Portfolio Teardown – Part 2

As I wrote about previously, over the next few weeks, I’m going to align these “old” investments to fit my current financial goals. of creating a cashflow large enough to fund my wife’s and my lifestyle. I’m starting with small holdings and working large. The stock I’m going to write about this week is probably one of my first purchases, and as you’ll see has not done very well at all.

Stock # 2 – Goliath Film and Media Holdings (GFMH)

Current Percentage of Portfolio: This investment makes up a miniscule portion of my portfolio, at 0% (You’ll see why in the explanation below).

Reason for the Investment: I bought this stock as part of the “Little Book that Beats the Market” experiment investment phase that I went through almost 10 years ago. At the time, I didn’t have much money to invest, and only put a total of $50 into this stock (eight whole shares!), along with probably another dozen stocks. The idea of the writer of the book is that you’d buy stocks monthly (2 or 3) based on his “magic formula”, hold them for only a year and sell these same stocks. The intention of the exercise was to find value stocks and that several of the securities purchased over the year would work out significantly well.

At the time, this strategy was as good as any for me, and I had the benefit of 40+ years of an investment window to make mistakes, with the upside touted as a 17-year annualized return of over 30.8%. 30.8% sounded terrific to me, and I figured I would be a millionaire in 5 years. Unfortunately, the problem with any value investing model is that at some point, you have to “eat” your losses. Carrying out a value investing strategy as a poorer debt-ridden 20-something, I lost interest in this method after the market tanked significantly over a period of months.

Current action: I’ve held this particular company in my portfolio because it is worth a grand total of $0.03. It would cost me more in commissions to sell it than it’s worth, so it will probably stay in my portfolio forever – reminding me of the time I bought a stock that decreased in value by 99.9% in less than a year.