Investors should have at least a six-year time horizon
๐ My investing mistake
The company was AIT Group a software company that had seen stellar performance during the technology bubble and appeared to still be trading well in 2002. Unlike many IT stocks at the time, AIT had rapidly rising revenues and profits and long-term contracts.
The chief executive and finance director, however, were found guilty of recklessly issuing a misleading trading statement. The issue concerned winning major contracts that, with no binding agreements in place, quickly unraveled. When the news came out, the shares fell by more than 80% and the CEO received a three-year jail sentence. It was one of the largest holdings in our fund at that time.
I learned that even honest people under extreme pressure to deliver results can lapse into criminality by trying to retrieve a situation. Their thinking is that the problem may resolve itself, given time. Unfortunately, things generally spiral out of control. And, also unfortunately, theres really no way of predicting this type of behavior.
๐ค A bit of advice
My first career was in oil and gas construction in Saudi Arabia, where I worked for three years in the early 1980s. This entailed long hours, good pay and nothing much to spend the money on. There was a tradition in our family of investing all spare cash in the stock market for the long term which I followed. I had modest success and the research was interesting. It seemed like a good alternative and more stable career in a growth industry back in Scotland, where there was more chance of finding the future Mrs Nimmo.
These days theres far more information at retail investors fingertips than there was when I started out, including so much free information on companies, funds and fund managers. All listed companies have investor sections on their websites brimming with information, results, and presentations.
Above all, look for companies that are profitable, growing and have sound balance sheets. I advise that investors should have at least a six-year time horizon as my experience to date shows that the long term is where the real money is made.
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