I knew the highboy would be expensive.  But when you’re 22 and starting out in the investment business, well, you’re very confident.  Have to be.  Besides I had saved $10,000 for my upcoming wedding.  That was an unimaginable sum of money for a 22-year-old in 1967.  What I had no way of knowing was that, in the stock market, the emotional impact of perceived loss was 2.5 times greater than the emotional impact of gain.  Fortunately, I did realize that I didn’t know much about investing. 

However, Robert F. Lawson did.  He had joined my firm having earlier been manager of Fidelity’s Magellan Fund and was part of a paradigm shift.  From the crash of 1929 until 1955, stocks yielded more than bonds.  But Lawson recognized that times had changed and told me to buy computer maker Digital Equipment.  Digital had been founded ten years earlier by MIT professor Ken Olson.  At its peak, it would be second in size to IBM.  But in 1967 it was about to go public.  Lawson said to buy it.  So I did.

Digital went public at $20 and quickly went to $30 before topping out.  It subsequently pulled back, below the offering price, and I bought 300 shares at 18 5/8s ($5,587.50).  The stock rallied again back to $30.  I was (in my mind) rich.  Really rich!  I still had over $4,000+ in the bank and now $9,000 in the stock.  So I did what any 22-year-old would do in the situation.  I bought more furniture and changed my order.  The queen-size bed became a king-size canopy bed.  The washing machine became a washer AND dryer.  Then, of course, there were love seats and tables.  And I had ordered the $2,000 Highboy!

The retailing world was very different in 1967.  All furniture came from the Carolinas COD (cash on delivery) and the store would call you the day before delivery.  That was fine as long as you weren’t marked to market, which I was emotionally, if not in reality.  Understand I had increased my stock risk by increasing my furniture order.  There was no way of knowing when it would arrive and I would have to settle up.  It would prove to be my first investment lesson, the emotional power of over leverage, especially when self-inflicted.  The stock started down yet again.  Ugh.  I couldn’t take it.   I sold it at 26+.  While I had made money (over 30% +) it felt like a horrible loss!   And a missed opportunity it was.

Eight years later I was living in Santa Barbara, California.  It was 1974 and the worst bear market since World War II.   In a moment of despair, I researched the eight year price history of Digital Equipment.  It was a time in life when you’re so down, you almost want to feel worse.  And I did.  My less than $6,000 investment –if held- would have been worth well over $100,000.  More importantly, I learned an important lesson.  COLD objectivity –not getting caught in the moment- is your friend.  Emotion is not.  I had got caught in the moment and lost, even though I made money.   

FRANCIS PATRICK BOLAND