My WORST Financial Mistake of the 2007 Calendar Year Was... (Technorati) Technorati | (Del.icio.us) Del.icio.us | (Digg) Digg | (Blinklist) Blinklist | (Comment) Comments (7)

As 2007 draws to a close, lets take a moment to reflect on what we have learned by highlighting our mistakes. We all make them, there are no exceptions to that rule. The only variable here is how big of a mistake was it.

I'll start. My biggest financial mistake of 2007 was going against my good friend David Gordon's advice and jumping into the options market without adequate knowledge or experience. Instead of sticking with my bread and butter of stock trading (short and long term), I wanted to test my luck in the options market. To my shock, I have never seen so much money lost so quickly from my portfolio. While I did have a couple triple digit percentage winners, I also had a couple options expire to the worthless state.

The real shocking thing was that I had picked winning stocks, but in the game of options, you need not only winning stocks but also winning time frames. This is where I fell short and the lesson was learned. You see with options, you need not only to pick the correct price, but also the correct time frame. My investment strategy doesn't look at time frames but rather stock behavior to determine my buy/sell points. While time is also an important factor when I trade, to limit my forward looking time frame was something I wasn't comfortable with from the beginning. None the less, I jumped into the options market against my better judgment.

My lesson was learned the hard way as the option market, while good for some, is not for me. So now I ask what is your biggest financial mistake of the year? Was it a bad investment, poor purchase, not recognizing a financial scam, not saving enough or all the above? I will be very interested to hear what the readers of 22 have to say. Too much these days I read on other financial websites/blogs how fabulous they are (over emphasizing the good) and how they never made a mistake (down playing or never mentioning at all the bad). While this kind of behavior can be expected on the web, it gets old after a while, so lets hear the flip side so we can learn from each other's experiences.

What was your biggest financial blunder this year?

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7 Comments - Post your comment below.

Dec. 12, 2007

Getting a girlfriend. But I guess it has its advantages also - finance isn't one of them though.

Katherine Binsack
Dec. 12, 2007

I'd say my biggest mistake for the year was not getting a credit card with a good rewards program. While it was a good move to use my debit card, which meant all my purchases were instantly paid for and I didn't accumulate credit card debt, I think I missed out on earning awards (travel credits, cash back, free stuff) for purchases I would have made anyway.

Dec. 12, 2007

Not to mention that having a credit card (if used responsibly) can help you build credit. Debit cards don't do much for you except keep you out of trouble. I guess you can make arguments for both sides of the coin.

Dec. 13, 2007

My biggest mistake is wrongly predicting the amount of time it takes for a stock to be low. I realized now that it takes, on average, 6 months longer than what I originally predicts.

Dec. 19, 2007

Katie, You say by using debit you were able to avoid credit card debt. But in reality, debit means the liquidity is readily available, and with todays internet banking, one click means; paid, no debt, and credit established. Besides, better credit entitles you to lower card rates. I don't know much about the rewards, but, I do know many of the cards come with fee's. But I'm sure CBoo knows more about that and should fill me in also. Hey Causalien, do you mind sharing which stock your "predicted" to be low? Conviction is a much better tool for investments than prediction. After all, we should act as the market tells us, not as we hope it to be.

Dec. 27, 2007

Todd - You make a good point. I use the Internet to check the balance of my account, but I could just as easily go on there to pay a credit card bill. It definitely makes sense that by using a credit card responsibly I could pay bills in the same number of clicks while enjoying the benefits of earning points/rewards and establishing credit.

Jan. 23, 2008

Getting a girlfriend can be expensive, however considering the alternative of having a lot of money and no one to share it with seems a little un-appetizing.

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