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Should You Sell Everything? Here's How to Know

Tim Beyers
September 25, 2012

Worldwide Invest Better Day 9/25/2012

Happy Worldwide Invest Better Day! Today at you'll find pages upon pages of advice for how to buy stocks and build a portfolio. If you're a beginning investor, you couldn't ask for much more.

But what if you've already tried investing? What if buying stocks hasn’t worked out for you so far?  Should you sell everything and start over? I did. More on why in a minute; first, let me tell you about my first visit to Fool HQ.

The day I met David Gardner
In 2003, two years before I'd join his Motley Fool Rule Breakers stock-picking team, a friend arranged for me to meet David on a trip to Fool HQ in Alexandria, Va.

For me, it was a short but memorable meeting in a scrappy space that fit every rebellious image I'd imagined since reading The Motley Fool Investment Guide and the 13 steps to investing Foolishly in the late 1990s, including the half-deflated blowup Hulk doll sitting next to David's desk, an homage to his recent pick of Marvel Entertainment in the pages of Motley Fool Stock Advisor.

Our brief meeting kicked off with the one question I'd been dreading: "So, how many stocks do you own?"

"None," I said, nervously. "I sold everything because I decided I just didn't know enough about investing yet."

David's response: "I think we'd consider that very Foolish."

Cut to me, relieved. Smiling. Thrilled even, and re-energized to get back to the business of studying stocks, a process I'd begun after a series of embarrassing mistakes.

Past as prologue
Mistakes are partly what defines me as an investor. And not just investing mistakes: I'd piled up more than $45,000 in mostly credit card debt by the time my wife and I were married in 1997. Paying off that debt taught me valuable lessons about money as I learned the basics of investing.

But I wasn't patient with what I'd learned. Instead, I decided to begin buying stocks almost immediately. Early purchases included shares of Caterpillar (NYSE: CAT  ) and Eastman Kodak (NYSE: EK  ) , which I knew little about. Instead, I chose to trust a mechanical model called "The Foolish Four," which first gained prominence in the Fool's Investment Guide. Back in 1999 and 2000, both stocks fit the criteria set forth in the book.

Yet in buying, I'd tossed aside one of the principal lessons of the book -- that anyone willing to study businesses can become a market-beating investor -- in favor of a shortcut. Months later I'd compound the problem by tinkering with what to that point had been a proven model. Doing so cost me dearly. And yet I wasn't done throwing money away.

Around the same time that I put my wife in the Foolish Four stocks, I purchased shares of (Nasdaq: AMZN  ) when CEO Jeff Bezos appeared on the cover of a popular business magazine. My reasoning: If Generic Business Monthly likes Amazon, then it must be a great stock. Neither the e-tailer's purported advantages over traditional distributors nor the future potential of digital book sales entered my thinking.

A few massive sell-offs later, my Amazon p