I made one of the biggest mistakes that any amateur investor will tell you that is completely stupid. In the time of this quarantine, the stock market is lower than it’s ever been in my recollection. And I wanted to make some money off all of these stocks that are on sale. I figured I’d do so since I’ve built up a good amount of money in my bank account. About a week ago I invested in a stock knowing the market is on average 30% lower than its peak. In other words, I knew that the market may not have reached its bottom just yet, but in the long haul it will go up to where it recently was before the Coronavirus. I knew even if it went down for a few days, that if I held onto it, then eventually I would be making some serious dough when the market turned around. Whether it be one week, one month, or one year, if I held I would make money eventually. I had a very clear strategy as I entered the game. Even with the market like a bucking bronco, I knew I had to be strong because it very well could go down more. But the point is not whether it goes down in one day. The point was that stocks are on sale and they will eventually go up. The have to go up. So, I put a little money into the market and then I made one of the biggest mistakes any investor could do.
The very next day, the market went down big time. I thought to myself this is just my luck. I haven’t put money into the market in over a year and when I finally do this is what I get. I panicked. I saw that one day trend and panicked. I pulled out before the closing bell. Going into this game of chance, I was an investor. However by the end of the first trading day, I was a day trader. This is exactly what I did not want to become. I did not want to be a guy who thinks he knows what the market will do on a daily basis. Even the guys on Wall Street have a tough enough time doing that, and they work over 70 hours a week studying this stuff. No, I wanted to be an investor. Like I said earlier, I knew the market had to go up eventually. The only question was how long. I just needed to be patient and at some point when the country, and even the world, gets their feet underneath them again the market will go up and get back to its normal trend. As an investor, I bought stock at some of the lowest prices I’ve ever seen. Although, on that first trading day I was checking the ticker and obsessed with every little percentage increase and decrease. In my case, it was mainly decreases on that first trading day. So, I panicked. I pulled my money out. What happened the next day? It shot up overnight and I lost out on gains that would nearly offset what I had lost during the previous day. I felt like an idiot. I did the one thing I knew I shouldn’t do. I became a stupid day trader and not an investor. After seeing the market go up again, I put money back in thinking that I’ll try to ride this upwards wave of good fortune. And I made some money, for about an hour. Then the market went way down once again. Coincidentally I found myself in the same predicament as before. I panicked again! My head was not in the right spot still. I wasn’t focused on the big picture. Rather I was focused on the small ticker going up and down a few sense. And I pulled my money out once again.
Looking back it’s frustrating. Not that I lost money, but I lost my head. If only I stayed with my original strategy, I would be in the green a few days later. The moment after I pulled out for the second time, the market went up once again, as if it was laughing in my face trying to teach me a lesson. I got so frustrated with myself that I almost didn’t care anymore. Weirdly enough, this lack of caring made it easy to put my money back in a third and final time and not be some obsessed where the day to day ticker went. Once I put the money back in, I took some time and cleared my head. I didn’t look at the ticker for a while, maybe a day or two. When I looked at the ticker again, it showed that I had been trending upwards ever since I stayed patient with the market. I was far from gaining enough to get back what I had lost, but it brought a feeling of relief knowing that my head was clear, and knowing that if I just stayed patient, that the market would go up eventually and I would realize the gains I originally was hoping for.
So this was a great lesson to myself. Do not become a day trader even if your intentions are to be an investor. For the average person such as myself, the only way to make money outside of being lucky is to be patient with the market. Do not obsess over the daily ticker. Instead, check less often and look at the price, not the percentage points. The percentage increases and decreases can make you go crazy. Look at the price and everything will be less overwhelming.
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