Oops, Tele-Typo

In the early 1980s, the stock of a teletape company I worked for had done well. The demand for video services had skyrocketed, as cable television spread and production for many new channels made life very good for people in the business. After I moved on to a new job, I inherited some money and invested $10,000 in my former employer's stock. I sold it for $3,000 several years later. The problem was that I'd had no idea what I was doing, and I let sentimentality guide me. Having worked for the company for so long, I felt as though I had inside knowledge. I ought to have bet against it, realizing that its infrastructure was crumbling and that cash flow was an issue. I didn't look at the present, but let my memory of past performance guide me. I know that intuition can sometimes lead us to high performers — but make your investments via reasoned, rational decisions.

— Phillip Schloss, Hillsborough, N.C

The Fool Responds: Amen. And remember that some businesses become obsolete. The digital age has caused pain for many industries, for example.

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