recurrent greed

A little more than two years ago I made one of my twice-a-decade stock purchases. During the early days of the financial crisis I bought what I thought was a severely underpriced General Electric (GE) at 19 per share. I allowed myself to fall into groupthink; working at a huge Wall Street client (which was almost about to collapse itself). All of the frequent traders I worked with were clamoring about ‘bargains’ and ‘steals.’ I let myself get seduced by the idea of blue chips on sale and snatched up a fairly substantial chunk of GE stock.

Soon I had unrealized losses soaring up to more than 50% of my original investment. GE bottomed out at a little more than $7 per share. As the market tumbled, I berated myself for being so foolish and set an alert to notify me if it ever rose about $19. I swore I’d get out of that position and get back into funds (or frankly, simple cash accumulation).

Time passed. The crisis thrashed around for a bit, then quieted down. Health care ‘reform’ replaced financial reform on the headlines and the market began a slow steady climb back up to 2008 levels. I forgot – as I like to do – about my portfolio and turned my attention to more important things like Season 2 of Mad Men.

Then suddenly, earlier this week, my phone pinged with a text: GE is above your notification limit of 19. More than two years later, I was reminded of how arrogantly I had crowed about my bargain purchase. I remembered how, with consulting work drying up and my portfolio bottoming out, I had bitterly regretted that purchase and told myself I would get out if I could ever just break even.

And I stared at the message. I could almost imagine the little angel on one shoulder (‘now you can get back to sensible investing’) and the little devil on the other (‘keep it just a little longer… this time it will be different’). I wondered if I should hold on to it just a bit longer… and deleted the text, and returned my attention to my work. I hoped this time things would be different.

Out of this mindset, of course, investors become speculators and Wall Street snickers. I know I’m supposed to be in it for the long term, and I know my investing strategy is now firmly centered around broad-based low-fee index mutual funds. ┬áBut I still remember the “go-go” days and hope that I’ll get one more lucky strike.