I started my investing journey 10 years ago in July 2012 and my options trading journey started last year in late Feb 2021.
In Dec 2021, I ended all my bad investments over the first 9 years of my investing journey by cutting a $135k loss on stocks such as SPH, Keppel Corp, Sembcorp Marine, Neratel, Marco Polo Marine.
Read more here:
I Cut $135,715 Worth Of Losses In The Last 1.5 Months
I bought heavily into options in 2021 and built up a LEAPS CALL Portfolio of around 485k. The prolonged bear market of 2022 which led to many tech stocks crashing meant I suffered heavy losses in this portfolio as it is made up of most tech and semiconductor stocks.
I eventually chose to cut my losses and sold off the entire portfolio, losing 415k.
Read more here:
I Closed All My Remaining LEAPS CALL Positions At A Total Loss of SGD415K (USD306K)
So, all in total, I realized a total of SGD551,174 (USD407,641) in the last 10 years of investing and options trading. At this time of writing, I have another 320k of unrealized loss in stocks, which I still have holding power and hope that these companies do not go bankrupt or have their share price stay low permanently.
Reference Article:
What Is Worse Than Having A Portfolio With $618,800 (Unrealized) Loss?
After losing more than half a million in the stock market, I would like to share 6 learning lessons that I hope newbies investors or options traders can take in their stride and avoid the potential pitfalls and mistakes that may come their way. For folks who have lost a lot of money in the stock market, I hope this article provides some comfort that you are not alone in this journey.
Lesson 1: Inflation Is Scary, But Bad Investments Are Scarier
Many folks jump on the investing bandwagon out of fear that inflation will eat away at their money over time. That is true as a $50 note could buy plenty of stuff 20 years ago but not now anymore as prices inflate over the years. Your savings in the bank kind of lost their value with time.
However, investing is never a sure win. If you pick the wrong company to invest in over a long period, you could end up with a capital loss far greater than the value that inflation takes out of your savings. Of course, if you have picked Google, Apple and Microsoft 20 years ago, the returns would have been astronomical, even after the bear market of 2022.
When I started investing in 2012, the Oil & Gas (O&G) companies, telecoms, banks, REITS (Real Estate Investment Trust) and the mighty SPH (Singapore Press Holding) were the darlings of the Singapore stock market, with the stable fundamentals and good dividend yields. Not all sectors survive the onslaught of rising competition and macro environment changes that happened over the last 10 years.
I was the bag holder of various stocks such as Sembcorp Marine, Marco Polo Marine, Neratel, Starhub and FIRST REIT, which saw their share prices collapse over the years.
So, the bottom line is, be mentally prepared for the risks that come with investing in the stock market. If you are not ready for that, it is better to park your money in instruments that can help keep your capital safe while still giving you some returns, such as Singapore Saving Bonds, high-yield savings accounts or Fixed Deposits.
Lesson 2: Protecting Your Capital Is Your Top Priority
Many investors started their investing journey focusing on how much money they think to make out of the market but neglect the fact that protecting their capital is just as important.
Take me as an example, if I had prioritized capital protection and did not take on too much risk, I probably would not have accumulated such a huge loss. And if I were to lose half of the current loss, I would still be $250k richer.
Therefore, I hope new investors can take note of this before they start investing. The lesser the capital loss, the lesser the returns you need to generate to break even. Sometimes, not losing is a form of winning.
Lesson 3: Cutting Loss Is The Most Important Yet Most Difficult Thing To Do
After losing 135k in the first 9 years of investing, I thought I have learnt my lesson to cut loss and exit bad investments before they perish completely.
However, I obviously did not learn my lesson and instead lost a bigger sum of $415k by not exiting bad option trades when I had so many chances to do so. I was in denial that things would eventually recover, the same blind faith that I had when I kept averaging down on the poorly performing companies in the first 9 years of my investing journey.
The loss is so much greater (415k vs 135k) and the collapse is so much faster (1 year vs 9 years) but the lesson is the same: get out of the sinking ship before it is too late.
Lesson 4: Celebrate Every Win, Even If They Are Small
There will be countless moments in this journey where you wish you could have bought more or sell later or not be so conservative, so you can have a bigger gain than what you have.
However, do bear in mind that for every trend that works in your favour, there is always a possibility that the opposite may happen and you end up losing your gains.
