Friday, April 12, 2013

HOGS and NICK sold - loss taken and lesson learned

Today I finally sold my small experimental positions in two LSE listed exchange traded products - Lean Hogs (LSE: HOGS) and Nickel (LSE: NICK).

I ended up taking a loss of 55% on these investments. I'm taking away three important lessons from this experience:

1. I must take the time to learn more about how things work before investing. In this case, more money was lost from the contango (roll over of futures contracts embedded in the products) than movements in the commodity prices or currency;

2. take my losses earlier. I should have sold these much sooner - like a year or two sooner. Unfortunately, I appear to be too unwilling to admit that I have made a mistake for my own good;

3. while I should normally only invest a meaningful amount of money in anything (and I have a floor), having one or two small speculations running is fine, so long as I do not have too many going at once and I remember to cut my losses early.

As with a couple of other very poor investments, I am grateful that only a small amount of money was at stake here.

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