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Diary of a Dumb Investor: how Lloyds screwed me over not once, but twice

I have bragged enough about my rare successes. So it's time to own up about my biggest mistake yet as an investor.

Diary of a Dumb Investor: how Lloyds screwed me over not once, but twice

**Lloyds shares have nearly doubled in value since I sold my holding at a huge loss last Summer**

There, I’ve said it.

I made a mistake, probably my dumbest as an investor so far.

Why? Impatient, I couldn’t bear the red stain on my portfolio. When I sold, Lloyds (LLOY.L) was down about 50% (since my predecessor on the portfolio, the first Dumb Investor, bought the shares in March 2011).

And at the time, before the eurozone existential crisis became nothing more than a historical curio – back when a Greek exit really was being taken seriously – more short-term losses looked likely.

Everyone was bailing out of companies that were heavily exposed to the eurozone, like Lloyds.

But then, thanks largely to politicians and bureaucrats, the company’s fortunes changed.

European enforcers made Lloyds slim down, selling hundreds of branches. But this was good for the bank, cathartic even.

Then, Downing Street went easy on Lloyds when it announced banking reforms.

To top it all off, the Bank of England announced a new bank aid programme (the 'funding for lending' scheme), which if nothing else raised sentiment around banking shares.

Importantly there were big improvements in attitudes towards the eurozone and the global economy as a whole. That’s good for banks.

So there you have it. Lloyds has screwed me over twice: first for its role in the financial crisis and subsequent taxpayer bailout; and second for losing me money as a shareholder.

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30 comments so far. Why not have your say?

Lee Whitehead

Jan 07, 2013 at 12:03

So does this lesson also apply to BP? and have you worked out yet how much you have gained from that share in Divi payments during the time you have held it and if you are indeed actually in profit now despite the paper loss?

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Jan 07, 2013 at 12:16

Banks (particularly Lloyds) and the euro zone were my two best performers during 2012. My exposure to the latter was via JEO and HEFT and the former via direct equities, some preference shares, and Invesco Perpetual Global Financial Capital fund.

What's odd is that I'm usually a passive investor!

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Mark Richards

Jan 07, 2013 at 12:59

Whilst they can be blamed for the first drop, surely you can't blame them for your choice to jump ship - they've done (by luck or judgement) what sharehodlers would want them to...

The real learning point here is the pyschology of losses. If you believe a company to have good long term prospects then you need to ride out the losses. Indeed someone comfortable in their prediction should be buying rather than selling!

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colin overton

Jan 07, 2013 at 13:58

I did the opposite, bought at 23p as a punt. Stock markets over react and unless Lloyds was virtually worthless, 23p looked cheap to me. Of course there was the risk that Lloyds would have gone bust, but I would have thought that the "book value" would have covered 23p or at least some of it. I wouldn't be surprised if Lloyds will double again in the next year or two in the run up to them starting to pay dividends. I fine it difficult to know when sell and crystallising a loss is always difficult. However it sounds to me like the column should be called Diary of a Dumb TRADER, not Investor based on this selling choice.

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Jan 07, 2013 at 14:46

"Lloyds has screwed me over twice: first for its role in the financial crisis and subsequent taxpayer bailout; and second for losing me money as a shareholder."

Nooooooo, Gavin. (i) Lloyds played a relatively small part in the financial crisis and was itself screwed over by Gordon Brown in person who leaned on senior mgmt to accept the HBOS hospital pass. And (ii) you screwed yourself by ignoring the advice of Joe Stalin and others to cling on through all last year's short-selling.

