On November 21st, I bought Square stock at around 46.74 and the end of the week had soared to 48.86, a 4.5% increase in value over a 3 day period. I was ecstatic! I told my parents how I was flying high on my predictive skills (actually my friend just told me about the stock before and I got into the craze) and was poised to throw even more money into Robinhood.
What happened is what you probably expected, and my optimism was met with the real world. Market forces decided that the stock was overvalued and the morning of November 27th, the opening after Thanksgiving, the stock dropped a dramatic 22% to 41.02, and with that almost all of the gains I have been accruing over the past couple months from my long term goals. Had I went negative I probably would have gave up personal trading and shoved that money into Betterment to manage my portfolio.
But honestly, for how much money I lost that day, it the best reality check for me.
The hardest thing it taught me was, Making money is hard. In the investment world, just because you have money doesn't mean your going to make money. There will, and always should be cared for that there is risk when you put money on the market. Today it was a market force that pushed the price down, the next it could be a blunder such as Equifax's security breach that dropped their stock by 35%.
The second thing it taught me was, having patience is hard. The urge to hit it big with these unicorn stocks and make it without effort is the pipe dream of investing. But that's not always how it works out, and in most cases will shoot you in the foot. Investment is a game of smoke and mirrors. There are a lot of games to be played, data to be analyzed, and bets to be decided. Don't always be woo when a stock jumps, but be critical of why it's soaring, and can it maintain that growth. In Square's case, the stock experienced a 241% increase at the one year mark, and 281% increase since its IPO two years ago.
The third thing it taught me was, hindsight is a blessing and a curse. It is a curse because you can always kick yourself for all the things you did wrong, all the decisions you could have made that would have made you more well off, but you did none of them and you are where you are because you made that decision. But that is not a healthy mindset to build from. We take our losses, and learn from our mistakes. Having the ability to examine real world data in the context of your own decisions, you can deconstruct what events may have lead up to the issue, what factors or indicators you could have caught, and how to be prepared for the next occurrence. Taking all these has led me to take more into account when making decisions, and be a more critical investor.
Will I invest again? Hell yeah!
Will I invest again? Hell yeah!
