Streetwise started the year with a prescient forecast: There is plenty of scope to be horribly wrong about predictions of speculative excess. As 2021 draws to a close, it is a good time for investors to look back at the decisions they made over the year, and why they made them, with the hope of learning from their mistakes. My mistakes are preserved for posterity in public columns, but investors should keep a diary of why they entered each trade, to avoid the human tendency to rationalize with hindsight.
Both my biggest mistake and one of my biggest successes was Tesla. Start with the mistake: In mid-January I argued that Tesla and other electric-car stocks were in a “wild bubble.” Tesla stock was at $845, up almost 20% in the first two weeks of the year and an eye-watering 685% in the previous 12 months. While it did fall hard for several months, it is now back above $1,000, helped both by an extraordinary rally in October and by another 20% gain in the days around Christmas. “Horribly wrong” just about captures it.
