Mistake I made: I bought stocks at the all time high in 2020
The stock market crashed and still falling 10-15% a week after I bought stocks at the all time high in 2020 haha.
Why am I laughing? Because it is funny and it’s a good story to tell, hopefully you guys won’t repeat my mistake: Greed got me here.
June 2019 I was telling a “stocks and share friend” about Bitcoin cycle.
I told him that by the end of 2019 to early 2020, the market will be un-usually high, up and up and up like crazy, because the feds are printing money to pump into the stock markets, fundamentals are out of the window.
(The conversation took placed before the Hong Kong protesting and C-19 virus, when the world was still peaceful and normal)
I told him to start selling his stock in early 2020 and switch into Bitcoin.
But I didn’t buy stocks myself; I was the virgin who give out relationship advice.
I was dollar cost averaging and slowly buying in cyrptocurrency, gold and silver, according to my financial goal.
Because I know my bitcoin, I have been studying and researching for years, still allocate 2 hours of education time to learn more everyday for the last 5 years.
But one secret reason why I didn’t get into the stock market in June 2019 was: I was too lazy to research which broker to buy stocks; I put all my energy into crypto assets.
Until I found eToro, I can easily set up trading account to buy stocks, shares, bonds, etfs, commodity and cryptocurrency all in one platform, including silver mining stocks and gaming / cannabis stocks that I was interested in.
Etoro also let you play with a fake USD $100,000 virtual practice account before you invest with real money.
I like that. I’d like to have a few practices run first.
So then I bought stocks when the market is at the peak
So I set up an account, passed all the financial knowledge tests and spoken to an account manager about my investment intention and strategy.
I told him that the stock market is already breaking all time high after all time high, and still going up & up & up.
Since I have 10k spare holiday money, I will put 5k first, take some short term gain, quick free money, maybe 1 week or 1 month, take 10-20% profit and get out.
That was my intention: Quick free $500 – 1,000 profits in 2 months.
I know that the market is probably going to crash in any moment, they may blame the virus, but we all know that the economy is already over due for a crash to complete this cycle.
I was gambling on Trump won’t let the market crash before the election so there should be another “blow-up-top”, another record breaking all time high.
I was playing a dangerous game and then the market fell this week haha
6 key take away I learned from this mistake:
1. Education: Investment knowledge can be learned
I only allocated 2 hours a day to research into the stock markets in Feb, I played with the virtual eToro account and made 7% in a week, so I put real money into it.
I was rushing into it.
I even told the account manager that I think the market is too hot, maybe I should wait.
But greed got me, I thought it could go up just one more week so I can dip in and out and make a few hundred bucks.
I’m better off stick with what I know best: Bitcoin, but I also want to learn new things.
2. Only invest in what you can afford to lose
I only put 50% of spare holiday money, still have another $5,000 sitting in the sideline waiting for the sales.
These spare funds are profits from an investment property last month, and I was prepared to invest long term if I got stuck due to wrong timing.
3. Budget and be okay with it
I haven’t ‘lose all my money’, I lost less than $500; treat it as a valuable lesson.
I didn’t go all in, I didn’t borrow money, I didn’t use leverage and I have a plan and am prepared.
I lost about 5% of my holiday budget; worse case is that I can’t go to Bali this year.
4. Focus on what you are about to do next, not looping in the “what if”
Better focus my energy on what I could do now?
I could quit and take my losses; or
I could invest even more when it bottom out; or
I could just stay put and wait a year or two; or
What else is possible?
I am now changing my investment strategy plan accordingly.
5. Back Up Plan
I have already positioned myself with my crypto, silver and gold portfolio, overall I am still in green.
I also have emergency cash in placed so this won’t affect my everyday life.
I still have income from jobs and businesses.
I am still young, can earn money back and start again with smarter decision.
6. Money mindset
Money is a game, investing is like gambling if you don’t know what you doing.
Sometimes you lose sometimes you win, as long as your everyday bills and foods is taking care of, don’t get too stressed about the market goes up or down.
Don’t let one failure stop you from trying new things too;
you are expanding your knowledge bank.
The best investment you can make is an investment in yourself.
The more you learn, the more you’ll earn.