Image Credit – Man doing a Polar Plunge – by Wikimedia
I remember buying Euro Disney stock on advice of a cousin who worked at a reputable brokerage in the 1990’s. The stock tanked not too long afterwards. Then, I stumbled upon some day trading articles in magazines and was hooked! I bought up a couple of books on day trading. At the time, I was in a low-paying job as a caseworker. I had roommates. I was going nowhere. I thought day trading was my golden ticket in escaping my mediocre life.
I didn’t have much capital to get started, so I did some paper-based trading. I tried out a bunch of strategies and I couldn’t find that trading edge. I even studied options heavily, most notably spreads, straddles, condors, etc. I did more paper trading. Then the dot com bust happened.
Spooked By The Markets
That was the extent of my feeble investing activities in the 1990’s. The aughts came and went – No brokerage account and no investment activities. My employer opened a 401(a) account and started funding it, just prior to the Great Recession! I was that spooked by losses in Euro Disney and even more shocked by the dot com bust and the Great Recession. Looking back, I truly missed out on these great investing opportunities! C’est la vie.
In early 2010’s, I finally opened a brokerage account, mostly to fund my Roth account. I invested in bond funds! Ugh. That was a huge missed opportunity. But, It did get me into investing again. I missed out most of the bull run in the 2010’s by continuing to invest in bond funds.
During the last quarter of 2018, I remember opening my 401(a) account statement and seeing my investments performing badly. That was the final straw for me. I decided to reexamine my investment approach, risk tolerance, and to determine the best path forward. I stumbled upon Mr. Money Mustache, the FIRE subreddit, and devoured FIRE blogs/books.
Diving In The Deep End
I was too conservative in my investments and I needed to catch up! I missed out on the bulk of the huge bull run already. No more bond funds for me! I started to invest in stocks and adjusted my portfolio allocation.
I still remember my personal scars from my earlier investing endeavors. I was scared to invest in the stock markets, but I needed to make up for lost time. I DCA’ed in most of my funds over a span of twelve months, until I was fully invested. I also invested in a wide variety of funds, such as large caps, REIT’s, high dividend fund, VTSAX, etc.
Immediately, my investment activities started to show some paper losses. So much for being an investing mogul like Buffet! At least, my DCA’s helped take some of the sting off those paper losses. Eventually, my account started to show some paper gains as well!
Exposure Therapy
Then, the strangest thing happened. My investments went up/down over a monthly basis. I stopped sweating the daily fluctuations of the financial markets. Even when the COVID-19 crash happened, I patiently waited until I tax-loss harvested (TLH) my stock holdings. I also took that opportunity to consolidate these investments into VTI. No more mutual fund alphabet soup. Yes, I was worried, but I knew to stay the course. I also knew that these crashes represented investing opportunities.
By being exposed to the stock markets on a daily basis, I lost my lizard-brained fears. I even found a trading edge that I was looking for in my nascent day trading endeavors – I found it in swing trading instead! Turns out, I do pretty well in swing trading stocks. I wish I knew that in 1990’s, I really needed the money, and had the wrong focus on day trading instead.
My investing approach continued through the bear market of 2022. Strangely enough, I made almost $7K in swing trading that year. I had to hunt out TLH opportunities to wipe out those gains. It feels even weird typing that out today. I’m doing great in 2023, sitting on thousands of paper gains. Yes, the year is still young, and I could lose them all. But, I’ve been exposed – I’m no longer sweating out the markets, losing sleep, etc. I have a wide variety of strategies I can use to navigate the markets today.
Conclusion
Investing in stocks involves risk. I understand the fear. It is all about managing risk and I feel I have a good handle on it, having been through various ups/downs in the past few years. Why not give it a try? Sure, do some paper trades. But nothing beats the real thing. When you’re ready to open a brokerage account and start investing for real, yell ‘Cannonball’ and dive in!
The usual disclaimer applies; This blog article is for entertainment purposes only. No express or implied warranty is offered, regarding any actionable information contained in this article. Laws governing investing are complex and varied. Personal finance is personal to you – no one else knows about your financial situation intimately. I encourage you to read and study information from other financial sources to gain the knowledge and expertise needed to manage your finances.
