The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Fuperw84 on December 12, 2017, 06:43:59 AM
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Hard to believe in one of the biggest bull market in history, I have lost $117k in the last 3 years investing in high risk oil and biotech stocks. I am disgusted with myself everytime I think about how much I've lost. I still owe $153k in student loans and $110k in Mortgage. I really want to run away from the stock market, accept I will probably never be able to regain my losses and focus strictly on paying of my student loans. But I love to follow stocks (my main hobby) and the thought of withdrawing from the market makes me feel depressed. I also worry about missing out if tax reform is passed and the market continue to jump in 2018. What should I do?
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Stop gambling on stocks and read this
http://jlcollinsnh.com/stock-series/
go invest in index funds you should have made a ton in the last 3 years. just know they are overly valued but we dont believe in timing the market so the market could drop but even if you're like Bob in the article below if you just hold and dont sell even at the top you'll still be ok
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/
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At the top of this sub-forum is a sticky topic titled "Investment Order", I'd read and follow that to determine the best flow of your future dollars. As MMM said in a recent post, the boom years are for setting yourself right and paying down debt and padding your savings. Chances are a recession is around the corner anyway, I'd use this time paying off your debt. In my opinion your student loans are on the high end but can be paid off. You didn't provide details on your income. I'd save enough for an emergency fund then pay off the student loans. After that it's up to you about the mortgage (you provided no details on what the rate is). Either pay it off or start investing in index funds, individual obscure stocks are incredibly risky. I own a few individual companies myself but it's a small percentage of my portfolio (less than 2%).
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Like others just said, stop using the stock market as a casino and start using it as investment.
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At the top of this sub-forum is a sticky topic titled "Investment Order", I'd read and follow that to determine the best flow of your future dollars. As MMM said in a recent post, the boom years are for setting yourself right and paying down debt and padding your savings. Chances are a recession is around the corner anyway, I'd use this time paying off your debt. In my opinion your student loans are on the high end but can be paid off. You didn't provide details on your income. I'd save enough for an emergency fund then pay off the student loans. After that it's up to you about the mortgage (you provided no details on what the rate is). Either pay it off or start investing in index funds, individual obscure stocks are incredibly risky. I own a few individual companies myself but it's a small percentage of my portfolio (less than 2%).
how did you determine he should pay that debt down with out knowing interest rates and if they are fixed.
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I'll address the unanswered part of your question, about how to deal with the loss. Investment advice aside, I would encourage you to look at that $117k as
a) an expensive, but valuable lesson about what can happen -- one that should stick with you emotionally and serve as a vaccine against future temptation to stock pick.
b) only money, and probably not even that much when taken as a percentage of your lifelong earnings.
In other words, you got lucky -- the bad kind -- and now you know better. Use this experience to your advantage.
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At the top of this sub-forum is a sticky topic titled "Investment Order", I'd read and follow that to determine the best flow of your future dollars. As MMM said in a recent post, the boom years are for setting yourself right and paying down debt and padding your savings. Chances are a recession is around the corner anyway, I'd use this time paying off your debt. In my opinion your student loans are on the high end but can be paid off. You didn't provide details on your income. I'd save enough for an emergency fund then pay off the student loans. After that it's up to you about the mortgage (you provided no details on what the rate is). Either pay it off or start investing in index funds, individual obscure stocks are incredibly risky. I own a few individual companies myself but it's a small percentage of my portfolio (less than 2%).
how did you determine he should pay that debt down with out knowing interest rates and if they are fixed.
With the lack of information I assumed the student loans had a similar interest rate as mine did, roughly 7%. That of course could be inaccurate but without more detail I can only generalize-hence why I pointed to the sticky post.
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My student loans interest is 4.85%. Mortgage is 4.35%. I would like to make a decision by end of year as to what to do. I lost a lot of confidence in my investing ability and afraid everything I buy will end up in a big loss. But if I quit the market completely, I will feel bad knowing I threw away $117k with nothing to show for it.
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I am fortunate to have a stable job for big corporation. I earn $120k before tax annually and $97k after tax.
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those are low interest rate loans. Go read the article i sent above by JL Collins you werent "investing" you were gambling. Buy the total stock market and forget about it and your future self will thank you - i spent 17 years stock picking before i saw the light. You have likely learned you lesson on stock picking now spend a few weeks of nightly reading educating yourself and move on to a brighter future.
I wouldnt pay down the loans i'd just open a vanguard account and start dumping your extra money there after you put 18.5k in your 401k and 5500 in your Roth and 6900 in your HSA follow the investment order linked above and index(its not as much fun to start) but when you pull in 100k like i did this year on a set it and forget it index allocation it starts to get really fun!
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My student loans interest is 4.85%. Mortgage is 4.35%. I would like to make a decision by end of year as to what to do. I lost a lot of confidence in my investing ability and afraid everything I buy will end up in a big loss. But if I quit the market completely, I will feel bad knowing I threw away $117k with nothing to show for it.
Sunk cost fallacy. You already did actually throw away $117k. The only thing you have to show for it is a lesson learned. Take b42's recommendation. There is sound advice in there.
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My student loans interest is 4.85%. Mortgage is 4.35%. I would like to make a decision by end of year as to what to do. I lost a lot of confidence in my investing ability and afraid everything I buy will end up in a big loss. But if I quit the market completely, I will feel bad knowing I threw away $117k with nothing to show for it.
Those are decent rates. If it was me, I would pay off the student loan, though with the interest deduction it would be less than or equal to your mortgage (assuming you don't itemize). It's your call as future long term investment gains will probably be higher than those rates. In my own case with a 7% rate, I decided to pay it off as I like to assume a low market return rate, plus a 7% safe return rate was a great bargain in my eyes.
As far as investment goes, toganet hit the nail on the head, use the loss as an expensive lesson. Early on in my investing life I lost $1,000 trying to invest my emergency fund, I sold at a loss right before my company had layoffs, I learned my lesson that way. Once you internalize the lesson, buy investments you know you'll hold onto for a lifetime, preferably index funds. Paraphrasing Buffett the best holding period is forever.
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153k in student loans? What are your advanced degrees in?
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Hard to believe in one of the biggest bull market in history, I have lost $117k in the last 3 years investing in high risk oil and biotech stocks. I am disgusted with myself everytime I think about how much I've lost. I still owe $153k in student loans and $110k in Mortgage. I really want to run away from the stock market, accept I will probably never be able to regain my losses and focus strictly on paying of my student loans. But I love to follow stocks (my main hobby) and the thought of withdrawing from the market makes me feel depressed. I also worry about missing out if tax reform is passed and the market continue to jump in 2018. What should I do?
"Its only a loss if you didnt sell"
Did you? ;)
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Seems like all of the replies here and over on Bogleheads point to the same boring but effective path. The tweets and posts about making lots of money in the stock market usually are by folks who don't tweet or post their mistakes and losses. It the nature of social networks. Some folks get rich winning the lottery but it isn't an investment strategy.
Pay off debt and save a lot. Simplify your lifestyle and see if you can live on $60K, freeing up $60k to work on the above. Invest in boring index stocks. Slowly become financially independent. Read the book "Millionaire Next Door".
JM2C. I lost a fair amount back in the tech bubble ( I really liked Gateway computers.....) Fortunately I was young enough to recover so I can retire a few years early. You can too.
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153k in student loans? What are your advanced degrees in?
Doctor of Pharmacy (PharmD).
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those are low interest rate loans. Go read the article i sent above by JL Collins you werent "investing" you were gambling. Buy the total stock market and forget about it and your future self will thank you - i spent 17 years stock picking before i saw the light. You have likely learned you lesson on stock picking now spend a few weeks of nightly reading educating yourself and move on to a brighter future.
I wouldnt pay down the loans i'd just open a vanguard account and start dumping your extra money there after you put 18.5k in your 401k and 5500 in your Roth and 6900 in your HSA follow the investment order linked above and index(its not as much fun to start) but when you pull in 100k like i did this year on a set it and forget it index allocation it starts to get really fun!
Thank You Boarder42 for your advise. The article is very helpful.
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Hard to believe in one of the biggest bull market in history, I have lost $117k in the last 3 years investing in high risk oil and biotech stocks. I am disgusted with myself everytime I think about how much I've lost. I still owe $153k in student loans and $110k in Mortgage. I really want to run away from the stock market, accept I will probably never be able to regain my losses and focus strictly on paying of my student loans. But I love to follow stocks (my main hobby) and the thought of withdrawing from the market makes me feel depressed. I also worry about missing out if tax reform is passed and the market continue to jump in 2018. What should I do?
"Its only a loss if you didnt sell"
Unfortunately I had to sell. I invested in PVA, SUNE, LINE, GDP,SDRL, EXXI etc.. They all filed for Chapter 11.
Did you? ;)
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You don't have to sell.
Chapter 11 is a reorganization, not a dissolution.
http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics
Many times the equity shares become worthless/delisted, but sometimes there is a little left for old shareholders.
There sometimes isn't a charge from a broker when the shares are worthless delisted versus the commission on selling.
Don't ask how I know :-) See ticker TK.
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Do read up on the sunk cost fallacy. It's still got its hooks in you. And it's not just in financial life that it will royally screw you over. It's a habit of mind that will ruin your life. It will draw you into gambling scheme after gambling scheme (financial, emotional, philosophical, whatever-ical.) You've got to cut loose. There's still a big part of your mind saying, "well, I *almost* had it right. If I did the same things except do X instead of Y, I could win big and recoup my losses and..."
That part of your mind is trying to kill you.
The good news is that you're totally free. You don't have to throw good money after bad, you can look up and take a deep breath and start right from here, wherever here is.
People have already given you the right practical advice. Take it. But you also have to practice accepting the losses. When your mind goes back to them -- which it will, over and over -- you have to realize it, and deliberately pick it up and set it to work on productive projects instead. You get better at it as time goes by -- you catch yourself faster, and putting your mind on another track gets easier. It's just a skill, like learning to ride a bike.
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Fuper-
judging from your username, you are 33 years old, With a good income and a nice degree.
Along with Boarder I am a member of the "Don't Pay off your mortgage club". If you can design a lifestyle to save Half your income, you could have all the debt you describe serviced and still afford to retire by age 50, ammassing sums of money that make the losses you describe in your initial post look irrelevant.
Psychologically, it's very hard to change money that is out there now, but it's very easy to make a committment regarding new money. Commit to yourself to put all new money you can save into VTI from now on. Remember, you don't have this money, yet, you could invest it in anything. Selling bad investments is Hard, but making this commitment yourself today is easy.
Once you've gotten used to that single step, you can start to think about how you'll move these dogs out of the oil patch and into VTI.
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I'll agree with others, stop gambling in stocks and go buy a very simple portfolio of index funds. Think 1-3 funds max. Start with a total market stock fund like VTSAX. Add in a broad bond fund and maybe some international stocks as you progress towards your target date.
The rate of return on paying off student loans is nothing to scoff at, 4.85% guaranteed rate of return is better than most bond funds have done lately. Do go and look at the net rate of return due to reduced deductions before you make that decision (hard to know how it affects your particular tax situation).
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Nothing to do but move forward from here. Maybe set up a separate account with a modest amount of "play money" (like 1-5% of your portfolio) to satisfy your trading urges and invest the rest in index funds as suggested by others.
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Losing $117k is a bitter pill to swallow but I know giving up trading will be worth it long-term. I will take time this weekend to reflect on my past mistake and make a determined plan to focus on other aspects of life and regain financial health. Greed, risk-taking impulse and lack of understanding of the risks involved cost me dearly. I feel the only way to move forward is not even consider trying to win back this massive loss. I will only dig myself a bigger hole.
