There is no such thing – worst investors. Yes? No? Read to the end.
By Gorica Gligorijevic
The stories about the most successful investors are well-known.
Okay! Not all and not everything.
But have you ever heard about the worst investors? Yes, you probably heard about less successful and about great losses.
But out there, in the markets, is one man who did everything wrong.
Yes, he had a great passion for investing, markets, and, most of everything, desire to earn wealth. Moreover, he was on the right path. But he did things at the wrong time. We ran into this tale randomly and was fascinated with this example.
The name of that investor is Bob.
Actually, he is the worst market timer ever. The worst investor of all time.
And lets the story began. Bob started investing in 1970 when he was 22. He planned to save $2,000 per year and increase his savings for $2,000 every next year. So, his plan was to hit that amount and retire at age 65. It should be in 2013.
In 1972, he had $6,00 savings on his bank account and was ready to make his first investment.
He invested in the S&P 500. Just before the market crash for the S&P 500 for almost 50%. He put all his money at the peak of the market. And we all know that after the peak follows drop.
Bob didn’t sell his stocks. He held them tight.
Maybe he was expecting them to grow again or he was confused or nervous. Every scenario is possible. This decision caused his later destiny.
His case is the best example of the Greater Fool Theory.
Behind the Greater Fool Theory is an idea to neglect the fundamental analysis of asset values. The main hope is to sell your stocks at a higher price to some other greater fool. Bob, the worst investor of all time, held shares in small tech company Wind River. He earned some money, not a small one, the real money.
And the 90s came.
Bob made his second mistake.
He bought the Iomega stocks at its precise peak. At the moment when their share price was on the maximum. It looks like Bob liked high-tech. Or he had confidence in new technologies. You have to admit that his predictions were good but the timing was wrong.
The tech bubble really went up at the end of 1999. Bob had $68,000 of savings to invest. And he bought, just before a 50% or more market downturn that lasted until 2002.
This the worst investor of all time somehow made losses on Facebook 2012. He bought into the IPO and sold these stocks because he noticed that they are climbing down. If he was patient for only one year his investment would be bigger for 40%. That was the difference between the price he bought Facebook shares and price in 2013.
This the worst investor lost money on Tesla also.
Tesla was up to almost 600% after Bob sold. Following his own loser’s pattern, Bob made another wrong decision. When the stock market crashed in 2008 and interest rates dropped to null, he recognized dividends as a 100-percent sure plan to make a profit.
Bob bought Star Bulk Carriers Corp. The dividend yield was 10 %.
He was defeated.
Dry bulk shippers had been hit hard. They lost 95% of its value in a frame time of 8 months. Theoretically, it was expected that Star Bulk should have a steady cash flow. But one of the company’s customers declared bankruptcy. Star Bulk gave the shareholders some cash to hold them satisfied. Actually, they got half of the dividend.
It was not the end.
Bob tried to trade the ETFs in March 2009.
He bought the Direxion Daily Financial Bear 3X Shares. Exactly at the time that stock prices were on their way to hit the bottom. He lost a fortune.
He bought China Mobile in 2007.
Bob read a hopeful report about the increasing amount of Chinese cell phone users. Of course, the price fell the day after his purchase. His worst mistake when he moved most of his 401(k) into cash 2014. But this story has a happy end. Bob ended up a millionaire with $1.1 million.
How is it possible?
Bob planned out his savings. He never paused on his savings goals.
Anyway, Bob was the worst investor of all time.