November 6, 2007
Sometimes patience pays off. It also pays to look at your holdings every once in a while. Since so much of my money is invested in income funds and securities, I sometimes forget to pay attention to those holdings that don't pay a dividend.
Often I just sell to soon. Late last year I purchased 100 shares (266 after a split) of China Life for about $13/share (split adjusted). It eventually went up to about $45 and then started falling back so I sold at $38. Not too bad. Except recently, the shares reached $106/share (today about $93). That really hurts every time I think about it. I made the same mistake with BHP and CCJ which I'll let you look up if you like.
In any event, there has been more and more discussion about the need for the country to look at alternative energy sources. I really haven't been that focused on it since there always seem to be more and more alternatives and a godzillion people are talking up everything. Solar, wind, water, ethanol - corn, sugar cane, cellulose, batteries, lasers, nuclear and so on. It all sounds good to me. But to invest in any of these possibilities takes a lot of investigation. So I just stick mainly with oil and natural gas. Since I won't be around in 50 years, it seems to make sense to me.
But I got a surprise today (because I didn't pay attention). Back in December 2005, I read an article about a Danish company building wind turbines - Vestas Wind Systems. The article said they had a great product but lousy management, really lousy management. But their order backlog was full and growing. So I thought, well maybe someone will buy them. Sounded reasonable to me. So I took a flyer and bought 500 shares at about $16/share in my IRA account (the taxable one of course). Anyway, I've pretty much ignored it the last two years and saw it creep up a bit at a time. Never looked at another research report, never looked at their quarterly and annual reports. Just ignored it.
So today as I was looking over everything I was surprised to see one of my holdings had jumped $14/share! Vestas - now just over $100/share! My $8,000 flyer is now worth $50,000 in two years. A 500% gain. So I was asleep at the wheel. Interestingly, one of the newsletters I subscribe to recommended Vestas last month for purchase up to $90/share. Wonder where they were two years ago?
What's worse, back in the mid-80's I had $120,000 to invest. I was using a stock broker at the time. I had looked at Berkshire Hathway which at the time was selling for $8,500/share, the most expensive on the NYSE. That would buy me 14 shares. Or he said, I could buy WalMart at $30/share and buy 4,000 shares. So I bought WMT and three years later sold it at $19/share. A big loss (plus over $1,000 in commissions for the sale). Later, WMT went on to quintuple. Berkshire, as you probably know, would have been worth over $1.5 million to me. And I wouldn't be writing to you today!
So what am I trying to get across here? We all want our money to work hard for us. We all want to see everything we buy go up. We all want to avoid making mistakes. We all want it to happen now! Well, ideally anyway.
But life just doesn't always work the way we want. I still buy the wrong things. I still buy the right things. I still am too impatient at times (like some of the EWH shares I sold 2 days ago). So if you are comfortable after thinking things through and you've at least done a little homework, stick through the ups and downs and if they are investments that pay you out a nice dividend, unless something goes seriously wrong with the company, the sector that it's in (like real estate this year), the management (like Merrill or Citigroup or Countrywide), or a tsunami hits, stick with your your instincts and time may take care of the rest.
So should I sell my Vestas????????
Have a super fine day tomorrow.
Pete Lipke
|