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I wouldnt worry about it. I lost much more if you count the years of not saving and investing, smoking, drinking, drugs, ect.
You are young, have a good income. Read the J Collins book and follow it to a T.
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Oof. BTDT, with almost as much money, investing in my employer's stock right before the dot-com crash. Now I'm up to 1.5MM, so a person can recover from that kind of mistake.
Tons of sympathy, and agree with the others - move into Vanguard's Total Stock Market Fund and consider this a good, if painful lesson.
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Agree with everyone else's comments.
It's an expensive lesson- take some time to really make sure you learnt it. How are you going to make sure you don't forget it the next time a seemingly shiny opportunity comes along? Some self reflection along this line of thought may be helpful.
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My student loans interest is 4.85%. Mortgage is 4.35%. I would like to make a decision by end of year as to what to do. I lost a lot of confidence in my investing ability and afraid everything I buy will end up in a big loss. But if I quit the market completely, I will feel bad knowing I threw away $117k with nothing to show for it.
Most of us don't actually have an "investing ability." That's why index funds are so popular. All you have to think about is where to allocate your money and the market does the rest of the work for you. Focus on managing your lifestyle which frees up money to invest. Read the guides offered here to give you ideas of where to start and build up your confidence in using the market to your advantage.
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This is a know thyself moment.
You must figure out your own behavioral and cognitive tendancies and be aware of how you will slip into them again in certain circumstances.
Here are some hard questions we should all ask ourselves:
Do you seek opportunities to prove your acumen? Are you bored and seeking a dopamine shot? Are you conditioned to trust in "experts" who make a living by writing? (such expertise is relevant in some domains, but not this one) Do you incorrectly believe your high intelligence in your field is generalizable enough to provide advantages in other domains, like stock picking?
Knowing your tendencies will not only help you avoid stock-picking, it will also help prevent the tendency from causing mistakes in other domains.
FWIW, I "lost" more than you lost over the past 8 years by being a scaredy cat and investing too conservatively for my life stage. This passive mistake is less painful than making an active mistake like you did, but it's there! My knowledge of this tendency will hopefully help me stay the course instead of shifting into cash/bonds on the next super-scary 5% downturn.
Last bit of advice, if you've not done so already, speak with a tax advisor about loss carry-forwards. With your high income, you'll claw back some of the losses in tax savings for the next couple years.
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+1 to loss carryforwards. You can get money as well as learning out of this.j
+1 to investment order.
Your future key is to save and invest. If you keep your expenses well below your income, you can pay all debt (or, rationally, all but a mortgage) and, by investing the rest, become wealthy over time.
Your investing ability appears normal. You made imperfect choices and lost some money. That's normal. Perfection isn't.
Losses occur in a percentage of high-risk plays. In the future, losses and gains will each happen if you continue investing in high-risk plays. They will happen not because of your ability, which being normal will have little effect, but because of your choice of investment type. However, your future choices are completely unconstrained by your past ones.
As stated by others, you can increase your probability of success by choosing lower-risk investment vehicles such as index funds. The odds shift in your favor and the percentage of wins gets much higher. You will feel less pain at the losses because they will be less steep. Your emotional ability to keep investing is the most important part. Your emotional ability to hear logic in the midst of pain is the next most important part. You are developing the latter quality in this thread. I hope you will shortly develop the former quality too. Most successful investors followed a similar path. Keep learning and keep going.
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Fuperw84 - Im so sorry to hear about your unfortunate results in the stock market.
Out of curiosity, what did you invest in that did so poorly?
All I can think of that has done so poorly in the last 3 years are oil stocks maybe? Perhaps some financials 2-3 years ago?
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I loaded up on oil exploration companies in November 2015 after big oil crash. Invested in Sandridge Energy (SD), EXXI, Penn Virgina (PVA), Goodrich Petroleum (GDP), Seadrill (SDRL), Breitburn Energy, Lynn Energy etc. They all filed Chapter 11 and my money essentially decreased by 70%. I then moved over to biotech in 2016 during Presidential Election. Was doing great and then near Election time, Hillary Clinton decided to attack the Pharmaceutical companies. I was on margin because I was confident the companies I invested in would get FDA approval (using my scientific knowledge as a Pharmacist). All biotech stocks plummeted in October 2016 and I was forced to sell at a lost due to margin call.
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You are just gambling. Pick a couple index funds and set up auto investments.
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I loaded up on oil exploration companies in November 2015 after big oil crash. Invested in Sandridge Energy (SD), EXXI, Penn Virgina (PVA), Goodrich Petroleum (GDP), Seadrill (SDRL), Breitburn Energy, Lynn Energy etc. They all filed Chapter 11 and my money essentially decreased by 70%. I then moved over to biotech in 2016 during Presidential Election. Was doing great and then near Election time, Hillary Clinton decided to attack the Pharmaceutical companies. I was on margin because I was confident the companies I invested in would get FDA approval (using my scientific knowledge as a Pharmacist). All biotech stocks plummeted in October 2016 and I was forced to sell at a lost due to margin call.
Hot damn !
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I loaded up on oil exploration companies in November 2015 after big oil crash. Invested in Sandridge Energy (SD), EXXI, Penn Virgina (PVA), Goodrich Petroleum (GDP), Seadrill (SDRL), Breitburn Energy, Lynn Energy etc. They all filed Chapter 11 and my money essentially decreased by 70%. I then moved over to biotech in 2016 during Presidential Election. Was doing great and then near Election time, Hillary Clinton decided to attack the Pharmaceutical companies. I was on margin because I was confident the companies I invested in would get FDA approval (using my scientific knowledge as a Pharmacist). All biotech stocks plummeted in October 2016 and I was forced to sell at a lost due to margin call.
Oh yeah, it was all HRC’s fault. Sheesh.
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Let go of what you're already lost. As others have said, read up on the sunk cost fallacy: https://youarenotsosmart.com/2011/03/25/the-sunk-cost-fallacy/ (https://youarenotsosmart.com/2011/03/25/the-sunk-cost-fallacy/)
You make a good income. You can invest a lot of money going forward and set yourself up with a good future if you follow solid investing principles. Onward!
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Maybe set up a separate account with a modest amount of "play money" (like 1-5% of your portfolio) to satisfy your trading urges and invest the rest in index funds as suggested by others.
I was thinking the same thing, since the OP mentioned that stock picking is "his main hobby". It's okay to spend money on a hobby that makes you happy, but that's what this is - spending, not investing.
I'm into snowboarding, but would I put all my savings into snowboard gear? No.
EDIT: oh, and don't ever buy securities on margin. Period.
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Unfortunately setting aside small amount of "play money" won't work. I know myself too well. $1,000 to trade will somehow end up being $100,000 down the toilet. I'm too greedy to be happy with such small amount in stocks. It is extremely difficult but I made up my mind this weekend to never trade stocks again. I have mentally giving up ever winning back the $117k I lost. I have accepted that fact and it is depressing but a relief in a way.
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Yeah, that's my read on it. (And the fact that it's a relief to give it up is a pretty good "tell," in that regard.) You just need to stop.
Unfortunately setting aside small amount of "play money" won't work. I know myself too well. $1,000 to trade will somehow end up being $100,000 down the toilet. I'm too greedy to be happy with such small amount in stocks. It is extremely difficult but I made up my mind this weekend to never trade stocks again. I have mentally giving up ever winning back the $117k I lost. I have accepted that fact and it is depressing but a relief in a way.
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Fuperw84, very mature decision to just stop. Good for you!!
In future, your safety factor will rise greatly by not using margin. You probably intend to avoid it anyway, since you won't be actively trading; forgive me for saying it out loud.
Good luck in the upcoming years... though you won't really need it, I think you're on track to a very good future.
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I loaded up on oil exploration companies in November 2015 after big oil crash. Invested in Sandridge Energy (SD), EXXI, Penn Virgina (PVA), Goodrich Petroleum (GDP), Seadrill (SDRL), Breitburn Energy, Lynn Energy etc. They all filed Chapter 11 and my money essentially decreased by 70%. I then moved over to biotech in 2016 during Presidential Election. Was doing great and then near Election time, Hillary Clinton decided to attack the Pharmaceutical companies. I was on margin because I was confident the companies I invested in would get FDA approval (using my scientific knowledge as a Pharmacist). All biotech stocks plummeted in October 2016 and I was forced to sell at a lost due to margin call.
How did you pick these stocks? These all sound very familiar to me. Do you belong to an energy site by chance?
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No. I went through all holdings in XLE and OIH ETF and mistakenly loaded up on anything near 52 week bottom. Biggest mistake ever. You can't hold on to you shares once Chapter 11 is filed. It will eventually be wiped out or diluted by 95%. I also lost big on Rex Energy (REX), Seventy Seven Energy (SSE), Ultra Petroleum (UPL) and Comstock (CRK). I will never touch another energy stock again. I have PTSD from all the losses in this sector.
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I have PTSD from all the losses in this sector.
Join the club, everyone on here made bad mistakes in the beginning until one learned about index funding and not timing the markets.
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My condolences Fuperw84. It sounds like you are successfully working your way through the 7 stages of grief. Your future is bright and you now have the kind of knowledge that can only be earned the hard way.
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Good luck getting yourself on the right path. I hope you can find a different outlet for your need for an adrenaline rush.
I have watched this behavior in my father. I am not at all saying you are like him, but he is basically an addict. He is an alcoholic in recovery and I see similar needs for a “rush” in other areas of his life. He played the IPO gambling game for a while before my mother showed him that he was losing more than he was winning and put a stop to it. He loves risk-seeking activities that would make me sick to my stomach. So, he has to manage these impulses (with help from my mother managing all of the $), so he gets his thrills in ways that won’t risk the bottom line, or his health and safety.
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The $117k is not coming back, so the remaining two things matter:
1) Not losing the next $117k.
2) Learning knowledge about yourself that will be protective in other decision domains.
In reality, these two objectives are hand-in-hand. The only way to accomplish #1 is by accomplishing #2.
My point is, there is a very real risk that without self-knowledge, you could turn out like some people who would take this experience as a simple lesson that they should have been gambling on social media stocks instead of energy/biotech stocks, or options instead of shares, or buying antique cars or art for appreciation, or trading with stop limits, or whatever alternative way to do the same underlying behavior. Self-knowledge will inform you of why you seek these things in the first place, when index buy-and-hold is the proven path to wealth. Similarly, what could this teach you about your work, your relationships, your history, or your plans?
You have courage going for you. Yes, courage led to your bold bets, but it also led to you publicly admit your error and seek counsel - something many people in your shoes could never do. Now you must point that courage inward, and let the learning process take you wherever it takes you.
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This learning process has taught me greed and taking the quick "easy" road in life does not work. I hated the fact most of my money had to go to student loans and mortgage. Foolishly thought I could swing trade my way into enough wealth to payoff off my debts. Wealth is built over time through hard work and savings. No other way around this. Ironically, i'm actually very frugal and strict with my budget. I would skip a tasty ribeye steak and go for pork shoulder steak because it is $7 cheaper. I would feel guilty about buying a new pair of shoe. I haven't bought any new clothes in 2 years. I'm so cheap, i refused to take any vacation. Yet I had no hesitation depositing $117k in Fidelity account and sometimes losing over $10k in one day. It is scary how casinos and brokerage companies know all the gimmicks to psychologically distort our view of the true value of money. To snap me out of this distortion, I have a mental exercise in which I forced myself to hold a $20 dollar bill in front of me and start listing all the things I can buy with this money. The only way to snap out of the delusion is to see the true value of money and appreciate every single dollar!
