Didn't Know the Rules
My Dumbest Investment

I'm a new investor. Not understanding the rules hurt when I found Delta Airlines stock trading at 18 cents a share. I thought, "Wow, an easy chance at some dough." It was scheduled to come out of bankruptcy soon, and I figured that as soon as it came out, its stock would surge. So I bought 8,200 shares of the stock for around $1,500. Unfortunately, I learned about an hour after the markets closed that as soon as it came out of bankruptcy, its current stock would no longer be traded, and it would reissue new stock, mostly to creditors. All existing outstanding stock would be worth nothing. That was a hard lesson. It's important to understand more about the game before you play.

- Jason Hyer, Roy, Utah

The Fool Responds:

At least you didn't lose more money than that. This is a common mistake people make with companies in bankruptcy. If and when such firms emerge from bankruptcy protection, their creditors and others get paid first (often pennies on the dollar), with common stock holders frequently getting nothing.

Do you have an embarrassing lesson learned the hard way? Boil it down to 100 words (or less) and send it to The Motley Fool c/o My Dumbest Investment. Got one that worked? Submit to My Smartest Investment. If we print yours, you'll win a Fool's cap!