More Straight Talk on Investing

22Regrets? I've Had a Few

One of the toughest challenges in investing is dealing with our own mistakes. To underscore the point that investors need to be able to acknowledge their own missteps, I'll share a couple of mine with you.

Many years ago, my wife and her friends started an investment club. They were interested in assembling a portfolio of individual stocks, not mutual funds, and they sought some advice from me and another friend who was a successful fund manager.

The two of us recommended a stock called Dome Petroleum, which was selling at $1 a share at the time. In our collective wisdom, we thought, how much can it lose? (If you don't remember that the answer to this question is “all of it,” go back and read Chapter 16.) So the investment club bought Dome Petroleum as its pick for the month. And sure enough, the investment club members lost all of their investment. Ugh!

My second mistake occurred just recently. As I've mentioned more than once in this book, I am a confirmed believer in funds and exchange-traded funds for my family's investments. I have owned but a handful of individual stocks in my adult life, and there's almost always a story behind my owning them. Here's an anecdote about being wed to an investment's price and, sorry for being cute, paying a price for that emotion.

Some years back, I provided some advice and counsel to a friend and his leadership team. To be supportive, I purchased shares of the company at $10, and three years ago, its stock was ...