Misc

How Lack of Research Cost Me $40,000

Hi guys! How did your weekend go! Did you have a blast? I know what would have made it even better – following this blog. Ha ha, shameless I know.

I spent my weekend catching up on a lot of reading I missed due to our China trip.

Gone are the days of clubbing at Bamboo or Ivy on a Saturday night. When I say clubbing I mean dancing and trying to chat up girls, not clubbing as in to beat or strike someone with a cudgel – that usually ends up with you locked up trying not to dance or chat up anyone.

Anyway I miss those days – life was simpler then! Now it’s about reading this, wedding planning that – LAME!

Who wants to read and plan and do all that responsible shit old man? What good is it for anyway! Time is short – YOLO MUTHAFUCKA! BROOKLYN!

O…OK…

But please sir if I may, let me tell you that not reading or planning cost me $40,000.

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That’s right random strangers – I’m shocked too.

You see, during that hedonistic period, I thought I had it pretty good – I worked for a large financial corporate in a decent job, earning decent income and the global economy just bounced back from the GFC.

During that bounce back I was heavily invested in the stock market and it was flying, forget shooting the moon, it was nuking the moon.

When you experience the euphoria of creating wealth through little to no effort, man does it feel good – similar to how those Bitcoin and Crypto Millionaires feel now (those lucky bastards).

Only problem is you have to know when to take a profit and sit on the sidelines. I was young and dumb – believing the market will rise and rise and rise.

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This man also believed the market will rise and rise and rise.

So I cashed out of the stocks I was in and chucked them all or nothing on a few micro-caps. That’s where… what’s that? What are micro-caps? Is that what little people wear on their head? No! Of course no! Don’t be mean – micro-caps are companies which are traded on the stock exchange but are so tiny they are not labelled as “small” but “micro”.

The basis of my trading strategy was pure speculation and gut instinct. Whatever looked cheap and had a lot of talk about them on internet forums, well I bought. So simpaul.

Initially, I had a couple of good wins – one stock rising from 8c to 27c, another from 15c to 25c almost overnight, but the best one went from 3.5c to 12c in a matter of days – shit yeah, investing is easy baby!

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Why over-complicate things?

I lost some money as well of course – but the general market mood was buoyant so I made more than I lost.

When success comes early and you have no experience of any great loss – you get cocky.

I piled into more and more micro-caps with bigger and bigger positions, until I held a position of almost $50,000 in an Australian-listed European-focused property asset manager. Man this stock had been battered during the GFC, it came from a price of 2c to trade around 25c – it was going places, I know it, my gut told me.

Then the European Debt Crisis happened, a group of nations nicknamed PIIGS (oink oink) – Portgual, Italy, Ireland, Greece and Spain came very close to being bankrupt and saying “lo siento, no hay dinero” with a sad smile and shrug of their shoulders if you asked them to show you the money.

bankruptpig
Qué? Yo no hablo inglés Tom Crucero señor.

Hey guess where the property assets of that property manager was?

Yeah so that $50,000 very quickly became not $50,000. It represented the vast majority of my net wealth then – “poof”, take that pride – “poof”, fuck you ego, “poof” – how’s that gut instinct now?

Net out of my other positions, I limped away with a $40,000 loss.

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Me, limping away.

So TheFrugalSamurai what did you do next? 

Plenty! I learnt the value of research and the value of pl… what’s that? You want a FULL breakdown of what happened next? OK, I’ll dedicate my next post to this topic – how about it?

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