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The experts preach to invest in what you know. Okay, so they caught me. I don’t know a thing about wireless technology patents or solar grade silicon which is what I invested in with Wi-Lan and Timminco. Trying to become a better investor, I decided to give this edict a shot. I reached deep down into my bank of knowledge and came up with… shopping.

I’ve been following the lululemon story recently. For those of you not into the yoga or pilates craze, this company specializes in athletic-wear for that niche market. Niche markets are always good, and it has that healthy living, West coast vibe to it. It had its IPO at $18 US/sh last Friday on the NASDAQ, and it promptly jumped over 50%. Obviously there is a lot of excitement but I’m waiting for the dust to settle. How well will they handle expansion in the US? Who is on their management team? Do I trust someone named “Chip”?

The biggest kicker is that I personally don’t own a piece of lululemon clothing. A hundred bucks for a pair of sweat pants is a bit much so their products do not resonate with me. I think there are more interesting plays in retail.

Personally, I’m keeping my eye on Reitmans as I shop there occasionally along with the Smart Set and RW&CO under its company umbrella. It has been a model, family-runned business for so long.

The Gap is another one to keep an eye on as the ex-CEO and chairman from Shoppers Drug Mart is heading there to right the ship of slumping same-store sales since 2004. The charts haven’t looked good even before that. Glenn Murphy had a good track record with Shoppers but there is a worry that he has no fashion experience. I do shop at the Banana Republic banner; the Gap and Old Navy, not so much.

Finally, there has been the incredible run of Le Château which recently did a 4-for-1 stock split. I can’t comment much on it as its apparel is not to my taste. I don’t know if the boat has already set sail for the chase.

In the future, I’ll be doing more research on these companies as an attempt to “invest in what I know”. What a concept.

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Well, I’m okay. Last week’s selloff didn’t send me quivering in a corner. I’m still in it for the long haul so I’m not going to sweat it. What does have me a little peeved off is the fact I missed this correction after I had put some money into my “mad money” account 3 weeks ago– I picked up Enbridge, Claymore BRIC ETF, Wi-Lan and Timminco.

I wouldn’t call Enbridge “mad” at all as I wanted a good solid company that I can hold long-term. Even though the BRIC ETF is thinly traded, I bought it because it was Canadian denominated and I don’t have access to US ETFs yet. I bought Wi-Lan and Timminco based on revenge. I’m not proud of succumbing to emotions while investing, but yes, it was based on revenge.

When I first had my misadventure in investing speculating, Peter Hodson (regular guest, Sprott portfolio manager) had come on Business News Network (then RoBTV) to choose Hudbay Minerals (HBM) as his top pick. This was back when it was trading at $4. At the same time, I was deliberating on Tahera (TAH). HBM or TAH… HBM or TAH. We know how that story panned out. Even with the selloff, HBM closed at $26 on Friday, while TAH was at 56c AFTER a reverse split (in essence, 11.2c/sh). So, Peter comes on again and chooses Wi-Lan and Timminco as his top picks. Revenge. Like a good little sheep, I bought it. BAAaaaaaa. In self defense, I bought the stocks before I started my blog.

…

Nah, I’ll be honest, 3 weeks is not enough for a personality makeover. I probably would still have bought it. At the very least, I did follow some of my own advice and did not initiate a large position. I did stick to my bid price but little did I know that it would go even lower. Based on those 4 purchases, I’m down $276.97 so far. I’m only up on Enbridge, my defensive play.

Will history repeat itself? Will I flame out spectacularly as I did before? Will I eventually have to file this under Stupid? I sure hope not. I decided to blog about this to show how hard it is not to be human, and how hard it is not to give into our emotions. I am the every (wo)man that hangs onto the media’s word for the next hot pick. I know this gambling but I’m taking a flyer on it. I’d also like to say this is money I can afford to lose and not lose sleep over.

In the future, I promise myself that I will come up with a definitive investment strategy and individual securities must meet certain criteria prior to consideration.

Before I sign off, I see Shore Gold is at a 52-week low and I’m tempted. Maybe it’s redemption for my diamond plays. I still don’t know anything about the industry but I just can’t stop looking. Must resist.

