In a recent letter to the Everlasting Portfolio community, Tom Gardner acknowledges lessons that he has learned through the 2-year-old portfolio. He concedes some of the mistakes he has made, including not buying more stocks of some companies and buying too much of others, because Tom sees investing misses as lessons. One Fool member who also understands the value of learning from investing mistakes is William Herndon.
Bill first started investing under the guidance of his father, who bought stocks for Bill in GM, DuPont, National Lead, and others. Then Bill bought his first stock in Reynolds Aluminum with loan money he had borrowed for a car:
By the time the car was delivered, the stock was down $1,500, and I had to go to my Dad for a bailout. He quietly listened to my sad story, and as he was writing me a check, he simply asked, "Did you learn?" And I replied with a thankful and respectful, "Yes I did, Sir."
Even then, Bill and his father were focused on lessons learned.
Yet Herdon learned his most valuable investing lesson after he chose not to invest early on in Whole Foods, which he wrote about on the Fool boards in March:
Next door to my Mom and Dad's house in Bastrop, TX, lived John Mackey. After my dad passed....I guess we are talking 1974 or thereabouts.....and I was working for Citibank in London, My Mom contacted me....said John had stopped by with a prospectus and was looking for early investors.....said he was starting a new kind of grocery store....called it Whole Foods. Mom said she read the prospectus and thought is "sounded like a lot of fruits and nuts" type operation and while she was close to John, she didn't think she should invest....but she wanted my opinion. To be totally honest, I didn't pay it much time 'cause I knew Mom was looking for a scapegoat so she didn't feel personally responsible for declining.....so I told her I read it and agreed that she should pass, etc.
So there you have my very best investment opportunity.........gone down the WholeFool drain.
These experiences might have turned some away from investing, but Herndon sees these moments in a different light:
These experiences taught me a lot about what I now know and guided greatly what I still absorb vs. what I reject. I sense that these events are what taught me to analyze a bit more but mainly, to make up my own mind, and to hear everyone but to filter what I actually retain.
Among the many lessons that Bill has learned through investing, four points spring to his mind for fellow investors and those looking to invest:
- DON'T speculate
- LISTEN to your radar
- DON'T listen to everything you hear, and
- FEEL IT! Nothing comes for free so be sufficiently risk averse that your radar continues to work. You have to "feel" an investment a) when you buy it and b) every morning when you wake up and realize you still own it. If you can't "feel" it, you shouldn't buy it. Once you own it...no matter what you hear or what your research tells you or what advice you receive, you have to "feel" it every morning or you had better dump it.
Bill became a Fool in the late '90s as a result of his wife's investment club relationship, but he became much more involved in 2012-2013: "After many years of being arms-length, I subscribed to MDP and the rest is history."
Retired now, Bill simplifies his financial life via the Fool.
Invest like William!
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John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool’s board of directors. The_Motley_Fool has no position in any stocks mentioned. The Motley Fool recommends General Motors and Whole Foods Market. The Motley Fool owns shares of Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.