Stock Market Investing Mistakes (Part 1)

After my first post, I got a lot of questions about my stock portfolio in general and especially about how I ended up with more than 40% of my portfolio in BMW AG shares.

In this post, I will share my experience with one of my stock portfolio losers – BMW AG stock. Of course, I’m the actual loser in this case and not BMW stock 🙂

After all, I promised to share not only my successes but failures as well. This is not necessarily a failure, but definitely an investment that I’m not proud of.

This story starts in June 2016. I was expecting the EU stock market to show some serious volatility due to the Brexit referendum. I prepared some cash to invest in European stocks in case of a significant drop.

The Brexit referendum took place on June 23, 2016. As you all know, the majority (51.9%) voted in favor of leaving the EU. My expectation materialized and the EU stock market went down due to overreaction.

I had a list of large-cap EU companies, with strong fundamentals and growing dividends, that I wanted to invest in. Bayerische Motoren Werke AG (BMW AG) was one of them and is the only one that I still hold in my portfolio.

Year2011201220132014201520162017
Dividend per share2.302.502.602.903.203.504

Below, on the graph, green arrows represent “buy” transactions, while red – “sell” transactions. Numbers near arrows show the number of shares bought/sold.

BMW.DE stock price (source: Yahoo Finance)
BMW.DE stock price (source: Yahoo Finance)

As you can see, most of my acquisitions happened around the Brexit event when the share price was below €70. I also added twice on a way up during the recovery.

Here is a full list of transactions:

When the share price got closer to €90 I thought that maybe I should lock some profit by selling my shares, at least partially. I sold 51 shares (red arrow) just to rebuy back even more when the stock started to decline again, following the “Buy when there’s blood in the streets, even if the blood is your own” mantra.

I plan to hold BMW AG stock unless there will be a serious deterioration in fundamentals or a notable dividend cut. Nowadays, their dividend yield is around 5.5%.

It was quite dumb to get to this situation where shares of an individual company account for 40% of the portfolio. Hopefully, I will have a chance to fix it by reducing my BMW AG position while increasing exposure to ETFs.

Alternatively, if BMW AG stock price drops significantly then the problem would fix itself and turn into a very expensive lesson 🙂 This is what happened with another stock in my portfolio, but this is a different story…

“Hope is the Last to Die”.

What would you do in this situation? Buy more/Sell/Stay away from the market/…? 🙂
Feel free to leave your comments below!

As always, it was a pleasure having you here.

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