$5,000 mistakes in exchange for $1,000,000

Picking good investments is a prominent part of my job now. I head the investment team in my company, so it might seem I was born with a natural talent for this. However, 20 years ago, when I first started investing, I made many mistakes. Like most of you, I started out clueless.

I am going to share my first 3 mistakes in my investment journey. These 3 mistakes cost me $5,000, but the subsequent lessons from them made me $1 million.

The Origin of Bole

Bole was the immortal in charge of the steeds in heaven. He was tasked by the Duke of Chu to find a superior steed that could gallop 1000 li (500 km) in a day. He passed many states known for good horses but, he eventually came across a horse pulling a cart. As he approached the horse, it raised its’ head high and neighed. With its’ long neigh, Bole knew that it was rare.

This seemingly normal horse then went on to be a strong companion in battlefields for the Duke. Ever since then, the name “Bole” is used to refer to someone who has an eye for talent.

There is a traditional Chinese saying “千里马常有，而伯乐不常有” which translates to “Swift horses are always there in the herd, but not everyone can be a Bole and identify them”. Similarly, there were many wonderful shares when I started investing, but I was not yet a “Bole”.

The Beginning

I started investing the moment I graduated from University. It was 2001, right after the Dotcom bubble burst and the year of the 9/11 attack. The world of investing was foreign to me and I could not save much with a starting income of $2,000 a month. However, I was determined not to let any of these reasons stop me, so I took my plunge.

There were no financial blogs in 2001 to help me and I did not know anyone who could teach me. Hence, I started with what I had, which were stockbrokers reports and financial magazines. I spent hours in book shops so I could sieve out ideas from the magazines without having to spend money on them. With the money saved, I could invest!

Nevertheless, all my 3 initial investments were painful flops.

3 Big Flops

After spending hours reading and “researching”, it was exciting to finally put my money to work.

The first company I invested was Frontline Technologies. It was a company that majored in system integration, and since “Technology is the future”, it seemed like a wise investment.

I bided $0.34 for 6,000 shares, and to my surprise I got the shares at a bargain of $0.31. Unfortunately, that was the last time that share crossed the $0.30 mark. The share price of Frontline Technology fell relentlessly to below $0.10 per share after my initial purchase. In 2007, it was sold to BT Group at $0.245 per share. This closed the chapter on my first share purchase with a loss of 21% after 6 years.

The second share I purchased from a company call Datapulse. At that time, Microsoft was launching its Xbox and Datapulse was the sole manufacturer of the Xbox games DVD. I thought this must be a gold mine for me. Imagine being the sole manufacturer for Microsoft game console DVD!

Again, I plonked the money I diligently saved over the past few months into the shares of Datapulse with great excitement. The result was the same as my experience with Frontline Technologies. The share only moved south after my purchase as Xbox sales were below expectations. The shares of Datapulse is now worth $0.18, but I have long sold the shares as a loss.

The third share I purchased was Surface Mount Technology. This was the worst investment I made in a public listed company. It was highly rated by a local stockbroker. I read the stockbroker report carefully and thought the report made sense. So, I decided to try investing my money again. Soon after my purchase, the company started making losses and the share price tumbled. My initial investment in 2003 was $3,080 but it was worth only $1 when the management privatized the company in 2014!

The Turning Point

These 3 failed investments made me reflect deeply. Upon my reflection, I told myself that if I want to invest seriously and successfully, I must form my own investment framework and methodology instead of just following investment ideas from stockbroker reports and magazines.

I started reading “The Warren Buffett Way”. This changed my entire perspective towards investing. Ever since, I have never looked back and have never lost money investing in shares of public listed companies. Over the next 10 years, investing tripled my savings and made me close to $1 million in profits.

The next turning point in my investment journey happened recently. However, I shall leave that tale for another time.

Moral of the Story

We have all heard that investing is the only way to grow your money and beat inflation. However, I would like to suggest that investing without knowledge is worse than merely saving. In a world where it is so easy to lose money, it might be better to stay status quo until you have invested sufficiently in yourself to be investment-savvy or invest effort into looking for an investment professional, who has your best interest at heart, to help you.

It is okay to make investment mistakes early in our lives as they are often not costly. These mistakes give us great opportunities to reflect, revise and re-engage.  After all, we are not all born as “Boles”. Like me, you could exchange $5,000 worth of mistakes for $1 million, if you reflect and learn from your investment experiences to find your own best way forward.

If you have any questions about your personal investment portfolio or want to learn how to better reap the opportunity you are now having, feel free to reach me via heb@thegreyrhino.sg or 8221 1200.

Remember to leave comments and share this site with your friends. Do subscribe to my newsletter for updates and share this site with your friends too. I would love to connect with you.