It’s June 8th, 2020 and the stock market has rebounded from one of the worst economic downfalls in this country’s history. Thanks to the Coronavirus, stocks across the board were wiped out. Many loss a lot of money. And others saw this as an opportunity.
I have played around in the stock market plenty of times before this past year, but I never had this amount of money to play with. For the eight months leading up to the pandemic I had been completely out of the stock market. I took my money out to concentrate on paying off my student loans which showed to be a great idea. Since I was out of the market and my loans were in good shape, I had a nice little pile of cash in my bank account that I was waiting to put into the market. I was waiting on the market to dip. However, I would have never guessed that the market would take a turn for the worse. My eyes were getting bigger and bigger as I saw the market drop day after day, waiting for the perfect time to pounce.
Like an out of shape basketball player, it took me a while to get back into the right mindset for investing. Early on, I made a big mistake of investing and then taking my money out at the end of that day after seeing my stocks lose 20% in a matter of hours. I panicked. So I took money out and waited for the market to drop even more. However, the very next day the market skyrocketed nearly 10%. I would’ve made up a lot of ground if I had my money in then. So I put my money back in. Although by that time it was too late and I had missed out of the opportunity. The market soon stabilized and started to go up slowly and consistently. I had to force myself to stay composed and crawl myself back into the green. About a month later I made all the money I lost back. It was a great lesson learned. Do not panic.
Two more months went on and I was up about 20% since I first put my money in. With this in mind, I made the mistake of getting too cocky. I was getting greedy and started to get careless with my money. I looked for quick gains on small and unknown stocks. I did about 3 minutes of research and came across a small stock that I never heard of. It grew about 500% in the past two weeks and it showed no signs of stopping anytime soon. I put all my profits into that stock and wouldn’t you know, it went down 60% by lunch!! I couldn’t have planned that any worse. I literally bought that stock at its peak. Nearly all my profits were lost. What was the lesson here? Get rich quick stocks are bad news!!! They work every once in a blue moon, but the downside is so much worse than the upside. Stay away from get rich quick stocks.
Now, my strategy has reverted back to the crawl strategy, putting my money into the market and leave it. Little by little it’ll grow. And once it does grow, let it grow some more. Our brains are looking for something new. It’s as if we conquered the market and looking for another way to get richer. We aren’t satisfied with slow and consistent gains once we’ve proven to ourselves to be capable of that. We want more and more profits.
Lesson learned…again. Invest and leave it alone. Stay away from get rich quick stocks. They can seem so tempting and you’ll be convinced that there’s no way they could go down, but you’d be surprised. A lot of times, the stock market does things that have no rhyme or reason and you can’t control it. For an amateur investor like myself, it’s best to play things simple. Crawl. It is the only method that has proven to work time and time again and I hope it does for you too.