Personal investing and the one that got away!

In late 1999, I did a little stock trading; I did most of my own research but bought and sold via a friend that worked at Merrill Lynch on Cape Cod.

There were a few industry sectors that I really liked, I found them interesting. Nextel was one of them where I managed to make some decent profits.

Strategy, tactics and patience are key to long term investing success
Strategy, tactics and patience are key to long term investing success

Another was an Israeli company that was involved in ‘internet security stuff’; at least this was how my friend at Merrill Lynch described it.

The company was called CheckPoint and its ticker symbol was CHKP; I still remember it!

Buying in at $20 per share, I was delighted when the stock rose to $30, then $40 and on up to about $48 per share.

But, with events in the wider economy taking hold, the price per share began to dip; I decided to sell out at $43. Once taxes and commissions were settled, I still ended up making a tidy little profit.

I must admit, I was feeling a little happy with myself. I bought low and sold high…Gordon Gekko would be very pleased indeed!

For some reason, even though I no longer owned it, I continued to track the company; there was something that I really liked about its product.

Within weeks, my decision to sell CHKP was proven to be bang on. It fell to $38 per share. To $35, to $30…the fall continued.
But, when the stock fell to $10 and kept on falling, I began to doubt my gut; was this company really as good as I had thought?
The stock continue to fall!

$8…$6…$4, “where would it all end for the Israelis?” I thought.

$3. “Oh, no, they are about to get wiped out” I thought but with no skin in the game, I was just a spectator now.

Alas, at $2.29, the fall ended.

“Did you see that, you gotta buy in” was the advice of my broker.

“Nah, its way too bloody for me” was my response.

And so began my great lesson.

While I really believed in the company, its technology and the future direction of the industry sector, I was emotionally compromised; having watched 94% of the value of the stock get wiped out, I was in no mood for buying in.

As the stock value began to rise, I convinced myself that its value was too risky, too volatile so I remained on the sidelines.

Over the following 18 months, the stock value grew and grew and continued to grow.

In the end, the value of the stock shot up to over $350, which was diluted following a number of stock splits.

For me, the real loss was the lost opportunity. While I had doubled my original investment in CHKP, this fact was lost in the fog of regret.

The numbers of course are sickening; a $1,000 investment could have become $100,000 in a relatively short period of time.

For any investor, key to their long-term financial well being is having a strategy and sticking with it. Time is a major key to long-term financial success.

But, on the odd occasion that a CheckPoint does come along, a careful investment can pay very generous dividends indeed. But, such investments need to be backed up with research and reinforced with conviction and commitment.

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