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By the way, Fuperw84, i know several other high powered people with intense viewpoints/ adrenaline rush tendencies/ all or nothing approaches, etc. The ones I know made the most progress internally and externally through finding a group of people with similar experiences (not the same, similar, everybody's different) and persistently listening to their advice. This forum might be a good source of advice but others might be too - especially ones focused on the emotional-struggle side of the equation. I don't mean to be intrusive here, just mentioning things based on similarities between your writing/speech and various friends of mine. Some of the groups they found helpful included (insert well known twelve step program, which i have attended), Debtors Anonymous, Gamblers Anonymous, etc. You don't need an exact fit to check them out, just a willingness to listen. Others in my circle have found stability and focus benefits through meditation, something which (unlike 12 step) has some scientific research upholding its effectiveness. And, every chance you get, get professional counseling - it's for everyone, and pretty much guaranteed to bring you more benefit than it seems at the time. Anyway, good luck with your plans and harnessing your energy.
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$117k sounds like a lot, but when you have money invested, it grows. You can get it back. I've had some cheaper lessons/losses, i.e., chasing a hot biotech and then having it crater, but only having $1000 to invest at the time. I experienced my greed/fear tendencies, and now think that they're universal human behavior. My dad is really into energy and biotech, and overall he's done well during his lifetime. However, he's also had some big losses. He doesn't seem to mind the volatility, since he thinks his big gains over time have outweighed his losses. Plus, he reached FIRE many years ago and has various buffers of safety in his financial picture. I have learned a lot from him, but have moved toward a much more JH Collins type of approach.
I think the last straw for me with biotech was when I narrowly missed a huge drop. We were saving for a house down payment. We have mostly Index funds, but I also had pretty decent chunk of Celgene. It had a great runup this summer/fall. I bought it at $100 and it went to $150. Boy, did I feel smart. ;) I sold it near the top when I wanted to free up a bit more cash for a house down payment and immediate repairs. Days after I sold, CELG plummeted to $100. I'm counting myself lucky and sticking with Index funds for the vast majority of my holdings and a few single stock "lottery" tickets if I want to "gamble"--I call it that, too!
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Hard to believe in one of the biggest bull market in history, I have lost $117k in the last 3 years investing in high risk oil and biotech stocks. I am disgusted with myself everytime I think about how much I've lost. I still owe $153k in student loans and $110k in Mortgage. I really want to run away from the stock market, accept I will probably never be able to regain my losses and focus strictly on paying of my student loans. But I love to follow stocks (my main hobby) and the thought of withdrawing from the market makes me feel depressed. I also worry about missing out if tax reform is passed and the market continue to jump in 2018. What should I do?
Stop using the stock market to gamble.
It's not stocks that are the problem, it's your behavior.
Find a different hobby, preferably one which can make you money instead of losing it. If you are organized and disciplined, perhaps credit card churning.
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My student loans interest is 4.85%. Mortgage is 4.35%. I would like to make a decision by end of year as to what to do. I lost a lot of confidence in my investing ability and afraid everything I buy will end up in a big loss. But if I quit the market completely, I will feel bad knowing I threw away $117k with nothing to show for it.
Bolded for emphasis.
Good. Glad you are getting some sense.
Stop trying to "beat the market" and just "buy the market."
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I loaded up on oil exploration companies in November 2015 after big oil crash. Invested in Sandridge Energy (SD), EXXI, Penn Virgina (PVA), Goodrich Petroleum (GDP), Seadrill (SDRL), Breitburn Energy, Lynn Energy etc. They all filed Chapter 11 and my money essentially decreased by 70%. I then moved over to biotech in 2016 during Presidential Election. Was doing great and then near Election time, Hillary Clinton decided to attack the Pharmaceutical companies. I was on margin because I was confident the companies I invested in would get FDA approval (using my scientific knowledge as a Pharmacist). All biotech stocks plummeted in October 2016 and I was forced to sell at a lost due to margin call.
And that's why you don't gamble on margin.
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Hard to believe in one of the biggest bull market in history, I have lost $117k in the last 3 years investing in high risk oil and biotech stocks. I am disgusted with myself everytime I think about how much I've lost. I still owe $153k in student loans and $110k in Mortgage. I really want to run away from the stock market, accept I will probably never be able to regain my losses and focus strictly on paying of my student loans. But I love to follow stocks (my main hobby) and the thought of withdrawing from the market makes me feel depressed. I also worry about missing out if tax reform is passed and the market continue to jump in 2018. What should I do?
So you have a hobby that cost you $117k in 3 years. If that's what you love to do keep doing it, as long as you accept the cost. Personally I'd rather own a 40 ft sailboat, which would still be cheaper and I think more fun, but to each their own. *shrug
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Y'all be nice. It takes some badass courage to walk into the internet, admit to a six-figure mistake, and ask for advice moving forward. It takes zero courage to mock such a person.
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I’m definitely on the index/mutual fund train :) my portfolio is more complex than it needs to be, but I’ve still got over 50% in VTSAX. Some in a far out target retirement fund to get some bonds/rebalancing without me having to do squat, some is a growth fund that I love, A very small amount in a gold fund which has been not been too hot but I’m keeping it anyway, etc. I started with VTSAX when I was 18, and I’m obsessed wih it.I’ve added to that portfolio because picking index funds is actually really fun!!! I had to freaking sit on my hands to not jump into the new Global Wellesley and Wellington funds that came out this fall. I’m done expanding for the foreseeable future.
Maybe you can find a similar thrill in researching index funds and making money, than you were able to do with researching the stock picks.
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Y'all be nice. It takes some badass courage to walk into the internet, admit to a six-figure mistake, and ask for advice moving forward. It takes zero courage to mock such a person.
I feel ashamed of my past financial mistake so nothing anyone say can will make me feel more ashmamed than I already feel. I am determined to recover from this loss and learn to never repeat it again. I appreciate all opinions and advises in this forum.
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I loaded up on oil exploration companies in November 2015 after big oil crash. Invested in Sandridge Energy (SD), EXXI, Penn Virgina (PVA), Goodrich Petroleum (GDP), Seadrill (SDRL), Breitburn Energy, Lynn Energy etc. They all filed Chapter 11 and my money essentially decreased by 70%. I then moved over to biotech in 2016 during Presidential Election. Was doing great and then near Election time, Hillary Clinton decided to attack the Pharmaceutical companies. I was on margin because I was confident the companies I invested in would get FDA approval (using my scientific knowledge as a Pharmacist). All biotech stocks plummeted in October 2016 and I was forced to sell at a lost due to margin call.
And that's why you don't gamble on margin.
I learned that from watching Saved by the Bell. Zack lost a lot of money.
Is there any reason to buy on margin other than gambling? I'm not sure I understand it. TV just taught me not to do it.
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I loaded up on oil exploration companies in November 2015 after big oil crash. Invested in Sandridge Energy (SD), EXXI, Penn Virgina (PVA), Goodrich Petroleum (GDP), Seadrill (SDRL), Breitburn Energy, Lynn Energy etc. They all filed Chapter 11 and my money essentially decreased by 70%. I then moved over to biotech in 2016 during Presidential Election. Was doing great and then near Election time, Hillary Clinton decided to attack the Pharmaceutical companies. I was on margin because I was confident the companies I invested in would get FDA approval (using my scientific knowledge as a Pharmacist). All biotech stocks plummeted in October 2016 and I was forced to sell at a lost due to margin call.
And that's why you don't gamble on margin.
I learned that from watching Saved by the Bell. Zack lost a lot of money.
Is there any reason to buy on margin other than gambling? I'm not sure I understand it. TV just taught me not to do it.
crash like 2008 where the market loses 40% of its value i could see as a reasonble time to possibly take out some margin - though i'd use protected margin via a cash our refi or HEL
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I've lost a lot more money than that in the past. Bottom line is forget it and only look in the rear view mirror to learn. You have time and an income on your side so follow the advice people said on here, forget trying to hit the home run and you will be more than fine. Just don't make the same mistake twice.
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I know this post is a bit old, but here are some more thoughts that can perhaps help someone else who wants to trade the stock market.
OP picked two sectors; first oil, then bio-pharma.
If you're trading, and a stock goes down, you have to ask the question 'why'? Did it report bad numbers? Did the CEO quit? Was there something material that specifically affected their business? Presumably, the answer to all these was 'no'. What advantage do you have? What do you know that the market doesn't know?
Who was on the other side of the trade? Why did the stock go down? Because the price of oil went down. Why did the price of oil go down? Because the Saudis made a political decision to open the taps and drive the competition out of business. The oil price (and therefore oil sector stocks) cannot go up until the Saudis are done. When will they be done? Dunno. Can the companies still make money at these lower prices? I guess we have the answer now, and it's 'no'.
A lot of other very smart people, even people in the oil sector, made incorrect decisions. Harold Hamm lifted his hedges (sold when oil was at $110 or so) when oil was at $85. He could've waited and made a lot more money, but he didn't.
OK; now to look at the bio-pharma sector:
Here you have a competitive advantage as a pharmacist. You understand the jargon and you 'common sense' level is higher. But, before you invest blindly in a bio-pharma, you have to do your research:
1) What phase is their research in? Phase I,II, or III?
2) How big is the market for their product?
3) Is this a 'real' innovation, or a 'me-too' product?
4) What are the qualifications of the CEO? Is he also an MD? Or just some MBA that knows nothing about science and research?
5) What is their 'burn-rate'? How many more months can they operate before they have to issue new shares?
These are just questions, comments and insights from someone who plays the market for fun and profit. A Wall St. pro would look at this and laugh. If you can't (or don't want to) do this research, then the best thing VSTAX index funds is by far the best investment. I've also got a lot of VSTAX, btw.
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Commit to this:
Let the $117K loss be just that. Don't try to get it back by buying individual stocks, you will likely lose more than you ever gain.
My good friend got burned too to the point of 1.2M in losses in the oil sector. He has balls, now he sits on 62,500 shares of AT&T worth $2.5M. It's his only holding....
Pigs get fat...hogs get slaughtered. You can gain great wealth by taking the slow boat. You do it right, commit to a plan and stick with it.
Again, commit to this, the $117K is a learning lesson. I've lost that and then some over the years. Don't be like my other buddy who just turned sixty that has been out of the market since 2009 because he was too scared to get back in. You will be invested all your life, just be prepared to loss 50% of whatever money you throw at the stock end of the portfolio.
How old are you if I may ask?
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What should I do?
I've been investing for like 30 years. Once thing I eventually learned was to stop trying to cherry pick the next hot sector or individual stocks. Instead just buy the broad market (ex- a total stock market index fund or an S&P 500 index fund). If you want more risk then just add QQQ (the NASDAQ index fund). Keep it simple.
Also observe age appropriate diversification into bonds (via a total bond market index fund).
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I hesitate to push a gambler into anything anywhere near their addiction. But you can't avoid money in this life.
Your earning potential right now is very high. You've got a little bit of debt still, so you can pay that down and put yourself into a very good position to weather future storms.
I would make a very conscious effort to keep financial aspects of your life as simple as possible and replace the time you were spending on those things with other productive uses. Find yourself a replacement hobby.
Become a great swimmer, tackle a cycling distance challenge, learn a musical instrument. Take cooking classes or dance classes. Learn to weld.
Once you've let some time pass and distanced yourself from the previous addiction, re-engage with long term financial planning with oven mitts and a face-mask.
The overwhelming majority of the information out there is designed to separate you from your money.
Anything on television should be ignored. Throw the TV away. Do it today. Well, sell it. Or keep it, but it is for movies only, cancel the cable, get some amazon prime.
When you think you've kicked the stocktrader habit, remember this:
By an overwhelming majority, the best investors are dead, or forgot about their accounts. Buy, then hold. Never buy with the idea that you will sell.
Read the Collins stuff: http://jlcollinsnh.com/
Read this nutjob's stuff: http://earlyretirementextreme.com/
Read this blog.
