Thursday, June 19, 2014

The Big Mistake I Made in 1999

The 1995 to 1999 period in the stock market was known as the dot com era, when the internet exploded and money poured in many stocks which had no profits, little revenue and depended on "eyeballs" as a metric.

As a young (well, younger) investor at the time, my main interest early on was building a retirement nest egg and making a fair return on my available cash, which wasn't all that much.  I had been trained to think of investing in good companies that paid a safe dividend.

It was a good strategy, and early on, I did pretty well, swelling my meager retirement account into a nice bundle and making a few bucks for play money.


Then one day, my boss at the time, introduced me to a bit more risk.  He gave some advice on a company named Scansoft.  I didn't know what they did then, and don't now.  But in few days, I made $1,000, a 20% return.  You would think I was hooked, but ah, I wasn't.  My training told me this wasn't right.  So, I backed off, and returned to safe investing.

All the while watching everyone making huge gains on stocks that no one thought had any value.  Names like Vertical Net and PSI Net are ingrained in my memory. Huge valuations with no sustainable business model.


Then there was one called Echelon that was particularly annoying.  Someone I knew knew someone was had researched the company, and they had a real product.  The stock started at 3 and came to my attention at 6.  I bought it at $13, it went to 30, and I bailed, convinced that it didn't belong there and would come crashing down.

Of course, it finally hit 100 before it crashed.  I don't know if it's still around and I don't care.

My Big Mistake

My mistake, as it turns out was NOT getting caught up in the fever and ridiculous valuations.  If I had, I would have made a lot of money, and could have gotten conservative nearer the top, or after it had been reached.

I see this a lot now.  Some people have been fighting this bull market all the way up.  I try not to, despite my conservative nature.  Bring it on.  I hope to have enough time to bail on the downslope rather than the way up.

Please, please, do your own due diligence, and don't take anything I say as an offer to buy or sell securities.  Look at my track record.