Do I know of anybody who has lost everything in the stock market?

[i4value]

I am very sure that if you talk to a group of people who have engaged with the stock market, you will find that everyone would have lost some money at some point in time.

The likelihood is that half of the group would probably have got richer at the expense of the other half.

But human nature is such that if you ask the group whether they have lost money, and you ask in public, you will find that almost everyone will say they made money.

Do I know of anyone who has lost everything in the stock market?

The likelihood is that you won’t find retail investors among this group as I don’t think any retail investor would have bet all their savings in the stock market.

But do I know of owners of listed companies who have lost everything in the stock market? Yes, because owners tend to have all their net worth invested in the company they founded.

In the Asian economic crisis, many Malaysian owners lost everything. This is partly because they borrow money using their shares as collateral.  When the market fell, they started to buy more shares to support the share price so that the banks would ask for more collateral. This worked in “normal times”. 

But in a widespread economic crisis, the market fell longer than the owners could have the cash to support the share prices. The result is that many lost everything when the banks forced-sold the shares (when the borrowers could not come up with more collateral).

The moral of the story - the people who lost everything are the owners who borrowed. Those who did not have any debt survived and got over the crisis. So, don’t borrow to invest.

Retail investors lost some money but I have not heard of any retail investor losing all. So, asset allocation and diversification is important even if you don’t borrow to invest.

Even if you are a trader, you would have your stop loss to prevent you from losing all. Of course if you don't have a stop loss, your are an idiot that deserves to lose all.

The above is extracted from the article An Introduction to Value Investing - confronting value traps

[Mushy]

I only invest in shares and I lost all my money sometime ago. Imagine my portfolio were filled with companies like celestial nutrifood, Jurong hi-tech, Daka designs, China powerplus, etc. But I had no debts, and a job, so i survived and still enjoying this today and years to come.

[ghchua]

I only invest in shares and I lost all my money sometime ago. Imagine my portfolio were filled with companies like celestial nutrifood, Jurong hi-tech, Daka designs, China powerplus, etc. But I had no debts, and a job, so i survived and still enjoying this today and years to come.

Hi Mushy,

I don't think you lost all your money investing in the few stocks you have listed here.

Celestial Nutrifood - Yes, you got nothing in the end but you would have received some dividends investing in the company.

Jurong Tech - Yes, you got nothing in the end but you would have received some dividends investing in the company.

Daka Deisgn - This company you will lose all your money investing in it.

China powerplus - You definitely get back something investing in this stock, in a form of dividends and an exit offer at 3.5c per share.
https://links.sgx.com/FileOpen/China%20P...leID=21681

Therefore, even with all the stocks that you have listed and invested in them, you did not lose 100% of your money.

[Yoyo]

A case of absolute or relative. Lose all money may not meant 100% loss but substantial loss.

There are many businessmen that has failed on their business ventures, even if declared bankrupt, are still living in rich properties and chauffeur around. 烂船也有三斤铁

On the other hand, I believe there are many heavily leveraged commoners who have lost their pants during crisis, though unreported.

[Yoyo]

I only invest in shares and I lost all my money sometime ago. Imagine my portfolio were filled with companies like celestial nutrifood, Jurong hi-tech, Daka designs, China powerplus, etc. But I had no debts, and a job, so i survived and still enjoying this today and years to come.

Hi Mushy

Remind me of my old portfolio, full of CLOB political plays, S chips, penny shares (hated the price premium on blue chips) and palm oil.  Of the companies named, I had China Powerplus.  I nearly invest in Celestial Nutrifood, back off upon learning that the Chairman/CEO said that he run (want to run) the business empire like an aircraft carrier.  "I need a good business manager, not a commander".

In remembrance of the years of learning, and still learning. Perhaps it is better to 无招胜有招. Yes, need a lot of LUCK.

[Mushy]

I only invest in shares and I lost all my money sometime ago. Imagine my portfolio were filled with companies like celestial nutrifood, Jurong hi-tech, Daka designs, China powerplus, etc. But I had no debts, and a job, so i survived and still enjoying this today and years to come.

Hi Mushy,

I don't think you lost all your money investing in the few stocks you have listed here.

Celestial Nutrifood - Yes, you got nothing in the end but you would have received some dividends investing in the company.

Jurong Tech - Yes, you got nothing in the end but you would have received some dividends investing in the company.

Daka Deisgn - This company you will lose all your money investing in it.

China powerplus - You definitely get back something investing in this stock, in a form of dividends and an exit offer at 3.5c per share.
https://links.sgx.com/FileOpen/China%20P...leID=21681

Therefore, even with all the stocks that you have listed and invested in them, you did not lose 100% of your money.

Hi ghchua,

Yes, you are right. I did not lose 100% of the money that I invested in shares during that period. The actual number was just close. Those were the typical types of companies I invested in the first few years of my investing career. The end results were mostly delisting with no return or huge haircut. The only company I remember that survived post gfc was fuyu which I still have. 

Celestial and Jurong were already not giving dividends few years before they stopped trading. And I was still buying despite warning signs long before crash. Hence it is laughable to say I got dividends as they all went back to buying shares that returned nothing. Jurong depended too much on a single customer whose products were going out of favour. Celestial appeared to be unprepared to redeem the bonds they took when it was coming due. These 2 alone wiped out around 80% of my portfolio.

Then there is Daka designs. But this was eventually buyout with around 1c for every share. I remember I went to collect a cheque at the lawyer office which returned me 1c per share.

[weijian]

A case of absolute or relative.  Lose all money may not meant 100% loss but substantial loss.

There are many businessmen that has failed on their business ventures, even if declared bankrupt, are still living in rich properties and chauffeur around.  烂船也有三斤铁

On the other hand, I believe there are many heavily leveraged commoners who have lost their pants during crisis, though unreported.

Indeed, there isn't much practical difference between a 80-90% loss and a total loss. For the former, one needs 5-10x baggers just to break even. So hopefully, one still has a regular salary to cover those losses, learn the lessons and do better in future. 人生可能没有很多个十年，可是如果你幸运或保持健康的话，至少也有几个十年。

[Wildreamz]

100%. 

80-90% loss is no different from total loss. Hopefully, it's just a small allocation long shot, and if there is another long shot that 2x or more, one would have covered all the losses and more.

[i4value]

I think we have forgotten about differentiating between speculating (gambling) and investing (buying after analysis). Many of the "lost all" stories sounds like speculating to me. If you lost all due to speculation, you are an idiot.

[weijian]

I think we have forgotten about differentiating between speculating (gambling) and investing (buying after analysis). Many of the "lost all" stories sounds like speculating to me. If you lost all due to speculation, you are an idiot.

hi i4value,

Hang around longer and you will realize that this forum on aggregate, is probably 1 of the most rational in Singapore.

Think from another viewpoint, not a lot of people will admit their losses (and in this case, "total" losses) in a public forum. You have to give it to these guys who done it in this thread. As a matter of fact, a lot of VBs have publicly admitted their own mistakes in the past as well.

They have probably fully recovered, learnt the relevant lessons and hence now able to laugh at their own past ignorant/speculative behavior.