In a recent post, I wrote about being a stock trading loser.
It’s true. I lost quite a bit of moo-la.
Here, I am going to share the numbers and details surrounding my trades from 2011 to 2012, and how I lost $1000 in the stock market.
If you missed my Financial Mistakes series, catch up here:
In the Beginning
In 2011, I decided to try my hand at trading stocks. $7 trades sounded good. So, I opened a Scottrade account and made my first deposit: $1,000.
Here’s a quick break-down of the stocks I’m discussing. I’ve also included a table of transactions and dates.
- Juniper Networks, Inc. (NYSE: JNPR)
- Develops networking equipment, a competitor to Cisco, Brocade, etc.
- Leap Wireless International, Inc. (LEAP)
- Parent of Cricket Wireless
- Acquired by AT&T in 2013
- Ford Motor Co (NYSE: F)
- Built Ford Tough.
- Research In Motion (RIMM)
- Developer of the Blackberry smart phone
- Now called Blackberry Limited (NASDAQ: BBRY)
- Sprint Corporation (NYSE: S)
- Telecommunications company
From August to November, everything seemed to be going fine. I had made a few hundred bucks, and I was feeling cocky.
Then, Research In Motion (RIMM) began to drop in value due to one of its largest outages in history. That outage lasted an entire day for users in the US, and it was on October 12, 2011.
Guess who bought 44 shares of RIMM @ $23.97 only two days later? This guy.
If you follow the trail, you’ll see that I continued to buy as the stock plummeted, thinking I could dollar-cost-average my way through the slump.
Nope. It never recovered.
Hey, you have to admire my fortitude. Warren Buffet does say, “Be fearful when others are greedy and greedy when others are fearful.”
He doesn’t say, however, anything about being ignorant. I should have done my homework and read up on what was happening in the news.
Better yet, I should have stayed out of this thing altogether.
I finally cut my losses and sold all RIMM stock, losing over $1,000, the first big loss of my short investing venture.
At this point, I was a loser. Taking that loss created a pit in my stomach. I thought, “Why did I keep buying? I’m so stubborn!”
After this experience, I realized I wasn’t going to be getting rich on stock trading (at least not as a hobby). So I spent a lot less time on this venture, and I probably saved myself quite a bit of loss by doing so.
Gain/Loss from Other Sales: $195.27
Gain/Loss from RIMM Sale: $1,066.03
Total Gain/Loss at this point: $870.76
I knew good and well about the Blackberry outage because my company used mostly Blackberry devices at the time, and I was one of the senior IT support admins for the company’s Blackberry server. That outage caused a lot of headache for our sales staff.
But I didn’t understand the impact a global outage would have on a company’s stock. And I wasn’t paying attention to news about the company’s performance. It was a valuable lesson learned.
I got extremely lucky. I read some article discussing some network/carrier expansions Sprint planned to make in the coming year.
Experts were predicting that Sprint’s stock price would be on the rise over the next year.
I scraped everything together I received from the RIMM sale and bought 900 shares of Sprint @ $2.33. There it stayed while my wife and I got busy planning our wedding.
By July 2012, I had become serious about paying off debt, and my wife and I were newly married.
I didn’t feel good about having these stock investments sitting out there when we were both trying to figure out how to pay for her masters degree and continue paying off debt.
So, I sold my shares of Sprint for $4.42, nearly doubling my investment and putting me back into the black overall.
Gain/Loss from Sprint Sale: $1,860.79
I also sold some shares I had purchased in LEAP a few months earlier. This turned out to be a $400 loss.
Gain/Loss from LEAP Sale: $408.81
At the end of my trading in 2012, I had a net gain of $581.22.
I knew how lucky I had been, and I didn’t have any business messing around with this stuff while I was over $150,000 in debt. So I put stock trading on hold for the next several years, and paid off all my debt. ‘
However, I continued to invest 15% of our income into retirement accounts.
What About You?
There you have it. The story of how I lost $1000 in the stock market, and got my butt handed to me. Do you have a similar story, did you come out better than I did?
If you would like to read more about my story, check these out: