstances or market conditions.

By learning from my mistakes, you can avoid repeating them. Remember, investing is a journey of continuous growth and learning. Stay focused on the long term, make informed decisions, and embrace the mindset of a successful business owner.

I hope you find these lessons helpful on your investing journey. If you would like to delve into more in-depth analyses of various stocks, feel free to check out my comprehensive fundamental analyses here. Happy investing!


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