Thanks for the gift, it truly sucked...
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
A few years ago I sent a wedding gift to a family member. The gift was a small chunk of change in an individual brokerage account for the blissful couple. I thought this was a rather thoughtful gesture, since they were embarking on what was sure to be a wonderful, stress-free endeavor. Ah, marriage.
Well the happy couple had no clue about business, markets, stocks, bonds, anything. My wife kept pressing them to “get on with it,” “make a move,” “do something," “it’s just sitting there,” but to no avail. Finally, I spoke with the husband and made a bad recommendation.
At the time, I was getting less and less green with my trades and actually hit some nice momentum. I had weathered a couple of losers, as well (anybody who held Razorfish stock with me knows), but for the most part, I was slowly getting respect from friends and family in the area of personal finance. I told this nameless individual that I was going to put a small stake in Wendy’s (NASDAQ: WEN) and it might make a decent amount of hay, as it was currently up for sale.
Nelson Peltz had made it abundantly clear that he was a potential buyer. I had done considerable research on Mr. Peltz (he’s on the board of Wendy’s), to the point where all I needed was a quote from him to trigger my Pavlovian glands and make the purchase. In 2008, I bought roughly 20 shares for $28.79 each (less than 1% position in my portfolio then; couch change). At the time, I didn’t consider it a speculation play, which is what I consider it now. Let me disclose that I ran the IT Department for a Wendy’s franchisee back then, and things “seemed” to be headed in the right direction (and then they introduced fruit, continued to give breakfast a bad name, etc.).
Since my scant $600 investment in Wendy’s, the company sold to Peltz’ Triarc company (which also owned another boil on the butt of fast food, Arby’s). The company has since changed names two times and sold off its Arby’s arm.
I hold a decent amount of respect for Mr. Peltz, who used to own Snapple and is currently the manager of the activist hedge fund, Trian Fund Management. I find this interesting, since it appears he is playing corporate raider and gobbling up shares of Pepsi (NYSE: PEP), which I owned in a previous trading life. It seems like everybody wants to be a Buffett.
Currently, Wendy’s trades around $5 a share (split-adjusted $21, for a flea-ridden, 18% loss).
Note to everyone, these things are going to happen. My rancid choice of burger joints at the time hasn’t deterred me from trading one bit. Unfortunately, with my gift of investing, my nameless individual, to this day, continues to pepper me with barbs about my recommendation, even though my trading prowess enabled me to purchase Final Four tickets for him and his wife, my wife, her family, my mother, etc. I don’t think the guy even has so much as a savings account. I can take his ribbing, but he should still set aside a small amount of cash for investing.
I can’t describe how annoying the old lines are, “If you had invested $10 in this stock, it would be worth…” For most positive outcomes, there are countless Enrons and more recently, MF Globals you can counter with, so spare me, I know. Let’s just say McDonald’s, has been piercing 52-week highs lately, selling for just under $100 a share (at the time I purchased Wendy’s, the clown was around $60 a share).
Don’t let a bad move bring you down, people. This is a marathon, not a sprint. I have had spells where my portfolio was over 60% red (thanks, Dubya). I showed it to my wife and she nearly cried. The burst of the housing bubble afforded us one of the best buying opportunities of our lives. I know of several people who made small fortunes from being patient, persistent and, above all, disciplined. There are buying opportunities every day, for every type of investor.
Until next time, from the trading table,
Fool blogger Kyle Metivier owns shares of Wendy's, but has no position in McDonald's, or Pepsi Co., and wishes he could spend 10 minutes alone with the guy that recommended Razorfish.