samedi 24 décembre 2016

2016: The toughest year of my investing life

2016 is not over yet, but I think that it's OK to analyze how things went.

That year was probably the toughest of my investing life. I've made plenty of bad investments in the past, but not with such sizeable positions as this year.

I was probably a better investor in 2011, 2012, 2013 and 2014 than what I've been in 2015 and 2016. The good thing is that I don't have to find a way to get better. I just have to go back to where I was before I lost my mind, paying too much attention to what superinvestors and insiders do. Most of them are pretty bad and I now know it (I have a very good memory for that kind of things). Just take a look at that fucking Bill Ackman with his crazy investment in Shitpotle Mexican Shit. That guy is going deeper and deeper on the territory of vanished credibility. I'm so ashamed to have believed in him.

Yes, 2016 was a very very tough year for me (Valeant, Concordia and Allergan have all been major mistakes, but only Valeant hurted badly my portfolio). I'm still amazed by the fact that my portfolio went up about 1% this year with such terrible stocks. All those fucking stocks had a shitload of debt and I bought them even though I knew it. I've been very very very stupid and I deserve what happened to my portfolio.

On the positive side, I made some good investments with Knight Therapeutics, Tucows, Biogen and United Therapeutics. My shift towards François Rochon had some benefits (Bank of the Ozarks did pretty well after Trump's election, Disney did well and Mohawk didn't really move). So, it wasn't a terrible year on every aspect.

If you compare that 1% return to the total return of the S&P 500 which has been almost 13%, you'll see that my portfolio sucked big time. I don't expect fascination from readers and Bay Street. I don't expect promo material like cups and T-Shirt written "Don't fuck with Donville-les-bains" to appear in retail stores. 

To my eyes, I did good. To your eyes, I hope I've sucked. I hope nobody worships me like some people keep worshipping Donville.

I'm determined to never repeat that kind of decisions and investments. Just watch me.

7 commentaires:

  1. The toughest part of investing is dealing with your own emotions. I have found that my most unpleasant experiences in the Stock Market have taught me my most valuable lessons. At the end of it I was a sadder but wiser investor. One thing I've learned is to avoid making impulsive emotional decisions concerning your investments. Sometimes I imagine I would like to start over gain already having the experience I have thus far gained. Howard Marks has said, "Experience is what you get when you didn't get what you wanted." true...

    1. The problem of impulsivity is that you rarely know if it's a justified impulsivity.

      For example: at the beginning of the scandal I'd thought that selling would be impulsivity.

  2. You wrote:

    I was probably a better investor in 2011, 2012, 2013 and 2014 than what I've been in 2015 and 2016. //

    I doubt it. It would be more accurate to say that 2011, 2012, 2013, and 2014 were much easier years to make money in the stock market than 2015 and 2016.

    If you could make ONE adjustment it should obviously be this:

    avoid companies with STAGGERING/ HUGE AMOUNTS of debt. If you just avoided concordia shitcare and Valeant you may have felt a lot better about your skills as an investor.

    Question: how do you control and limit risk when you make mistakes or things do not go your way?

    Will you exit a position if it is down __% ?

    Will you cut your position in half if it turns violently against you and you find yourself down 10% or 20% in no time?

    Do you just buy high quality companies and have faith the price will rebound in due time?

    This was a year when so many stocks got destroyed. so many stocks were down 50% or more from their yearly highs. If you were in Valeant or Concordia and you did not cut losses or limit losses effectively,...yeah. you got killed.

    I'm just as stupid as anybody. I tried my luck with Valeant and Concordia this year. I bought Valeant at $30 (catching a falling knife) and I bought Concordia Shitcare at $44...(and still got out in the 40s)

    I gained $5 on Valeant and lost about $2,000 on Concordia. In a year where I had a couple of stocks double, my best trade by far was buying Concordia at $44 and losing less than 10% of my investment (since it trades under $3 today).

    1. I never exit a position because it's down. For example, NVO is down a lot since my first purchase. But I still believe in the company.

      Usually, I sell because I don't believe in the company anymore (CXR, VRX, NHC) or because it's becoming too expensive for me (BYD, MA).

      Note that I've usually been fucking wrong for the last reason.

  3. Through various mistakes I have made so far ever since I started investing in September 2014, I could not agree more with what Warren Buffett said.

    Rule No.1: Never lose money.
    Rule No.2: Never forget rule No 1.

    I am realizing that the most important thing about investing is sticking to quality of companies that I buy.

    I was burned with Concordia and it hit me badly but luckily million dollar lessons were learned from it at the fairly early stage of my investing career.

    1. If you follow this simple rule:

      Only invest in companies that have at least a track record of 5 years of real earnings.

      You'll never do the same mistake.

  4. I remember when all the craze about the healthcare stock and having zero exposure I felt I was missing something, it's really hard not to go with the crowd.

    I had a pretty good year in 2016, I'm kind of proud of it and I'm trying to find what to watch for in 2017.

    I'm really wary about the whole market , all this excitement about Trump, how much he will lower the taxes and good it will be for about every stock.

    But maybe it's just me, maybe 2017 will be a very profitable year and I will be alone missing the boat.

    Just my 2 cents.