As they say, you win some and you lose some.
Let me take you on a personal journey into one of the ones I lost, my biggest investing mistake of last year.
In the dying days of 2013, I made an investment in Westfield Group at $10.24 a share.
Later, in 2014, that company split into Westfield Corp Ltd (ASX: WFD), and Scentre Group Ltd (ASX: SCG), two property trusts with great yields and steady growth prospects.
In my mid-year portfolio review (conducted over a number of weeks) I decided repeatedly to keep both Westfield and Scentre because of their yields, growth and in Westfield's case, strong foreign currency exposure.
Three months later I sold Westfield for $7.15 (a small profit) and used the money to take a short term stake in Australian Bauxite Ltd (ASX: ABX).
Westfield Group now trades for $9.66 a share, while my Australian Bauxite shares have lost 12%.
'What was he thinking?' I hear you ask.
Asides from questionable brain activity the morning of the sale, I've identified several major mistakes with my strategy. Here's hoping you don't repeat them:
- I disposed of a company for no compelling reason
I've now lost the potential for future profits, which should come naturally to a business if there is no compelling reason to sell it.
- I didn't replace that company with a better idea
In my opinion, speculative mining shares never count as a 'better idea'. Thus I also lost the potential for future profits from a second company; now my money is hardly working at all.
- I disposed of a company that I had decided repeatedly not to sell
Second guessing yourself is an expensive business in the share-market. I even wrote a number of articles back in September about how Westfield Corp was sure to rise as the Aussie Dollar fell. Here's hoping readers did as I said, not as I did!
And of course let's not get too far into the silliness of using the money from a dividend-paying blue chip to invest in a small cap mining company.
While I'm confident Australian Bauxite will repay the investment, especially with production commencing soon and a number of convincing reasons to invest in bauxite, this incident still hasn't exactly seen me at my most clever.
It's definitely not the decision Warren Buffett would have made, and no doubt he would have a few stern words to say about my decision.
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