Hi Glen,
Sorry to hear about the painful lesson but I guess its a path to learning which I myself am no exception.
The most important lesson I have learnt in investing regardless of which field you believe in is that there's no such thing as passive investing. Buffett doesn't check prices daily, but he didn't mention he did check operations every day. You have to know whats your investment thesis and if things turn out different, its time to exit. Ignore the fear of missing the run up. Unfortunately most choose to see red and then risk aversion sets in, holds for a few years and finally sell it at a big loss.
Thanks for highlighting that having majority ownership means little. Most times such companies can be spotted by management actions and how they raise funding. This brings me back to AM.TO, why is the owner constantly selling?
However I beg to differ to start viewing all firms as fraudulent first. That is like a tainted view. One of the more important key to investing is not to have bias. Clearly the repercussions to that might be bad, for example selling the good ones and keeping the bad ones.
For example, BYD which I recommended a short while I was in a investment firm. I wouldn't say its a fraud since operations are ok and data doesn't support that statement. However I noticed thin margins, no moat, claiming to be the next leader in hydro and electric cars when its best expertise was not in cars but in AA or AAA batteries. One of the largest tech companies in Asia claimed that BYD stole their technology also made me worry a bit. Im still wondering though why he bought it.
Further, the signs of fraudulent companies are fairly similar and gets easier to spot with some practice.
The one thing Buffett was right (I dont always agree with what he says) is that we tend to invest through our rear view mirrors cos its always clearer than the windshields. Its same as the RTOs. One shouldnt just jump in purely cos PEs are low, cash is more than market cap etc. Look forward and ask questions is the best way forward.
Sorry for the long message. Oh btw, why is BIDU a fraud?
