Monday, 9 November 2015
Our Worst Investment Mistakes
We had bought into CLOB shares at a time when it was the thing that everyone was doing. For the knowledge of younger readers who might not know what CLOB is, I have copied this description from an old Asianweek article: "Singapore's Central Limit Order Book (CLOB) was set up to trade Malaysian companies over-the-counter in the Lion City after both exchanges went their separate ways in 1990. In 1998, when Malaysia impose controls on its currency, some 172,000 CLOB investors - as many as 95% of them Singaporeans - found their shares frozen. "
If my memory serves me right, we had bought the CLOB stocks without really thinking. Seriously. It was like "tigam tigam" then. We had this naive thinking that since they were penny stocks and prices were already quite low, they probably couldn't go any lower. And so many people were doing it, so how could we be wrong? How wrong we were! Rekapac is now worth less than the minimum commission incurred even if we were allowed to sell it! Not forgetting also how we had cut to cut losses for our other Malaysian stocks after CLOB was frozen, by accepting steep discounts in value and hefty transfer fees.
Years later, on a whim, I made the mistake of investing in unit trusts during the dot.com boom. Technology and emerging markets unit trusts were the rage then. I was looking at our money sitting in the CPF ordinary and special accounts and thinking that I would likely do better than the returns that CPF was giving. I walked into a bank near my workplace and must have made an investment consultant there very happy that day because I happily bought what he suggested - from technology to special situations funds in emerging Asian countries. These unit trusts were putting in fantastic returns in the past year or so and there were charts to show so. I didn't take the small print disclaimer "Past performance is not indicative of future results" very seriously. Needless to say, the funds sank, halved in value and stayed there for quite a few years. Luckily, it was money that I was not in urgent need of.
The third major investment boo-boo we made was buying a private property years back at the - mind you- near the height of the property boom. I blogged quite extensively about it in a previous post. The long and short of it was we bought at a high, sold at a low and didn't quite made the moolah in rental that a lot of people said they did when they bought property.
If there is one lesson consistent with all these investment mistakes, it was that we were LAZY. We took the easy way out, following "gut feel", "friends", "investment consultants" and of course, "what everyone else was doing".
It was through these mistakes, I suppose, that we are more careful nowadays. So, all in, the mistakes were worthy lessons.
Do you have any "worthy lessons" to share too?