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“(NEW) New Century Financial Corp seen filing bankruptcy.” What did I do wrong? March 9, 2007

Posted by deminvest in My investing mistakes, NEW New Century Financial Corp, stock I own, stocks, stocks that pay high dividends.
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Here is the source.

Now I wonder: “What did I do wrong when I picked this stock? Where there hints to forecast this disaster?”

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I definitely can TAG this post among “My investing mistakes”.

Even if I burned $1700 on NEW, it makes me laugh to read my April 3 2006 enthusiastic buyer’s post specially where I write:

“right now I tell I feel like someone who made a big bargain!”

or my April 20 Comment:


“This stock continues to amaze me for how well it is performing and how cheap it is. I think I’ll only sell it if it triples its value.”

But then I don’t feel like laughing at all when I read other investor’s comments on my Blog. I really hope that they did not buy NEW because they read about it in my stupid Blog. I think I should maybe stop posting about a subject I know so little.

But now let’s try to learn form mistakes.

What did I do wrong when I decided to buy New Century Financial Corp?

Examining my last years post I find out:

1) I did not understand well this company’s business… I wrote “What the heck is New Century Financial Corp ?”. A rule I should stick too is: “Only invest in companies you understand well”.

2) I should have been suspicious of numbers that seemed too good to be true. I should have though: “maybe they are not true…” Enron should teach…

3) I should never invest more than the amount allowed by myself. No matter how shiny it seems, not more than $1300 on a single stock!

Now I can only hope that NEW Century Financial survives. A company that has made $59.8 billion of mortgage loans in 2006, could make a lot of damages to many good people (like me) by going belly up.

I will end this post thinking about the Big Man’s bonus… “New Century Financial CEO got $1.07M bonus for 2005″

Congratulations Big Man. We, the people, really feel you deserved that bonus. Good job!

Comments»

1. deminvest - March 10, 2007

What i found around the Internet:

http://www.secinfo.com/d14D5a.z34nj.htm
“New Century’s CEO, Robert Cole, was rated by Forbes.com as the highest ranked chief executive based on pay-for-performance among the 500 largest U.S. companies. During his tenure, Mr. Cole has produced annualized returns of 25 percent.”

: Congratulations mr. Cole!

“Several hundred thousand shares of restricted stock have been granted to executives over the past three years under their performance-based compensation plans. Those plans require them to receive their performance-based bonuses in stock to the extent their bonus calculation exceeds 150 percent of their base salary”

Congratulations magers for getting bonuses exceeding 150% of your salary!

and also:
“In summary, Management and The Board of Directors urge you to vote for the 2004 Performance incentive Plan. There is no burn rate issue if the proper business classification is used. Additionally, the Plan is designed to help attract, retain, and motivate the highest-caliber talent possible in pursuit of maximizing the value of your investment in New Century.”

It was so good to attract those geniuses!

We shareholders must be happy to see those “talents” at work!

2. deminvest - March 27, 2007

They are delisted now.

3. Ryan - April 25, 2007

Fuck NEW

4. Ryan - April 25, 2007

I really dont like New Century Finacial. They are just sitting around laughing their asses off right now. Smoking a $2,000 cigar with my hard earned money. The worst part is that I!!! gave it o them. I simply pushed a couple of buttons and put it in their hands. I really dotn understand myself sometimes.

5. deminvest - April 26, 2007

And a $1700 cigar with mine. It makes me mad to read once more the post I wrote when I also decided to buy NEW. I wrote “too good to be true”. Well nothing was like it seemed about NEW.


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