Investment Consulting

Saturday, July 5, 2014

My biggest investment mistake

My biggest investment mistake

Like everyone else, I have made ​​many mistakes in my life and in any stock exchange. It's someone trying to hide their mistakes and failures, but I think to hide mistakes is just that, a mistake. Mistakes, if we serve to learn and improve, are quite positive, despite the damage that we can assume temporarily. Yes, I agree with Warren Buffett and prefer to learn from the mistakes of others and not mine.

As I said, I have also made ​​mistakes in stock exchange, luckily have not been many, but some. I have not invested in any bubble, I did not use tools that do not know, I have not leveraged nor have I made ​​great follies (probably know something of value investing has helped me on this). Therefore, I have never lost money on the stock market and I made catastrophic mistakes, but I've been wrong on occasion, particularly at a time, which is what I will try in this post, and it is Telefónica.

Is not to lose a lot of money with Telefonica, but eventually I got carried away and invested in a company that I did not like and which since then drag losses. The case of Telefónica I know almost everyone. I speak from memory, but promised to pass a dividend of 1.4 euros per share to 1.6 in one year and 1.75 in two. That meant that by purchasing at the time, would have a dividend yield of more than 10% (gross).

Telefónica as a company I did not like much, I do not like his management, nor his balance and saw a rather dark future for the sector. The Whatsapp was quite unknown and very new, but had heard about it and I felt that the business of SMS was over. I also thought that the calls were within the Skype extension and the like. Yes, someone has to put the net, but the business is not the same. Anyway, I did not like the company. Of managers I'm not going to talk much, but I think they pose a burden and make wrong moves and corporate acquisitions or too late. However, despite everything, I let go of that dividend yield and invested. Since then no further action to achieve the price I bought it.

Why is my worst investment

I think because I was totally against my principles and acted irrationally. There was nothing to attract me to make this purchase, but I got carried away by the lure of a big dividend which was suspicious to see the accounts of the company. Still, I got carried away and the result was pretty bad (but not catastrophic).

- Ok, then ... you sold the shares?

In the past, when I discovered a mistake I acted and I sold. Buy & Hold does not mean buy and forget, follow the company and act as things go, yes, just act calmly and with much forethought. So if I have it clear that I was wrong, I sell. However, in the case of Telefónica, although I still think the same company, there is something that makes me continue to keep, and one of them is the connectivity between machines (M2M). The potential is huge and I think Telefonica can use it and in fact, has a good start as it has won a large contract in this field.

Investing in Telefonica when I did not like the company was a big mistake and in fact was the last time that I bought shares in a company with which I was not happy. For example, I've talked a few times of Coach Bags in Rankia it has fantastic numbers, but I so dislike the policy and strategy, although the company and its numbers could make a clear buy, rather watch from the sidelines.


Like I was wrong with Telefónica I was wrong to take a business and many other things in my life. The good thing about all this is that once you make the mistake and not repeat it again in the future, with a similar situation, salts unharmed. The experience is only achieved by doing things (the only mistake is not doing nothing), but I agree with Warren Buffett think it's best to learn from the mistakes of others. For him, the way to learn from the mistakes of others is to read as much as possible, and I try to follow.

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