Hi friends, about 4 months after coming out of VOO and QQQ ETFs in spring 2000 and taking a 30% loss I found TMF. With whatever money I was left with I bought multiple TMF stocks including lots of SA & RB stocks including lots of FVRR and LMND when they were recommended multiple times (you probably know how they have been doing in the past 18 months). About 6 -8 months after I found TMF I stumbled upon this board sometime during late spring of last year. I was amazed by the amount of stock analysis and discussion many do here and so gradually over the next 2-3 months moved all my money into the stocks discussed on this board.
Between May and mid Nov 2021 my stocks grew by whopping 55% (I know others did far better than that!). Long position in UPST and few options certainly helped. So life was great. In fact I even wrote to few in the board that I wished I invested in the stocks discussed on board earlier and had gains of 70%+ like many others. Then the selloff started in Nov 2021.
Fast forward 6 M, now my portfolio is about 25% of Nov 2021 ATH. Apart from UPST a list of other stocks like AMPL, MNDY, LSPD, BILL and few others seem to have contributed to the spectacular loss (some paper loss and some realized loss). Of course, again my position in options (which I should have never invested in) helped me reach there faster though!
So with 25% of value, for my portfolio to go back to it’s ATH again it requires 300% growth from here! which almost is impossible. It has to grow about 120% for me to even get back the capital I put in. So unfortunately, not left with much hope or much to show for the last 10 years of all the hard work and sacrifices I and my family have made in saving the money in order to invest and have a more secure future for my children.
I see many here are in by and large similar situation as myself (even though most seem to have lost somewhat to a lesser extent than me. Maybe they were not stupid enough like me to buy call options – that too call options of high growth stocks)
Panicking is easy. But the more important question we need to ask ourselves is - where do we go from here? To answer that I think we should approach it with the way we usually approach any other problem. 1st Analyse and understand the causes that created this problem in the first place. 2nd Try to find possible solutions to solve the problem (or at least minimise further damage)
Of course, if anyone else bought options like me – then I don’t think there is any better way to explain it other than it was due to getting infected with stupidity like me. Putting that aside, what were the other reasons that might have contributed to significant loss of value of our portfolios and how do we fix it (or at least try to fix it)?
a) We tend to buy shares of company A after lots and lots of discussion, but if we don’t like even one earnings report we sell A swiftly and buy stock of company B. If we don’t like what company B reports in 3 months then we sell Stock B and buy stock C, then stock D and so on. And sometimes we sell company D and buy back stock of company A again thus making a full circle. But the problem with that strategy (at least for me) has been whenever we were selling unfavourable stock and buying a more favourable stock I was losing more and more capital and by the time I reached Stock D I often times was left with not much capital to invest. Because we often seem to buy high when a particular stock is in favour and sell low when it falls out of favour only to use the money to buy another stock which is more expensive.
The situation is even worse for people like me who invest using taxable accounts as they incur significant tax liabilities if any of these stocks make little profit.
- How do we solve it?
I don’t think there is any magical solution. Maybe we should just try to choose stocks that have a real chance of holding on to for at least few years. If there is no realistic chance of holding on to them for at least few years, then maybe we should just stay away from them rather than going in and out of them and often losing capital. Probably easier said than done to find such stocks consistently I guess!
b) We also should be bit more tolerant to criticism. We seem to shoot down any comments that go against popular opinions on the board. At times we delete messages, even block people from future commenting, other times we see a dozen replies but the original message deleted; which means people who were not quick enough to read won’t even get to know what the original deleted comment was about. I understand it’s sometimes is important to prevent people from criticizing just for the sake of criticizing or if we strongly believe someone has short selling interests. But we should be very careful in preventing people from freely expressing contrarian views. Simply because they can be useful in reviewing the theory about a stock we believe in even if we do not totally agree with their views. Otherwise we might just end up with a team of people who agree to everything we say. And that might not be good in protecting anyone’s interests.
How do we solve it?
If we feel having such comments on board clutters the board, then one idea is to have a parallel board for OT posts. May be name it “Saul’s Investing OT Discussions” with no censorship or minimal censorship so that we can get more opinions free of fear.
In summary, investing appears to be far more hard work than I used to think. Most of us seem to be going through tough times and none of us have crystal ball to look into the future to say what a particular stock will do in 1, 2… 5 yrs time. No strategy/solution can be perfect. But that shouldn’t stop us from brainstorming and think about strategies to minimise losses in the future. These are just my thoughts. You might agree or disagree; and that’s perfectly fine with me. Or you might have more ideas or better ideas than me that you might want to share to help us in these difficult times which is affecting all of us.
The tragedy is, all this money that I have saved all these years and invested was meant for my young children’s education of which I have lost almost 60% of the initial capital. That is depressing to say the least. Maybe I should sit tight and just ride this out (which also means potentially risking my remaining 40% capital)or maybe I should just sell everything, accept the losses, preserve whatever is left of my capital and go back to investing in plain vanilla ETFs like VOO/ QQQ. Not sure. Any advice from any of you (either on or off board) would be greatly appreciated.
Good weekend and Good luck to everyone (which we all need a lot at this juncture).