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Stupid Newby Mistake
Old 01-16-2009, 09:06 PM   #1
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Stupid Newby Mistake

OK, I knew better, but did it anyway. Don't let this happen to you:

I have been wanting to move a small portion of my portfolio (2.5%) into gold mining stocks for a long time, but prices were too high, so I have been waiting for them to fall. My plan was to purchase Market Vectors Gold Miners ETF when the price seemed right.

I do not check they markets that often (which is generally a good thing) and when I looked on October 29 I saw mining stocks had been destroyed. Great, here was my chance. Unfortunately, I had not set up a brokerage account yet with Vanguard. Well, I did not want to wait given the fire sale prices, so instead I purchased Precious Metals and Mining instead. It's a precious metals fund also, right?

Well, no it is not. It is a mining fund, of everything but precious metals (Nickle, copper, etc). That is why you read the prospectus. So today, my Precious Metals and Mining shares are DOWN 14%, while Market Vectors Gold miners ETF is UP 65%.

This is probably one of the only times I have ever made a great call on the market, and I blew it.

Remember, fund names are meaningless. I knew this, but got excited and did not do my due diligence. I have no one to blame but myself, and have lost the price of a nice car by my mistake. I am currently trying to accept my loss and liquidate my PM&M shares, but I can't stand this idea of buying into the MVGM ETF at 75% higher than I intended.

Anyone want to share their story of stupid behaviour to make me feel better?
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Old 01-16-2009, 09:25 PM   #2
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didn't think wamu would fail...too big, gov't would help, etc. bought most of the way down, you know good dca strategy. ...also lost the price of a nice car...I was really stupid!!!

R
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Old 01-16-2009, 10:39 PM   #3
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As a long-time owner of the fund that was once called simply Vanguard Precious Metals, I want to attest that the fund still holds plenty of precious metals miners. Also, the companies aren't exclusive. For example, gold is typically extracted in the copper mining process. It's been probably around three years since the fund broadened its domain to include other than gold, silver and platinum miners. My stupid mistake was not selling my considerable holdings in the fund after it had gone up over 150% in about three years.

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Old 01-17-2009, 10:23 AM   #4
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My stupid mistake was not selling my considerable holdings in the fund after it had gone up over 150% in about three years.
Yes, the next time I have something that goes up over 150% in about three years, remind me to sell it high!

I didn't do that in the early 90's with some tech funds, and with some financial stocks in the 2000s. But we're not talking substantial holdings here, so it was a cheaper lesson.
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Old 01-17-2009, 11:33 AM   #5
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I owned 33 mutual funds at one point in 2002.
4 with a front load, many with exp ratio > 0.5%.
Helllloooooooooooo?
just call me newbie, newbie, newbie...
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Old 01-17-2009, 11:39 AM   #6
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just call me newbie, newbie, newbie...
It's safe to say we've all made dumb mistakes with lots of 0000's after them. I sure know I have.

This is ranges from buying high cost funds all the way to "can't miss" limited partnerships. It doesn't include not being able to predict whether the S&P will go up or down in any given timeframe. Some things are just guaranteed to be disasters or, at least, greatly underperform.
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Old 01-17-2009, 11:55 AM   #7
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Every individual stock I have ever bought has lost money, except Kellogg.
Thankfully, 99% of my portfolio has always been in mutual funds.
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Old 01-17-2009, 12:00 PM   #8
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It's safe to say we've all made dumb mistakes with lots of 0000's after them. I sure know I have.

This is ranges from buying high cost funds all the way to "can't miss" limited partnerships. It doesn't include not being able to predict whether the S&P will go up or down in any given timeframe. Some things are just guaranteed to be disasters or, at least, greatly underperform.
I initially approached investing like ordering off a Chinese menu.
TG I picked 5 VG funds in all that mess. The "rack and stack" I was able to do at M* portfolio manager got me thinking...why am I doing this? I feel good that I learned early on about "cost matters" and took corrective action to reduce it. My stake in each of the 33 funds was the minumum to open, BTW. So my losses weren't too awful. Whew!
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Old 01-17-2009, 12:09 PM   #9
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Well, I bought Petrolero Brasiliero (PBR) about a year and a half ago. It was up over 100% at one point a few months later... and I held onto it.

It's down 43%.

Shoulda sold it high and dropped it into an index fund, but I hadn't become a born-again index investor yet.

I need to bite the bullet and sell it. I've known this for six months. Proof that newbie status is enduring.
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Old 01-17-2009, 12:10 PM   #10
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Thanks. Misery loves company!
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Old 01-17-2009, 12:12 PM   #11
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Originally Posted by tomintucson View Post
As a long-time owner of the fund that was once called simply Vanguard Precious Metals, I want to attest that the fund still holds plenty of precious metals miners. Also, the companies aren't exclusive. For example, gold is typically extracted in the copper mining process. It's been probably around three years since the fund broadened its domain to include other than gold, silver and platinum miners. My stupid mistake was not selling my considerable holdings in the fund after it had gone up over 150% in about three years.

