I made a mistake. I’ll be the first to admit it. And I learned a valuable lesson.

For weeks, I have been predicting that Panera Bread shares would rise on the news of their earnings. Considering they have reported nice same store sales increases, and management successfully opened well over 100 stores last year, I knew it would rise.

The day before the earnings were announced, shares were priced at around $49. However, due to the market consensus, which was negative at the time (fear of interest rates, etc.), I was hesitant about buying shares.

Then I listened to the conference call. And my overall feeling was so incredibly positive, I decided to buy more shares. Not a lot, mind you– the price was considerably higher than my previous purchases ($40.95 and $46.92, respectively). But I just wanted to get another tiny slice. So I decided to buy into the market’s frenzy. I bought a few more shares (less than 10% increase in my position) at $54.22.

Now, I am still fairly confident and bullish about Panera Bread. But I will be the first to admit that I fell under the influence of Mr. Market, as Warren Buffett so simply spelled out.

Mr. Market is there to serve you, not guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game. As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.”
–Warren Buffett, in Berkshire Hathaway’s 1987 Annual Report

Of course, Panera’s shares have been down since my purchase at $54.22. I still think the shares are worth more, but I wish I had stuck to my guns and bought more when it was still near $49.

Yes, I fell under the spell of Mr. Market. I hope I don’t make the same mistake again.