My inbox has exploded with emails regarding how my trader buddy Mike got knocked out of the stock market last week.
I’m really touched by the outpouring of sympathy and condolences from many of you and I will make sure to pass them on to Mike.
It was really a sad and touching experience to see Mike’s eyes tear up as he told me he was wiped out of the market on his TVIX trade that went bust.
When you spend years building up your trading account and then have it wiped out like that, it’s heart wrenching.
I’m really moved by the sympathetic emails I’ve received. You and I may disagree, but when one of us gets wiped out, we all pull together. It’s just amazing for me to see that.
Mike and I have a boss at our day job who is an old school gold bug. Our boss has mastered the Jedi Mind Trick and is as tough as they come. He’s a man that many office staff tremble in fear when he walks by their desk. He’ll tell you which way the cow went and he’ll tell you in a hurry. Our boss is so tough that when he does a pushup, he isn’t lifting himself up; he’s pushing the Earth down. Office rumor has it that once a cobra bit his leg. After 5 days of excruciating pain, the cobra died.
Once a week, I meet with the boss and perform stock analysis on his portfolio. When I told him about Mike getting wiped out, he paused for a second then said he was sorry to hear that. That was incredible to hear that because we trade so differently. We’ll argue and debate the merits of buying gold versus buying stocks. We’ll get mad at each other and not talk for awhile. We’ll give each other news clippings until one of us gets mad and says he doesn’t have time to read his BS. But if one of us makes a mistake and gets wiped out, we put our differences aside and come together to support our fallen comrade.
I think back when I lost $10,000 in a penny stock scam called Plasticon. I felt horrible. I didn’t want to tell my wife because I was afraid that she would think I was so stupid. I had big plans and dreams for that $10,000. It was going to be my seed money for a house for my growing family. All of my hopes and dreams were crushed as Plasticon shares dropped to zero and trading was halted. The SEC moved in and returned as much money as they could to Plasticon’s creditors. Share holders got shafted. I then lived with the embarrassment for years where at family functions family members I hadn’t seen in awhile would ask how my Plasticon investment was going? I still feel horrible to this day when thinking about it.
In the video episode below, I’ll show you the chart of TVIX so that you can see what happened to Mike.
A famous trader once said, the only reason I didn’t make even more money in the stock market was because of my winners. Think about that for a second. Here’s a famous trader, famous for his winners, and yet he viewed his winning trades as a liability because he knew that the best lessons learned are the really painful ones.
Did you know that all, I mean ALL the best traders in the world who have ever lived, they ALL wiped out their trading accounts at least once, and many two or three times?
I feel a comradery with other traders who have gone through the pain of losing everything. I think alot of us do. Our better nature as human-beings relates to the pain someone is going through when they lose everything. In all respect, I say welcome to the losers club.
I’m willing to bet that if I did a poll right now of everybody who is watching this video and whether or not they have lost everything at some point in their trading, I bet that 80% of you would say yes. I know, it’s not something we like to talk about because the memory is painful.
Once you lose everything, you have two choices, two paths in front of you. One path is to denounce stock trading as a scam, blame it on HFT or algorithms or grey markets or the rich bankers, or Goldman Sachs, or whatever really scary thing you can think up and to justify why you lost money and why you quit trading. That’s the easy path to take that most people do take. The other path is harder. The other path is to look at yourself and admit to yourself what you did wrong on the trade. Did you put all your eggs in one basket? Did you not set or not stick with a stop loss? Did you just drink too much Kool-Aid on that one? Whatever it is, you critique yourself and find your flaw. You then go through the hard task of re-building your trading account and getting back up on the market bull that bucked you off and almost killed you. Your desire to be independently wealthy and trade for a living from home drives you with it’s single powerful call: live free or die trying. You now understand with greater clarity the tag line on my blog that reads: “Live Free Or Die Trying”. That’s the kind of determination you must have if you are to get better at stock trading.
I’ve come to feel like most of you are family and I wanted to say thank you for your kind words and support regarding Mike. I’ll make sure to pass on your sympathy and condolences.