Kind of.
The TLDR version is this: At 19, I invested all my money in one stock. That investment wrecked me so bad that it sent me down the path to saving over $100,000 before my 25 birthday.
The much longer version:
When I was in college, I stumbled onto a book written by “Mad Money” investing guru Jim Cramer.
Now for those of you who’ve never heard of Jim before, here are a few clips from his show:
That should give you a *general* sense of how he thinks about investing.
Everything is “BUY, BUY, BUY”!
Or…
“SELL, SELL, SELL!”
And when I read his book, I was absolutely convinced I was going to get rich by picking individual stocks (just like he did in his infamous career on Wall Street).
At the time, I was a super broke college student and had about $3.27 to invest in the markets.
So I began aggressively saving every penny I could from my job at a fast-food restaurant. I took on extra shifts. Asked for a raise. Whatever it took to get a real amount of money saved up to begin my foray into stock picking, led by Uncle Jim.
I didn’t want to waste my time while I was saving though.
So every day, morning, noon, and night, I was watching clips from Uncle Jim on his show. Reading his articles on CNBC. Following his tweets.
Now, this was back in 2011, when the market was recovering from the depths of the recession. And things were SUPER shaky.
I remember reading the headlines, seeing the market pullback 10+% and hearing Uncle Jim talk about how things were crumbling from the inside.
How it was time to “get out completely” because the entire economy was crumbling.
I’ll be honest. I was scared of what would happen to my money, but after 2 months of this, I’d set aside around $850 and, according to Uncle Jim, I was ready.
With so much turbulence in stocks, Uncle Jim had crafted a plan for savvy investors to get rich.
While stocks tumbled to their death, WE (Uncle Jim’s Followers) were going to buy gold.
Because everyone knows that when there’s extreme instability in the market, you buy GOLD, the only stable asset.
And so far, he was right.
Gold had experienced a huge run-up in price over the previous few months. And when things crumbled in 2008/09, gold was one of the best places to put your money.
So believing that thesis and motivated by fear, that’s exactly what I did.
I put every penny of my $850 in gold right here at around $1,750/ounce:
Now what happened next is probably entirely obvious to you.
But as a college student who’d just bought his first stock, it was a new feeling to me.
At first, the stock went up a little.
And I thought I was a genius!
Having bought at the exact right time.
It went all the way up to $1,889 an ounce!
“This thing was going to the moon!” I remember thinking.
But then it started to move lower.
And lower.
And lower.
“Surely, it’s going to bounce!” I thought.
But it kept going lower.
“Should I buy more?!” I panicked.
Uncle Jim had moved on to his next fascination and once-in-a-lifetime stock pick so he wasn’t really commenting on what to do with our gold.
But watching my $850 investment drop to $640 …and then $580 was devastating.
There were times when I literally couldn’t sleep at night because of how fast it would drop in a single day.
Over the next few years, my moonshot investment in gold would turn out to be one of the worst I’d made in my life.
Because it never did stop falling until 2016.
ALMOST 5 YEARS AFTER UNCLE JIM PROCLAIMED IT’S RISE TO MOON STATUS.
Look at this chart:
But the truth is I’m incredibly grateful for that experience of losing almost all my money because it led me down a path to finding out how to *ACTUALLY* invest.
Instead of trying to pick individual stocks, I learned about buying the entire index.
Instead of trying to time the market, I learned about the power of automating my finances.
Instead of chasing stocks, I learned about the power of finding undervalued assets.
And so in 2011 and the beginning of 2012, I put all the money I had in gold.
But during the panic that ensued, I started automatically saving a fixed percentage of my income every month into a broad, low-cost index fund.
And while the gold chart went “DOWN, DOWN, DOWN!”….
…This is what happened with the S&P 500 index:
Turns out, 2012 and every year since was a great time to be investing.
The crazy thing is I don’t know if I would have truly understood the lesson of “don’t try to outsmart the market” if I’d just learned it in theory.
I needed to feel the heartbreak. I needed to know how bad things could get or else I wouldn’t be as religious and strict as I am about saving and investing into broad indexes today.
Using my patented “SORRY-UNCLE-JIM, I-CAN’T-BEAT-THE-MARKET” investing strategy, I was able to save more than $100k before my 25th birthday, which I considered a big milestone (and I’m no one special).
For anyone just starting to invest in the market, I’d first recommend you learn about investor psychology and the traps we all fall victim to. (Like sunk cost, confirmation bias and the like).
A good place to start is the book A Random Walk Down Wall Street.
Then, I’d recommend you open an account and just automate your money.
And if you’re going to follow the markets and pick individual stocks for fun (note: FUN!), you need to get a sense of big trends, up-and-coming industries and the terminology investors use on a daily basis.
For that, I recommend you sign up for The Hustle.
It’s a free, daily newsletter that sends you a short, witty update each morning with the latest trends driving the business world (and links for further reading if you want to dive in deeper).
Remember, investing your money is like planting trees: The best time to plant a tree was 20 years ago. The second best time is today.
Happy trading!
And if you found this answer helpful, it would mean the world to me if you would share it (or upvote it).
I really can’t describe how helpful this kind of advice would have been to me when I was in college. And if we’re able to help even ONE person avoid the mistakes I made, it’ll be worth it.
Thank you!!
UPDATE: Wow, thank you guys for the support on this one. I hope you got something out of the content! If you wish to have more conversations like this and fire away questions at any time, feel free to subscribe and share.
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