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February 22, 2008

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steve sumon

Somthing to share with you: The stock did quite well over the next couple of years, and I sold my shares in 1995 to net a cool $10,000 in profit (before taxes). Not bad, eh? What I did wrong Given that profit, it might not seem like I did anything wrong. But trust me, I committed blunders galore. For starters, I did little to no research into the company or the stock before buying it. It might have been a great company, but if its stock had already been bid up too high and was overvalued, I wouldn't have stood to make much money. If the company's debt or accounts receivable or inventory was growing much faster than revenues, that would have been a red flag. If profit margins or returns on assets were dropping, that would have also been worrisome. But I never thought about that. I didn't know much about Broderbund's competition, either.

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