My Worst Investment Ever Podcast Charles Rotblut – Realize When You’re Lucky and Walk Away
BIO: Charles Rotblut, CFA, is a vice president and financial analyst at the American Association of Individual Investors (AAII).
STORY: Charles bought a Dotcom stock in 1998. A week later, the stock had tripled. His dad advised him to take the profits, but he insisted the stock would keep going up. Three days later, the stock lost almost all its value. Charles sold the stock and made very little profit.
LEARNING: Don’t confuse luck with skill. Utilize a rolling stop loss to manage risk. Always have a diversified portfolio.
“The market has an uncanny ability to make you look silly. It doesn’t matter how smart you are, how skilled you are, the market can and will make you look stupid, and not just on one occasion, but on several occasions.”
Charles Rotblut
Guest profile
Charles Rotblut, CFA, is a vice president and financial analyst at the American Association of Individual Investors (AAII). He is the editor of the AAII Journal, created both the PRISM Wealth-Building Process and VMQ Stocks, and authors the weekly AAII Investor Update email. His book, “Better Good than Lucky: How Savvy Investors Create Fortune With the Risk-Reward Ratio,” was published in November 2010. Charles holds the Chartered Financial Analyst (CFA) designation and has analyzed both publicly traded and privately held companies.
Worst investment ever
Charles bought a Dotcom stock in 1998, right before Thanksgiving. The stock took off, and he made triple-digit gains. On Thanksgiving day, Charles told his dad about the stock, and he advised him to take the profits. Charles insisted that the stock could run even higher. The following Monday, he got to work, logged into his computer just as the market opened, and saw that the stock had increased. On checking on the stock again a few hours later, it had lost almost all its value. All the profits had pretty much vanished.
Charles got out of the stock and made just a slight gain, but nothing near what he could have made had he listened to his dad.
Lessons learned
- It’s easy to confuse skill with luck, so be conscious of when luck happens.
- If you don’t want to sell your stock, take some of your profits and hold a little.
- Put the gains you take in an index fund.
Andrew’s takeaways
- Whenever you get to a point where a stock has gone up or down so much that you’re starting to question your situation, sell 50% of your position.
- Utilize a rolling stop loss to manage risk.
- Always have a diversified portfolio.
Charles’s recommendations
Charles recommends using a stock screen to find stocks with all the traits you seek that nobody else is discussing.
No.1 goal for the next 12 months
Charles’s number one goal for the next 12 months is to save more than last year. He also wants to get onto the TED Talk stage.
Parting words
“Just be disciplined. Think about simple strategies. If all you do is write down very simple buy and sell rules and follow those routinely, you’ll have returns that are far in excess of the average investor.”
Charles Rotblut
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Connect with Charles Rotblut
Andrew’s books
- How to Start Building Your Wealth Investing in the Stock Market
- My Worst Investment Ever
- 9 Valuation Mistakes and How to Avoid Them
- Transform Your Business with Dr.Deming’s 14 Points
Andrew’s online programs
- Valuation Master Class
- The Become a Better Investor Community
- How to Start Building Your Wealth Investing in the Stock Market
- Finance Made Ridiculously Simple
- FVMR Investing: Quantamental Investing Across the World
- Become a Great Presenter and Increase Your Influence
- Transform Your Business with Dr. Deming’s 14 Points
- Achieve Your Goals
Connect with Andrew Stotz:
Further reading mentioned
- James O’Shaughnessy, What Works on Wall Street, Fourth Edition: The Classic Guide to the Best-Performing Investment Strategies of All Time
- John P. Reese and Todd O. Glassman, The Market Gurus: Stock Investing Strategies You Can Use From Wall Street’s Best