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The Colonel

Jan 07, 2013 at 15:35

The cleverest man I have ever known said any "fool can buy the right shares

the skill is knowing when to sell them"

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Ian Lees

Jan 07, 2013 at 15:38

I was screwed by Group TSB - when scottish Widows Trustees - refused to pay out my full cash equivalent - having misled benenficiearies of the final salary scheme about is lack of solvency. scottish widows trustees and scottish equitable trustees - manipluated the cash equivalent - when the Trustees at scottish widows were negligent - and failed to keep accurate records ( a facility carried on by Group TSB ). Then there are the endowment missselling, pensions missselling - PPI etc., etc., This unethical Group of unprofessional employees - continue under the Rules of the FSA as regulator. Soon custmers and theri accounts are to be sold on - the sort of wage slave trade of Group TSB - after Gordon ( the gopher ) Brown elected ( with his colleagues Alistair Darling and Phoney Blair - to conspire to sell the Halifax - who had purchased Bank of Scotland ( without the knowledge of the Finance Director of B of S - who had been told " it was a partnership ", until he lost his job see Scotsman Newspaper Edinburgh ) referred to as HBoS sometimes ? Now Group TSB are using the client bank to wreck and destroy regular saving of consumers - whislt selling them over priced contracts - for high commissions - and theri offensive selling procedures. You are lucky you onluy got screwed twice - others have not been so fortunate under Sir Hector Sants and his protectionist policies for banks.

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Jan 07, 2013 at 16:16

As the one who said he had faith in Lloyds, long term, I have a fair holding in Lloyds and added to the shares when they were low, not hugely, and again I added a couple of thousand last week.

No, Lloyds didn't screw you, remember the history, Gordon Brown screwed you, in part. However, mainly, you screwed yourself by being impatient.

I have said that investing in shares is a long game, but you, and your predecessor, were/are not listening, reading if you will. I expect it will still be many, months before I get to a break even point on Lloyds, but the signs were there that the right action was being taken. Currently my 'losses' on Lloyds exceed the value of your entire portfolio. Whilst Lloyds is currently moving in the right direction, I still expect to experience some volatility in the price.

I presume you will now accuse TNK and Obama in screwing you as well, in relation to BP. In the meantime there is the divi income, which is increasing quite steadily, which I hope you are not wasting on curries and the like.

I still say hang on to your hat, the roller coaster ride is far from over.

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Chris Clark

Jan 07, 2013 at 16:22

I went for an ethical portfolio.

That sort of made it rather easy to rule out the banks!

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Jan 07, 2013 at 17:15

"Lloyds have screwed me over twice"

What an imbecilic, vacuous and shallow remark that is. Is it intended to make you sound cool and trendily au-fait? Not one comment on here finds in your favour - abandon this patronising and hindsight-rich series and try to find employment more suited to whatever skill set it is you possess.

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Jan 07, 2013 at 17:30

In all the bleating and moaning since the 2008 financial debacle as it concerned LBG I feel that one point has been overlooked - the special dividend of 50p per share in Jany. 1996! I never regarded it as genuine " income" but looked upon it as an unofficial repayment of capital - so I don't feel so bad about the overall situation. Is that fair comment? Lairdie

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Jan 07, 2013 at 17:55

One of my clients rang up in great excitement today having just noticed that the RBS share price had mutliplied by ten.

Should I have left her with her delusions?

Regarding bank shares generally: when to sell is when you lose faith in the quality of the management and their ability to manage the crisis they have got themselves into. Those of us who regularly pick up the shattered dreams of innocent victims of bankadvisers should be aware that these utterly amoral crooks frequently get promoted to positions of


Anyone who thinks a bank share is a sensible part of a portfolio needs their head examined. There are many more scandals to come from this utterly disreputable industry and their shares have about as much security as Greek government debt. Hold them at your peril. I'd rather hold a scorpion by the tail.

Dumb Investor will eventually end up thanking his lucky stars.

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Jan 07, 2013 at 18:12

I am doing very well with ordinaries in a couple of UK banks, a few preference shares bought at deep discounts, and global financial credit generally. I also know a few people who did very well out of Greek sovs and Greek bank bonds.

It's because some choose to shun whole sectors and territories that smarter investors get to mop up the gravy.

I do however agree regards buying any kind of investment from a bank. I have no idea why anyone would do that as investing isn't exactly rocket science and with just a little effort you don't need never again have to endure the fee-drag and hassle of bank "advisers", IFAs, and all the other sundry middlemen.

