Comments on: My Dumbest Investment http://www.mint.com/blog/train-wreck/my-dumbest-investment/ The blog of the free, simple personal finance solution. Track all your spending automatically, find the best deals, save more money. And save the world. Fri, 20 Nov 2009 20:48:42 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: Chuck Van Court http://www.mint.com/blog/train-wreck/my-dumbest-investment/comment-page-1/#comment-5596 Chuck Van Court Mon, 15 Oct 2007 16:43:35 +0000 http://www.mint.com/blog/train-wreck/my-dumbest-investment/#comment-5596 I once met a very smart technology guy in 2001 who went from having a net worth in excess of $100M to going bankrupt in 18 months. He was so focused on building his company that he never "took some chips off the table" while he had the chance. Investors definitely want entrepreneurs to have tons of skin in the game to ensure they are totally committed to achieving success, but the entrepreneur is foolish to not hedge their bet by purchasing options that protect against downward moving valuations. I once met a very smart technology guy in 2001 who went from having a net worth in excess of $100M to going bankrupt in 18 months. He was so focused on building his company that he never “took some chips off the table” while he had the chance.

Investors definitely want entrepreneurs to have tons of skin in the game to ensure they are totally committed to achieving success, but the entrepreneur is foolish to not hedge their bet by purchasing options that protect against downward moving valuations.

]]> By: Randy http://www.mint.com/blog/train-wreck/my-dumbest-investment/comment-page-1/#comment-2972 Randy Sat, 18 Aug 2007 01:53:42 +0000 http://www.mint.com/blog/train-wreck/my-dumbest-investment/#comment-2972 If you want some perspective, pretend you own a bond issued by your company, and that your monthly salary is actually the coupon payment on that bond. Let's say you make $6,250/month ($75K annually) working for a sound company (coupon rate of 5%). This is equivalent to owning a $1.5 million bond. That's a huge slice of just about anybody's net worth, so why reduce your diversification even further by owning your company's stock? If you want some perspective, pretend you own a bond issued by your company, and that your monthly salary is actually the coupon payment on that bond. Let’s say you make $6,250/month ($75K annually) working for a sound company (coupon rate of 5%). This is equivalent to owning a $1.5 million bond. That’s a huge slice of just about anybody’s net worth, so why reduce your diversification even further by owning your company’s stock? ]]> By: Brian Crescimanno http://www.mint.com/blog/train-wreck/my-dumbest-investment/comment-page-1/#comment-2842 Brian Crescimanno Wed, 15 Aug 2007 16:35:59 +0000 http://www.mint.com/blog/train-wreck/my-dumbest-investment/#comment-2842 One of the truly unfortunate things about the "dot-com" bust that was that the boom before it was fueled (mostly) by fresh-faced kids--too naive to know any better. I feel fortunate that I was in college during the bust, so I felt much less of the effect. The scary part for me is that because of the economic climate, I almost passed on going to college to go straight into the fray of the dot-com boom. In my final semester of my senior year of high school, I played the "stock market game" as part of my Economics class and watched as stocks like Ebay, AOL, and Yahoo! soar. Part of our exercise to go along with just playing the game was to prepare some information for the teacher as to why our stocks were performing as they were. When I looked at my dot-com filled portfolio (that landed me 2nd place in the state in the game) and researched the companies, I couldn't figure out why any of them were being valued so highly. None of the companies were profitable, and many of them seemed not to even care about becoming profitable. It was then that I realized the bust was inevitably coming--and the fact that I was still in high school and somewhat sheltered from it helped me realize it in advance. I can imagine what it was like though--caught up in the "high life" that the bubble supported and never once pausing to ask if it was going to last. Had I been a year older, I'd have ended up caught in it too. Hopefully, a site like this will attract the new generation of young people and get them started on the road to true personal financial success before they get caught up in the dangers of "stock options" and PT Cruisers. One of the truly unfortunate things about the “dot-com” bust that was that the boom before it was fueled (mostly) by fresh-faced kids–too naive to know any better. I feel fortunate that I was in college during the bust, so I felt much less of the effect.

The scary part for me is that because of the economic climate, I almost passed on going to college to go straight into the fray of the dot-com boom. In my final semester of my senior year of high school, I played the “stock market game” as part of my Economics class and watched as stocks like Ebay, AOL, and Yahoo! soar. Part of our exercise to go along with just playing the game was to prepare some information for the teacher as to why our stocks were performing as they were. When I looked at my dot-com filled portfolio (that landed me 2nd place in the state in the game) and researched the companies, I couldn’t figure out why any of them were being valued so highly. None of the companies were profitable, and many of them seemed not to even care about becoming profitable. It was then that I realized the bust was inevitably coming–and the fact that I was still in high school and somewhat sheltered from it helped me realize it in advance. I can imagine what it was like though–caught up in the “high life” that the bubble supported and never once pausing to ask if it was going to last. Had I been a year older, I’d have ended up caught in it too.

Hopefully, a site like this will attract the new generation of young people and get them started on the road to true personal financial success before they get caught up in the dangers of “stock options” and PT Cruisers.

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