Tom
We know we are supposed to rebalance, but it is hard, oh so hard to sell the winners and buy the losers.
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Old 01-17-2009, 01:02 PM   #12
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I need to bite the bullet and sell it. I've known this for six months. Proof that newbie status is enduring.
Why? Is is part of a plan to completely exit single stocks? Or are you negative on oil and gas? Or is it just revulsion with this stock and your losses in it?

You may have excellent reasons, but this may not really qualify as a Newbie Mistake. It could be an good investment going forward, and your loss is much less than even the S&P over this time.

Ha
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Old 01-17-2009, 06:17 PM   #13
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Why? Is is part of a plan to completely exit single stocks? Or are you negative on oil and gas? Or is it just revulsion with this stock and your losses in it?

You may have excellent reasons, but this may not really qualify as a Newbie Mistake. It could be an good investment going forward, and your loss is much less than even the S&P over this time.

Ha
We're moving to index funds and are refining our asset allocation categories. This one no longer fits. Still, selling it is proving difficult to me. I'm working on getting my head wrapped around why. I think that it's probably because we're kissing commodities goodbye in our asset plan (the PBR was purchased when we didn't really have a plan and I was picking stuff that "looked promising."). So it's more regret that I purchased in an undisciplined manner, than anything else.
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Old 01-17-2009, 09:03 PM   #14
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We're moving to index funds and are refining our asset allocation categories. This one no longer fits. Still, selling it is proving difficult to me. I'm working on getting my head wrapped around why. I think that it's probably because we're kissing commodities goodbye in our asset plan (the PBR was purchased when we didn't really have a plan and I was picking stuff that "looked promising."). So it's more regret that I purchased in an undisciplined manner, than anything else.
I understand. Still it is hard for me to think that commodities in general and oil and gas in particular won't come roaring back as soon as the economy recovers. At least that is how I am playing it. One of us will be right I guess.

Ha
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Old 01-17-2009, 09:08 PM   #15
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It's safe to say we've all made dumb mistakes with lots of 0000's after them. I sure know I have.
Not me, all my mistakes have been extremely intelligent. Most of my bad moves have been very well thought out, but wrong. It's my sucesses that tend to be dumb, or maybe lazy. I seem to do better when I don't do much.
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Old 01-18-2009, 05:38 AM   #16
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Not me, all my mistakes have been extremely intelligent. Most of my bad moves have been very well thought out, but wrong. It's my sucesses that tend to be dumb, or maybe lazy. I seem to do better when I don't do much.
I did a lot of work with technical analysis. That was a lot of work and totally ineffective. There are others but my smartest move was to go into simple AA and indexing.
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Old 01-18-2009, 08:33 AM   #17
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After Loosing 75% of my Limited savings in my IRA in the 80's? Best adivce I got and followed was ' Most of Us are, our Own Worse Enemy on Investing our own $"..
Just Imagine.. How good you are at doing your job and now Figure How Good Some Apprentise is trying to do it....R They as good? That is what most People are on investing > Apprentises... and haven't got a Clue and by the tiem they do learn? They lost most of their $.. to the Pro's..who are just waiting in the wings to sucker you in...

Thus Put what you have left and any new $ into eitehr (a) A Balanced Fund and own 2 of them of different types or (b) Own nothing but Bonds"

I did "a" and sure glad I did, it saved my Retirement $ and Marriage..

Since I could Blame Someone else if it went bad...LOL

But, It never has yet... ( since 2000 ) Darn it...

Ave 12.5% apy from 2000-2007 , lost -11% in 08'...
And She's a Very Happy Camper with me... and after the last bear was over? She has gotten all the kids, etc into them as well..and their marriges are happy too..
We just had out New Yrs Family Dinner and dicussed it and everyone is resting easier they only lost aobut -10% last yr while all their Friends lost 2-3x more..

For indexers? Just Compare VWINX vs a 60/40 Port these past 9 yrs ( since 2000) and see how "well" you would have done btwn them...
Per $10k Cost basis? How about VWINX has a $15,861 value and A 60/40 Port of indexes has only $9,235.. So much for Indexing on your own..

It's even worse Comparing to the likes of FPACX,OAKBX or PRPFX Bal. Funds..ave about $18,000 value vs $9,235 with your 60/40 Port of Indexes..

;->)
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Old 01-18-2009, 10:44 AM   #18
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It's my sucesses that tend to be dumb, or maybe lazy. I seem to do better when I don't do much.
Even though it is counter-intuitive, investing according to my long term plan and then doing little to nothing seems to have worked best for me as well.
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