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Chris Clark

Jan 07, 2013 at 19:21


Well, it is a good comment, but I was having a little difficulty discerning how you define a bank crisis. For example, one can count it at about 5 crises a year since 2008, or view the whole lot as 1 crisis from 2008!

How would I tell the difference? :-)

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Jan 07, 2013 at 19:55

I think any time you have the chance to buy Bank Shares as you could for as little as 29p a share for Lloyds its a no brainer, I bought at 29p 35p I can't see how you can lose, Even excepting Hbos debacle you should still make a profit in the long run if you dont lose your nerve, I took all my money out of my very low interest easy Access Saving account at 1% and steamed in, Its the best thing ive done in a while im up about 34% at the moment, Happy Days.

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Nobby Clark

Jan 07, 2013 at 20:27

'Long term' is what we're told, so that the good times can generally overhaul the bad times and come out on top. However, if one gets rolled by bastards like Martin Rigney at Topps Rogers, then there are cases when all one's investment is locked into a collapsed or at best dodgy and inaccessible fund, which, whilst undergoing investigation and all sorts of legal goings on, continues to haemorrhage profusely for years, until such time as the matter is sorted, by which time said investment has been completely lost. All this whilst being unable to put the brakes on, so having to sit back and just watch one's money go down the drain, powerless to stop it. Compared to Rigney's misdemeanours, investing in Lloyds looks positively joyous!

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Jan 07, 2013 at 21:10

Dumb Investor, please stop blaming your predecessor for all things negative. It is beginning to annoy.

His (your predecessor's) purchase of BP and Lloyds was at worst somewhat premature, but both will eventually come good and then may be sold, giving you something to crow about, letting you postulate, once again, that you are vastly superior.

Perhaps, you are the better investor, but all we see is the 'the Great Self Excuser'.

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Raymond Hurley

Jan 07, 2013 at 21:17

Kenpen2 is correct Dumb Investor.

You are a fool.

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Jan 08, 2013 at 06:53

It is absolutely essential to blame someone/something else for your misfortunes. If there is one thing worse than being caught in a calamitous price drop it is selling and then missing out on a vertiginous climb. OK, he's sold, now let's go to the moon! The bastards!

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Magic Monty

Jan 08, 2013 at 08:53

Dear Dumb Investor,

You nailed it "Impatience" shares are not not should be condidered a short term investment unless you set a stop loss (I'm not a fan of that). Just keep reviewing the fundamentals, then make a wise decision once the dust has settled.

Not in all cases but you will notice that when most big companies really screw up and get the heat of the media scrutinizing their every move and decision. The large companies actually sharpen up their act perform better and later their share price recovers strongly.

eg; BP, Loyds, Barclays, RBS, M&S and so on. These often make the best returns if you buy at the bottom and wait c. 5 years.

Good luck on your next investment

(My tip for you is Shaftsinkers - SHFT c. 45p)

Valuation, Cash, recovery prospects and current valuation per share. The value will out if you are patient.

Magic Monty.

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Jan 08, 2013 at 10:08

I bought Lloyds TSB shares in about 1984 and paid considerably more than what they are worth now. Is that a long enough time period? It's not worth selling the shares I have but at least the dividends were good whilst it lasted.

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Jan 08, 2013 at 15:56

On further thought DI, there are some real villains in your sorry tale, they being the cabal of short-sellers who made 2012 such a miserable year for us Lloyds investors. If anyone screwed you over, they did.

I don't know why short-selling is tolerated. Yes I've read theoretical defences of it as a mechanism to increase market efficiency by shaking out over-valued stocks but this kind of big boys' gang-bang is just deliberate market manipulation, no different from ramping or any other disreputable technique. I hope it will soon come to be seen as another abuse of capitalism and be banned.

Meanwhile what can we minnows do if one of our stocks comes under attack ? I guess only sell out asap with a view to buying back when they've done their worst; or, if you don't sell (as I didn't), hang on like grim death and double up at the bottom (as I fortuitously did on this occasion).

Does anyone know how to find out whether a stock is being shorted, and if so by whom and on what scale ? Could be a useful topic for a future article ?

