2004: I read about a new business that provided digital photography printing technology to big chain stores. It seemed like it had promise and their shares were cheap so I put $1000 into it. It went nowhere for a while and I cashed out of it at a 10% loss.
2010: A friend who had been investing in the stock market for years with poor success convinced me to invest in an ETF natural gas stock. The rationale was that natural gas was at an all time low so that it should bounce back up soon. I had an extra $2000 kicking around so I put my money in. The very next day I was up $400. That would be the last day I was up at all. In the end I was left with $500. I could have bought 150 homeless people dinner with the money I lost.
Since I departed from my job back in Sept 2015, I’ve been involved in the stock market game. Near the beginning of this new venture I was up $1200 from a $6000 investment within a matter of days. If I had cashed out right then my return would have been better than 90% of what professionals accomplish in a year. Of course within another few days my $1200 went to zero and then -$1200.
This time around was different though. I had learned from my mistakes and from the mistakes of others, and had a different strategy before I even purchased a share. Fast forward 8 months and I brought my stock portfolio back to the positives by staying disciplined and following the cardinal rules. Today, I’m back in the negatives because I made another mistake.
Managing your own money in the stock market is like lifting weights…most people have tried it but a small percentage stick with it and an even smaller percentage achieve any meaningful success.
Most people look at the stock market like they do a casino…they hope to score big in a short amount of time. What I’ve learned from my most recent folly is that having long-term success in the stock market is no different than achieving success in anything else. No one can be very good at any profession without taking the time to learn and make mistakes. To think you can succeed in the stock market with an uninterrupted upward trajectory from the beginning is the same as believing you can build a house for your family because you built one for your dog.
They say 9 out of 10 people fail at making money in the stock market. I believe the failure comes from biting off more than your stomach can handle which will emotionally and/or financially cripple you.
To anyone thinking of getting in the stock market game, I would highly recommend that you take it slow and not have your first priority be making money but instead to learn. Have a small amount of money invested so that it has your interest but not enough that you will potentially lose sleep or your kid’s lunch money for the year. Expecting to score big from the beginning would be like trying to be a professional without ever completing the amateur level.