How to deal with losing $117k in stock market?

[reeshau]

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.

[boarder42]

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.

[reeshau]

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.

[boarder42]

Posting only that would have been better

[Maenad]

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.

[RWD]

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.

[Cache_Stash]

Diversification is protection against ignorance.

[wenchsenior]

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.

[JLee]

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.

[talltexan]

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?

[SansSkill]

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.

[I'm a red panda]

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.

[JLee]

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).

[PoutineLover]

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.

[One]

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.

[ysette9]

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.

[Fuperw84]

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?

[wenchsenior]

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.

[boarder42]

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

[Cache_Stash]

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. 

[boarder42]

Put it all in small cap index funds. High risk

[matchewed]

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.

[cloudsail]

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.

[markbike528CBX]

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!

[PDXTabs]

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).

[DS]

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.

[Davnasty]

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.

[ysette9]

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.

[talltexan]

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.

[ILikeDividends]

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.

[Roland of Gilead]

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.

[smallstache]

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.

[smallstache]

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.

[DavidAnnArbor]

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

[smallstache]

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.

[marty998]

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.

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.

[DavidAnnArbor]

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.

[Dicey]

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.

[DavidAnnArbor]

Learn how to be a pyrotechnician. Great money, mostly part time work. Ten fingers not always necessary.

Chuckle

[2Birds1Stone]

@Dicey, almost spit up my iced coffee!

[Dicey]

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...

[talltexan]

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.

[Fuperw84]

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.

[Cache_Stash]

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.

[ysette9]

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!

[reeshau]

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.

[matchewed]

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.

[Cache_Stash]

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.

[privatefarmer]

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).

[Full_Beard]

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.