The Stock Market Can Make You Rich, But It Can Also Bankrupt You | Sharing Some Principles Of Investing

For the first 9 years of my investing journey, I have stayed away from the US market because I fear the volatility that comes with it. Some stocks can rocket to the moon in share prices while some stocks can crash like falling knives. Sometimes, it is the same stock that did both.

Let’s take a look at a few examples.

If you have bought Meta Platforms (Facebook) just one year ago. you will be ecstatic to rise 42% to an all-time high of $384.33, in less than 6 months. However, you bought Meta share during these peak prices, you will be distraught to see it crash 38% since then.

There are other examples such as Paypal, which dropped 53% from its price one year ago.

or Zoom, which dropped 65% in share price from a year ago.

Or Shopify which has dropped 50% from its all-time high of $1,762.

On the other hand, there are companies that are consistently increasing in their share prices, even in a bearish market or market that is going through a correction, Here are some examples:

To sum up this article, I have a few investing/ trading principles that I would like to share with you:

Try your best not to FOMO (Fear Of Missing Out) and chase stocks when they are at their all time-high. It is possible from the last few examples that these stocks can get higher and reach new highs. However, it can also go the other way, when fundamentals or macro economic environment change.
Macro economics play a big role in today’s share market and when the market is filled with fears due to the pandemic, tapering or rate hikes, investors sell off regardless of how excellent the fundamentals of the companies are. Mega-cap stocks report excellent earnings but their share prices are also dragged down by the fears of interest rates hike.
Cut loss early if you have already lost conviction on the stock. One of the biggest mistakes of my early investing journey was to keep holding to stocks that have fundamentally changed, praying that they would one day return back to their all-time high or at least at my breakeven prices. That never happened and I accumulated a 6 figure loss on these stocks.
Learning about options trading can help you claw back some of your losses and lower your breakeven price. Selling covered call on stocks that we own more than 100 shares can help us earn some income while we wait for the prices to recover. However, if you think that your stock will not recover anymore, refer to S/N 3.

I hope the above principles are useful to you if you are new to investing/ trading or can inspire you if you feel lost in this journey. After almost a year of trading and investing, I am still learning and I still believe that this is a place where wealth can be built, if only we learn how to manage our fears and greed well and keep learning to improve ourselves.

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Keen to learn about options trading but do not wish to pay for expensive courses, this newbie guide will help gain the knowledge and fundamentals to understand options better. And it’s totally free!
The Newbie’s Guide To Options Trading

The LEAPS Strategy has helped me make more than USD120,000 in 2021. Here’s all you need to know about this strategy that can help you increase your wealth exponentially:
The Ultimate LEAPS Options Thread

Looking for ideas on what stocks to invest in or which stocks to trade? You can take reference from what I have been buying or selling. I try to update them as soon as I can in this section, as well as share my thoughts behind executing these trades:
MY TRADES

Excited to start your trading journey or perhaps try out with a paper trading account to build your confidence in trading? Check out this step-by-step to help you get started:
How To Buy Options on Interactive Brokers (Step-By-Step)

If the bear market in 2022 is making feel depressed as your stocks come tumbling down, read this article to find out how you can use options trading to help you claw back some of your losses as you await market recovery:
How I Do Earn Even When The Stock Market Is Bearish?

I watched tons of videos on YouTube since 2020 and if you are wondering if there are any useful channels that you can subscribe to for learning market trends, TA, FA, check out this compilation here:
My Secret Weapons For Options Trading: I Watch These YouTube Financial Channels Every Day

I concluded my first year of options trading with more than USD160k of gain, see how I do it and the capital I use for every month to give you a sensing of the percentage yield I get out of my gains:
1st Year Options Trading Recap: The Journey Towards SGD$217,509 Profits In 2021

This blog is as authentic and as transparent as I can share, I do not just show the wins and hide the loss. I have made some very bad decisions in the first 8 years of investing and paid a huge price for them. Here is the loss I have accumulated during these years. I hope you learn some lessons from my mistakes.
I Cut $135,715 Worth Of Losses In The Last 1.5 Months

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