When It’s Bad To “Set It & Forget It”

Or

How I made a 57% loss in a supposedly very stable value stock.

A

In 2014, a super smart friend who’d just started his own investment fund advised me to invest in GE, IBM, CocaCola, Exxon & forget it. So I did just that.

Reinvest the dividends and let compounding do its thing.

Buy it & forget it. Right?

I bought GE stock in March 2014. What a great company and dividend yielding stock, I believed.

GE was doing pretty well after recovering from the Financial crisis of 2008.

So when there was dip in Mar 2014, I BTFD

I was happy with the dividends and GE Stock grew modestly.

I was feeling rather good.

And Then all Hell Broke Lose. https://www.fool.com/investing/2018/12/10/the-fall-of-a-blue-chip-general-electrics-horrible.aspx

2017: Bad CEO out , I’m thinking, yay, now things will be good again

Too much debt in Balance Sheet (BS). Bad Shaheeda didn’t pay attention to the BS

2018: New CEO takes over.
Oh no, $6.2 B Reinsurance Liabilities Charge
Stock

New CEO fired after 6 months.

I still think the restructuring plan would work; after it’s a 100+ yr company.

By now my investment is in GE is already in losses.

I say, “Well, it’s on paper right? I don’t need the money now, so I’ll hold.”

2019: GE’s underlying problems didn’t go away. Debt is still massive.

I finally GTFO. I sold.
Bought GE at $25.44;
Sold GE at $9.28 4/19
After dividends, total loss 57%

You know what hurts?
Had I bought $SPY, I would’ve made 72% in the same period instead of losing 57%

Not to worry, I have a happy ending!

In Aug 2019, I bought $ZM (Zoom).

I made 300% on it. I missed the opportunity to sell when it was up 450%

I’m happy


Always do your homework.
Read
Don’t be complacent.
Past performance is no guarantee for the future

Reading the news is really important.
DOW literally BOOTED $GE off its index in 2018. Get this, GE was replaced by Walgreens-BOOTS !

If that wasn’t an & , I don’t what else could be! And I still chose to believe my own gut without proper research.

Learned

End

Ps: sorry about typos or grammatical mistakes above

I really wish we could edit. But not to fret, I’ll do a short blog with more details on the same topic soon.