As you might expect with a Fool, I've been investing in ASX shares for many years now. Whilst I've been fortunate enough to enjoy relative success with my investing, I have certainly not been blessed with a perfect run. In fact, I have made many rather embarrassing investing mistakes with my ASX stock portfolio in the past decade, particularly in my first few years of investing.
Jaded investors often say that you can only truly become a successful investor by making mistakes and losing money. The pain of those losses can then be channelled into keeping yourself on the straight and narrow.
But I don't subscribe entirely to that theory. Which is why, today, I'm going to share these embarrassing mistakes in the hope that others can learn from them without losing the money that I did.
3 of my most embarrassing ASX stock investing mistakes revealed
Investing mistake 1: Buying a company that went BK
It doesn't take a giant intellect to realise that buying shares in a company that is in danger of bankruptcy is not a savvy business idea. Yet one of my first investments was exactly that. You might think it's difficult to turn a $2,000 investment into $4, but I somehow managed to accomplish this task. Buying Slater & Gordon stock (which has since been delisted) is still, to date, my worst investing mistake.
I purchased this company almost ten years ago when I was first embarking on my investing journey. At the time, I was attracted by favourable coverage and what was then considered to be a pioneering business model. It turns out the only thing that Slater & Gordon pioneered was how to go broke as a leading legal firm.
After a disastrous UK acquisition, Slater & Gordon ended up having to call in the administrators, and subsequently restructured the company at the expense of existing investors. My ownership stake was diluted to almost nothing, and was subsequently reaquired by the company thanks to its low value.
The lesson? Don't buy companies that are anything less than financially sound.
Mistake 2: Chasing a hot trend
In my first few years of buying ASX shares, I was susceptible to 'jumping on the bandwagon' and chasing the latest hot trends on the market. The stock market is almost always in the throes of the latest fad, the industry that everyone simultaneously decides is going to be the next big thing. One year it might be 3D printing companies. The next, it might be buy now, pay later (BNPL) stocks, or lithium shares.
The fear of missing out is a real problem investors have to learn to ignore. It can be hard watching other investors making what looks like easy money. Unfortunately, I once tried to do just that, and bought a bunch of shares that I didn't really understand.
This ended up losing me a whole lot of money when I eventually realised the error of my ways. Fortunately, I did eventually realise, and promptly sold out. As well as knowing when to hold 'em, it's also important to know when to fold 'em.
Mistake 3: Listening to an 'expert'
In the modern world of stock market investing, opinions and recommendations from third parties on which stocks to buy are not exactly as rare as hen's teeth. Whether they come from a family member, a taxi driver or someone on YouTube or TikTok, these opinions should always be taken with a grain of salt.
One of my most embarrassing and costly investments was made on the recommendation of a self-proclaimed 'expert' on social media. I invested heavily in their stock pick, only to lose the vast majority of my money when things went sour.
No one cares about your money as much as you do. As such, you shouldn't put too much stock (pardon the pun) in the opinions or recommendations of others. Use them to serve and inform you, not to guide you.
