A man shared a story about his friend read a book on investment and thinks that he is smart enough to challenge the “stock king” Warren Buffett.
He then took to the hills, after losing a chunk of his savings.
Here is the story:
There are two kinds of people in the world of investment, winners and losers and it comes down to even more sub-categories in both winners and losers.
I have a friend who belonged to a sub-category of the “investment losers”, he started working about 6 months ago after he completed his national service and wanted to find an alternative income.
So he bought an investment book off Amazon and started reading it, after reading the book he claims that he knows everything about stocks and he is confident that he can earn a big chunk from the stock market.
He even confidently proclaimed that he will be better than Warren Buffett.
Initially, he made small wins here and there and started to be proud and flaunt his earnings on branded goods. This attracted the attention of his friends and some of his friends decided to invest in him by giving him $5,000 each to invest.
However, just 1 week after he received the money from his friend he lost almost 60% of it and started to panic.
He called me and asked what I should do and I really have no idea how to help him. I then told him to be honest and tell his “investors” about what actually happened.
But things escalated and his friends are now calling him a scammer.
Here is what a veteran investor thinks:
I’d say the average beginner invests too much in the wrong thing and too little in the right. They buy one share of GOOGL because it’s “expensive” and 1000 of AMD because it’s “cheap.”
They get scared and sell on one-day downswing. They buy AAPL because the new iPhone is announced, see a mild one day return, and think they’re geniuses.
They do all of this trading looking at returns of a hundred dollars, patting themselves on the back, while ignoring $10 trading fees in and out.
They don’t think about taxes.
They don’t focus on retirement savings first.
They don’t minimize unnecessary debt.
They do all of this, and then, hopefully, one day, start fixing a few of those mistakes. Maybe not all of them, but enough, and then they’re not really beginners anymore.