July 14, 2008
I have a confession to make. My name is Rich, and I’m a stupid investor.
You see, I’m a Freddie Mac (NYSE: FRE) shareholder. I also own a small stake in Fannie Mae (NYSE: FNM).
But that’s not what makes me a stupid investor.
These men are not stupid
Plenty of great investors hold shares of the government-sponsored enterprises, including Bill Miller, Rich Pzena, Jean-Marie Eveillard, and David Dreman.
None of these men are remotely stupid. In fact, they are among the most accomplished investors of this generation.
But there’s a key difference between those men and me.
OK, two key differences
For starters, each member of the aforementioned foursome is a far more experienced investor than I am. And that likely goes a long way toward explaining the second key difference between us.
My exposure to Freddie and Fannie was much greater than theirs.
Watching any of your holdings plummet by 85% is painful. But that pain increases exponentially when the sinking stock comprises a significant portion of your portfolio.
In my case, Freddie Mac was my largest individual holding — by a long shot — and my failure to practice proper diversification has likely postponed my retirement by a number of years.
Good thing I love my job
I’m not going to lie: My paper losses sting…
