Your
biggest financial blundermay not be stock you bought that
subsequently tanked, or the time you chose
not to sell an overheated stockat the peak of its
valuation. In fact, your worst stock mistake may be something
you never did in the first place.
The hall of shame
I still cringe when I think about the money I've lost
on investments such as
General Electric (NYSE: GE) and the cement
company
Cemex (NYSE: CX). And I'm still kicking
myself for letting my $3,000 investment in America Online
surge to $210,000 -- and then watching most of that gain
evaporate. But the worst error I ever committed, when I look
back on it, was my failure to start investing soon enough,
nor to pick the right companies when I did.
I'd already heard about Warren Buffett during my days at
business school in the early 1990s, but I didn't invest in
his company then. If I had, I'd have enjoyed a 10-fold
return. A $3,000 investment would have become $30,000. Those
who were smart enough to invest with him back in 1965 would
have earned an annual average of more than 20%, turning a
$3,000 investment into millions!
Back in 1989, I wasn't earning much, but I was still
accumulating thousands of dollars --
in my checking account. Look how $3,000 would have
grown if invested in some not-so-obscure names over that
period:
Company
20-yr. avg. annual growth rate
$3,000 would have grown to
Dell (Nasdaq: DELL)
33%
$875,000
Amgen (Nasdaq: AMGN)
21%
$131,000
Staples (Nasdaq: SPLS)
20%*
$101,000 Continued... |