My stepdad is the worst investor I’ve ever known.

And I’m not saying this to throw the man under the bus.

Quite the opposite.

He’s the person who first piqued my interest in investing – which eventually became my career.

I’ve spent most of my adult life analyzing companies, valuing businesses, and investing in stocks.

So I have to give him credit for that.

But unfortunately for him… he mostly taught me how not to invest.

He had the two worst qualities you can combine as an investor: He was emotional and uninformed.

And he was consistently emotional and uninformed – for decades.

Let me give you a few examples.

He Lost Thousands In The Dot-Com Bubble

During the dot-com bubble, my stepdad used to call me almost every afternoon.

The conversations were always the same.

"Davis, turn on CNBC."

I'd grab the remote, flip through the channels, and find the business news.

Across the bottom of the screen were stock prices scrolling by with little arrows next to them.

"What color are the arrows?" he'd ask.

"Red."

Click.

I quickly learned that the color of those arrows had a direct relationship with his mood that evening.

Green arrows? Good day.

Red arrows? Stay out of the way.

At the time, he was trading stocks like Global Crossing and Lucent Technologies.

These were darlings of the dot-com bubble that eventually imploded along with other speculative internet stocks.

Unfortunately for him, he kept buying these overvalued businesses after the market peaked in March 2000.

Every drop looked like an opportunity to buy more.

Then the stocks dropped again.

And again.

Global Crossing eventually filed for bankruptcy. Lucent lost 90% of its value and eventually merged with a French telecom company in 2005.

My stepdad lost thousands of dollars along the way.

Should I Buy This Stock I Know Nothing About?

Years later he asked me, “Should I buy Honeywell?”

Questions like this were common at the time.

Sometimes I’d give my opinion on the stock. Sometimes I’d press him.

“What do you like about Honeywell?”

In situations like this, he usually didn’t answer.

There’s a chance he knew the details of Honeywell’s business and valuation, and simply didn't feel like typing it all out on a flip phone.

But more likely, he didn’t know the first thing about Honeywell’s business.

He didn’t study the company. He didn’t look at its financials. He couldn’t explain what made it a good or bad investment.

Someone probably mentioned the stock to him, he heard about it somewhere, or he saw the ticker moving and wanted in.

And that was the problem.

He was willing to put his own money into a company before doing the basic work to understand what he was buying.

You don’t need to be a professional analyst to invest in individual stocks.

But you should at least be able to explain what the company does, how it makes money, and why you want to own it.

My stepdad couldn’t even answer the first question.

Yet he dumped thousands of his hard-earned dollars into the stock.

He Even Got Wrecked By The Crypto Boom

In case you were wondering… he did not learn from his mistakes during the dot-com bubble.

On December 12, 2017, I received this text from him:

“What do you think about Litecoin?”

The date is comical in hindsight.

If you think back to late 2017, crypto was going parabolic and most people were hearing the words Bitcoin, Ethereum, and Litecoin for the very first time – including my stepdad.

A week earlier, Litecoin was trading at $90.

By the time I received that text, it was $305.

Right on cue, my stepdad got FOMO and bought into the hype.

He only texted me to validate his purchase.

Five days later, on December 17, Litecoin peaked at $357 before trading down to $20 by the following December.

Different decade. Different asset. Same investor.

During the dot-com bubble, he chased technology stocks after they became hot.

During the crypto bubble, he chased cryptocurrencies after they became hot.

He got burned both times.

Please Don’t Invest Like This

My stepdad made plenty of different investing mistakes, but almost all of them came from the same two problems:

He was emotional and uninformed.

This is a brutal combination for an investor.

• He bought companies he didn't understand.

• He chased investments after they became popular.

• He let rising prices create FOMO.

• And once his money was invested, every red or green arrow affected his mood.

The dot-com bubble, Honeywell, and Litecoin all happened years apart, yet the underlying behavior never changed.

Unsurprisingly, the results didn’t change much either.

I got to watch these mistakes play out in real time.

And while they cost my stepdad plenty of money, they taught me some of the most valuable investing lessons I’ve ever learned.

I hope you can learn from them too.