When I was younger I would hear the older adults say I lost it all to the stock market. But I didn’t understand enough to ask what was in their portfolio or if a professional was managing it.
Is anyone willing to share if this happened to them or anything similar and why it happened and what you did to get back to investing and what you learned.
Wisdom being in the market over time
byu/Longjumping-Mango831 ininvesting
Posted by Longjumping-Mango831
10 Comments
Firstly, pick an unprofitable company, and then panic sell + FOMO buy.
I got back to the market during the COVID crisis. It was such a golden opportunity, and I made a lot of money. But I was still inexperienced and unprepared at the time, otherwise, I would have tripled my portfolio.
Never happened to me, but most people I know that have said this 1 or more of the following happened:
Sold after/during a crash.
Compared their “I lost everything” to their record high value as opposed to what they bought it for. Upon further questioning their overall % increase that they held the investment was still decent, but it WAS worth way more a year ago!!!
They were not diversified, often having just one sector, or just one or two stocks, or some meme stock.
Most people aren’t good at picking any stocks or the best time to buy or sell.
Most people don’t understand buying a stock is doing business together. Even they do, they don’t know how to properly evaluate a business.
For the vast majority of people, dollar cost averaging buying VOO or SPY would be a wise thing to do.
I’ve been in the market since 2006.
My biggest loss was my divorce. She got half of everything including my investments and retirement funds.
Since then (2009) I’ve invested consistently in my retirement and in an individual brokerage account.
I’ve hit $3M. My only debt is my second home, which will be paid off when the primary sells.
Historically there have been drawbacks. But I’ve never left the market. Every pullback has had a bounce back.
The people that say that can be of two categories – one that legit bought dumb companies and lost money, or two that they had to sell their investments (bad or good) during unfortunate times like a recession due to job loss.
Remember, when going with index funds like the S&P500, time in the market truly is the way to go. Some can afford to do that while some cannot.
Investing in the stock market is what gives me the financial freedom. I did it in about six years. Now, everything will continue to compound further.
I went all in on Goldman Sachs during the fiscal crisis for 50k, sold at the bottom down 30k, made it all back by flipping to SSO, leveraged S&P 500.
Don’t put more than 5% in any one stock
Starting investing in early 2000. “Time in the market beats timing the market” they said. “The best time to invest was yesterday, the next best is today” they said. “100 year average 8% to 10% per year” they said. Invested. Leveraged. Lost my shirt when the dot com bubble burst and took over a decade to recover.
The depression. Feeling like such a fool. Paying off a debt that bought thin air. For years.
Never. Again.
Wait for market correction minimum -8%. Dollar cost average to try to hit rock bottom. Market recovers. Hold, accumulate, rinse and repeat.
Retired at 45
I started right before the Tech Bubble popped. Had some positions go to zero but the vast majority didn’t and some of the survivors have been excellent since. Picking individual stocks Peter Lynch style was the DIY approach at the time when higher fee mutual funds were dominant. DIY strategy has shifted over to Three Fund now which is much less volatile. Point being modern adults that adopt the Three Fund approach from the start (or invest via 401ks) are much less likely to have that “lost it all to the stock market” experience.
What did I learn from getting crushed early on? Don’t get too cute with too much of your portfolio.
People trading individual stocks and especially options/futures (modern addition: Kalshi contracts, crypto) can lose inordinate amounts of money, even all their money. Add leverage and exotic financial products (eg, 2x levered MSTR) and almost no one makes money. Some lost everything in the 2000s downturn, some lost everything in the 2008 downturn. Just incredibly difficult to make money in an epic downdraft where expectations & valuations are going through a major reset.