Keep expenses low, avoid debt, invest without greed.
You are wealthy, and you have a responsibility to act like it. The opportunity is yours to be seized.
Here's a video from warren buffett, he invented the all you can eat buffet or something...
https://www.youtube.com/watch?v=mOS4wAsBnvM
If you make it through that and are not convinced, seek professional help, because literally the most capable investor the world has ever known is practically begging you to wake up and realize that the best available option for those of us that aren't going to go actually work at improving the companies we own is to just own all the companies and hope for the best.
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But I love to follow stocks (my main hobby)
You should probably look for another hobby. Either that, or keep a "dinner party" fund available. Put $500 in there and stock pick so you can bullshit around with people at social events.
Everything else goes in low cost index funds.
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I would like to make a decision by end of year as to what to do.
Slow down buddy, you very aggressively invested with (I guess given the heartbreak) most of your savings which is generally impatience. Continuing to be this impatient in your attempted recovery is just gonna lead to more of the same high risk taking which will very likely lead to more losses. I frankly like the idea of you focusing on paying off your loans so you see positive traction while more time passes and you get further away from these losses, the memory of which is gonna drive you to more risk in the attempt to quickly recover.
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I've been thinking about the following approach for a "fun trading" account:
Put 90% into bonds, something very safe and with a fairly high yield. The other 10% can go into something risky, like options on whatever stock ideas I get. The income from the bonds can gradually replenish that, but that way I get something that is moving every day, but also fairly sustainable. Thoughts?
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But I love to follow stocks (my main hobby)
You should probably look for another hobby. Either that, or keep a "dinner party" fund available. Put $500 in there and stock pick so you can bullshit around with people at social events.
Everything else goes in low cost index funds.
For an alcoholic, there never is 'just one drink'.
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you all realize this post is old right?
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But the lesson is timeless.
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thats probably where people should be commenting not in his old thread about his gambling problem.
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If it makes you feel better, I lost around $40,000, obviously less than you but I don't know if it was the stab in the back or the pat on the back but I was forced to sell due to margin, I had some naked put option to buy at low prices and I didn't have enough liquidity in the bank. The stock never hit those put options but it forced me to sell OTHER shares such as Suncor Energy at the lowest point $20, it is now almost $40/share....
I also had negative overall returns in the hottest bull market. Now I have a lot of cash because I am out of trading waiting to get back into the S&P and patiently waiting...
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Consider it tuition. I think that most of us who moved from trading stocks to investing in index funds have paid it in some amount or another.
I myself traded stocks and options for many years. Heck, I even put together a project that combined video games on phones with a complex trading system (I come up with some dumb ideas!).
One day, I decided to compare the net worth produced by my work and research to what I would have made by simply buying and holding an S&P index fund. The results were about the same.
I didn't know what I was doing, didn't understand the complex stuff that I was attempting, and could have mastered another language with the time that I put in, without losing a cent. Off to index funds I went.
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Thank You for the opinions and feedback. I have been out of the stock market the last few months. Currently focus on paying off all my credit card debts. I will finish paying off all credit cards this month. My next focus is paying off my student loans ($137k). I will be paying $5,000 monthly starting in June. I will be getting back into stock trading but with major changes. I'm going to put $5k in Fidelity and make the best out of that starting fund. I made a promise to myself to never put a single dollar more into my brokerage account. The maximum risk I'm willing to take is $5k on individual stocks. Being a responsible adult involves having discipline and self-control. Giving up on stock completely is too difficult for me, especially since I have too much interest and it's my main hobby.
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Thank You for the opinions and feedback. I have been out of the stock market the last few months. Currently focus on paying off all my credit card debts. I will finish paying off all credit cards this month. My next focus is paying off my student loans ($137k). I will be paying $5,000 monthly starting in June. I will be getting back into stock trading but with major changes. I'm going to put $5k in Fidelity and make the best out of that starting fund. I made a promise to myself to never put a single dollar more into my brokerage account. The maximum risk I'm willing to take is $5k on individual stocks. Being a responsible adult involves having discipline and self-control. Giving up on stock completely is too difficult for me, especially since I have too much interest and it's my main hobby.
I was a financial planner for many years, and used to make a deal with clients like you: I would put 90% of their investable assets in index funds, and they could do anything they liked with the remaining 10%, including building a bonfire in the backyard and burning it. By actively trading stocks, most of them ended up burning the money just as thoroughly as a bonfire would, but 90% of their money was safe. If you can strike the same deal with yourself, you should be fine.
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Update: I relapsed this year and continue to trade in my Fidelity account. Fortunately, I remained disciplined and only lost $1,200. I'm finally done now after I bought 10,000 shares of Pulmatix (PULM) biotech stock and it plummeted 30% the next day on ZERO news. I a now convinced that the stock market is rigged and market markers are hiding behind the scene to manipulate and scam retail investors. I took a loss and withdrew everything out of my Fidelity account. I am completely done with stock picking. I created a savings account with American Express and any extra money is transferred monthly to this savings account. I have no extra money in my budget to trade stocks anymore. Today is Monday and I have not watched CNBC, Bloomberg or FOX Business news. I blocked all 3 channels. Today will be the first day in 4 years, i have not watched any business channel or looked at stock quote. I feel down and bored right now but I hope this feeling will go away. The first week of withdrawal from the stock market is going to be difficult.
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Update: I relapsed this year and continue to trade in my Fidelity account. Fortunately, I remained disciplined and only lost $1,200. I'm finally done now after I bought 10,000 shares of Pulmatix (PULM) biotech stock and it plummeted 30% the next day on ZERO news. I a now convinced that the stock market is rigged and market markers are hiding behind the scene to manipulate and scam retail investors. I took a loss and withdrew everything out of my Fidelity account. I am completely done with stock picking. I created a savings account with American Express and any extra money is transferred monthly to this savings account. I have no extra money in my budget to trade stocks anymore. Today is Monday and I have not watched CNBC, Bloomberg or FOX Business news. I blocked all 3 channels. Today will be the first day in 4 years, i have not watched any business channel or looked at stock quote. I feel down and bored right now but I hope this feeling will go away. The first week of withdrawal from the stock market is going to be difficult.
i hope you're funneling money into an index fund not just a savings account. congrats on turning off the stock picking but you need to get that money invested still.
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Update: I relapsed this year and continue to trade in my Fidelity account. Fortunately, I remained disciplined and only lost $1,200. I'm finally done now after I bought 10,000 shares of Pulmatix (PULM) biotech stock and it plummeted 30% the next day on ZERO news. I a now convinced that the stock market is rigged and market markers are hiding behind the scene to manipulate and scam retail investors. I took a loss and withdrew everything out of my Fidelity account. I am completely done with stock picking. I created a savings account with American Express and any extra money is transferred monthly to this savings account. I have no extra money in my budget to trade stocks anymore. Today is Monday and I have not watched CNBC, Bloomberg or FOX Business news. I blocked all 3 channels. Today will be the first day in 4 years, i have not watched any business channel or looked at stock quote. I feel down and bored right now but I hope this feeling will go away. The first week of withdrawal from the stock market is going to be difficult.
Seriously, seriously, SERIOUSLY stop what you are doing right now and go find a local Gambler's Anonymous meeting. If you have any hope of maintaining this 1st positive step, you are going to need support. Try this:
http://www.gamblersanonymous.org/ga/locations
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I'm also now out of all my individual stock positions. Some of them jumped up right after I sold them.
But when I log into my account, and see the index funds sitting there, knowing that I'm at zero in individual stocks creates such a feeling of inertia. Staying at zero really matters.
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I'm also now out of all my individual stock positions. Some of them jumped up right after I sold them.
But when I log into my account, and see the index funds sitting there, knowing that I'm at zero in individual stocks creates such a feeling of inertia. Staying at zero really matters.
What made you decide to get out of individual stock? I'm still struggling right now. I have a strong urge today to jump in and buy some GE and TSLA stocks. I'm resisting the temptation right now and not putting any money in Fidelity account. Going to go to buffet and eat to distract my mind. I wonder how long it takes for these urges to go away.
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The hardest part about completely giving up on picking stocks is admitting that I suck. I'm very ambitious and have always succeeded in my career. This is so tough to admit that I failed and give up on trying to win back the money I lost.
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I'm also now out of all my individual stock positions. Some of them jumped up right after I sold them.
But when I log into my account, and see the index funds sitting there, knowing that I'm at zero in individual stocks creates such a feeling of inertia. Staying at zero really matters.
What made you decide to get out of individual stock? I'm still struggling right now. I have a strong urge today to jump in and buy some GE and TSLA stocks. I'm resisting the temptation right now and not putting any money in Fidelity account. Going to go to buffet and eat to distract my mind. I wonder how long it takes for these urges to go away.
i got out 4 years ago - immediately put all my money into index funds. doesnt take long to see they are out performing my pretty good stock picking. the stress melts away - i remember standing on a factory floor while i was supposed to be focused on starting up a line sweating on whether i should keep holding tesla or sell it - that was the end of 2013 i barely beat the market that year thanks to some well timed tsla plays. then i found this site and indexed. no anxiety no stress from indexing you just dump your money in and forget about it. I think you need to educate yourself it appears you still think you can "win" against the index - you may also need gambling help.
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The hardest part about completely giving up on picking stocks is admitting that I suck. I'm very ambitious and have always succeeded in my career. This is so tough to admit that I failed and give up on trying to win back the money I lost.
this is a gambling attitude its why las vegas exists you have a gambling problem
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Same thread is on Bogleheads, presumably by the same OP. They are giving the same advice, not surprisingly.
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Yay! $1,200 was pretty cheap, for a refresher of this particular lesson :-)
You're going to have to replace the activity though! That's your next task. Find something with roughly the same psychological intensity and reward pattern, but with less damage potential. Some hobby or harmless obsession. Frugality, say? Crushing your grocery bill, that sort of thing? Whatever. You can't afford a lot of boredom -- it'll suck you right back.
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The hardest part about completely giving up on picking stocks is admitting that I suck. I'm very ambitious and have always succeeded in my career. This is so tough to admit that I failed and give up on trying to win back the money I lost.
super duper SERIOUSLY stop what you are doing right now and go find a local Gambler's Anonymous meeting:
http://www.gamblersanonymous.org/ga/locations
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I'm also now out of all my individual stock positions. Some of them jumped up right after I sold them.
But when I log into my account, and see the index funds sitting there, knowing that I'm at zero in individual stocks creates such a feeling of inertia. Staying at zero really matters.
What made you decide to get out of individual stock? I'm still struggling right now. I have a strong urge today to jump in and buy some GE and TSLA stocks. I'm resisting the temptation right now and not putting any money in Fidelity account. Going to go to buffet and eat to distract my mind. I wonder how long it takes for these urges to go away.
One of my work responsibilities is covering large companies who are customers of my employers. I listen to their earnings calls every quarter and consequently track the stocks, regardless of whether I would own them. It seems like any of them can fall 20% in a day with very little notice or reason. Saw that happen to enough of them (including one I owned), and I realized I was taking a lot of risk I didn't have to.
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Stock picking should definitely be considered as an expensive hobby where you need to be okay with losing any money spent. I think Burton Malkiel compared it to horse races at some point. But similarly, it might not be for everyone.
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What made me decide to get out of individual stocks?
Just stop bying more.
I too had 100 % of my investments in risky oil stocks.
I forget the exact peek but think I have “lost” 80K since then.
Starting 2 years ago, after I found this site, all of my NEW investments are in ETFs.
I have not sold those stocks. But now they make up less than 25% of my portfolio.
I was never a trader & just bought & held onto these stocks. I will likely sell them once they are upto book value again.
