Can I still be a millionaire day trader by the time I’m 50?
At the time I first started stock trading in 1994, I started in mutual funds. I did not have much. I kept putting in a tiny bit of money each month from my day job to my stock trading account and when I had enough, I would purchase more of the same large funds. I brought my trading account up to $10,000 which was also the bulk of my entire net worth.
I got tired of the little gains each year from my mutual funds and then Janus was busted by the SEC for permitting their favored patrons to trade in and out of their funds while small dudes like myself had to buy and hold.
I started looking at penny stocks and greediness filled my brain with how much I would make quickly if I went long the right one.
I was innocent, susceptible white meat for the next sly penny stock scam that came along.
I invested $1,000 in a pink sheet stock called Plasticon. I discovered this stock from Investor Business Daily. The periodical looked trustworthy. Afterward College Stocks profiled Plasticon, and last Green Light. Truly this was the next sizzling penny stock.
I was youthful. Everything published about this pink sheet company was a fib. The CEO Jim Turek even went on Investors Business Daily streaming video news show and lied. I remember telling my wife he looked honest and she agreed.
Subsequent to my initial $1,000 invested, the stock fell 50%. Hence what did I do? Why double down of course. I purchased an added $2,000 worth of stock.
Then Yahoo Finance published the news story that Plasticon was filing for a listing to the OTCBB. This stock is a show jumper I thought! Therefore I researched the subject of stocks that went from the pink sheets to the OTCBB and found that some did really well after uplisting. Consequently what did I do? Well I bought $1,000 more of Plasticon as any decent penny stock investor would do.
The stock fell an additional 50%. I was a little nervous. But then a news story came out that Plasticon had just signed with a major distributor to sell their plastic re-bar supports! This could be like Tazer I imagined. A small penny stock supplying product to a major distributor means wild pay-day profits! I bought an additional $2,000 on the news.
The stock fell an additional 50%. I was becoming very nervous now. But suddenly, like a reward from God (I used religion in my stock trading back in those dumb days), James Turek announced that Plasticon was not going to file for an OTCBB listing, oh no, they changed their mind and were going to file for a listing to the AMEX. Hence what did I do? Well if I thought that an uplisting to the OTCBB was worth $1,000, then surely an uplisting to the AMEX was worth $2,000. Therefore I purchased $2,000 more!
All this occurred over a 3 year period until finally, the penny stock fell under $0.001 and Plasticon filed for bankruptcy.
There are so many errors that I made along the way to losing everything. Clearly I was quite despondent about how much I had lost. What made it all the more depressing was that it was my entire life savings. That money was everything to me. It was all my hopes and ideas, especially when you compound this amount at some 4% or 5% for maybe 40 to 50 years ahead of me. I sat down long and hard, reviewed all of my mistakes, and attempted to understand my stock trading and investing lessons. My wife asked why I was doing it at all, waking up at 6:00am PST for so many mornings to trade stocks, reading hundreds of books about investing, and yet I had zilch to show for it, but a gigantic hole in the pocket and heart. It was a great question, and I had an uncommon answer.
My own response was “I prefer to lose it all now in my thirties, rather than losing it all in my fifties. If I be taught my lessons early, I would not make the same big mistakes much later. Nowadays, I am stock trading and investing some $15,000. One day, I hope to be managing and investing one million dollars. I can afford to lose $10,000 in my thirties, but I won’t be able to afford to lose even 20% of a million dollars when I’m older.” Sure, I was in pain from my unfathomable loss. But I was so unwavering in continuing my stock trading and investing, and I was sure that one day I would be managing a much larger amount. Because I knew I would be investing for the next 30 years or more, the earlier I learned how to do it the better.
Each one of my past investing and stock trading errors has continued to help me to become a better investor and smarter trader. My big loss of everything in my early thirties has made me a much more careful and knowledgeable investor. He who has grabbed a bull by its tail knows twice as much as he who never has. I realized some of the lessons you can never learn from books. All the real crucial lessons must be learned from agonizing errors.
Below is a video of some of the painful lessons I learned.