Hi all,
Not posting here looking for advice, or help, but just a story that might help somebody else at some point, and I guess I'm using this as a bit of a confessional box also
I've always been a good saver, since I was a kid. I'm in a secure job, and earn good money (53k) for my age (late 20's.)
For the past few years, I've had an interest in the stock market, but never actually did anything about it until last summer (2007). I was fed up of seeing companies that I 'fancied' going up and up, when I was predicting the same thing to myself. One company in particular went up 500%, and I 'knew' it would but did nothing about it, which was kinda infuriating really!
Anyway, I decided to pull €5000 from my savings, to play about a bit. I was going to spend 1000 on 5 stocks, but then I changed mind, and decided to play a little more - ended up opening a spread betting account (no lectures please). I started with €1000 in there.
Within a few weeks, I was at €1500. This was great. I was picking good companies, and often it was real day-trading stuff - taking a profit if I made €50 etc. So anyway, after a while I threw in the other €4000. It went up and down for the next few months. I had a few favourites - stocks that seem to go up 5% every 2nd day, often just timing it right made the difference.
Anyway, by the end of October 2007 I had reached €9,500. That's a 90% return in about 3 months. Tax free. Wow. Amazingly the last stock I sold to reach that figure was none other than Bear Stearns. Of course that's when the Dow Jones was at 14000.
Then I got cocky. The very next day, I lost €1500, a week later €1600, day after that €900. In fact in November 2007, I saw €8000 disappear. Impending trade closures made me transfer an additional €1000 into the account to try to keep things alive. (making €6k investment total)
Then I got stupid. Betting on shares/indices/futures I knew nothing about. (All my previous shares were in my own industry, so I had a real idea about the companies). By April 2007, when I made my last trade I was down to about €200. It's still sitting in the account.
I wasn't really upset, I had pretty much written off money I deposited originally. It was a fantastic learning experience. Something I'd be willing to pay for. Was doing homework every night for an hour or two! I guess annoyed was the word, that I made some reckless decisions, and didn't cash out when I should have. Hell of a ride.
So, you'd think I'd have learned my lesson, right? Well, no.
In June 2008, I went to a brick & mortars stock brokers, and bought €3000 worth of shares. At the moment, they're down around 50%, but I expect them to come back in the long term.
Also in June 2008, I opened up an internet brokerage account. Transferred in €8,000. This was a proper trading platform - like what you see the brokers on TV use! My account was in Euros, but wasn't too happy with the LSE and ISE stamp duty charges, so moved my account to a margin account to allow me to trade in USD. The consequence of that was that I could now buy shares on leverage. I had €8000, but could purchase up to about €12000 in shares (and pay interest on the borrowings). I had to keep a certain margin in the account naturally. This was going really well.
This was all fine up to about a week ago. I had positions open in about 12 different companies. Again, 'good' companies from across the world. Some were doing really well, some not so well. I was pretty much break-even. But this didn't have the volatility of spread betting. At least that's what I thought.
We all know what has happened in the last 2 weeks or so. Needless to say, because I was leveraging, against a falling market, I didn't have the necessary margin in the account, a number of my positions were closed, some in profit, but some down over 60%. Had I been keeping my eye on it, I could have transferred cash in to keep the margin, but that probably would have perpetuated my problems!
The current value of my account is around €1500, with only 3 stocks. If they were to return to what I purchased them for, I'd only get €3000.
To summarise, I've put 17k on the stock market in the last year (5+1+3+8). All I'm left with is 1 stock at a brick and mortar broker and 3 online, all down about 50% (6k investment, currently worth €3k)
The other 11k is gone. No hope of recovery. The €3k, will likely take 5 years to recover to €6k if ever.
I'm not done with the Stock Market - (I'm also in a investment club putting in a sensible €50 a month), and I'm going to get back in and purchase real shares with real cash maybe after Christmas.
I wasn't completely reckless - I have around €45,000 in a savings account, topping up by €1000 a month, towards buying a house. (so the dropping prices is healing my pain somewhat!) That could have been €62k if I just left things as they were!
I don't need a 'told you so' or 'how could you be so stupid'. I know. Maybe my story will offer a bit of advice to some others.
Don't use spread betting. Don't use margin accounts to purchase stock.
