Myles of Investments

Read about my successes and failures. Learn from my experiences and gain insight without losing any cash!!!

Lesson: Catching a Falling Knife
Lesson: Currency Exchange
Lesson: Mutual Fund
Lesson: Paid to Wait
Lesson: Pricing in a Downturn

This is where you’ll find find my Blog. I will comment on the latest news relating to investing, real estate, and the financial markets.

Lesson: Catching a Falling Knife

There is a saying that goes, don’t rush to try and catch a falling knife, because you might get cut. I did this with a purchase of Coolbrands stock a few years ago. I had heard about this company from a friend, and how much it had gone down. I took a look at the history of the stock and the past earnings, and attempted to project a growth rate in the future considering the current earnings and impact of the recent news.

I projected wrong, and the company went from bad to worse. I bought at just over $6 per share and in a short period of time the stock sank and was hovering around $1. The company had spurned one of its major customers, and the impact was huge. They needed to offload assets and brands to fund their debt because their cashflow was drying up.

I thought I understood the business, and I saw flexibility of the branding, where the hottest food or diet trend could be put on the same icy popsicle. The grocery business is a tough game, shelf space fees are at a premium, and the big players in the game are influential.

I made a big mistake in trying to catch a falling knife, and I am now hesitant to rush my process and my analysis, in trying to ensure the best price. Perhaps if I had taken longer to evaluate the company, and been more thorough I would still have my original $6, and I wouldn’t have hurt my wealth trying to catch a falling knife!