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A $125 Mistake- Accidental Contra

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rockcarving I sold off my Breadtalk shares last week. Due to my carelessness, I did not check to see that the bonus shares allocated was put into a separate Breadtalk A counter.

So in effect, I sold short as I sold off more than what I owned in the original counter. The next day, the broker called to said that I sold my counter short.

If I had waited for the SGX to cover the short selling, I could be liable for a big fine. Something like $1,000 if I remembered what the broker said.

Because there margin accounts, share lending accounts etc. I was able to pay an admin fee to my broker to set up an account like that and cover it back. In case you don’t know, a margin account allows you to use your existing stocks as collateral which you use to borrow money against from the brokerage which you park your shares with. Share lending or borrowing just means that you use it to borrow or lend shares to investors who needs it for a fee.

And after all that, I had to buy back the same lots of stocks that I have shorted by.

Total cost of mistake= $100 + $25 plus for the buyback. Hit to my ego: Priceless

Moral of the story- Always double check what you are selling, especially if they are bonus shares.

So now, I still have the bonus shares from Breadtalk left. I’d have to remember to sell it in the correct counter the next time I sell it.

Have you made any investment or trading mistakes?

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2 comments:
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Musicwhiz said...
April 19, 2010 at 11:49 PM  

Hi Lemizeraq,

Investment mistakes - too many to count. They are all described in detail on my blog.

Trading mistakes - None. Cos I don't trade.

Regards,
Musicwhiz

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Lemizeraq said...
April 20, 2010 at 10:40 PM  

Hi MusicWhiz,

Ya, I made both investment mistakes and after the Breadtalk mistake, a trading mistake too.

Although like you I don't trade shares for short term, nor believe in trading stocks and shares, this counts as a trading mistake for me.

Lemiz

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