2017 was my first full year of “mindful investing”. As expected, I made many mistakes. These can be classified into two buckets.
Selling Winners Early
I sold WTW around $18. It soared to nearly $50 over the next few months.
I sold AAPL at an average price ~$130-140. It kept rising to $175.
Peter Lynch said, “Selling your winners and holding your losers is like cutting the flowers and watering the weeds.”
I should hold my winners longer.
Historically my worst mistakes have been “successful investments”.
I sold MSFT and EBIX for 80% and 300% gains, only to see both stocks double from there. And don’t even get me started about Priceline. I sold it only because I had made 10x on the stock. There was no fundamental reason for selling. It was agonizing to watch it soar 10x from that point, over the past 7-8 years.
Sucking my Thumb too Long
I dabbled with a few stocks, hoping to buy them at more attractive prices, only to watch them fly away. I watched FSLR go from $25 to $60, MSM from $70 to $95, FAST from $40 to $55, VFC from $50 to $75, WFC and NKE from $50 to $60+, and on and on.
So perhaps, the lesson is don’t be too picky. But is that the right lesson to draw?
I began the year with a certain view of the overall market: I expected it to return somewhere between -25% to +15%.
One can ask two questions: (i) was the view correct, and (ii) was the strategy (of being patient with buying) correct, given the view?
In retrospect, the S&P clearly overshot the optimistic end of my expected range. The pendulum had swung more than I thought. My view was wrong.
However, given a view that is negatively biased, the strategy of waiting for more attractive prices was not necessarily wrong. Or at least, a single year (esp. one like 2017) may not be sufficient to draw that conclusion.