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My Stupidest Calls of 2008

By Toby Shute - Updated Apr 5, 2017 at 7:51PM

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A look back at an active year in CAPS.

Hi, my name is Toby, and I'm addicted to virtual stock picking. Some of you may know me as TMFSmashy, my Motley Fool CAPS alter ego.

Back in May, I ran a pair of articles in tribute to my 1,000th outperform/underperform call in CAPS. On this final day of 2008, I'm rapidly approaching 1,500 picks. Clearly, I'm not on the road to recovery.

This seems as good a time as any to pause and reflect on my performance. Overall, I'm thrilled, having lifted my score by several thousand points and my accuracy above 72%. I even managed to crack the elite ranks of the top 50 players, out of more than 125,000 total.

But I'm not here to brag. I made some boneheaded moves, too, and those are what I want to focus on. It's the only way I can keep improving as an investor, both in CAPS and in real life.

Thus, I present to you three things I fumbled:

No. 1: Abandoning ship
Stepping through the calls I ended this year, there are countless examples of companies that proceeded to implode after I removed my red thumb (that's an underperform call, for the uninitiated). Some examples include Interoil (AMEX:IOC), New Gold (AMEX:NGD), and Amkor Technology. The share prices temporarily headed higher, and I got spooked out of my positions. The lesson here is plain: Know your stocks, so you can invest with conviction. That holds equally true whether you're taking a long or a short position.

No. 2: Getting greedy
With shares plunging left and right, it became tempting to pile onto these firms on the downside. This can be just as damaging as chasing a stock that's screaming higher, thanks to the infamous short squeeze phenomenon. One situation in which I got burned was an October underperform call on Cheniere Energy (AMEX:LNG). I'd identified Cheniere's issues all the way back in April, which was the vastly superior time to call an underperform on this liquefied natural gas infrastructure player.

No. 3: Clinging to old beliefs
This is a classic psychological issue in investing, and it's well-illustrated by my failure to see the impending doom for energy players once the commodity market cracked in July. As share prices dipped (a prelude to a plunge), I threw my support behind firms like Nabors Industries (NYSE:NBR), Helmerich & Payne (NYSE:HP), and Newfield Exploration (NYSE:NFX), only to see their shares collapse over the ensuing months. I even went in for an extra helping of SandRidge Energy (NYSE:SD), a company I'd rightly abandoned in June.

So what was your biggest investing mistake in 2008, in CAPS or otherwise? Let us know in the comments box below.

Fool contributor Toby Shute doesn't have a position in any company mentioned. The Motley Fool's disclosure policy never dons a dunce cap.

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Stocks Mentioned

Newfield Exploration Company Stock Quote
Newfield Exploration Company
Cheniere Energy, Inc. Stock Quote
Cheniere Energy, Inc.
$147.71 (0.87%) $1.27
Nabors Industries Ltd. Stock Quote
Nabors Industries Ltd.
$123.42 (-0.19%) $0.23
Helmerich & Payne, Inc. Stock Quote
Helmerich & Payne, Inc.
$40.88 (1.31%) $0.53
New Gold Inc. Stock Quote
New Gold Inc.
$0.82 (0.86%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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