2 of My Biggest Investing Regrets

As I go about in creating wealth through investing, there are a couple of painful lessons that I learned along the way. Hopefully, by sharing my experience here, you can avoid from making them.

One of the “expensive” lessons that I’ve learned is that if the business and the company is good, it is ok to buy them at fair value.

Benjamin Graham, in his teachings from Intelligent Investor, stated that it is important to buy securities at a certain margin of safety. Obviously, the larger the margin of safety, the less room of error for the stocks you hold… thus, limiting your risk.

For the past 1 year, I have found, in fact, 3 companies that are trading at their fair value, thus, without the given margin of safety, I decided not to buy their stock.

Boy… was I so wrong in the decision.

For example, F & N… a very fundamentally strong giant here in Singapore… owning a big percentage of APB as well. When I was looking at F & N sometime in November 2011, it was trading at about $5.80. At $5.80, I concluded, was near fair value… for my estimate was about $6… thus, without a good margin of safety, decided to skip this stock.

However, in June 2012… due to Heineken’s bid for APB, F & N’s share price soar to about $8.90. As I am writing this post, today, F & N is trading at $9.45. That’s about 63% ROI.

Another company that I was looking at was Super Group…

In March 2012, it was trading at about $1.60. Given the fact that I calculated its fair value to be at about $2, and if I were to give it a margin safety of 40%, the price to go is at $1.20. so.. again… I didn’t buy into this company.

Come October, its share price starts to climb… all the way till $3.20 in November. Today, it is trading at $3.08. A 92% ROI if I had bought into it back then.

These are 2 of my most “heart breaking” misses. Of course, when you look at the hind sight, its easy to say that I should have bought them. Nobody knows their share price would soar so quickly in the next few months.

Fact is however, I learned that if a company or business is making money, fundamentally sound and at the same time, growing its earnings… sometimes, it is ok to buy some at fair value instead of waiting for its “ultimate crash”.