One day they will make up very little of my portfolio either by my ETF contributions growing (preferred) or by those companies going bankrupt.
Somehow I can’t bring myself to sell them today but I will NOT buy more.
Would that work for you? You need to start somewhere.
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Maybe become a gamer where you can occupy your mind and competitive spirit in a fun way.
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I temporarily unblocked CNBC, re-allocated my budget to set aside $400/month to pick stocks and actually deposited money into Fidelity and Robinhood yesterday. Fortunately, I resisted temptation to buy any stock and went a long walk at the park. I ended up cancelling all deposits before 4pm yesterday. I really want to throw $10,000 into bitcoin and Ethereum but have resisted all temptations to pull the trigger so far. I blocked CNBC again today and just going for long walks and reading to distract myself. This is my 3rd day with trading stocks. Going to counseling and gambler's anonymous is not for me. I'm trying to do it cold turkey on my own.
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I temporarily unlocked my liquor cabinet, retrieved my daily four beers and a bottle of whiskey and actually set them on the table yesterday. Fortunately, I resisted temptation to open any of them and went a long walk at the park. I ended up putting the bottles back in the cabinet before 4pm yesterday. I really want to down the whiskey but have resisted all temptations to put it to my lips so far. I locked the liquor cabinet again today and just going for long walks and reading to distract myself. This is my 3rd day sober. Going to counseling and alcoholics anonymous is not for me. I'm trying to do it cold turkey on my own.
.......
You need help, man.
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If you have $10,000 lying around throw it at your debt or get VTI & forget about it.
Why do you need to “win” the stocks back immediately?
That is not going to happen overnight & you will be dissatisfied.
Make a plan, spread sheet it, & you will probably see in 3-4 years you will have your money back with aggressive saving into Vanguard funds
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And here I am, happily retired, sitting by my pool in Florida with a paid-off house and a fat bank account, all courtesy of index funds.
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I temporarily unblocked CNBC, re-allocated my budget to set aside $400/month to pick stocks and actually deposited money into Fidelity and Robinhood yesterday. Fortunately, I resisted temptation to buy any stock and went a long walk at the park. I ended up cancelling all deposits before 4pm yesterday. I really want to throw $10,000 into bitcoin and Ethereum but have resisted all temptations to pull the trigger so far. I blocked CNBC again today and just going for long walks and reading to distract myself. This is my 3rd day with trading stocks. Going to counseling and gambler's anonymous is not for me. I'm trying to do it cold turkey on my own.
At this point I hope you're trolling, because if not, yikes.
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Agreed I'm 50/50 on a troll here or Serious mental health problem. You're either a wildly impressive troll or have an insane addiction and need help.
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Serious question for the OP. Are you taking any medications that are dopamine agonists for any mental or physical health reasons, by any chance? If so, see your doctor right away about changing or getting off those meds. Your thought and behavior patterns around stocks are clearly distorted, so if there is any clear physiological reason for this, you should address that first, and then work on mental health and habits.
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I know that dopamine agonist and certain anti-psychotic meds can make you gamble and do other reckless behaviors. I'm a medical professional. I'm not on any meds though. Gambling runs deep in my family. I inherited the trait from my dad. What's separating me a little from him is that I know I have a problem and busting my behind off trying to get rid of this gambling addiction. The stock market is actually harder to give up than casino or poker because it so readily available. You can even trade on your phone! I am not trolling. Addiction to stock trading is as serious as heroine addiction in my opinion. I gave up smoking cigarettes (was a chain smoker) and it was easier than giving up trading stocks. I also post on gambling addiction and psych forums for tips to getting rid of this disease. Reason why I'm here and in other index forum is because I'm hoping to get advice and opinions from people who went through the same problem as me and succeeded.
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I'm not looking for sympathy. My main reason for posting here is simple. I'm sure most of you did not jump into index fund immediately. Most of you probable went through a phase in which you dabbled in stock trading or individual stock picking. I'm more curious to know how most of you managed to give up that urge and started indexing only.
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I'm not looking for sympathy. My main reason for posting here is simple. I'm sure most of you did not jump into index fund immediately. Most of you probable went through a phase in which you dabbled in stock trading or individual stock picking. I'm more curious to know how most of you managed to give up that urge and started indexing only.
Simple observation. As a financial planner, I saw countless people lose their life’s savings by thinking they were smarter than anyone else or had a “system” for beating the market. But the really smart people, the ones like the Doctorate in Economics from Oxford who ran the derivatives trading desk at his investment bank, had their personal money in index funds and retired rich.
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I'm not looking for sympathy. My main reason for posting here is simple. I'm sure most of you did not jump into index fund immediately. Most of you probable went through a phase in which you dabbled in stock trading or individual stock picking. I'm more curious to know how most of you managed to give up that urge and started indexing only.
Simple observation. As a financial planner, I saw countless people lose their life’s savings by thinking they were smarter than anyone else or had a “system” for beating the market. But the really smart people, the ones like the Doctorate in Economics from Oxford who ran the derivatives trading desk at his investment bank, had their personal money in index funds and retired rich.
For me, I never was in deep into the minutiae; though I knew saving for retirement was important. When I landed my fist job that paid well, I set it and forgot it. While "tempted" to play the buy-sell-quick turn around, I didn't indulge. People far smarter who could talk circles around me would try to convince me to do so; they tended to loose a bunch of money.
The kicker for me was my Dad. He invested to the tune of $200,000 in something "guaranteed" (to this day he hasn't told me what it was, I wonder if he knows) in the mid-2000's. When the crash hit he says he lost a boat load and cashed out (ouch!), locking in his losses. He then jumped to gold thinking that was going to climb through the roof. Well not so much, he is sitting on a pile of novelty coins he overpaid for, not receiving dividends.
What I am trying to say, there is always "the next big thing" out there, whether a style trend, or stock. Be careful what you invest in. Plan to stick with your investment as it will grow over time. Looking for the quick money maker smacks of gambling, as has been written here already.
How do you stop yourself? Don't eat the potato chip, you can't eat just one.
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I'm not looking for sympathy. My main reason for posting here is simple. I'm sure most of you did not jump into index fund immediately. Most of you probable went through a phase in which you dabbled in stock trading or individual stock picking. I'm more curious to know how most of you managed to give up that urge and started indexing only.
You can be successful in individual stock investing, but almost nobody has the key ingredients to do so:
1) Education: not even formal education, but understanding the fundamentals of business, economics, and stock markets so that you can be an informed participant. Understand how to read income statements, balance sheets, and statements of cash flow. Read about global macroeconomics and trade--understand and ponder the potential of another 2 billion middle-class market participants coming up in China and India. Understand the SEC's Edgar system, and subscribe or regularly check other filings, like debt offerings, major holders, and industry analyst events.
2) Effort: Religiously read 10Q's and 10K's, not just of companies you own or are studying, but also their competitors, customers, and suppliers. Keep abreast of business news. Devote time regularly to research, and rarely to buying or selling. (a dozen transactions in a year is a very busy year for me)
3) Discipline: Stick with the method, even if it isn't "working" this quarter or year; there are factors outside of your control. Take rote analyses and other people's recommendations with a huge grain of salt: grist for your own work, but never something to act on. Make you you thoroughly understand a situation before you act; the liquidity in the market entices you to "act now! limited time offer!" but it never is. As Warren Buffett says, there are no called strikes in the stock market.
If someone had a sure-fire key to knowing the market, and could guess right just twice in a row, they'd be the world's first trillionaire already. People have theses, and they can work more or less, but nobody can time the market perfectly. (again, once lucky, but never twice in a row)
Oh, by the way, Warren Buffett and his ilk are doing this; that's the "pack" you have to keep up with.
If this all sounds like too much, then just index and get on with your life.
The closest analogy I can give to successful stockpicking is fishing: a whole lot of time that seems nonproductive, mixed with occasional payoffs. If you don't enjoy the process: getting up at the crack of dawn, tieing flies or collecting favorite lures, weather that is cold / rainy / sweltering, days with nothing to show for it, cleaning the darn things, then you aren't cut out to be a fisherman. Everyone just wants to catch fish, and let someone else worry about the rest.
And even with all this said, my portfolio is about 50/50 indexed. It's where I park my money when the fish aren't biting. It's also my ballast--my hedge against my own limitations. While I am confident in my investing, and I hope it is the icing on the cake, I won't let it cost me everything.
Many people, recreational fishermen, might have just 10% of their assets in a "Mad Money" account. This is, essentially, a hobby: it may end up costing money versus indexing, but it keeps the person interested in investing. But in the end, I agree with a lot of comments here. You are using the language of addiction: "urge", "beating", etc. I think any kind of active investing may be quite dangerous.
Benjamin Graham, Warren Buffett's teacher and mentor, never talked about beating the market. (although he did, for long runs) rather he talked about achieving "satisfactory returns." If you can't find a point where your investments are satisfactory--where they are achieving your plan, and you are at peace with that--then you will probably be better off with them in someone else's hands. Investing isn't anything in itself. (speaking on a personal basis; of course, capitalism has a purpose) It is merely the means--a means, as there is more than one way to get there--to fund your life.
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I'm not looking for sympathy. My main reason for posting here is simple. I'm sure most of you did not jump into index fund immediately. Most of you probable went through a phase in which you dabbled in stock trading or individual stock picking. I'm more curious to know how most of you managed to give up that urge and started indexing only.
You can be successful in individual stock investing, but almost nobody has the key ingredients to do so:
1) Education: not even formal education, but understanding the fundamentals of business, economics, and stock markets so that you can be an informed participant. Understand how to read income statements, balance sheets, and statements of cash flow. Read about global macroeconomics and trade--understand and ponder the potential of another 2 billion middle-class market participants coming up in China and India. Understand the SEC's Edgar system, and subscribe or regularly check other filings, like debt offerings, major holders, and industry analyst events.
2) Effort: Religiously read 10Q's and 10K's, not just of companies you own or are studying, but also their competitors, customers, and suppliers. Keep abreast of business news. Devote time regularly to research, and rarely to buying or selling. (a dozen transactions in a year is a very busy year for me)
3) Discipline: Stick with the method, even if it isn't "working" this quarter or year; there are factors outside of your control. Take rote analyses and other people's recommendations with a huge grain of salt: grist for your own work, but never something to act on. Make you you thoroughly understand a situation before you act; the liquidity in the market entices you to "act now! limited time offer!" but it never is. As Warren Buffett says, there are no called strikes in the stock market.
If someone had a sure-fire key to knowing the market, and could guess right just twice in a row, they'd be the world's first trillionaire already. People have theses, and they can work more or less, but nobody can time the market perfectly. (again, once lucky, but never twice in a row)
Oh, by the way, Warren Buffett and his ilk are doing this; that's the "pack" you have to keep up with.
If this all sounds like too much, then just index and get on with your life.
The closest analogy I can give to successful stockpicking is fishing: a whole lot of time that seems nonproductive, mixed with occasional payoffs. If you don't enjoy the process: getting up at the crack of dawn, tieing flies or collecting favorite lures, weather that is cold / rainy / sweltering, days with nothing to show for it, cleaning the darn things, then you aren't cut out to be a fisherman. Everyone just wants to catch fish, and let someone else worry about the rest.
And even with all this said, my portfolio is about 50/50 indexed. It's where I park my money when the fish aren't biting. It's also my ballast--my hedge against my own limitations. While I am confident in my investing, and I hope it is the icing on the cake, I won't let it cost me everything.
Many people, recreational fishermen, might have just 10% of their assets in a "Mad Money" account. This is, essentially, a hobby: it may end up costing money versus indexing, but it keeps the person interested in investing. But in the end, I agree with a lot of comments here. You are using the language of addiction: "urge", "beating", etc. I think any kind of active investing may be quite dangerous.
