My Dumbest Investment Bet on the Wrong Horse

In the mid 1980s, I had about $10,000 to invest, and I was dithering between two companies. One was Convergent Technologies. I worked in technology in Silicon Valley, and thought I understood the company. It was a turnaround play, as the company’s once-rapid growth had stalled due to parts shortages and management issues, among other things, and it was posting losses. A former Hewlett-Packard executive was brought in, which was promising. I bet on Convergent. The other company was a little startup called Amgen. Had I bought into Amgen at the time instead, it’s highly unlikely that I’d still be holding the shares. But if I had, that $10,000 investment would have been worth more than $12 million today. I run the numbers again every few years to stay grounded. (And yes, out of masochism!) Now when I look at Amgen’s share price, I get lost in some “what if” kinds of thoughts. There are several huge, important, basic lessons in this story. — P.K., San Jose, California The Fool Responds: There sure are. But don’t be too hard on yourself. One lesson is that while hindsight may be 20/20, you couldn’t have known Amgen’s future back then. Investing in troubled companies and hoping they’ll get their act together can be risky. You can reduce risk and still do well by sticking to healthy, growing companies that aren’t overvalued.