I've written a lot of stupid things over the years.

It's true. I've been with The Motley Fool since 1995, and I'm closing in on a whopping 10,000 articles. As a limb-venturing analyst, I take big swings from time to time. I sometimes whiff badly.

Tastes like crow
Here are some of my more regrettable calls over the years:

  • "This may be the easiest bull argument I'll ever make," I wrote shortly after Crocs (NASDAQ:CROX) had peaked two years ago. "The shares are cheap. The company is misunderstood.
  • "Yes, Sirius (NASDAQ:SIRI) matters again," I wrote in November 2004, as the satellite-radio operator hit a new 30-month high and a $5.5 billion market cap. "If things pan out just right, the stock will be worth every penny."
  • "Despite its financial bent, E*TRADE (NASDAQ:ETFC) wasn't stung by subprime woes in its lending business," I wrote two summers ago, after the discount broker's badly received quarterly report.
  • "Something special is happening at Six Flags," I wrote in March 2006, weeks after the amusement-park operator's stock hit double digits for the first time in more than three years. Special? The regional chain filed for bankruptcy reorganization this year.

All four of these stocks are trading markedly lower today.


Rick's Call





Dec. 6, 2007





Nov. 16, 2004





July 26, 2007




Six Flags

March 9, 2006




Source: Yahoo! Finance.

I can't run away from my mistakes. Even watching Crocs and Sirius rally sharply off their lows this year doesn't make the sting go away. I went out on limbs, and the branches cracked.

Humble pie with a cherry on top
If this self-effacing excursion feels like a ridiculously circuitous route toward a back pat, you're right. I'm willing to own up to my blunders -- and relish them, actually -- because there's a secret to getting over the misses: the long ball.

Baseball purists know that Hank Aaron hit 755 homers in his illustrious 23-season career. Few will tell you that he also struck out 1,383 times. He failed more often than not in touching all the bases. Do fans care? No. In one powerful swing, Aaron could change the course of a ball game.

Investing is the same way. It's not about the misses. It's about the slugging percentages.

"A dot-com upstart winning over a skeptical market with market-crushing quarters?" I rhetorically wondered in February of 2006, as Baidu (NASDAQ:BIDU) delivered yet another better-than-expected report. "Maybe there's more of Google (NASDAQ:GOOG) in the Baidu DNA than we think."

The stock closed at $54.73 that day. I officially recommended it to Motley Fool Rule Breakers newsletter service subscribers a few months later. It has been on fire ever since. China's leading search engine just surpassed Yahoo! (NASDAQ:YHOO) for the runner-up spot in worldwide search-market share. With shares changing hands at roughly $340 these days, we're talking about a stock that has more than quintupled since my bullish pitch.

In other words, even if Crocs, Sirius XM, E*TRADE, and Six Flags went to zero, a similar investment made in each of those four stocks and Baidu would still be profitable today.

If you're lucky enough to snag a five-bagger, it gives you the flexibility to strike out four other times.

Just keep swinging
This isn't lip service. I have publicly owned Netflix (NASDAQ:NFLX) since October 2002, with a split-adjusted cost basis in the low single digits. It has been a 10-bagger for me. If I feared competition, I could have invested in the now-bankrupt Hollywood Entertainment and Movie Gallery chains -- several times over -- and still be ahead.

In the end, our scorecard is smoking the market by an average of 14 percentage points per recommendation, because we're able to hit it out of the park from time to time. A fistful of winners can be more powerful than a bucketful of losers.

So bring on my next mistake. And the one after that. You don't have to get it right every time. All you have to do is make sure that when you're right, you're really right.

If you're curious and would like to see which promising stocks Rule Breakers analysts think could be the next Baidu or Netflix, simply follow this link for 30 days of free access to our top stock recommendations.

Longtime Fool contributor Rick Munarriz is off to the batting cages. He owns shares in Netflix. Baidu and Google are Rule Breakers recommendations. Netflix is a Stock Advisor pick. The Fool has a disclosure policy.