BURNT BY STOCKS : STUDENT LOST $700,000 IN 3 MONTHS

[Musicwhiz]

Haha, I notice this story is always posted and re-posted when the market gets a little exuberant, and on other forums as well.

Greed and Fear are the two most pervasive human emotions, and somehow when it comes to money humans behave irrationally. It is not easy to grow and compound money unless one has the ability to overcome risk (fear) and also be able to rein in their impulses to splurge/spend (greed). It requires not just investing knowledge/skill but also personal finance skills.

[lonewolf]

I find it a bit ironic that here we are talking about the virtue of not speculating or trading or contra-ing on shares; in a forum that is peppered with ads on Day Trading, Forex Trading and other courses that promise one to reap huge profits on shares trading.

[iisterry]

... just an attempt by the New Paper to hype something up for readership, that's all...

Well, its a tabloid. They do post stories saying that XXX of XXX makes $XXX,XXX in the market too.

They have a notorious reputation of not verifying facts and taking in stories wholesale too.

[yeokiwi]

I find it a bit ironic that here we are talking about the virtue of not speculating or trading or contra-ing on shares; in a forum that is peppered with ads on Day Trading, Forex Trading and other courses that promise one to reap huge profits on shares trading.

Why not? Since they are willing to pay to put the advertisements.
Passive income is very important to value investors and also value forums
But, I am quite surprised that valuebuddies can actually be self sustained via advertisements even though the traffic is not that high.
Kudos to Cyclone.

[Satchmo]

If I am not wrong, this appeared in the old Wallstraits forum right?

I dun condemn trading, it's just one of the many ways to get money from the market. Some are good at it, some not. Of course, doing risky stunts like contra-trading without money to back it up is just asking for it.

[newborn1000]

The remisers should had better credit control.........period.......

He never should had increase his trading size......it's ridiculous.........

Even though, I got a string of chain wins, I never increase my trading capital size.......

[Big Toe]

If the story is true, then it would be unfortunate that he had beginner's luck and made money in the beginning.
What is fortunate is that he is still young and this hard lesson would be remembered as long as he live.

Mr market taught investors many hard lessons and I will be the 1st to admit, it's impossible to know what he will throw at you next.
We can only do so much to increase our chances. If we thread carefully, over time, we should do well. The past crisis taught me that if something had not happened before in the past 100years doesn't mean it will not happen. The same event can lead to very different endings due to differing time/space/circumstances.

Pardon me for being vague but sometimes it is just not possible NOT to make a mistake.
But with experience and a logical mind, the mistakes become smaller and less severe.

[mikh]

While he can learn from his mistake, his parents are not so fortunate. They lost their life savings for the love and trust they placed in their son. This learning lesson is worth little to them.

[Musicwhiz]

Pardon me for being vague but sometimes it is just not possible NOT to make a mistake.
But with experience and a logical mind, the mistakes become smaller and less severe.

I can identify with this. I used to make a lot more mistakes when I started out - some of the blunders were costly, yes.

Now I'd like to think I make fewer mistakes, and these mistakes cost far less than the older ones.

I hope experience is the best teacher.

[gutman]

Thanks for posting the story. I can certainly relate to the story with my own. At the peak of the recent financial crisis, my loss including paper loss amounted to more than $500K.

I was investing and speculating in stocks before the crisis. In a single day, I could make a gain of 10-20k or a loss of similar amount. I bought some stocks with good fundamentals, but I also bought into stocks on tips and hearsay. Like everyone else, the bull run made me believe I have that special skill to pick the right stock. I also bought into call and put warrants, betting on directions of the STI index. I was 70% invested in equity.

I thought I was well read. Armed with all sorts of investment books including books on Warren Buffet, and a frequent visitor to Wallstraits.com, I was searching for stocks from any media I come across. I was teaching friends and colleagues on how to pick the right stocks. I was telling people to just go for low PE and PB. If only stock picking is that simple.....

Sometimes, we really need some adverse event to knock some sense into us. The global crisis certainly humbled me. I was stunned at how the market melt down, and how my portfolio's amount decrease day after day. I was depressed.

The fortunate thing was that I did not borrow, sold out the weaker stocks and held on to some fundamentally stronger stocks which I added bit by bit along the way during the last 2 years. One such stock is ARA, which I bought at $0.80 before the crisis and started to add more when it dropped to $0.40. Though some of my holdings are still underwater, my overall portfolio has posted positive returns since last year.

I am still invested in those stocks. But now, I spent time looking at balance sheets, cash flows and developments in the companies I am invested. I attend their AGMs, and watch their quarterly results. I tried to check up on the CEO as it is the CEO and the management team that delivers the numbers.

Today, I constantly remind myself that it was a lot of hard work plus luck that I have made some positive returns in my portfolio. I am certainly not smarter than a lot of investors out there, nor do I have the midas touch.