A Reflection on my Investing Mistakes

Learning from your own Journey

By Nikotes, author of Expanse Stocks

Investing humbles you. You can do all the research, build a solid thesis, follow the numbers, and still get it wrong.

I’ve made plenty of mistakes over the years. Some technical, some emotional, and some I didn’t even spot until later. But the biggest lesson since I started trading in 2018, and investing a few years after, is this: the only real failure is not learning.

This is a reflection on where I’ve stumbled, what I’ve learned, and how those lessons have shaped my 🔗 Investment Philosophy today.

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Confusing Results with Process

We all like stories where a stock doubles and everyone claims credit. But what if that gain came from a lucky earnings beat or market hype, not a solid thesis? And what if a losing position was based on sound reasoning, but just didn’t work out?

One of the most valuable shifts I’ve made as an investor is separating results from process. I can’t control market randomness. Investing is about probabilities, not certainties. What I can control is how I think, research, and invest.

It’s easy to let short-term results shake your confidence, but real progress comes from reviewing your decisions. When something works, I ask:

• Did the stock rise for the reasons I expected?

• Was my position size in line with my conviction?

• Did I miss a better opportunity?

When something doesn’t work, I try to honestly decide if my process was flawed or if it was just bad luck.

A great perspective on this came from a book I recently read: The Psychology of Money by Morgan Housel. It’s a must-read for anyone investing their own money. You can find more resources and ideas like this in the 🔗 Resources corner of Expanse Stocks (open to everyone).

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Letting Losers Run

There were times I held onto underperformers simply because I was emotionally attached or too proud to admit I was wrong. Complacency played a role too.

The reality is that a stock down 30-40% is often telling you something. Sometimes the market is overreacting, but sometimes your thesis is broken. I made plenty of mistakes during the 2021 bubble, e.g. NIO and ARRY come to mind. Truthfully, I was a different investor back then (if you could even call me that, more trader/gambler than anything). Selling could’ve been less painful if I’d had a process to re-evaluate sooner.

These days, I follow a mental rule: if a position drops 20% from my cost basis (excluding broad market selloffs), I reassess the thesis. I ask questions like:

• Has something fundamentally changed?

• Is my conviction still justified?

This rule saved me from complacency recently (last year) with a high-quality name like ASML. After the drop, I re-evaluated. I chose not to sell, but it forced me to revisit my assumptions and stay intentional, not passive.

And… Not Letting Winners Run

Just as painful as holding onto losers too long is selling winners too early. It’s tempting to lock in a gain, especially if a stock pops 50+% in a short period. You feel smart. You feel in control. But in many cases, I left massive upside on the table.

I’ve got a few of these too, but one painful example was: Constellation Software. I bought it as a high-quality, high-recurring model software compounder back in Nov 2022, and when it was up ~35%, I trimmed thinking it had “run too far.” One year later, and it was up another 60%. Nothing about the business had deteriorated. On the contrary, it had strengthened.

This taught me an important lesson: great businesses often continue being great, why sell?

I’ve come to adopt a mindset of “sell only if the thesis is broken or the opportunity cost is overwhelming.” Gains alone aren’t a sell signal. Now, I aim to let my winners surprise me to the upside.

To sum up both takes above and quoting Peter Lynch:

"Selling your winners and holding your losers is like cutting the flowers and watering the weeds."

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Underinvesting in Highest Convictions

This is often underappreciated, and a silent killer of an investor’s portfolio returns. It’s easy to get excited about a stock and add it to the portfolio. But not sizing it appropriately, that’s a missed opportunity.

I’ve made this mistake more than once. Amazon and Constellation Software back in 2022 were two. I had high conviction and a solid setup, but I sized them modestly. Meanwhile, I added to lagging names that hadn’t earned their spot like Datadog or Snowflake, which I ended up selling back in 2024 and 2022 respectively (the latter for a 25% loss).

These experiences taught me that sizing should reflect conviction. Not every idea deserves equal weight. If I believe in a business, the allocation should show it.

Today, I run a concentrated portfolio of around 15–25 names, where conviction and quality drive position sizing, not diversification for its own sake.

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Overrating Top-Line High Growth

I’ve also made the mistake of chasing exciting revenue growth without questioning the quality or sustainability behind it.

Just because a company is growing 30%+ on the top line doesn’t mean it’s creating value. If that growth comes at the expense of margins, free cash flow, or capital efficiency (low ROIC or ROIIC relative to cost of capital), it can actually destroy value. I go deeper on that here 🔗 Understanding ROIC, ROIIC, and ROCE: Measuring Capital Efficiency.

I fell into this trap during the Covid bubble by investing in businesses with impressive customer growth or flashy launches but no real moat or path to profitability. Growth for growth’s sake is tempting, but risky.

Today, I look for profitable durable growth, as I outlined in 🔗 Understanding Growth & Its Key Drivers. Not just revenue expansion, but growth supported by attractive unit economics, high returns on incremental invested capital, and disciplined execution. It’s not how fast you grow, it’s what you earn on each new dollar invested.

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Ignoring Mistakes of Omission

I never bought Nvidia or Broadcom. Not because I didn’t know they existed but because I didn’t act when I had a chance.

These are the mistakes you don’t see on your portfolio statement, but they’re just as real and as important. They hide in the research you never did, the skepticism that went too far, the ideas you liked but didn’t pull the trigger on.

Now I journal more. I keep files with ideas I almost bought and revisit them regularly to spot patterns and blind spots. It’s not only about what we did; but also, what we didn’t do and why.

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What These Mistakes Teach Me

Each of these experiences left a lesson; some I’ve applied, others I’m still working on:

✅ Process matters more than results
✅ Patience is powerful
✅ Position sizing is strategy, not afterthought
✅ Humility beats ego every time
✅ Reflection is essential and often overlooked

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Final Thoughts: I Still Make Mistakes

It’s easy to only talk about the wins. But it’s the mistakes, when you actually learn from them, that move the needle.

I still make them. I probably always will. But I make fewer now. And more importantly, I make different ones. That’s progress.

If you’ve had your share of missteps, you’re not alone. The goal isn’t perfection. It’s being a bit better, a bit wiser, and more honest with yourself.

“If you want to become a better investor, lose money. Just not too much.”

That’s something my father, a self-made man and better investor than me, once told me.

Here’s to the lessons. And to keeping at it.

– Nikotes

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