Please ensure Javascript is enabled for purposes of website accessibility

My Stupidest Calls of 2008

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

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

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.