Leon's avatar
$19.3m follower assets
My worst trade: Don't invest in frauds ;-)
It was 2016 and I left college some months ago and earned my first "real" money at my job. I was always fascinated by the thought that I could invest my money in companies and participate in their success. After establishing ETF saving plans I also wanted to try my best with stock picking.
I have searched for a company that increased revenue & earnings in the past and is active in a market with excellent prospects and expected growth rates preferably a company from Germany as I thought that this would be easier for me to understand (as I'm german).

And you know what? I found such a company! Everything looked fine to me. Growing revenues every year, great margins and active in a future market: mobile payment. The name of the company was Wirecard. Some of you might now already know why this will end as my worst trade :D

But one thing at a time. So it was early 2016 and I decided to invest some money in Wirecard at 38 €. The due diligence process was not that long, to be honest. I mean it seemed like this company is a rising star in the german tech segment. But only few months later a first short report came out that accused Wirecard of many things. I read a little bit in stock forums and everything seemed to be fine according to them. In addition the BAFIN (Germany financial supervision) fined the author of the report. So for me it was clear that Wirecard is a clean company and I decided to invest some more at 33 €. From then on a steep ride started and the stock reached over 190 € in 2018. So with my first stock investment, I made more than a five-bagger. Well, at least I could have made it if I would have sold at the top. Unfortunately, I haven't. Wirecard continued to increase top and bottom line every year like clockwork. But the accusations that something isn't right became more and more over the years. I always had in my mind that back in 2016, everything seemed to be fine and that even the BAFIN was on Wirecards side. So this time it must also be the bad shortsellers that just want to make money with these accusations. And to be honest, I also fell in love with this stock. I mean, it was my first stock and it made 5x in only a few years, so everything will be fine. I was so blinded that I didn't really pay attention to the arguments of the short sellers.
Well and then in 2020, everything blew up. Wirecard wasn't able to hide the fraud anymore and I couldn't believe it. I wasn't even able to sell the stock directly after the official announcement that a big part of the cash was undetectable :D I waited until the stock fell from 135 € to 19 € and finally sold. So instead of a 5-bagger I made a big loss. It could have definitely been worse from a monetary point of view. But I will always remember that my first invest was in a fraud and that I was too ignorant to listen to wiser people. But at least it was an early lesson for me that one should never fall in love with a stock and always be open to arguments against an investment thesis.

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Conor Mac's avatar
I knew it'd be wirecard! What a crazy story that was. Hard to go from a five bagger to a loss, but the silver lining is I bet it smacked you in the face with a lesson that will save you from future occasions like this; when the stakes are bigger!
Leon's avatar
@investmenttalk Absolutely! 🙌🏻😄
StockOpine's avatar
Great post Leon. You’ve been lucky enough to learn these lessons early.
Leon's avatar
@stockopine Yes, that was really a good lesson 😄
Todor Kostov's avatar
@mavix Thanks for the post, Leon! Better learn early in your investing journey so future mistakes are limited to minimum.
Leon's avatar
@kostofff Absolutely! :)
Nathan Worden's avatar
Oh interesting, I didn't know that the BAFIN fined the author of the report about Wirecard! That definitely would make one feel safe.
Leon's avatar
@nathanworden Yep, the BAFIN played an important role in that scandal, but not a positive one 🙈
Nathan Worden's avatar
"My very first investment was a fraud" has a ring to it! I guess its good to get that lesson out of the way right off the bat!
MAPsignals's avatar
I just caught the Wirecard documentary on Netflix (I think). I never knew of the scandal until then and now to read your story !
Leon's avatar
@mapsignals The netflix docu is a good one :)
Dividend Dollars's avatar
Ouch, I can’t imagine going from that big of a gain to a loss so quickly 🫡 thank you for the lesson
Brett Schafer's avatar
best to learn these lessons early
Beaver Capital's avatar
Wow crazy! But I bet you’ll be further ahead because of this - learning opportunity 👊🏼
Luka 🦉's avatar
Wow never heard of it. Just checked online. Crazy
Leon's avatar
@stock.owl Watch the docu on Netflix if you‘re interested in more 😅
Porchester 🔺's avatar
Great post!
Leon's avatar
@porchester Thanks :)
SLT Research's avatar
The Wirecard story is just insane. There are a few documentaries on Netflix. Thanks for sharing your story, can’t imagine how it felt
Leon's avatar
@slt_research I was in a meeting when everything came out and so I couldn‘t react fast after the announcement. But even after reading all the news i was shocked and wasn‘t able to react 😅
Arnaldo Trezzi's avatar
Crazy story. Couldn’t really help thinking “when it is too good to be true it probably is”.

Thanks for sharing your unfortunate experience!
Beaver Capital's avatar
Wow what a story. Thanks for sharing!



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