Learning from investment failure

We all like to hear amazing investment stories – risks taken that are rewarded with staggering returns.  Take the example of David Choe, an American painter, muralist and graffiti artist.  He was 29 years old in 2005 when Facebook asked him to paint a mural in its Palo Alto office.  Short on revenue, Facebook offered him payment by a small shareholding instead of $60,000 in cash. 

Although Mr Choe described Facebook’s business model as “ridiculous and pointless” he also liked to take a wager – so accepted the shares.  Remarkably, at the time of float in 2012 his tiny Facebook shareholding was worth US$200m! 

While we like success stories, we often learn more from stories of failure.  Below are three true (and tragic) stories that generated massive losses for investors.  What, if any, lessons can we draw from them?

1 – Ratner Group