as part of our
The market, like the Greek gods on Olympus, has a cruel
streak. It seems to enjoy toying with us mere mortals, and it
seems to enjoy teaching us a little humility as well.
This time last year I threw my hat into the ring of
10 Stocks for 2012
contest with my recommendation of Turkish telecom giant
Turkcell (NYSE:$ TKC).
A monster run in the third quarter pushed me into first place,
where I kept a tenuous lead up until New Year's Eve.
As the final day of 2012 progressed, I had a comfortable 2% lead
over the TheStreet.com's Philip VanDoorn and his recommendation of
Capital One Financial (NYSE:$ COF)-
a lead that I maintained throughout the day. Up by more than
a percent with less than an hour until close, I felt victory at
hand. I pulled a cigar out of the humidor, one I had been
saving for a special occasion, and cut it.
So there I sat, cigar in mouth and torch in hand…waiting…when a
funny thing happened. In the closing minutes of the trading
year, Capital One had a massive surge while my precious Turkcell
I lost the contest by less than 1% in the final
of the trading day.
Needless to say, the cigar didn't get smoked. It got
hurled at my computer screen in a volley of expletives I'm not
particularly proud of.
Congratulations to Philip, by the way, on an excellent choice
that would have earned his readers a handsome 38% return.
What lessons can we learn from my humbling tale?
To start, never get cocky when investing. This is an
endeavor that rewards a cool, composed disposition. Your ego
can be your worst enemy-particularly for male investors.
Yes, it's fine to engage in frat-boy-like banter with fellow
(or better yet, over a beer after you leave the office). I do
it all the time, and it's all in good fun. Just make sure you
keep a sense of humor about it, and accept that you will look like
a fool now and then when you make your investment moves
public. It happens to us all.
Second, investing is a lot like horse shoes or hand
grenades. In the real world, being close is generally good
enough. Few investors who bought Turkcell at my recommended
price would complain that it "only" returned 37% or that the
Banco Santander (NYSE:$ SAN)
, which came in third, "only" returned 26%.
And along those lines, it's important to not get fixated on
arbitrary timelines. In the real world of investing, you
don't buy a stock and hold it for exactly one year, buying on
January 2 and selling on December 31. If an investment is
working, you let it run. And if it's not, you
reevaluate. You either give the investment theme more time to
work out, or you cut your losses and move on.
Arcos Dorados (NYSE:$ ARCO)
had a terrible year, down 42%. But Josh Brown, who
recommended, did not stand by idly while it sank. After
the stock gapped lower on a bad earnings release, he sold the stock
in the accounts he manages and lived to trade another day.
That's what a good investor does.
And now, it starts again. InvestorPlace just launched the
"10 Stocks for 2013"
iteration, and it should be a fantastic contest this year. I
cast my lot with German luxury automaker
Daimler AG (OTC:$ DDAIF),
maker of the iconic Mercedes Benz. But I also hold Jeff
Intel (Nasdaq:$ INTC)
and Steve Freehill's
Two Harbors (NYSE:$ TWO)
both personally and in my
Dividend Growth Portfolio
at Covestor. (Listen to Jeff and me discuss our picks in this
I encourage you to follow the contest. And you buy
Daimler-and it wins this year-we can light up victory cigars
together on New Years Eve 2013. The slightly-damaged stick
that I cut on New Years Eve 2012 has been placed back in the
Disclosures: Sizemore Capital is long DDAIF, INTC, SAN, TKC, and
via e-mail today.
The post Lessons from 2012: Wait Before Lighting That Victory
Cigar appeared first on Sizemore Insights.