Your biggest misses in 2014

[ericd1]

I thought long and hard about Apple when it slid, but didn't pull the trigger.

 

Perhaps more than a few of us (me included) missed Fairfax' 2014 move.

 

Could have should have but didn't sell IBM over 210.

 

Still a happy camper!

[Packer16]

I saw a few currency hedging misses.  Is there an easy way to hedge currency with smaller positions of lets say in the $100,000s versus millions?  TIA.

 

Packer

[giofranchi]

And I decided to shift my capital into businesses where I am comfortable both with the past (track record) and with the future (communication and implementation of present business strategy).

 

I just wanted to add a comment about why I attach such a relevance to a great track record sustained over many years:

 

It is not because the past matters to investors… It clearly doesn’t, and all that matters to investors is the future instead.

 

But it is because I think we really don’t know how and why very few people achieve extraordinary results in business (or in any other human endeavor for that matter).

 

I certainly want to see a business strategy that I understand well and like. And I want management to communicate it openly and clearly, and to implement it judiciously and competently.

 

But… from that to extraordinary results… who really knows??… My reasoning is simply that those very few who have achieved extraordinary results in the past, and sustained them for a very long time, are more likely than other people to achieve extraordinary results in the future too.

 

Gio

 

[frommi]

I saw a few currency hedging misses.  Is there an easy way to hedge currency with smaller positions of lets say in the $100,000s versus millions?  TIA.

 

Packer

 

Margin account with IB is the easiest and cheapest way that i know of.

[meiroy]

I saw a few currency hedging misses.  Is there an easy way to hedge currency with smaller positions of lets say in the $100,000s versus millions?  TIA.

 

Packer

 

Margin account with IB is the easiest and cheapest way that i know of.

 

Yes, easy to do with USD and foreign currency pair though have to be careful it doesn't go the other way with x40... Or use ETFs that track the currency as long or short and buy directly or via options.

[nkp007]

Biggest miss: Fannie/Freddie prefs. Was up 2x +, sold at slightly lower than cost basis.

 

Lessons learned from this:

 

1) Position sizing is important. The position grew to 20% of my portfolio even though it started as a small part of my portfolio.

 

2) Your downside isn't your cost basis, it's the current market price. I should have realized at some point the upside was 2x, and the downside was total. I was so caught up in holding until a decision was made that I didn't recognize the market was giving me an opportunity to cash out at least part of my stake. Ideally, would have sold half given what was knowable at the time.

 

Sometimes the market gives you opportunities to buy in / cash out at attractive prices. Not everything needs to be played to fruition. Sometimes selling on optimism / exciting master plans is the way to go.

 

 

[Guest JoelS]

My biggest miss is probably only relevant to me, and my situation. It was simple, but I avoided making it easy. I estimate it cost me about 10% in performance.

 

I started with 100% cash in September of 2013. I should have immediately reallocated into 25% fairfax, 25% Berkshire, 25% S&P Index, and 25% cash; or a like combination. From there I could have stock picked over the year, drawing down as I went. Instead I had a huge cash drag earning next to nothing, in the face of an appreciating market (especially in the last few months of 2013). I say I should have, not because doing so would have worked out in practice but because it was a logical thing to do from the outset. This would have given me a better return while adding very little additional risk. I believe I didn't do it because to do so would have been "unconventional" in the traditional sense.

[Uccmal]

I saw a few currency hedging misses.  Is there an easy way to hedge currency with smaller positions of lets say in the $100,000s versus millions?  TIA.

 

Packer

 

Margin account with IB is the easiest and cheapest way that i know of.

 

Yes, easy to do with USD and foreign currency pair though have to be careful it doesn't go the other way with x40... Or use ETFs that track the currency as long or short and buy directly or via options.

 

I am sitting at the opposite end right now.  The drop in the Canadian currency has left me better off.  So I should hedge now. 

 

1 option:  buy Cdn currency by moving money from my US account to CDn account

Problem 1) costs over 2%

Problem 2) My My Cdn margin account has a huge cash asset already; my Us margin account is in deficit; For me the interest costs on the US account are about 1.25% higher. 

Problem 3: If I did it now and the Cdn dollar continues to drop, then I lose both the conversion and further appreciation.  - 90% of my holdings are US companies.

 

From 2005 to last year I had a CAGR that was over 25% without hedging anything, while fighting the currency gain versus the US dollar.  Even back in 2005/06 my FFh holdings were American. 

 

So. I look longingly at the opportunity and decide I am not in the business of hedging.  I am a stock picker and the 10-20 % needs to be in my safety margin.  Best thing is my Seaspan, BAc, WFc, and JPM holdings paying dividends into my tax free accounts - an extra 15% on conversion. 

[Palantir]

My biggest hit was selling out of AWILCO when I saw day rates declining, oil majors spinning off old rigs, insiders selling, no obvious guarantee of cash flow in the future...Can't believe I even bought that crap.

[maxthetrade]

I saw a few currency hedging misses.  Is there an easy way to hedge currency with smaller positions of lets say in the $100,000s versus millions?  TIA.

