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Barry Ritholtz

What My Worst Trades Taught Me About Investing

Losing money on Wall Street can be profitable in the long run.

You can learn a lot by being wrong on Wall Street.

You can learn a lot by being wrong on Wall Street.

Photographer: Michael Nagle/Bloomberg via Getty Images

In a recent appearance on Bloomberg TV, anchor Tom Keene surprised me with this question:  “What is your best Apple story?” I said that in the early 2000s I managed to snag a loaner iPod soon after they were released. It was obviously a new, digital version of the ubiquitous 1980s Sony Walkman. At the time, Apple Inc.’s shares were trading at $15, with $13 a share in cash on the balance sheet. I did not see a lot of risk in the shares. I pitched it to my firm’s 800 or so brokers, many of whom bought lots of shares.

But I was surprised when soon after, and the shares shot up to $20, the brokers began to sell. “Up big, 33%, gotta ring the bell,” is what I was told. I held on, and finally sold when my “stop loss” order was triggered on a pullback after the shares reached $45, leaving me with a 300% gain. “A triple!” I smugly declared, in what was probably the worst sale I ever made.