Benjamin Graham, Warren Buffett's teacher and mentor, never talked about beating the market. (although he did, for long runs) rather he talked about achieving "satisfactory returns." If you can't find a point where your investments are satisfactory--where they are achieving your plan, and you are at peace with that--then you will probably be better off with them in someone else's hands. Investing isn't anything in itself. (speaking on a personal basis; of course, capitalism has a purpose) It is merely the means--a means, as there is more than one way to get there--to fund your life.
This is like telling an alcoholic they can drink in moderation after proving they can't. Multiple times.
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This is like telling an alcoholic they can drink in moderation after proving they can't. Multiple times.
Maybe I should have bolded this:
Many people, recreational fishermen, might have just 10% of their assets in a "Mad Money" account. This is, essentially, a hobby: it may end up costing money versus indexing, but it keeps the person interested in investing. But in the end, I agree with a lot of comments here. You are using the language of addiction: "urge", "beating", etc. I think any kind of active investing may be quite dangerous.
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Posting only that would have been better
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I'm not looking for sympathy. My main reason for posting here is simple. I'm sure most of you did not jump into index fund immediately. Most of you probable went through a phase in which you dabbled in stock trading or individual stock picking. I'm more curious to know how most of you managed to give up that urge and started indexing only.
For most of us, it's because we don't experience the adrenaline rush that a gambling addict does. Trying to find the next Apple or Amazon just... doesn't do it for me. So it may be difficult to find who you're looking for, since I think most of us don't have the same urges you do. Definitely stay active with some sort of gambling addicts group - busting addiction is ridiculously difficult on one's own, having support makes it better. I think that's why people are suggesting GA - more for the support aspect than any particular methodology.
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I'm not looking for sympathy. My main reason for posting here is simple. I'm sure most of you did not jump into index fund immediately. Most of you probable went through a phase in which you dabbled in stock trading or individual stock picking. I'm more curious to know how most of you managed to give up that urge and started indexing only.
I have never purchased a single share of individual stock. From day one I have always attempted to be as diversified as possible. When I was younger I didn't understand the stock market so I avoided investing in it (outside of my 401k). I wasn't comfortable investing in equities until I learned about index funds.
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Diversification is protection against ignorance.
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I'm not looking for sympathy. My main reason for posting here is simple. I'm sure most of you did not jump into index fund immediately. Most of you probable went through a phase in which you dabbled in stock trading or individual stock picking. I'm more curious to know how most of you managed to give up that urge and started indexing only.
I think your assumption might actually be incorrect for this particular board, though I don't know for sure. I've never had an inclination to trade stocks in my entire investing life...I just started right out in index funds. Most on this board don't view investing as a 'thrill' but as a boring and relatively safe way to accumulate wealth. And personally, I don't even view wealth/increasing net worth as a thrill, but rather as a safety net AGAINST risk.
Given that, there are sure to be at least some members that used to stock pick, or still do. But I'm not sure their advice will be that helpful b/c I think most here don't experience stock-picking the same way you do, emotionally speaking.
I have never had the slightest interest in buying individual stocks, and I find day to day news about the market boring (mainly b/c, like most news, it is pointless brain clutter in terms of usability). I would never want to sink the time required in research that would be required to *possibly, but not necessarily* get an edge on any particular stock or sector (though I have a few sectors that attract me intellectually). For whatever reason, my brain isn't wired to get a 'happy' from that. I also am a semi-knowledgeable fan of thoroughbred horse racing, and when I have the time, I get a charge out of trying to mentally handicap and pick cards for a few of the big races. And sometimes my hunches are correct, and it's fun and I brag to my family. But I would never bet ACTUAL money. Shit, I worked hard to earn that money and why would I risk it when would I know most of my bets won't be winners? Same with stock market....it's a waste of time for 99% of the people who try it.
And ironically, I actually TAKE a dopamine agonist lol.
I can't speak to the best counseling approaches to gambling addiction, but your posts indicate a few problems. One is your mental framing (e.g., I'm smarter than average, so I should be able to master this/life will be boring if I don't stock pick...both purely subjective framing statements that are almost certainly untrue) that allows you to justify what is essentially just a chemical jolt your brain is getting from putting money on the line in a high risk situation.
Perhaps cognitive behavioral therapy would be helpful in recognizing your distorted assumptions?
Best of luck.
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I'm not looking for sympathy. My main reason for posting here is simple. I'm sure most of you did not jump into index fund immediately. Most of you probable went through a phase in which you dabbled in stock trading or individual stock picking. I'm more curious to know how most of you managed to give up that urge and started indexing only.
Nope. Straight to indexes. I am not under the illusion that I am smarter than everybody else.
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A couple of different factors worked me out of individual stocks:
1. I started listening to Paul Merriman's investing podcast. He's very, very harsh on regular people who want to set aside a little money to "play". He said he refused to work with clients who said they wanted to do that even with 3%-5% of their money. His case against individual stocks is pretty compelling.
2. The co-worker with the most interest in investing and stock-picking was trasnferred out of our group. He used to sit next to me, and we'd compare portfolios daily. Now he's in a different building.
3. (THIS MIGHT ATTRACT CRITICISM) I started replacing Individual stock positions with options positions. I rationalized to myself that I could still get the upside I believed was there with these companies, but now I had a time limit when I would be out.
4. What #3 created was a lot of extra cash in my trading account. I removed that cash and used it to pay down some debt. Seeing the way the options danced around actually freaked me out--the % gains change so rapidly compared to when you own stock--so I would up selling them early, too.
That trading account still has some money left, all in index funds. Again, stock positions are harder to dislodge, there's a lot of inertia because you're basically having to psychologically deal with having been wrong in the past, and who wants to admit that?
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I for one didn't actually start with indexes.
I started in a managed mutual fund with way too high fees, followed by index funds.
I have considered investing in individual stocks and or options, but not with my portfolio but as gambling/entertainment using my monthly discretionary income. I think you need to find a hobby that gives you the same high as you get from option picking that has a fixed cost instead.
Throw your portfolio in indexes and HODL. Yesterday.
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I for one didn't actually start with indexes.
I started in a managed mutual fund with way too high fees, followed by index funds.
I have considered investing in individual stocks and or options, but not with my portfolio but as gambling/entertainment using my monthly discretionary income. I think you need to find a hobby that gives you the same high as you get from option picking that has a fixed cost instead.
Throw your portfolio in indexes and HODL. Yesterday.
Agree- I didn't start in individual stocks either. High school economics taught me to stay out of the stock picking game.
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I for one didn't actually start with indexes.
I started in a managed mutual fund with way too high fees, followed by index funds.
I have considered investing in individual stocks and or options, but not with my portfolio but as gambling/entertainment using my monthly discretionary income. I think you need to find a hobby that gives you the same high as you get from option picking that has a fixed cost instead.
Throw your portfolio in indexes and HODL. Yesterday.
You know, that's what I did too...back when I was super young, I had a mutual fund. I finally killed it this year and now I am all indexes except for some company stock from my last employer (purchased through their stock purchase plan).
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I started in a mutual fund with high fees, way back in high school when I didn't know much about investing but I knew it was good to do it. I finally switched to index funds recently, and I've never picked a stock in my life. I watched my dad pick risky investments and lose a bunch of money, and I didn't want that. I've always had a long term mindset with my investments, and I don't think I can predict the future of individual companies, but I do believe that the economy as a whole will continue to grow.
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I'm not looking for sympathy. My main reason for posting here is simple. I'm sure most of you did not jump into index fund immediately. Most of you probable went through a phase in which you dabbled in stock trading or individual stock picking. I'm more curious to know how most of you managed to give up that urge and started indexing only.
If you want to invest in individual stocks look for companies that have beat the market over 20 years. Mcd, Nke,msft, aapl,cost. You're gambling. Look for companies that have been around for 20 years and will still be here in 20. You take too much risk. It's a long game, not get rich quick.
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I suspect that the core constituency on these forums are people who are really good at delayed gratification. We are able to rationalize away the baser urges that compel people to spend everything they earn, buy flashy gadgets or newer cars, and fail to plan for the future. We get a rush (as it were) out of plotting the most efficient path to our financial goals that may be 10-20 years in the future. All of that means that we aren't driven by the thrill of individual stock gambling and clutching on for a white-knuckle roller coaster ride. We put our money in day in and day out into solid, boring investments with positive expected returns. It isn't sexy but it is proven winning strategy.
I don't want my investing to give me a thrill or raise my blood pressure. The idea of betting on individual stocks makes my stomach churn. I have zero interest in that kind of risk. Why should I take on all of that potential downside when I already have a plan that will make me rich and allow me to retire early? That already is winning the game; i don't need anything more.
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I suspect that the core constituency on these forums are people who are really good at delayed gratification. We are able to rationalize away the baser urges that compel people to spend everything they earn, buy flashy gadgets or newer cars, and fail to plan for the future. We get a rush (as it were) out of plotting the most efficient path to our financial goals that may be 10-20 years in the future. All of that means that we aren't driven by the thrill of individual stock gambling and clutching on for a white-knuckle roller coaster ride. We put our money in day in and day out into solid, boring investments with positive expected returns. It isn't sexy but it is proven winning strategy.
I don't want my investing to give me a thrill or raise my blood pressure. The idea of betting on individual stocks makes my stomach churn. I have zero interest in that kind of risk. Why should I take on all of that potential downside when I already have a plan that will make me rich and allow me to retire early? That already is winning the game; i don't need anything more.
I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
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I suspect that the core constituency on these forums are people who are really good at delayed gratification. We are able to rationalize away the baser urges that compel people to spend everything they earn, buy flashy gadgets or newer cars, and fail to plan for the future. We get a rush (as it were) out of plotting the most efficient path to our financial goals that may be 10-20 years in the future. All of that means that we aren't driven by the thrill of individual stock gambling and clutching on for a white-knuckle roller coaster ride. We put our money in day in and day out into solid, boring investments with positive expected returns. It isn't sexy but it is proven winning strategy.
I don't want my investing to give me a thrill or raise my blood pressure. The idea of betting on individual stocks makes my stomach churn. I have zero interest in that kind of risk. Why should I take on all of that potential downside when I already have a plan that will make me rich and allow me to retire early? That already is winning the game; i don't need anything more.
I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
Basically, you will have to psychologically disconnect your thrill-seeking from money/investing altogether, and seek that high elsewhere in some other form that doesn't involve dollars and isn't going to be so potentially self destructive. Extreme sports, maybe? ETA: You will also probably need to automate your investing as much as possible, so that you mess with/check your accounts only infrequently. Or, if even that is too much stimulus, you will need have someone you trust handle it for you.
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I suspect that the core constituency on these forums are people who are really good at delayed gratification. We are able to rationalize away the baser urges that compel people to spend everything they earn, buy flashy gadgets or newer cars, and fail to plan for the future. We get a rush (as it were) out of plotting the most efficient path to our financial goals that may be 10-20 years in the future. All of that means that we aren't driven by the thrill of individual stock gambling and clutching on for a white-knuckle roller coaster ride. We put our money in day in and day out into solid, boring investments with positive expected returns. It isn't sexy but it is proven winning strategy.
I don't want my investing to give me a thrill or raise my blood pressure. The idea of betting on individual stocks makes my stomach churn. I have zero interest in that kind of risk. Why should I take on all of that potential downside when I already have a plan that will make me rich and allow me to retire early? That already is winning the game; i don't need anything more.
I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
Basically, you will have to psychologically disconnect your thrill-seeking from money/investing altogether, and seek that high elsewhere in some other form that doesn't involve dollars and isn't going to be so potentially self destructive. Extreme sports, maybe? ETA: You will also probably need to automate your investing as much as possible, so that you mess with/check your accounts only infrequently. Or, if even that is too much stimulus, you will need have someone you trust handle it for you.