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TD Waterhouse offers free seminars for investors. I can’t comment on the educational level of the content as I’ve only attended one seminar and it was on “Powerful Fixed Income Investment Strategies”. Because of my age, I hadn’t given much thought on fixed income. My knowledge on this subject is non-existent. I found it hard to follow even simple definitions but I blame that on the presenter’s inability to get his point across as well. He was meandering all over the place! You might get a better presenter in your area though.

I also can’t comment on if they are bias towards TD products but the one I attended only gave facts on bonds as investment vehicles. If you are attending a seminar about WebBroker, their online interface, obviously that’s geared towards their products.

I’d still recommend going to these seminars if you have some free time at lunch and there’s one near your area. At the very least, you will get exposed to new terminology and you can review that by yourself later.

West coast seminars

East coast seminars

Obviously, if TDW does this, I’m sure other brokerage houses offer the same, so I’d ask around.

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My self-flagellating post was so liberating yesterday that I decided to confess to another financial faux pas.

The first stock I ever bought was Tahera Diamond Corp. I got in at 60 cents a share on March 8, 2005. I went in purely based on the hype of message boards. The stock was extremely liquid, trading at about 2 million shares a day. They were about to open Nunavut’s first ever diamond mine and the 3rd in Canada. They had partnerships with Tiffany and De Beers (later with Teck Cominco). These people had to know what they were doing even if I didn’t. If I didn’t jump on this, I was going to miss the opportunity to get mega rich.

Does this in anyway sound familiar? Well, after a 5 to 1 reverse split and the fact that it’s trading below 60 cents tells you exactly how much I lost (*cough* 80.9%). The lessons I formulated for myself and hope to apply in the future are the following:

Don’t believe the hype of message boards. As witnessed by the saga of John MacKay, CEO of Whole Foods, there are pumpers and bashers lurking on boards to manipulate the price to suit their purpose.

Don’t try to swing for the fences with the first at bat. I tried to do this by taking a large position from the beginning in order to avoid transaction costs. In hind sight, paying extra commissions from buying on dips or even highs would still be cheaper than losing thousands of dollars.

Stick to the bid price. I get caught up in the frenzy and I get impatient when my order hasn’t been filled. I nudge up my bid price only to see the stock drop a week later. Even if an opportunity is missed, other ones will appear. It’s like a box of Kleenex; another one always pops up.

Don’t fall in love with the industry. Diamonds did not prove to be my best friend. A few weeks after TAH, I picked up shares of Forest Gate Resources, another penny stock which had property surrounding Shore Gold’s motherload of kimberlite body in Saskatchewan. To this day, I don’t know what kimberlite is but I think it has diamonds in it. This play was strictly to ride someone else’s coat tails, which is vaguely reminiscent of the tech boom when everyone wanted in on the action. By the way, I’m down 68.4% on this one.

I guess I should have put stop losses on these bad boys but I knew they were going to be volatile. I just didn’t know they would suck this bad. In any case, I’d say there is a STRONG possibility that I’ll sell this year to offset capital gains.

My sad confession concludes here. Notice that I did not mention fundamental or technical analysis because I did not do any. The good news out of this debacle is that it has motivated me to learn more about investing. Lessons are so much more meaningful when it kicks you in the ass.

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Yesterday, I accidentally locked myself out of my online bank account because I couldn’t remember what my favorite dessert was. I phoned online support to get my account unlocked. While attending to my problem, the representative told me that my chequing account balance was quite high, and I’d be better off with putting my money in a savings account. Heck, I know that. I have a savings account with another financial institution but it was a hassle to transfer the funds because I kept on forgetting the username and password. So, other than living expenses and pre-authorized purchases of e-funds, I’d been letting my money accumulate from paycheque to paycheque while trying to figure out how to invest my money (la raison d’être of this blog). What jolted me into reality was that she mentioned I can make $800 a year in interest. When you voice it as a monetary amount, it all crystalizes. The interest rate is no longer just a percentage. It’s EIGHT HUNDRED DOLLARS.

Obviously, I know the balance of my chequing account but I didn’t realize (or it didn’t sink in) its earning potential in a humble savings account.

The moral of the story is that if you don’t know what you are doing or you haven’t decided what you are going to do, for cripes sakes, put it in a money market fund or a savings account. Don’t dawdle. There is no excuse for it.

I’m filing this one under stupid. OOooWww!

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