Investment Confessions

[calmloki]

We had been making some smaller real estate loans - $10-$30k - and really were feeling we had a handle on them. Decided to step up and loan $90k through a group in downtown Portland. Fancy offices, big table, half a dozen professionals and experts in suits. These people had the skills! We didn't have the money secured by first mortgages, just a cheesy contract with the company principals. Within a year the group folded up and vanished with most of our money - think we collected about $10k in interest, so a $80k loss.
Our lost opportunities have been far greater - several places in Prescott that have more than quadrupled in value since 2010, the small airbase in Condon Oregon that just would have been cool to own, plenty of places that would have required a serious stretch but would have/could have paid off handsomely. "Regrets, I've had a few. But then again, too few to mention."

 

[retired1]

My mistake is I'm still hanging on to ~200 shares of GE. I bought these at ~18 and now I'm under water. I plan to dump all GE stocks towards end of year for harvesting losses for TY 2018.... unless magically they start rebounding later this year

 

[jazz4cash]

Remember "tracking stocks"? These were "stocks" but not equities since they did not actually represent ownership of the underlying company. When GM bought Hughes and EDS they issued class H and class E shares to represent these groups and they outperformed the market. The guy that pioneered the tracking stocks idea was hired away by ATT and initiated a tracking stock for their brand new wireless division. DW was an employee and eligible to get in on the IPO. In a remarkably out of character (for her) decision she decided to invest 20k at $19. That was just before the market tanked 50% but those things went to 0. There was after all no tangible assets backing them up. Oh, and DW got laid off too. We had losses to write off for years. We did recover about $200 from the class action, though.

 

[copyright1997reloaded]

Remember "tracking stocks"? These were "stocks" but not equities since they did not actually represent ownership of the underlying company. When GM bought Hughes and EDS they issued class H and class E shares to represent these groups and they outperformed the market. The guy that pioneered the tracking stocks idea was hired away by ATT and initiated a tracking stock for their brand new wireless division. DW was an employee and eligible to get in on the IPO. In a remarkably out of character (for her) decision she decided to invest 20k at $19. That was just before the market tanked 50% but those things went to 0. There was after all no tangible assets backing them up. Oh, and DW got laid off too. We had losses to write off for years. We did recover about $200 from the class action, though.

I remember a guy that came to work from us from a dot com busted firm. He had been issued a bunch of stock options, which became worth a lot of money, but he has unable to sell them due to lock up provisions. By the time he was able to cash them out, they were essentially worthless, and he had hundreds of thousands of losses for which he was able to deduct only $3K per year off of his taxes.

 

[bobandsherry]

I remember a guy that came to work from us from a dot com busted firm. He had been issued a bunch of stock options, which became worth a lot of money, but he has unable to sell them due to lock up provisions. By the time he was able to cash them out, they were essentially worthless, and he had hundreds of thousands of losses for which he was able to deduct only $3K per year off of his taxes.

Interesting, I've only seen where options expire worthless, not any that created tax losses.

 

[kcowan]

When Nortel was tanking, I said it can't go to zero so I bought 1000 shares at market. They bottomed at $0.68 and I got them at $0.76 as they rebounded and I sold them for 100+% return at $1.75 and watched them climb to $7+ but I was not a pig anymore thankfully!

 

[copyright1997reloaded]

Interesting, I've only seen where options expire worthless, not any that created tax losses.

I don't remember the details, but he was forced to exercise when they went public, thus generating the profit on which he had to originally pay taxes but the stock could not be sold for a period of time (e.g. 6 months or a year due to insider lockup provisions). The stock cratered by the time the lockup expired. So, tax bill for the first part, big tax loss on 2nd part in a later tax year...but since he was limited to 3K loss per year, he had a lifetime of tax loss carry forward.

I wish I remembered more detail like what security it was, but it was a long time ago (circa 2002-2004) and I didn't prove too deeply at the time.

 

[Islandtraveler]

In the early 90s I bought a little known beverage company known as Hansen's Natural. I paid $2.00 a share. I doubled my money in 9 months. I was strutting like a peacock. Small detail. The company changed names. It is now known as Monster Beverage. 1 share has since split into 48 shares and currently sells for $60.00. That means my $5,000 investment would have been worth over $6,000,000 today. Shoulda, Woulda, Coulda.

 

[Markola]

The 90s fad with the priceless name, “Dogs of the Dow”. Yep, I went there for a while. Fortunately, it was hard to go too wrong in the 90s market. Looks like some true believer still has a 90s vintage website and is still going at it http://www.dogsofthedow.com

 

[GoBears]

Used the firm’s approved broker to manage my 401k investments after I made partner. Good news is that the sales loads were waived. Bad news is he charged 1% of AUM and expense ratios were not cheap. A decade or so passed and I discovered under the plan that I could self direct with Schwab. Since the AUM fee accounted for about half of my annual contributions, I immediately transitioned from 20 actively managed funds to the self directed account. The 401k is now held in 4 index funds.

I kept $200k or so in my 401k on the sidelines in cash after the 2008-09 recession, while still with the advisor. I was in my late 40s and had no real understanding of asset allocation at the time.

Thankfully, I never sought help from advisories for my IRA or taxable account. But, it took me several years to grasp tax efficiency principles for the taxable account and even longer to discover the benefits of index funds.

 

[Dtail]

Used the firm’s approved broker to manage my 401k investments after I made partner. Good news is that the sales loads were waived. Bad news is he charged 1% of AUM and expense ratios were not cheap. A decade or so passed and I discovered under the plan that I could self direct with Schwab. Since the AUM fee accounted for about half of my annual contributions, I immediately transitioned from 20 actively managed funds to the self directed account. The 401k is now held in 4 index funds.

I kept $200k or so in my 401k on the sidelines in cash after the 2008-09 recession, while still with the advisor. I was in my late 40s and had no real understanding of asset allocation at the time.

Thankfully, I never sought help from advisories for my IRA or taxable account. But, it took me several years to grasp tax efficiency principles for the taxable account and even longer to discover the benefits of index funds.

Didn't discover Index Funds until a year before retirement, but the lack of knowledge did help me stay fully invested in 2008 and the turnaround. Go figure.

 

[tdv2]

DW had stock options worth about $75K during the tech run up in 1999-2000. Of course we decided to hang in there----they expired worthless. Didn't really lose the money but could have had a nice gain.