 

Packer

 

Currency futures are by far the cheapest way to hedge currency risk. The imbedded interest rates are much better than you can get as a retail investor. When the contracts come due and you don't want to take delivery of the underlying currency you simply roll the contracts to a future expiration date, i.e. you buy/sell the contract due and sell/buy the contract with a later expiration date. The contract with the next expiration date is usually the most liquid. At IB it's very cheap to trade futures.

 

[wknecht]

I saw a few currency hedging misses.  Is there an easy way to hedge currency with smaller positions of lets say in the $100,000s versus millions?  TIA.

 

Packer

 

Currency futures are by far the cheapest way to hedge currency risk. The imbedded interest rates are much better than you can get as a retail investor. When the contracts come due and you don't want to take delivery of the underlying currency you simply roll the contracts to a future expiration date, i.e. you buy/sell the contract due and sell/buy the contract with a later expiration date. The contract with the next expiration date is usually the most liquid. At IB it's very cheap to trade futures.

Are there futures that allow you to trade smaller dollar amounts? For JPY I see contracts for 12,500,000 JPY. For EUR I see contracts for 125,000 EUR. Are there any for smaller amounts or is selling cash short at the retail rates the only option?

[ATLValue]

I just took a look at my account to remind myself what my biggest losses were this year and considering some of the discussions on this forum I think it is  pretty funny that they turned out to be Biglari Holdings and the Sandridge preferred (SDRXP).

 

With BH I bought a little, kept doing research on the company and ultimately became completely disillusioned with management because of his compensation scheme.

 

I purchased the Sandridge preferred's for the yield and opportunity to participate in any upside with the common and ended up selling after receiving one dividend and seeing some other smart investors exit. I thought I would have some relative safety in the preferred's but considering that they are trading around $39 right now my analysis was very flawed.

[physdude]

I saw a few currency hedging misses.  Is there an easy way to hedge currency with smaller positions of lets say in the $100,000s versus millions?  TIA.

 

Packer

 

Currency futures are by far the cheapest way to hedge currency risk. The imbedded interest rates are much better than you can get as a retail investor. When the contracts come due and you don't want to take delivery of the underlying currency you simply roll the contracts to a future expiration date, i.e. you buy/sell the contract due and sell/buy the contract with a later expiration date. The contract with the next expiration date is usually the most liquid. At IB it's very cheap to trade futures.

Are there futures that allow you to trade smaller dollar amounts? For JPY I see contracts for 12,500,000 JPY. For EUR I see contracts for 125,000 EUR. Are there any for smaller amounts or is selling cash short at the retail rates the only option?

 

There are mini futures available for half the full contract amounts but they are slightly less liquid (which should be irrelevant unless you are day-trading them).

[tombgrt]

My lack of proper patience. Even for core holdings it's damn hard not to constantly add and trim positions as they move. It's very likely I would suffer less of this as I increase my stock diversification. Certainly something to improve in coming years as "wanting" rarely equals "getting". Also add lowering expectations for the future to help with that.

[wknecht]

I saw a few currency hedging misses.  Is there an easy way to hedge currency with smaller positions of lets say in the $100,000s versus millions?  TIA.

 

Packer

 

Currency futures are by far the cheapest way to hedge currency risk. The imbedded interest rates are much better than you can get as a retail investor. When the contracts come due and you don't want to take delivery of the underlying currency you simply roll the contracts to a future expiration date, i.e. you buy/sell the contract due and sell/buy the contract with a later expiration date. The contract with the next expiration date is usually the most liquid. At IB it's very cheap to trade futures.

Are there futures that allow you to trade smaller dollar amounts? For JPY I see contracts for 12,500,000 JPY. For EUR I see contracts for 125,000 EUR. Are there any for smaller amounts or is selling cash short at the retail rates the only option?

 

There are mini futures available for half the full contract amounts but they are slightly less liquid (which should be irrelevant unless you are day-trading them).

Still way too large for my purposes. I guess my only option is to sell cash.

 

I hedged my JPY.  So folks in the Japanese threads that are unhedged can thank me later as I've no doubt done it at the worst possible time. EUR is next.

 

I didn't adequately assess my ability to withstand currency fluctuations before buying international stocks.  I was okay with moderate fluctuations, but watching them plummet hurts a lot because I don't understand them enough to know where they're going next. I have stocks that are extremely volatile and I couldn't care less generally speaking.

 

Doesn't impact my decision, but the currency wars seem to be escalating.

[Patmo]

My biggest misses weren't in what I bought or didn't as much as when I bought them and the kind of size I made them. All of my positions I still believe are great bets even at the price I initially bought them at, but could have been made way better as I have a natural propensity to invest in stuff everybody else hates, and share price has a propensity to reflect that hate given just a bit of time. Why would I invest in a double when I can get a 6 bagger? Let the market make a bigger mistake is what I tell myself now.

 

So as I saw price get cheaper and cheaper I felt compelled to buy more and more of the same, resulting in positions that are too large for me. Even if it works well I don't want a 5-7 stock book, I would prefer my dome to start showing AFTER my 20's are gone.