Correct I'm an adrenaline junky and gambled and actively traded stocks for 17 years. I love my money and my time more than the thrill of making a quick buck esp when I'm losing. You're a loser you realize it so stop trying to become a winner you failed as most people do at stock picking.
OP is only responding when someone makes apoint where he can counter I'm not like that. You can either accept you need outside help on this or continue to destroy your life and your finances. You've crossed the line of being able to do this by yourself IMO
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I suspect that the core constituency on these forums are people who are really good at delayed gratification. We are able to rationalize away the baser urges that compel people to spend everything they earn, buy flashy gadgets or newer cars, and fail to plan for the future. We get a rush (as it were) out of plotting the most efficient path to our financial goals that may be 10-20 years in the future. All of that means that we aren't driven by the thrill of individual stock gambling and clutching on for a white-knuckle roller coaster ride. We put our money in day in and day out into solid, boring investments with positive expected returns. It isn't sexy but it is proven winning strategy.
I don't want my investing to give me a thrill or raise my blood pressure. The idea of betting on individual stocks makes my stomach churn. I have zero interest in that kind of risk. Why should I take on all of that potential downside when I already have a plan that will make me rich and allow me to retire early? That already is winning the game; i don't need anything more.
I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
Because you'll never retire.
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Put it all in small cap index funds. High risk
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I suspect that the core constituency on these forums are people who are really good at delayed gratification. We are able to rationalize away the baser urges that compel people to spend everything they earn, buy flashy gadgets or newer cars, and fail to plan for the future. We get a rush (as it were) out of plotting the most efficient path to our financial goals that may be 10-20 years in the future. All of that means that we aren't driven by the thrill of individual stock gambling and clutching on for a white-knuckle roller coaster ride. We put our money in day in and day out into solid, boring investments with positive expected returns. It isn't sexy but it is proven winning strategy.
I don't want my investing to give me a thrill or raise my blood pressure. The idea of betting on individual stocks makes my stomach churn. I have zero interest in that kind of risk. Why should I take on all of that potential downside when I already have a plan that will make me rich and allow me to retire early? That already is winning the game; i don't need anything more.
I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
Go ahead and give up your agency and ability to make your own decisions/work your way around a problem to some some excuse. It's only all your wealth and finances.
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To be honest, if you trade stocks regularly, the amount you lost isn't really that much. It's about what I lost on alibaba alone when I sold right before their stock went nuts. Albeit that was lost earnings, but still hard to think about. And I only dabble in trading as a side hobby. The vast majority of our net worth is in index funds, bonds, and real estate.
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I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
Fuperw84, if you need to jolt, I'd recommend motorcycle road racing. While much safer than going moderately fast on the street, you WILL NOT be thinking about CNBC pundiits opinions. If you do think about other stuff, you will be much slower than I ever was.
#528 WMMRA (Washington Motorcycle Road Racing Association) 1996-2006
markbike528......CBX--not the race bike!
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I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
Fuperw84, if you need to jolt, I'd recommend motorcycle road racing. While much safer than going moderately fast on the street, you WILL NOT be thinking about CNBC pundiits opinions. If you do think about other stuff, you will be much slower than I ever was.
Or downhill longboarding. It might be the only thing that really clears my mind (even more so than motorcycles, but I never raced).
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I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
This mentality comes through practice, not through nature. Can't blame your genes on your mistakes your whole life.
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I suspect that the core constituency on these forums are people who are really good at delayed gratification. We are able to rationalize away the baser urges that compel people to spend everything they earn, buy flashy gadgets or newer cars, and fail to plan for the future. We get a rush (as it were) out of plotting the most efficient path to our financial goals that may be 10-20 years in the future. All of that means that we aren't driven by the thrill of individual stock gambling and clutching on for a white-knuckle roller coaster ride. We put our money in day in and day out into solid, boring investments with positive expected returns. It isn't sexy but it is proven winning strategy.
I don't want my investing to give me a thrill or raise my blood pressure. The idea of betting on individual stocks makes my stomach churn. I have zero interest in that kind of risk. Why should I take on all of that potential downside when I already have a plan that will make me rich and allow me to retire early? That already is winning the game; i don't need anything more.
I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
Obviously you acknowledge that index funds are the way to go, but how did you come to that conclusion?
I ask because I know that I was mostly convinced, enough to start buying VTSMX, after a few weeks of reading MMM and a few other blogs. But from there I've spent many hours reading books, blogs, forums, anything to reinforce the concept. I actively look for holes in the strategy to keep myself feeling confident. Over time my view of money and investing has changed in ways that I can't exactly put into words. I know this doesn't directly address the need for thrill seeking but I do think that if you commit to reading a few books that really get into the details, it might begin to rewire your brain. Not to mention it will keep you distracted for a bit.
Your Money or Your life would probably be good too. It's not going to discuss index funds much (haven't read the revised edition yet) but may help to put perspective on what dollars really are (your life). When I was young, I had some of this risk taking behavior but increasing the pain I feel when I lose is what has kept me away from risking my money. If I were to lose money gambling now, my brain would immediately start doing the calculation to tell me how much time I just added to my working life. Over time, it gets easier until you just don't even consider it an option anymore.
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I view your risk-seeking behavior like my own desire to eat sweets and other unhealthy food: an evolutionary relic that served our ancestors well in the far-distant past but isn’t aligned with our modern society. You don’t need to fight saber-tooth tigers to bring home dinner or impress a potential mate anymore than I need to fatten up on fructose-rich foods for the impending famine. We have to recognize our foibles and come up with coping mechanisms.
In my case I don’t grocery shop hungry and don’t keep “bad” foods in the house to reduce my issues with temptation. My sister is on the opposite end of the risk spectrum from you when it comes to investing. Her gut tells her to keep her money in cash under the mattress but her logical brain knows that won’t allow her to achieve her long-term goals. So she sets up her investments in a way that logic and data say will give her the best chance of success, and then she doesn’t open any of her statements or log online to check her balances. That is her coping mechanism. You just need to put your grownup pants on and figure out a good coping mechanism, whether that be logic or goal-setting or pure distraction. This is one of those sucky things that comes with being an adult, like saying no to the chocolate cake.
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I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
Fuperw84, if you need to jolt, I'd recommend motorcycle road racing. While much safer than going moderately fast on the street, you WILL NOT be thinking about CNBC pundiits opinions. If you do think about other stuff, you will be much slower than I ever was.
Or downhill longboarding. It might be the only thing that really clears my mind (even more so than motorcycles, but I never raced).
I actually find the game Banagrams is perfect for forcing you to think totally about the game. It's impossible for me to let my mind wander while I'm playing that.
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How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
By accepting that you can't achieve your retirement goals using the same method you use to gratify your adrenaline addiction. Recognize that those are two different problems that require two different solutions.
Fix the retirement problem by plowing your money into a boring old index fund with automatic dividend reinvestment. Problem fixed.
Fix the second problem using whatever appropriate method you can find. Support group? Chanting? Electroshock therapy? Evel Knievel style motorcycle jumping? Heck if I know. This is probably the wrong forum to help you find a solution to that problem.
If you insist on chasing after that one elusive silver bullet, deluding yourself into believing you can solve both of those problems with a single shot, you are just going to keep running around the same circle you're trapped in now, shooting holes in things you probably didn't want to put a hole in.
Divide and conquer. Pick whichever problem is easiest to solve, and solve it first. Then work on the hard problem.
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Man if you are not down at some point on biotech you probably are not doing it right. The swings are wild but if you can hang in there you can bank some serious cash.
I have gone from being down $50,000 in my biotech investments two years ago to being up $340,000 today. And this is in my trading account that only had $100,000 in it at the start.
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When I started investing in the mid-90s, I owned shares of active and index stock mutual funds (mostly active). In aggregate, they did nothing for 15 years. So seven years ago, I switched to a basket of about 25 companies and some high-yield closed end bond funds. I chose those companies based on proven methods of...well...bullshit. Some were "core holdings" that I overweighted, but looking back I cannot explain what made a "core" company.
I have since whittled the portfolio down to six companies and no closed end funds. The six companies represent 12% of my portfolio and shrinking. The other 88% is in stock and bond index funds. I haven't sold off the reaming 12% only because I don't want to book any more capital gains this year. Eventually, I will have to bite that bullet.
During my time with the large portfolio, I watched some of my shares go up or down 10% or more in a single session. I watched the oil industry tank. I watched a direct competitor of my "safest" holding lose 50% in a session, and it no longer exists. I read article after article during earnings season and drilled down into financial statements. It was all a waste of time.
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When I started investing in the mid-90s, I owned shares of active and index stock mutual funds (mostly active). In aggregate, they did nothing for 15 years. So seven years ago, I switched to a basket of about 25 companies and some high-yield closed end bond funds. I chose those companies based on proven methods of...well...bullshit. Some were "core holdings" that I overweighted, but looking back I cannot explain what made a "core" company.
I have since whittled the portfolio down to six companies and no closed end funds. The six companies represent 12% of my portfolio and shrinking. The other 88% is in stock and bond index funds. I haven't sold off the reaming 12% only because I don't want to book any more capital gains this year. Eventually, I will have to bite that bullet.
During my time with the large portfolio, I watched some of my shares go up or down 10% or more in a single session. I watched the oil industry tank. I watched a direct competitor of my "safest" holding lose 50% in a session, and it no longer exists. I read article after article during earnings season and drilled down into financial statements. It was all a waste of time.
Correction...down to five.
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I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
This mentality comes through practice, not through nature. Can't blame your genes on your mistakes your whole life.
+1
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I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
This mentality comes through practice, not through nature. Can't blame your genes on your mistakes your whole life.
+1
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OP didn't blame his genes, but his upbringing by gamblers. It is a learned behavior and OP learned it early.
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I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
This mentality comes through practice, not through nature. Can't blame your genes on your mistakes your whole life.
+1
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OP didn't blame his genes, but his upbringing by gamblers. It is a learned behavior and OP learned it early.
I'd like to think people have the capacity to learn good, and un-learn bad, habits. Hope for humanity and what not.
Some habits might be harder than others to break, some may seem impossible. I acknowledge some might in fact be impossible but you'd like to think it's just a question of the amount of effort to be thrown at it.
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I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
This mentality comes through practice, not through nature. Can't blame your genes on your mistakes your whole life.
+1
-1
OP didn't blame his genes, but his upbringing by gamblers. It is a learned behavior and OP learned it early.
Yet people on here posted about seeing their parents invest badly or take bad financial risks and have chosen to go into index funds precisely because of these negative financial memories of childhood.
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I suspect that the core constituency on these forums are people who are really good at delayed gratification. We are able to rationalize away the baser urges that compel people to spend everything they earn, buy flashy gadgets or newer cars, and fail to plan for the future. We get a rush (as it were) out of plotting the most efficient path to our financial goals that may be 10-20 years in the future. All of that means that we aren't driven by the thrill of individual stock gambling and clutching on for a white-knuckle roller coaster ride. We put our money in day in and day out into solid, boring investments with positive expected returns. It isn't sexy but it is proven winning strategy.
I don't want my investing to give me a thrill or raise my blood pressure. The idea of betting on individual stocks makes my stomach churn. I have zero interest in that kind of risk. Why should I take on all of that potential downside when I already have a plan that will make me rich and allow me to retire early? That already is winning the game; i don't need anything more.
I agree. Most of the people in index fund probably have the mentality of patience and discipline for delay gratification. What if some is wired differently like me? Someone who needs to jolt, that rush and thrill. How can someone like me be in index fund (best possible strategy) if i'm wired to take high risk?
