Tuesday, August 19, 2008

Lesson Learned From Investing

The lesson I learned from Investing has nothing to do with money, it goes deeper than that. I had $100,000,000 and 200 trades to use. I didn’t bother doing research to see which stocks to buy, rather I just searched for the companies “I knew”. Mistake #1

At first I was hesitant to buy so many shares of stock, so I started off buying 30 shares of Target, Google, Microsoft and some others. I didn’t even bother looking at the price of the stock. Then once I got into it, I started checking every few minutes hoping the stock would go up. I would see it jump a few and see green numbers signifying a profit. All seemed good so I started buying even more shares of stock. It was such a fun game watching the numbers jump.

Then the numbers started turning red signifying a loss. I decided to sell the ones that were giving me a profit, and kept the losing ones hoping they will go higher. Then I bought some more random stocks like Sony and HP. They were all doing good. I suddenly became interested in the VIN news feed item where it would report the market position of the stock close.

I let my stocks sit for a few days then checked back once a while. After seeing them loosing, I was afraid they would loose more, so I sold them at the first time when I saw it start to come up. Mistake #2

Then later on I started following it more closely, I would watch Google finance, see when the stock became very low and I would buy 100’s of shares. Then the stock would go back up and I would gain a lot of money. Lucky for me the market was doing very good and kept going up and up.

But there can be stocks that are just going to keep going down, the companies will become bankrupt and your stock with be worth zero, so in such a case it is important to sell your stock at the first sign of loss to minimize it. Luckily I didn’t have any bad stocks.

The lesson in all this is:

  1. Don’t make hasty decisions. Take the time to research and compare choices. If you make a hasty decision you may regret it later. Don’t go into something not knowing anything. First inform yourself, get familiar with what you will have to do and you will succeed.
  2. Sometimes you have to stick with it, things can get rough and go down and you may seem like things are bad, but then they will pick up and end up higher than it started with. So you just have to be strong through the downs and they will go soaring high. Never give up!

So in life when your making big decisions, which car to buy, which house to buy, which job to take. Don’t make the decisions on a whim, but rather put effort into researching and seeing what is best for you. The more effort you put into it, the more valuable it becomes.

At times life can get hard, children can misbehave and you almost give up hope. But no matter how bad they are, things will turn out good, it is just a stage they are going through. In the end they are the most worthy investment to be made.

But at the same time, you can be in a situation where your in a bad relationship, in such a case it is better to leave right away and minimize your loss before it gets worse and the relationship becomes abusive.

18 comments:

  1. I have real money invested. I read Rich Dad, Poor Dad and went banana's. Turned 18, and invested :-)

    I was like that. The first yaer or so I would check the market like 100 times a minute.

    It was crazy. I made different mistakes than you did.

    I bought a hyped up company that was emailed it to me, and waited to long to sell.

    A few other companies I bought, after intense research, one went up REALLLLY high, and I didn't sell because I thoguht "nea, it'll go up higher"

    sure enough it didnt. :-(. It continually declined. I sold it at a profit, but not as high as I could've.

    Then cuz of that I decided to sell this other company when it was high. I was like "I'm not going to make the same mistake twice" So I waited a day, put in a sell order, and sure enogh a week later it was up a crazy amount!

    errr.

    Here goes, company A was hyped. Some product it came up with made alot of people buy it. So the price went up. But since news like that is mild in comparison to the many other things the company does, the company couldn't keep its price up, so the share value slowly declined.

    With company B, the company made a huge profit or sale (don't remember, something with the ships) and had a whole new plan to reinvest the money. So when it started going up, it was because of a longterm effect, rather than just some product.

    Anyway...If you ever put in real money...www.fool.com is the most awesome site for what to search for, and how to invest. :-)

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  2. ABout the point of the post generally. You're very right. Its important to research and reference and all that. Making decisions in haste can be very bad.

    Also, I was just reading this thing on aish about Michael Phelps and how important 1/100th of a second could make. And i thought "wow, leave it to the frummies to take something completely irreligious and turn it into a life lesson" and then I read this post. :-)

    lol

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  3. FrumSkeptic: "So I waited a day, put in a sell order, and sure enogh a week later it was up a crazy amount!"

