Bad investing decisions, expensive learning process

Hey all,

I'm sure we've all made bad investing decisions in the past, it's part of the learning process right?

I made one when we had gained $150K capital gains on a place I held for 12 months. I was so obsessed with making more money (greedy) I ventured down the development path hoping (speculating) that the units would present more profit than the capital gain that had already eventuated. I also thought that I couldn't get into the market again at that price point and that handcuffed me to this place. Long term buy and hold was also my focus.

Fast forward 2 years and the Perth market has nosed dived. I now have 3 units with a value same as the loan amount, no capital gain. My servicing is crap and I can't get any other loans so I'm missing out and not moving forward in Australia. If I sell I'll probably lose more.

I'm sure it'll end up ok in the future but I know my position now would be very different if I had sold and pocketed the $150K 2 years ago.

I'm putting this down to lack of knowledge, speculating and not enough time on SS/PC.

I'm now focusing on my knowledge, statistics rather than speculation and the help of the great guys and gals of PC.

Luckily enough we're still investing, albeit in USA.

Can you think of a investment that you wish you had done differently? What did you learn?

 

If you had sold 2 years ago and taken the profit, where would you have reinvested the funds?

 

Sydney

Actually I'm not sure, I didn't have the knowledge back then to make that kind of decision.

Knowledge is key!

 

Difficult. Many were predicting that Sydney had peaked in 2015, then 2016 and now 2017. Sometimes you can't pick the peak until after the peak. Also, I hear that some Sydney suburbs dropped in 2016 so you could have been unlucky!

But really, Perth could come good in 2018. If we see a couple of years of solid capital growth then you might be happy you held.

In the meantime, you can improve your position somewhat buy offsetting an IP loan and dumping as much cash in as you can. That way at least you will be prepared for whatever comes next.

 

Lets hope so.

yeah that's the plan. I just wish I had access to the cash now that other opportunities have arisen. I severely lack patience

 

I can do you a big what if. At the end of 2015, I sold an IP in Heidelberg Heights because I felt the market had peaked. For nearly 12 months I felt smug that I sold because that product in that area dropped in price a little. Today I open the paper and find this:

34 Law Street Heidelberg Heights, Vic 3081 sold for $785,000 on 14 Feb 2017.

34 Law Street, Heidelberg Heights, Vic 3081 - Property Details

This property is 500 metres away from the one I sold. It has an identical floor plan but looks to be in worse condition than mine.

Now for the stats. I sold for $968 per square metre.
34 Law Street sold for $1,365 per square metre.
If I pro-rata the sale price per square metre of 34 Law Street to my lot size, I could have sold for $280,000 more than I did.

Of course there is no guarantee but put it this way: I am no longer feeling smug about my decision

Tagging @Barny because I said ask me in 12 months if I am still happy with my decision.

 

ow, that sucks!

Assuming your more knowledgeable now than you were then , could there have been anything you could have done differently at that time that may have swayed your mind thinking it was peaking?

 

Hahaha I laughed reading this. Not that you missed out on growth, but that you remembered.

 

@Hodgo You did something when most haven't done anything.

It will come good over time, in the meantime you've received a fantastic education.

It's not all bad!

 

Hindsight is 20:20!

 

Thanks Hammer, I agree with your sentiments, I just wish we had done it differently, would have been in a better position now, or maybe not

 

At least you didn't buy in Gladstone or a mining town ....

Cliff

 

haha, I just about did, but was luckily working there frequently at the time and saw the change coming. nothing like boots on the ground.

 

I think it's commendable of you to acknowledge and learn from mistakes made and picking yourself back up to get back in the game. Some people are fixated in never learning and acknowledging mistakes, hence they make no progress.

 

thanks Jins.

there must be lots more stories to tell. Please share.

 

I bought a mining services stock that will remain unnamed about 10 minutes before the market tanked, and then bought some more (cos it was "cheap") about 5 minutes before the market tanked.

Luckily I sold out at 300% over the low.

And it's now trading about 8x what I sold it for.

That's a bit S H 1 Thompson.

But at least I also bought a bunch of US stocks when the $A was right at top over parity to the $US.

That made me feel a bit better...

 

70 Morgans Street, Port Hedland, WA 6721 - Property Details

20 years, lost 54% of the price. Sad...

 

Spoon, from the pics that seems like a big garden that didnt quite make it...

 

In 2000 I bought a few thousand of some tech start ups. Good companies with good products. They went up a lot but got superseded, taken over and price crashed. One went broke, one is exploring for gold or copper in Thailand or Philippines and I have no idea what the other one does. They are worth about $200 now and one would cost more to sell than it is actually worth.

 

Glad that had a happy ending. Mining stock was at one point very lucrative in WA. I personally know someone who had more than 16 properties before the boom ended, he bought for about $350k average and was renting for $1500 per week. He was laughing all the way to the bank, I wonder if he's still laughing