Not posting here looking for advice, or help, but just a story that might help somebody else at some point, and I guess I'm using this as a bit of a confessional box also
I've always been a good saver, since I was a kid. I'm in a secure job, and earn good money (53k) for my age (late 20's.)
For the past few years, I've had an interest in the stock market, but never actually did anything about it until last summer (2007). I was fed up of seeing companies that I 'fancied' going up and up, when I was predicting the same thing to myself. One company in particular went up 500%, and I 'knew' it would but did nothing about it, which was kinda infuriating really!
Anyway, I decided to pull €5000 from my savings, to play about a bit. I was going to spend 1000 on 5 stocks, but then I changed mind, and decided to play a little more - ended up opening a spread betting account (no lectures please). I started with €1000 in there.
Within a few weeks, I was at €1500. This was great. I was picking good companies, and often it was real day-trading stuff - taking a profit if I made €50 etc. So anyway, after a while I threw in the other €4000. It went up and down for the next few months. I had a few favourites - stocks that seem to go up 5% every 2nd day, often just timing it right made the difference.
Anyway, by the end of October 2007 I had reached €9,500. That's a 90% return in about 3 months. Tax free. Wow. Amazingly the last stock I sold to reach that figure was none other than Bear Stearns. Of course that's when the Dow Jones was at 14000.
Then I got cocky. The very next day, I lost €1500, a week later €1600, day after that €900. In fact in November 2007, I saw €8000 disappear. Impending trade closures made me transfer an additional €1000 into the account to try to keep things alive. (making €6k investment total)
Then I got stupid. Betting on shares/indices/futures I knew nothing about. (All my previous shares were in my own industry, so I had a real idea about the companies). By April 2007, when I made my last trade I was down to about €200. It's still sitting in the account.
I wasn't really upset, I had pretty much written off money I deposited originally. It was a fantastic learning experience. Something I'd be willing to pay for. Was doing homework every night for an hour or two! I guess annoyed was the word, that I made some reckless decisions, and didn't cash out when I should have. Hell of a ride.
So, you'd think I'd have learned my lesson, right? Well, no.
In June 2008, I went to a brick & mortars stock brokers, and bought €3000 worth of shares. At the moment, they're down around 50%, but I expect them to come back in the long term.
Also in June 2008, I opened up an internet brokerage account. Transferred in €8,000. This was a proper trading platform - like what you see the brokers on TV use! My account was in Euros, but wasn't too happy with the LSE and ISE stamp duty charges, so moved my account to a margin account to allow me to trade in USD. The consequence of that was that I could now buy shares on leverage. I had €8000, but could purchase up to about €12000 in shares (and pay interest on the borrowings). I had to keep a certain margin in the account naturally. This was going really well.
This was all fine up to about a week ago. I had positions open in about 12 different companies. Again, 'good' companies from across the world. Some were doing really well, some not so well. I was pretty much break-even. But this didn't have the volatility of spread betting. At least that's what I thought.
We all know what has happened in the last 2 weeks or so. Needless to say, because I was leveraging, against a falling market, I didn't have the necessary margin in the account, a number of my positions were closed, some in profit, but some down over 60%. Had I been keeping my eye on it, I could have transferred cash in to keep the margin, but that probably would have perpetuated my problems!
The current value of my account is around €1500, with only 3 stocks. If they were to return to what I purchased them for, I'd only get €3000.
To summarise, I've put 17k on the stock market in the last year (5+1+3+8). All I'm left with is 1 stock at a brick and mortar broker and 3 online, all down about 50% (6k investment, currently worth €3k)
The other 11k is gone. No hope of recovery. The €3k, will likely take 5 years to recover to €6k if ever.
I'm not done with the Stock Market - (I'm also in a investment club putting in a sensible €50 a month), and I'm going to get back in and purchase real shares with real cash maybe after Christmas.
I wasn't completely reckless - I have around €45,000 in a savings account, topping up by €1000 a month, towards buying a house. (so the dropping prices is healing my pain somewhat!) That could have been €62k if I just left things as they were!
I don't need a 'told you so' or 'how could you be so stupid'. I know. Maybe my story will offer a bit of advice to some others.
Don't use spread betting. Don't use margin accounts to purchase stock.