The Motley Fool: How I Lost $200,000:
When you lose hundreds of thousands of dollars, primarily because of your own stupidity, there isn’t much solace.
I was a contributor to the Motley Fool in the early days when they started on AOL. When they “professionalized” their staff, I stopped. I owe a lot to the Gardner brothers, both for what they taught me about investing and about life. But I became disenchanted with their approach during the tech bubble as it became more and more clear that valuations were out of whack. They had a great approach to evaluating businesses, but they consistently ignored value. It was the only way that one could participate in the hot market of the time- you had to ignore what you were paying in order to keep playing.Once I realized that the party was over, I sold most of my holdings and manage to preserve much of the gains I had from the period. Others, like Selena Maranjian who authored the article remained true believers and held on until the bottom. The Fool had to abandon their founding principles in the end because their real money portfolios which had outperformed the markets during the rise had returned to earth. Now they push community and most shocking to me in a way, is they now promote mutual funds. They send out emails trumpeting short term gains in selected stocks which I generally ignore.This article bugs me as Selena seems to be blaming herself for not putting value into the equation and selling during the bubble. I think it would be more honest for the Fool itself to come clean about its mistakes during it’s growth period. They lacked a sell discipline. It’s something every investor needs. Knowing when to sell is much harder than knowing when to buy. In general, one should sell when the reason for buying is no longer present. In a liquid market with relatively low transaction costs, every day that one holds an investment, it is as if one is buying it anew. At least if we ignore tax considerations which can create value in selling stocks held at a loss and penalties in stocks held at a profit.
