What's Your Investing Horror Story?

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For Halloween, I thought it would be fun to hear about your investing horror story. We all brag about how we have made a great move (as I always boast that I bought my first house with the trading profit from a leveraging Manoeuvre!). But we rarely talk about our worst trade, the one that made all our profits vanish within a few months? So I want to know if you are like me; I want to know if you have some skeletons hidden in your investing closet!

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I won?t let you down and will start first! Here?s my story? be ready ?cause this one is pretty scary!

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We are at the end of summer 2006. I had been trading since 2003 with great success and especially that year. I?m up 71% with my portfolio and I feel that everything I trade turns into gold. While I?m having great success with my trades, I?m also having great success in real estate. I just successfully sold my house and I?m going to buy another one in November. Everything is going smoothly ;-D

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But there is this stock: Northern Shield Resources (CVE: NRN). I?ve been making a few plays on it and making some really good profit. I?m well aware that it?s a speculative mining stock but until then I had made a lot of money on it. I actually bought my shares at $0.38 the first time and the stock went up to $1.40 a few months later. In August, I decided to use part of the down payment for my future house to average up and buy more stock at $1,00 or so. In September, I then had $15,000 invested in NRN with an average price of $0.76. I?m still making profit but holding my position as the company will announce results of their latest prospecting in a few weeks.

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I already made plans as to how I will spend my extra profits. I truly believe the stock will rise to a few bucks (maybe $5 if I?m lucky!) and that I will have enough money to not only buy my house, but a? BMW and a nice trip down south at the same time? my wife is going to be so proud of me!

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So I go for lunch with a few friends on a casual day at work. I always look at my positions when I come back from lunch. Not that it ever changes anything but I like to see where my portfolio is at in the middle of the day . It was a sunny day, lunch was great and we laughed a lot; it was just another great day in my life? until I looked at my computer screen and saw my portfolio.

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The stock value went from $1,00 to $0.45 during my lunch hour!

In a heartbeat, I lost about $8,000 (remember, that was my down payment money!). I started suffocating? I had to leave my office and take a walk. Eight Thousand Dollars. This is the only sound ringing in my head?. Until a worse sound crossed my mind like an axe chopping off my head:

?Mike, you?ve got to tell your wife about that?.Oh and Mike, you also have to figure how you will still put 20% cash down on your house now that you don?t have it anymore??

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Ugh!

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That was one of the most painful experiences I have ever had and definitely the worst investing story I have to tell. In the end, I told my wife with a pitiful face and borrowed the missing amount for my down payment from my parents and repaid them a few months later with my year-end bonus.

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I learned a lot from this trade:

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#1 I must play with money that I can actually lose and not with cash that needs to be used shortly for something else!

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#2 I?ve also learned that investing is not gambling and I should not combine greed with ambition. These are 2 very bad ingredients for an investor?s soup!

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#3 When you are lucky enough to make a lot of money in a short time, don?t be greedy, just cash in your profit and find another stock to buy (I should have sold this stock at $1.43 and made it one of my best investment stories instead!)

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#4 Finally, investing in mining stocks is just a bad idea. Invest in real businesses generating real profits; hope is cute but will not report any gains on an investment statement

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So I hope you appreciated reading how I failed and hope that you never have? but we both know that?s not true Now it?s your turn; what is your investment horror story?

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