My 4 Worst Investments And How You Can Learn From My Mistakes

People always talk about their best stock picks. It’s more fun to talk about buying Facebook at IPO or picking up Netflix before it’s meteoric rise.

Investing in Moonshot companies is fun. However we like to keep it real at Financial Freedom Countdown. In fact, I believe you can learn more from failures than your successful picks.

Sears Holding (SHLD) – 2007 As you know from my immigrant story, I came to this country by myself. Everything from emergency fund to bank accounts to credit cards to renting an apartment was a learning experience. Stocks were not even on my radar the first few years. In fact, I never contributed to my 401(k) for the first 2 years. And this was with a 50% match. Yikes!!

One stock which he highly recommended was Sears Holding. In my defense, I did not immediately buy although Jim Cramer was yelling BUY BUY BUY.

It is no surprise that my first foray into stocks was switching on CNBC and watching Jim Cramer on Mad Money.

Lesson Learned:

Don’t take stock tips from Jim Cramer lol.  It is wrong to assume success in one field translates into expertise in another. Lampert’s hedge fund success was extrapolated to his expertise as the CEO and Chairman of Sears.

United States Natural Gas Fund (UNG) – 2008 Natural gas was all the rage in 2008. While the thesis was right what crushed me was not realizing that UNG was a poor proxy for the actual price of Natural Gas. One of the biggest challenges in any oil or natural gas commodities fund is the contango and backwardation. Since these ETFs are futures contracts; one needs to watch the spot and futures price.

Lesson Learned: When investing make sure you anticipate any technological changes that may result in your thesis not being valid in the future. Also make sure you understand the instrument used in order to invest/speculate. The usage of futures contract turned out to be my undoing.

Initial Coin Offerings (ICO)s – 2017

Once I went down the rabbit hole of Bitcoin, it was only a matter of time I decided to delve deeper into other Cryptocurrencies. A lot of tokens came into existence and were offered as ICOs. These were known as “altcoins” and once they failed the moniker changed to “shitcoins”.

Lesson Learned: In hindsight, most of these tokens did not have a strong business case. Since Bitcoin is already decentralized money; you could just use Bitcoin to pay for all these services. I could see a case with respect to decentralized and anonymous internet being a good use case since Bitcoin does not offer anonymity yet. The lack of adoption should have been a major red flag.

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