30 - GameStop stock investment post-mortem (2017-2019)
Release Date: 06/08/2019
Mental Models discussed in this podcast:
- Zero Based Thinking
- Check out Annie Duke's book "Thinking in Bets" to learn more
- Skin in the Game
- Check out Nassim Taleb's book "Skin in the Game" to learn more
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GameStop Stock Investment Post-mortem - Show Outline
The full show notes for this episode are available at https://www.diyinvesting.org/Episode30
Initial Buy Thesis
- Dividend yield exceeds 10%
- Dividend is sustainable
- Check out Episode 5 of the podcast to learn more
- Loss of 50-55% of the principal invested in GameStop stock
- Was my Buy Thesis correct?
- Root Cause of my Investment mistakes
- Was my Sell Thesis correct?
- I did not sell solely because the dividend was eliminated
- Free cash flow from declining businesses ought to be distributed to shareholders
- My bad process led to bad results in this case
- Could have been better or worse
- Never buy a retail company with declining revenue
- Never buy a physical retail company with debt on its balance sheet (If they lease their locations)
- Do not hold onto a stock once you know your investment thesis is wrong
- Prioritize investing in companies where management has skin in the game
- A combination of large stock price declines without insider buying or stock buybacks
- Non-investors you talk to think the company will be a bad investment