A Guide to Unsuccessful Investing
Thinking of taking a loan to start investing? Think twice...
I consider myself very fortunate. Really, if there is a highly unlikely event or a statistically improbable scenario which yields some sort of negative outcome, I am fortunate enough to pick the exact timing to be hit by that tide right away. I used to be afraid of diving. Not for the obvious reasons, though. I was not afraid of drowning due to running out of oxygen. I wasn't even afraid of being eaten by a shark or a jib - I heard they are quite friendly beasts unless you look like a seal or punch them in a nose. I was afraid of the unlikely scenario of being swallowed by a whale. You know, being swallowed by a whale wouldn't kill you. You would be all alive and well… stuck in its belly until it would either a) spit you out b) shoot you out through the blowhole (that one might actually be fun!) or c) you would run out of oxygen. Can you imagine that? Yet, despite my fears, I did set out to go diving. Right among the biggest and most hungry whales there are - in the stock market.
It was in January 2020 when I decided I'd start investing in the stock market. My motivation was noble of course - to make enough money to buy an island (but paying off my debt would suffice, too). Given that at the time we'd been in a bull market for 20 years, it seemed quite easy to make money. Just put some money in, wait a bit and get some money out. Suffice to say that I was doomed from the very beginning.
In the initial two weeks I completed the education necessary to become a successful investor and of course a millionaire - I created a demo live trading account, bought a few long CFDs for a couple thousand dollars with insane leverage, they all went up the next day, I sold them and I made more than my annular salary. I was good at this! I decided I was ready. It's the first week of February. The timeline is important here, you'll learn why soon if you don't already know that. I switched over to a real trading account and deposited mostly every penny I had. Seemed like a good idea, because remember, I was good at this! And in a week of trading I … did actually make money! Well, sort of. I made $10. And I paid $20 on the commissions.
Encouraged by this sudden success which proved my theory of being born for trading, I was to make what would be one of the most unfortunate decisions of all - in order to beat the commission prices, I needed to make bigger investments. So I took a loan. See where this is going already?
It's the last week of February. I'd finally received the loan and I was ready to start with some serious investments. By the time I got the money to my broker, I'd already picked my winning stocks. I sat by my computer at 15:30 (the opening of the market) and I stood up at 15:31 with about 30% invested in CFDs, 60% in stocks and 10% in options. All long and bullish of course. I bet Ray Dalio would be so proud at how well I diversified — if only I'd known who that was at the time. Now, I might need to take back my previous statement, because that was by far the most unfortunate decision, to go all-in right ahead. The second day, the coronavirus hit the market. In a week I was down 200% (ye, remember that 10% I didn't invest? That kept the margin going…) on the CFDs and 15% on the stocks. In a month, in the middle of the March, I was down 60% overall and I was slowly but surely readying myself to make money by selling posters on the street (which, as it turned out, I wouldn't be able to do either, because we've got locked down!).
In the chart above, there are actually two baselines. See the upper one which cuts off the green area? That is the time when I came into the market and bought my first stock. Well, you can't say I didn't get the chance to enjoy my few days of fame, i.e. the market being in the greens.
The funny — or sad, depending on what's your life stance — thing is that despite the market has been steadily going up ever since, I haven't managed to get . But unfortunately the money lost in CFDs have inevitably fallen into oblivion. Oh, and don't get me wrong, it's not just these. I've certainly committed some additional craziness over the past couple of months yet again. But that's a different story for a different occasion.
Nevertheless, I have stayed in the stock market. I do plan to continue to struggle and get beaten a few more times until I reach those hights, even if for a brief moment.
See, there're plenty of "ifs" there - and believe me, I spent the unspeakable amount of time thinking about what could've been. Like, if I got the money from the loan just ONE day later (when they announced the outbreak in Italy and the market started to crash), I would probably wait a while to start investing and I could even hit the bottom in the mid-march and be like 200% up right now. Heck, I could've even been up 2000% up right now if I made the right pick and invested in the acclaimed COVID champions! I could've... or you know what... Enough.
No point in living in the past when we ought to look to the future and try as good as we can to make it better than the present. This has been a wonderful ride. I couldn't have wished for a better experience and a (rough) lesson. It brought me where I am right now. And I want to share this journey with you. So that you don't repeat my mistakes, so that you too can profit from them and so that you don't get swallowed by the whales, just like I did.
Look out for more... I have waaay more to tell.
