We've all made money mistakes.
I know I'm guilty of several that still make me cringe:
A designer clothing habit I couldn't afford.
The year after the stock market crash I stopped investing completely.
Forking over cash for my home warranty.
Anytime I've lent money to friends.
The list goes on.
But one, I've never talked about publicly. And it's definitely my most embarrassing — that time I took investing advice from a professional comedian.
Yup, it's a thing that actually happened.
I was in my early 20s, unwinding in the lobby of a Holiday Inn & Suites somewhere in the Midwest. Illinois or Indiana? I'm not exactly sure.
What's important to know is that it was after midnight. I was finishing some post-show paperwork in the corner of the bar when I overheard a conversation between a couple of comics.
“Look, I'm no financial advisor, but MannKind is going to be huge! How could it not be? Afrezza's really close to FDA approval. The only reason approval's been delayed is because they haven't finished an inspection in their European manufacturing facility.”
My curiosity had officially been piqued.
“My brother's bet his entire Roth IRA on this stock. I'd be funneling every penny I get into that company if I were you.”
So, I joined them at the bar and continued feeding on their MannKind praise as I downed a couple glasses of whiskey.
When I returned to my room, I started poking around in my brokerage account. And sure enough, the stock was priced just as they had said. I was so excited I could barely sleep. And I placed a $500 buy as early as I could the next morning.
Proud of my newfound financial prowess, I immediately called my father to brag about my purchase.
“You took what advice? From whom?” He nearly spit out his oatmeal.
“Whatever. You're just being overly conservative and paranoid,” I insisted.
I'd bet you can predict what happened next.
A few weeks later, it was uncovered MannKind had artificially inflated their stock prices by lying about the status of Afrezza's FDA approval. And the stock plummeted 37%. Plus, they were facing a class-action lawsuit.
Licking my wounds, I sold my MannKind shares at a significant loss. And spooked by the entire situation, I didn't attempt to buy stocks again for at least a couple of years.
My point in sharing this story isn't to bash the collective financial literacy of entertainers. I've worked with artists who've made more than my entire salary in one night! And many artists are incredibly good with money. Or, at least, they are smart enough to hire business managers who are good with money.
What I'm saying is don't get suckered into your co-worker's hot stock tip. Or some up-and-coming pick your rich friend won't stop raving about. They don't know what they're talking about.
Because the truth is, no one can predict exactly what's going to happen in the stock market. Not even the Oracle of Omaha, Warren Buffett.
Readers: Have you ever taken bad investment advice?