Mental Models discussed in this podcast:

• Zero Based Thinking
• Resulting
  • Check out Annie Duke's book "Thinking in Bets" to learn more
• Skin in the Game
  • Check out Nassim Taleb's book "Skin in the Game" to learn more

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You can find out more information by listening to episode 11 of this podcast. 

GameStop Stock Investment Post-mortem - Show Outline

The full show notes for this episode are available at https://www.diyinvesting.org/Episode30

Initial Buy Thesis

• Dividend yield exceeds 10%
• Dividend is sustainable
• Check out Episode 5 of the podcast to learn more

Investment Results

• Loss of 50-55% of the principal invested in GameStop stock

Investment Process

• Was my Buy Thesis correct?
• Root Cause of my Investment mistakes
• Was my Sell Thesis correct?
• I did not sell solely because the dividend was eliminated
• Free cash flow from declining businesses ought to be distributed to shareholders

Conclusion

• My bad process led to bad results in this case
• Could have been better or worse

Lessons Learned Investment Rules

1. Never buy a retail company with declining revenue
2. Never buy a physical retail company with debt on its balance sheet (If they lease their locations)
3. Do not hold onto a stock once you know your investment thesis is wrong
4. Prioritize investing in companies where management has skin in the game

Red Flags

1. A combination of large stock price declines without insider buying or stock buybacks
2. Non-investors you talk to think the company will be a bad investment

References:

• Investing Rules - How I limit investing mistakes