    So yea, that's what happened to me. It brings that annoying feeling of "should've could've would've but didn't"

    So with Company B if you held on longer than it would've went up higher, and you sold it too early?

    o, cool, thanx for the link, I'll check it out if I ever decide to invest for real. :-)

    lol :-)

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  4. Woah, am I the only one who couldnt read past the 100,000,000 part?

    Woo! Maybe I'm in the wrong career

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  5. end of world: The 100,000,000 wasn't real money. It was using StockTrack which is a virtual stimulator of the stock market. It was for an invesment class I was taking. All it cost me was $20.00 to participate on the site.

    I doubt I would ever have that much amount of money, let alone to invest.

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  6. Really good post.

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  7. You're welcome. Now I want to try investing. You made it sound fun. Though its probably nerve racking with real money on the line. But when its fake you probably feel bad about not putting in real money when one of your stocks goes through the roof. I'd be mentally calculating how much I could have made all the time.

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  8. FrumPunk: yea, it definitly was fun. Although it did have some price to it. There were 15 people in my class, and the whole thing was worth 20 points of our grade. For the top 5 people they took points away from the bottom 5 people so that they would get anywhere from the range of 21-25. For the bottom people they would loose points to the top people, so they got anywhere from 15 to 19.

    So everyone was driven to invest a lot of money to get the highest return to put them on the top so they would get more points.

    Because I wasn't an expert, and too lazy to research, I got in 10th place, which was good enough cause that meant I kept my 20 points, I didn't gain or loose any.

    I never thought about feeling as if I put real money in. For me it was just numbers, I couldn't picture such a thing in real life. I think stocks is just too risky, I wouldn't do it.

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  9. Hah, thanks for the explanation, Babysitter. I'll stop withering in envy now.

    That's a really interesting way to get 20 points of your grade. It sounds stressful, though. I'm glad I didn't major in business.

    By the way, just wanted to compliment you on your writing too (like frumpunk). I've been reading your earlier posts, and its so nice to see how you're developing your style (hope that doesnt sound patronizing. It's not supposed to)

    And I'm in the process of linking you :) Thanks for linking me first

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  10. End of World: Yea, it kinda was a bit stressful, especially the last day. I'm not majoring in business, I just needed to take the class for my major. I don't get this business stuff either. I think its more a men's subject.

    Thanx every time I write it comes out sounding different, I think some of my beginning ones were much better though.

    Thanx and Your welcome!

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  11. How do you have time to be everywhere at once?

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  12. End of World: Look at the comment I wrote on Moshe's blog answering your question.

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  13. End of World: I see your doing a good job at it yourself ;-)
    I'm starting to see you all over the place.

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  14. "So with Company B if you held on longer than it would've went up higher, and you sold it too early?"

    Yup, sold to early. Oh well. Its not like I lost anything. :)

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  15. FrumSkeptic: That's true, at least you didn't loose anything.

    Although I heard Gehenom is the feeling of when you knew you could have done more mitzvos, but didn't, so you feel a certain loss at that, even though you haven't lost the mitzvos you did do. Although with investing I would say its good to feel like you didn't loose, more satisfying.

    btw, you see how you can learn through reading too, I started copying you and doing smilies even though I used to never do them before.

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  16. I liked your post, babysitter. While I'm pretty conservative with financial instruments (i.e. for now more into CD's and high-yield savings accounts), I did venture into the world of investments via a mutual fund (ABWBX, Class "B" shares). Through close to the end of last year, things were coming along just peachy (it was a four star fund as rated by Morningstar). Since then, it's been a rollercoaster, following the mortagage industry meltdown/subprime debacle. My bank (brokerage) bought it for me at close to the fund's historic highs, and it has yet to stabilize. Last Friday, though, with a huge rally, ABWBX did beat both the DJIA's and NASDAQ's performance going up $.36/share in one day, so I do hope it's a preview of things to come. I made sure that not only money be invested in a mutual fund (i.e. funds are diversified as is) but also pick a scenario where about 60% be in equity and about 40% in cash and fixed income.

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  17. Alan: Thanx, yea its good to diversify. That's good you were able to sell it at its high. Sounds like your a good investor.

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