Learn how to be a pyrotechnician. Great money, mostly part time work. Ten fingers not always necessary.
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Learn how to be a pyrotechnician. Great money, mostly part time work. Ten fingers not always necessary.
Chuckle
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@Dicey, almost spit up my iced coffee!
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Glad you laughed, but it's true! My parents' over the back fence neighbor was a pyrotechnician for KISS in their glory days. Boy, did he have stories to tell. One or two of his kids got into the business, too. Years later, one of my customers (in an unrelated business) told me she was doing this as a lucrative side gig. She liked the license plate on my minivan, "NOTAMOM", and asked me to help her come up with one for her work truck. We came up with "PYROMOM". Yeah, fireworks are a neverending walk on the edge...
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I found out that a co-worker of mine--who sold his house to my in-laws--injured his eye working with fireworks on July 4. This injury affects his ability to drive, which is a problem because the house he bought after selling his old one to my in-laws is...not exactly in a walkable area.
He also cannot get to work right now.
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Going on day 12 without doing any trades. It's tough with Tesla, Bitcoin and Ethereum stocks sinking into monthly lows. I really wanted to jump in and do a quick trade. I even called DirectTV to unblock all the business channels but was unsuccessful (fortunately the phone rep did not know how to unblock these channels). Resisted the temptation throughout the day and went for a 2 mile jog to clear my mind. I can't wait for these urges to disappear for good. It might take months or years but I will try my best to make it happen.
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Going on day 12 without doing any trades. It's tough with Tesla, Bitcoin and Ethereum stocks sinking into monthly lows. I really wanted to jump in and do a quick trade. I even called DirectTV to unblock all the business channels but was unsuccessful (fortunately the phone rep did not know how to unblock these channels). Resisted the temptation throughout the day and went for a 2 mile jog to clear my mind. I can't wait for these urges to disappear for good. It might take months or years but I will try my best to make it happen.
Were you thinking of taking a long position in one of those at their monthly lows? If so, I'd like to share something. TSLA is a POS stock. It is very volatile, they have the WORST balance sheet in the market (seriously they do), They are valued at 2X FORD and produce 10% of FORD's revenue and they haven't had any positive cashflow EVER. Why would you put your money into shit? Chasing stocks down is a futile effort. They're down for a reason. By buying, you are effectively saying you know more than the market because the market is wrong. Maybe, just maybe the market is right.
I would never put my money into shit investments. Horrible idea and I learned that early in my investing "career" by making the same mistakes. You have "learned it through your purchase of shit oil stocks. The ones with the worst balance sheets, highly leveraged and likely to go into bankruptcy. They were down for a reason too. You should have bought the high quality oil stocks when the oil market tanked.
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Good for you for finding methods to distract yourself from your urges. Going on a run is a great way to clear your head and feel better about yourself all at the same time. Keep resisting! Keep finding better things to do with your time!
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Going on day 12 without doing any trades. It's tough with Tesla, Bitcoin and Ethereum stocks sinking into monthly lows. I really wanted to jump in and do a quick trade.
Maybe you need to use the old trick for credit card users: have a trusted friend or relative change the pw on your investment accounts, and write it down on a piece of paper. Then they fold the paper and put it in a baggie. The baggie gets placed in a big pan or bowl, filled with water and frozen. You get the urge to trade, you have to wait for 10 lbs of ice to melt...
Good luck.
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Going on day 12 without doing any trades. It's tough with Tesla, Bitcoin and Ethereum stocks sinking into monthly lows. I really wanted to jump in and do a quick trade. I even called DirectTV to unblock all the business channels but was unsuccessful (fortunately the phone rep did not know how to unblock these channels). Resisted the temptation throughout the day and went for a 2 mile jog to clear my mind. I can't wait for these urges to disappear for good. It might take months or years but I will try my best to make it happen.
Were you thinking of taking a long position in one of those at their monthly lows? If so, I'd like to share something. TSLA is a POS stock. It is very volatile, they have the WORST balance sheet in the market (seriously they do), They are valued at 2X FORD and produce 10% of FORD's revenue and they haven't had any positive cashflow EVER. Why would you put your money into shit? Chasing stocks down is a futile effort. They're down for a reason. By buying, you are effectively saying you know more than the market because the market is wrong. Maybe, just maybe the market is right.
I would never put my money into shit investments. Horrible idea and I learned that early in my investing "career" by making the same mistakes. You have "learned it through your purchase of shit oil stocks. The ones with the worst balance sheets, highly leveraged and likely to go into bankruptcy. They were down for a reason too. You should have bought the high quality oil stocks when the oil market tanked.
Or don't give stock picking advice to the person who clearly has a problem with stock picking.
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Going on day 12 without doing any trades. It's tough with Tesla, Bitcoin and Ethereum stocks sinking into monthly lows. I really wanted to jump in and do a quick trade. I even called DirectTV to unblock all the business channels but was unsuccessful (fortunately the phone rep did not know how to unblock these channels). Resisted the temptation throughout the day and went for a 2 mile jog to clear my mind. I can't wait for these urges to disappear for good. It might take months or years but I will try my best to make it happen.
Were you thinking of taking a long position in one of those at their monthly lows? If so, I'd like to share something. TSLA is a POS stock. It is very volatile, they have the WORST balance sheet in the market (seriously they do), They are valued at 2X FORD and produce 10% of FORD's revenue and they haven't had any positive cashflow EVER. Why would you put your money into shit? Chasing stocks down is a futile effort. They're down for a reason. By buying, you are effectively saying you know more than the market because the market is wrong. Maybe, just maybe the market is right.
I would never put my money into shit investments. Horrible idea and I learned that early in my investing "career" by making the same mistakes. You have "learned it through your purchase of shit oil stocks. The ones with the worst balance sheets, highly leveraged and likely to go into bankruptcy. They were down for a reason too. You should have bought the high quality oil stocks when the oil market tanked.
Or don't give stock picking advice to the person who clearly has a problem with stock picking.
Maybe that's true. But, I would say my post is akin to methadone.
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as a fellow pharmacist, I feel your pain brother. I am sure you are like the rest of us PharmDs and looking for an early retirement... particularly in retail pharmacy, I know burnout comes quick and hard. my .02 :
1) if you are in retail pharmacy, get your BCPS and try to transition into inpatient. the burnout is far less as it is much slower paced and less strenuous.
2) spend your free time reading bogleheads.org. it will teach you everything you need to know about investing. also buy all of john bogle's books and as others have said, jlcollinsnh.com is a fantastic resource.
put the past behind you. you got very fortunate to be one of the lucky few to make it into pharmacy school. so you got very unlucky with some stocks. it all washes out in the end. you win some, you lose some. use this as an opportunity to pick the right path going forward (in other words, index funds).
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I think you ought to max your retirement account options, make additional payments on your student and mortgage debt, invest monthly amounts in an SP500 Index in a taxable account, and if you can continue to do that and invest in stocks, then you should develop a strategy for doing so. And this, by the way, isn't a strategy for buying stocks:
I went through all holdings in XLE and OIH ETF and mistakenly loaded up on anything near 52 week bottom. Biggest mistake ever.
A chunk of folks here seem to think you have an addiction akin to an alcoholic. You might; I can't say and I avoid making diagnoses over anonymous forums on the Internet, but if you have a problem, you need to have someone else manage your finances while you get treatment. It's hard enough to make rational decisions without fighting an addiction; it's a recipe for disaster to try to make those decisions when also influenced by addiction.
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as a fellow pharmacist, I feel your pain brother. I am sure you are like the rest of us PharmDs and looking for an early retirement... particularly in retail pharmacy, I know burnout comes quick and hard. my .02 :
1) if you are in retail pharmacy, get your BCPS and try to transition into inpatient. the burnout is far less as it is much slower paced and less strenuous.
2) spend your free time reading bogleheads.org. it will teach you everything you need to know about investing. also buy all of john bogle's books and as others have said, jlcollinsnh.com is a fantastic resource.
put the past behind you. you got very fortunate to be one of the lucky few to make it into pharmacy school. so you got very unlucky with some stocks. it all washes out in the end. you win some, you lose some. use this as an opportunity to pick the right path going forward (in other words, index funds).
I took years and a lot of money lost but i'm finally understand it now. There's no magic formula to financial independence and escape retail hell as a pharmacist. You you have to prioritize. Work and save your hard earned money and pay down debts. That is the only way!
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This week has been difficult but I still have resisted all temptations to buy stocks. This is 24 straight days without stock trading. I unblocked CNBC again but watching a lot less. I have a strong urge to buy bitcoin and Tesla stock today but went on a 4 mile jog to kill the urge. It doesn't make things easier with me leaving for a new job and I just got a huge lump sum check for unused vacation of $17,000. Seeing that much money deposited into my checking account is major temptation but I'm determined to keep it in my bank account as emergency fund.
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This week has been difficult but I still have resisted all temptations to buy stocks. This is 24 straight days without stock trading. I unblocked CNBC again but watching a lot less. I have a strong urge to buy bitcoin and Tesla stock today but went on a 4 mile jog to kill the urge. It doesn't make things easier with me leaving for a new job and I just got a huge lump sum check for unused vacation of $17,000. Seeing that much money deposited into my checking account is major temptation but I'm determined to keep it in my bank account as emergency fund.
Put it in a fucking index fund Jesus. Then you're invested in everything. And you can just watch the broad market and not care.
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Put it in a fucking index fund Jesus. Then you're invested in everything. And you can just watch the broad market and not care.
Right, if you're fighting the urge to gamble on Tesla and Bitcoin, this is the best advice for you.
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Put it in a fucking index fund Jesus. Then you're invested in everything. And you can just watch the broad market and not care.
Right, if you're fighting the urge to gamble on Tesla and Bitcoin, this is the best advice for you.
And if you don’t want to die alone and broke, please seek help from an addiction counselor or a program like Gambler’s Anonymous.
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This week has been difficult but I still have resisted all temptations to buy stocks. This is 24 straight days without stock trading. I unblocked CNBC again but watching a lot less. I have a strong urge to buy bitcoin and Tesla stock today but went on a 4 mile jog to kill the urge. It doesn't make things easier with me leaving for a new job and I just got a huge lump sum check for unused vacation of $17,000. Seeing that much money deposited into my checking account is major temptation but I'm determined to keep it in my bank account as emergency fund.
Ok look, congratulations on your willpower holding up, but there are two things here.
Bitcoin has no fundamental value.... just because it is down 70% in 9 months does not make it cheap.
Tesla is guided by the whims of a man who has not shown a lot of mental stability in recent weeks.
Am a little curious as to why you think they are good investments, as to me this shows it is obvious why you lost $117k in the first place.
But first, if this is your emergency fund, go put it in a time deposit.
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OP may not know this, but "time deposit" is australian speak for "certificate of deposit".
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@Fuperw84, congrats on 24 days. Keep on being strong, you're doing exactly what you need to do.
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OP may not know this, but "time deposit" is australian speak for "certificate of deposit".
i didnt know that thanks for that tip. its like we all speak a differnent language around here.
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just because [Bitcoin] is down 70% in 9 months does not make it cheap.
That's worth repeating. That was your crazy earlier strategy, i.e., buy stocks that are at their 52-week lows. That makes no sense, unless you're also looking at the company's fundamentals and have sound reasons to believe its under-valued or correctly valued but going to make a turnaround.
You can't possibly say either about Bitcoin or Tesla. That's stuff to buy with your 10% play money while your 90% sound money is doing work for you in an SP500 Index fund.
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Am a little curious as to why you think they are good investments, as to me this shows it is obvious why you lost $117k in the first place.
There is four pages of history in this thread that will satisfy your curiosity.
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Do you have a retirement account? 401k, 457, IRA etc? Like was posted above, invest in index funds!