In this episode, co-hosts Engineer My Freedom and European DGI share their personal experiences and Dividend Investment Mistakes aiming to help listeners avoid similar pitfalls in their investment journeys.

The hosts express their excitement about returning from vacations and reconnecting with their audience. They acknowledge the challenges posed by the COVID-19 pandemic but emphasize the importance of taking time off to recharge. With a relaxed mindset, they transition into the main topic of the episode: reflecting on past investment mistakes.

Personal Investment Mistakes

Engineer My Freedom’s Mistakes

Engineer My Freedom shares his biggest mistake of the year: investing in Tango. He recalls purchasing shares at around $15, driven by the allure of a high dividend yield of 7%. This decision stemmed from a common trap for new investors—chasing yield without conducting thorough research.

• Chasing Yield: He admits to not objectively analyzing Tango, instead trying to justify the purchase to fit his investment thesis. This led to a significant loss when the stock price plummeted to $6, and ultimately, he sold at a loss, only to see the stock rebound shortly after.
• Confirmation Bias: He recognizes that his desire to invest clouded his judgment, leading him to ignore warning signs. This experience prompted him to reevaluate his investment strategy, focusing on objective research rather than fitting stocks into preconceived notions.

European DGI’s Mistakes

European DGI reflects on his investment in Tupperware, which he bought between $60 and $70 in 2016. Despite extensive research, he misjudged the company’s declining business model, influenced by the CEO’s optimistic narrative.

• Misjudgment of Business Health: He highlights the importance of recognizing when a business is deteriorating, regardless of past performance or brand familiarity. After a dividend cut, he cut his losses, realizing that his initial thesis was flawed.
• Learning from Experience: He emphasizes the need for investors to reassess their positions regularly and not to hold onto stocks out of sentiment or past success.

Key Takeaways for Investors

The hosts discuss several critical lessons learned from their experiences:

1. Conduct Thorough Research: Always perform due diligence before investing. Avoid making decisions based solely on high yields or recommendations from others.
2. Avoid Confirmation Bias: Be aware of the tendency to seek information that supports your existing beliefs. Instead, challenge your assumptions and look for reasons not to invest.
3. Know When to Cut Losses: Develop a strategy for exiting positions that no longer align with your investment thesis. Holding onto losing stocks can lead to greater losses.
4. Invest Independently: While it’s beneficial to learn from others, make your own investment decisions based on your research and understanding of the companies.
5. Consider ETFs for Passive Investing: If you lack the time or expertise to conduct thorough research, consider investing in ETFs as a safer alternative.

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