Neil Woodford, Vodafone Group plc And Wm. Morrison Supermarkets plc: Even The Gurus Make Mistakes

In every profession, we tend to seek out and look up to the leading lights. In investing, this means people like Neil Woodford and Warren Buffett. There is so much we can learn from these investing gurus. Their advice and stock picks have helped ordinary investors like you and me on our meandering path to prosperity.

But I thought I’d take a slightly different tack in this article about these greats of the profession. Instead of analysing their many investing successes, what about their investing failures? What about when they have made mistakes?

A fine line between success and failure

Take Neil Woodford. Last year perhaps his most famous trade was to sell Vodafone (LSE: VOD) (NASDAQ: VOD.US), only to see the telecoms company’s share price rocket after the Verizon demerger.

At the time of his trade, I — like many other investors — also thought about selling my holding in the company. But something — which I couldn’t describe as anything more than a general feeling that the shares were undervalued — made me reconsider, and I decided not to sell. A few months later the Verizon demerger caused the shares to rocket.

The thing is, the Verizon demerger took most people by surprise. It might just as likely not have happened. The Vodafone share price might have remained moribund, and we might now be saying that Woodford had nailed it once again.

Woodford also bought into supermarket chain Morrisons (LSE: MRW) (NASDAQOTH: MRWSY.US). Yet this company’s falling sales over the Christmas period have sent the share price tumbling well below Woodford’s average purchase price.

But I think last year most people underestimated the pace of change in the supermarket sector, with the astonishing growth in online shopping, the increasingly fierce competition and the fragmentation of the sector.

We are all human, after all

Whether we like to admit it or not, there is a strong element of luck in investing. We can’t predict the future, but we can stack the odds in our favour. Sometimes we win our bets. Sometimes we lose. If you win more bets than you lose, you will make money.

 Yet, let’s be clear, people like Woodford and Buffett are still giants of the investing landscape. Their long-term investing performance is second to none, and they have made fortunes for millions of investors.

But perhaps this illustrates a broader point: we all, even the best of us, make mistakes. Perhaps ordinary investors like you and like me should not be so down on ourselves when we make mistakes. Because to make mistakes is to be human.

After all, the most successful investors are not those who never make mistakes. The most successful investors are those who make mistakes, and learn from them.

Our new report on dividend investing

Companies like Vodafone and Morrisons are popular high-yield investments. We at the Fool firmly believe that the dividends you earn from your shares, steadily reinvested each year, will make the difference between a reasonable portfolio and serious wealth.

That's why our panel of investing experts have put together a report about income investing. Please read our report on "How To Create Dividends For Life" -- it's available without obligation and completely free.

> Prabhat owns shares in Vodafone. The Motley Fool has recommended shares in Morrisons.