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April Fools: 4 Bone-headed Investment Blunders That Cost Billions

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April Fools’ Day is tomorrow. On this infamous day each year, the internet is flooded with fake news and made up stories. But wait! This is 2017, so that’s every day.

Yes, in our absurd political landscape, we figured there’s not much use in putting out more nonsense news stories online. Instead, we’re celebrating the day by highlighting some real-world foolishness. From sports stars to financial “experts” and regular Joes, here are some of the most boneheaded calls and foolhardy investment decisions ever made.

John Elway Loses $15 Million in a Ponzi Scheme

Via Tech. Sgt. Marc Barnes

From Denver Broncos Super Bowl-winning quarterback to the team’s General Manager, there’s no question that John Elway is wildly successful in the sports world. But his prowess on the gridiron hasn’t always translated so well to the financial sphere. Take for instance one particular hedge fund investment, wherein the Hall-of-Famer and his co-investor ponied up $15 million to Denver-based hedge fund manager Sean Mueller. Turned out, Mueller’s investment strategy was nothing more than a Ponzi scheme, leaving Elway smarting from the loss.

Oh well, at least Elway still has those two Super Bowl rings to keep his spirits up. Not quite so lucky is our next April Fool…

Lenny Dykstra’s Debts Force Him to Auction Off His Championship Ring

Via JoeInQueens

As a World Series-winning center fielder for the New York Mets, Lenny Dykstra had a reputation as a bit of a wild man, but an excellent player nonetheless. Once he retired from the majors, Dystra’s wild streak continued… his excellence, not so much.

According to Wikipedia, “Dykstra managed a stock portfolio and served as president of several privately held companies, including car washes; a partnership with Castrol in “Team Dykstra” Quick Lube Centers; a ConocoPhillips fueling facility; a real estate development company; and a venture to develop several “I Sold It on eBay” stores in populous areas of Southern California. Dystra even appeared on Fox News Channel’s The Cost of Freedom business show, and his stock-picking skills were mentioned by Jim Cramer, who had Dykstra write an investing column for TheStreet.”

Not a bad resume!

That is, until Dykstra made the ambitious choice of purchasing former NHL great Wayne Gretzky’s $17 million estate hoping to flip it. To say the gamble didn’t pay off is a major understatement. At one point, Dykstra owed more than $13 million on the house, and security guards were eventually told to keep him away from the property because he had stripped the house of over $51,000 worth of items and allowed the homeowners’ insurance policy on the property to lapse.

Legal issues, drug problems and bankruptcy soon followed, leading Dykstra to reportedly auction off his World Series ring for $56,762 “to help pay debts that accumulated to $31 million. Strike out.

Goldman Analyst Arjun Murti Calls $200 Oil

In 2005, Goldman Sachs (GS) analysts made a bold prediction: Crude oil would surge to $105 a barrel, as tight supply and exploding demand sparked a “super-spike” in crude prices. A few years later, in spring of 2008, crude was indeed over $100. All was well!

That is, until Goldman analyst Arjun Murti doubled down, making a call for $200-a-barrel oil in the coming years. A few months later, crude peaked at $147… and as you know if you’ve been to the pump any time recently, it’s been downhill ever since. The world has been flooded with oil in recent years, and the much-touted “commodities supercycle” has been in secular bear mode ever since. Today, crude is around $30 a barrel. Murti decided to retire from Goldman in early 2014… which was probably a much better call.

Warren Buffett’s Million-dollar Blunder is… Berkshire Hathaway?

On the 50th anniversary of Warren Buffett’s decision to take control of Berkshire Hathaway (BRK.A), Buffett shared a few of his personal financial faux-pas in his annual letter to shareholders. One of which happened to be… purchasing Berkshire Hathaway. Wait, what?

In early 1967, Buffett bought the business that would eventually be the seed of Berkshire’s insurance, investment, and, eventually, conglomerate empire. Buffett bought and merged it into Berkshire, the publicly traded powerhouse that’s made billions for investors, and that he still runs today.

However, Buffett says if he had bought the insurance business through his investment partnership hedge fund, which he still ran at the time, he and his investors would have captured all of the investment gains he has created over the past 50 years. Instead, he has shared those gains with the public shareholders of Berkshire Hathaway. That’s right, if Buffett had been a bit more savvy, he could possibly be worth hundreds of billions, instead of just tens of billions. This of course begs the question: Warren, what were you thinking?

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