Introducing

The journey begins

My investing journey began in May of 2008.

I opened a Roth IRA with $500 I had saved up from my modest wages, typed “Apple” in E*TRADE's search bar, and proceeded to buy as many shares of AAPL as I could afford. 

I had read enough about saving and investing and compounding to know that the best thing I could do was buy a great company and hold it forever, letting compounding do its thing. 

So I bought a great company.

And they all lived happily ever after. 

The End.

Ok, fine.

Fine. 

The plot took a turn.

About a month before I started my journey as an investor I sent the following, i-don't-have-time-for-punctuation chat to a friend:

so many cool things I've learned today. simple things that should help with investing. just go on etrade, learn about Bollinger Bands, MACD, Overbought and Oversold.  i'm sure there is soooo much more to learn, but just learning those three things really opens your eyes to some cool stuff. just go to a 1 year chart of [ticker] and turn on those three indicators. stuff we should've learned earlier. but better late than never.

Yikes. 

The word ‘doomed’ comes to mind.

Within a month of my initial purchase, my “investment” in Apple showed an unrealized loss of $100, or 20%. Future-Michael’s retirement was looking grim.

Panic set in. 

The rational, long-term investor in me fainted at the first sight of blood. I sold my Apple stake before things could get worse.

I bought Apple for ~$5 per share^. I sold my stake at ~$4 per share. Three months after I sold, it hit ~$3 per share. My market-timing skills had been validated. I had saved Future-Michael’s $400 by pulling it out of the market and waiting for smoother waters. 

I probably pulled a muscle patting myself on the back.

Of course when I say Apple’s shares “hit $3,” it’s more accurate, and way more dramatic, to say it “bottomed at $3 per share on its way to $228.”

Selling my ownership stake in Apple was, to put it mildly, a bone-headed thing to do.

I would have been better off had I forgotten my E*TRADE password and never looked at my account. That original $500 investment would be worth a little over $31,000 as of this writing.

The seed

By my math, Apple has compounded at ~29% per year for the 16 years since that fateful day. It’s one of the best runs in history, and I missed out on that run because:

  • I was thinking like a short-term speculator rather than as a long-term investor.
  • I saw shares of Apple Computer, Inc. (the business) as merely shares of AAPL (the stock). 
  • I let Mr. Market’s mood swings influence my decision to sell an ownership stake in one of the best businesses we will see in our lifetime.

These lessons, learned and earned over a lifetime of study and experience, have played a key role in my decision to start this venture called The Investor’s Journey.

Losing 16 years of compounding (especially at the insane rate of 29% per year) cannot be replaced. But my children are young. And, it’s possible I still have decades left to compound wealth and secure a satisfactory result, assuming I can avoid stupidity.

I once heard a proverb, likely attributed to that great philosopher Anonymous, that the key to happiness is planting trees whose fruit you will not live to see. In a way, that’s my hope for the Investor’s Journey. 

My decision to sell Apple at $4 was a costly error. But if I can help others – if I can help you – avoid similar errors, then at least it was money well spent.

^adjusted for stock splits