Q: You've said several times that all investors make mistakes, so I'm curious: What do you consider your biggest investing mistake?
I've certainly made my share of investing mistakes, from losing a few hundred dollars in college because I didn't yet know why penny stocks are bad ideas to simply analyzing stocks incorrectly. And, I've learned valuable lessons from every one of them.
However, I consider my worst investing mistake to be selling a winning investment too early. I did this a few times early on in my investing career. As one specific example, I bought Tesla for about $23 shortly after its IPO. When the Model S was named Motor Trend's Car of the Year in 2013 and the stock shot up, I sold my shares for about $58 -- a gain of about 150% in a year and a half or so.
Fast-forward to the present time and Tesla trades for nearly $350 per share. I could literally afford to buy a Tesla with the gains I missed out on. Now that's a mistake. And, the sheer dollar amount that I missed out on by cashing in my chips too early easily makes it my biggest investing blunder ever. However, the right mindset is to treat all of your mistakes as opportunities to learn.
The lesson here? If you believe in a company for the long run, selling just because the stock went up is a bad idea.
I've certainly learned from this experience. As I write this, I'm sitting on a gain of about 500% on my Square shares but have absolutely no plans to sell because I think the company still has massive long-term potential.
Matthew Frankel, CFP owns shares of SQ. The Motley Fool owns shares of and recommends SQ and TSLA. The Motley Fool has the following options: short January 2019 $80 calls on SQ. The Motley Fool has a disclosure policy.