Sunk by Love of Doughnuts

I figured out early that you don't make any real money working for companies - you have to own them, such as via stocks or mutual funds. I've always done my own investing, whether it was choosing funds inside my 401(k) or choosing the stocks to buy and sell in my brokerage account. I've never been afraid of risk as long as I spread it across a large number of different stocks. One of my biggest mistakes was trying to "catch a falling knife" - stock in Krispy Kreme Doughnuts - and not having the guts to just let it go. I've always looked at a fallen stock as a possible buying opportunity, but I let my love for the doughnuts cloud my better judgment. I guess I was in denial that it could drop much further. I eventually took what was left and put it in some companies that have done very well.

- R.T.S., Sandston, Va.

The Fool Responds: Be careful - fallen stocks have often dropped for good reasons.

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