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wayne roberts

Jan 10, 2013 at 17:02

DI - you are just as emotional as your predecessor and that didn't do him any favours, are you going to beat yourself up over every buy/sell decision? No one knows where any stock price is really going to go.. Can't you make this year a bit more exciting and do more buying and selling? You never come up with much food for thought, surely someone in the Citywire offices knows a bit about the stock market and can give you some ideas/recommendations? You've only got 10k, why not put on some high risk trades and give us something a bit more interesting to read?

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Jan 13, 2013 at 11:16

The question is what happens now?

The shares have doubled from 25 pence to 50 pence so should we now sell or continue to hold hoping they may continue their recovery.

Regarding bankers in general they have certainly lost the trust of the British people. and as my father would have said "a good name goes a long way but a bad one goes even further" in other words it is going to take a generation for the British public to trust bankers again.

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Ian Lees

Jan 13, 2013 at 11:53

As a general rule - if you see a profit - you should take it. This depends on your element of greed . Do " you", think the shares have further to grow ? Do you think they will drop in value ? In my opinion the shares have not made a recovery - they have only reduced their losses, manipulation of the amount of shares e.g RBS - where you were offerred one share for the ten held - merely disguises the actual value. The valus of a share is only what they are worth buying by the number of investors mainly investmetn managers..

The banks have never really had their cusotmers or the people of Britain ( or any other Nation ) at the heart oof their operations. Banks are in the business of lending - they are money lenders either to us ( their customer or their business ) or to anyone desiring a lump of money for whatever reason, or to the Bank of England or to each other. Any other " service " offered is a system to control peoples cash - encourage lending whatever way they can for as much profit as they can. For example Natwest offering 11 times income on property - as the property bubble exploded - knowing full well they can reposess - those reckles enough to purchase a property for greed rather than effective financial planning. In the US they have already repossessed many homes - and we will see more of this as people who purchased their residence - then purchased second third and more properties - and the casual investors - as they are exploited by the money lenders - find their dreams and aspirations - destroyed by banks - operating under banking licence - extract the most profit out of their cusotmers - and consumers - by reposession, increasing charges and interest rates - whilst the economy is in recession. There is no Get out of Jail Card with real life Monopoly - when those in charge of the Monopoly are a Monopoly - and there is no real competition e.g Edinburgh based Bank purchased LloydsBank, Halifax and Halifax Bank of Scotland et., etc., allowed by this and previous Governments - to decrease competition. No wonder banks like Wells Fargo are 'staging' and structuring their American recovery in the UK . . .plc.

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Jan 13, 2013 at 15:19

I've doubled my money on Lloyds ordinaries and have done very well from the LLPC preference shares. I continue to hold both as think the ordinaries will do well when dividends restart, and I know Lloyds want to do this as they have already paid juicy divis on my prefs to enable this.

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Jan 13, 2013 at 18:06

Alwaysright, ah the virtues of being a paragon. So you hawk financial products, rather than making the fortune you could easily do with your big head.

I suppose your clients are all trillionaires as a result of your infallible advice? I think not.

As for DI being mark II, forget it. This is some reporter. If you got a gift from a relative, would you allow your brother to take over the gift of that proportion? I think not. Being mk II is a fiction.

Notwithstanding the naysayers, I am sticking with the shares, and expect them to start earning their keep within a few years, and show me a profit. True that I haven't seen a divi yet, nor a profit, but this was always a long term investment.

According to some I am insane, and I compounded the madness by buying more shares recently, OH WOW pink cows dispensing brandy by the gallon outside my window!

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masud butt

Jan 13, 2013 at 18:35

My Lloyds shares are 90% down, I have decided to forget this Red spot on my file. it happen in life.

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Jan 13, 2013 at 18:50

Masud, sorry about that, but for me, another 16p or so and I am break even, but only because I was adding to my original tranche on the dips, albeit for a while they kept falling.

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masud butt

Jan 13, 2013 at 19:07

Thanks, Snoekie.

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