So, a small win is better than a loss and a small loss is better than a bigger loss. Learn to celebrate the small wins as a small profit is still a profit. No one wins it big all the time. Having this mindset of “I could have won more if I put in more money/ take on bigger risk/ sell later” will put you in a dangerous mentality where you could potentially lose big or lose it all.
Lesson 5: There Will Be Lucky Stars In The Universe, But There Are Also Jinx Stars
I spent the last 10 years learning from various mentors and gurus, from AK (ASSI), Dividend Warrior, to Adam Khoo, Chicken Genius Singapore (Ken Teng), from reading financial blogs to watching YouTube videos daily. I started with dividend investing and the concept of earning passive income to buying high-growth stocks in the US market to options trading. I am thankful for all these selfless sharings by the gurus/ mentors.
I realized one important thing: just because a particular guru is very successful through the years, it does not mean that he is right all the time. I lost a lot of money after following AK to buy Marco Polo Marine as well as following Adam Khoo to buy Alibaba and Meta (Facebook).
So, it is critical not to blindly follow your mentors to YOLO all your hard-earned money into a particular recommendation. He can lose more money than you but that may just be a tiny bit of his portfolio. Besides, he may have other avenues, such as selling courses, to recuperate the “big loss”.
Lesson 6: A Dream Cannot Be Born Without Pain
Last year (2021), when I was earning more than 200k, it was like a dream come true, as I would no longer need to continue my day job, and face all the stress and boring work, if I were to earn this crazy amount of money each year.
The dream was short-lived as I was investing/ trading at the peak of the bull market that had also created crypto millionaires, only to make them fall and crash even harder. I made $222k in 2021 but lost 415k in 2022. What a rollercoaster ride!
However, not all is lost. With every mistake, experience and lesson learnt, we become wiser and stronger. The dream will still be alive if we do not give up trying, keep fighting and keep learning new knowledge that can help us get there someday. Sometimes, pain is a necessary evil and all this pain may just be the baptism of fire that we must go through before reaching our goals and dreams. When we finally reach there, the fruit of success will taste so much sweeter.
I hope this sharing makes some sense and is useful to you to help you avoid the potential pitfalls in investing or trading. But if you are already in one, hang on and trust the process. Whatever doesn’t kill you will make you stronger.
Lastly, remember this: life is so much more about making money or accumulating wealth. More money is always welcome but there are things that are more valuable in life that money cannot buy, such as our health and our relationship with the ones we love.
If you are feeling down, take a moment and look around you, the sun is still rising every morning and the world is still beautiful.
Chin up and keep going, you still have every chance to turn things around.
I wish all of you a Merry Christmas and a wonderful 2023 ahead.
<< Subscribe to my blog to have all these articles delivered directly to your email address >>
*** FREE MONEY ***
Sign up for WeBull Securities Brokerage and fund any amount to receive up to USD500 in share value (Apple, Tesla, Microsoft, Google)
Receive Free Money (USD30~USD500) When You Sign Up With WeBull Securities Platform (Fund ANY Amount)
*** FREE RESOURCES ***
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
After accumulating more than 600k of unrealized losses on my portfolio, I wrote this article to encourage friends and investors who are also losing a lot of money to the market.
If You Are Feeling Depressed From Losing Lots Of Money In The Stock Market, Here’s An Article For You
In the 10 years of my investing journey, I have made many mistakes but also learned many lessons from these mistakes. I compiled the 10 most valuable lessons that I have learned and may they help you succeed in your investing journey.
Happy 10 Years Of Investing | 348k (Realised) Profit, 635k (Unrealized) Loss & 10 Lessons Learnt
The precious 6 lessons I learnt after cutting more than half a million of losses in the stock market through bad investments and risky trades.
6 Lessons Learnt After Losing 551k In 10 Years Of Investing & Options Trading | What Newbies Should Know They Start Investing/ Trading
How I managed to build a 1M investment/ trading portfolio despite coming from humble beginnings.
How A Poor Kid Got To A 1M Investment Portfolio | Tips & Principles Of Building Wealth
I did these 10 side hustles while holding a full-time job, so I share them here so you can be inspired to grow your wealth through a side hustle that you enjoy.
I Did These 10 Side Hustles While Working Full Time | 10 Side Hustle Ideas To Help You Earn An Extra Income
Struggling with inflation and high cost of living? Try these 10 methods to help you save money and accumulate more savings for investments or rainy days.
10 Ways To Save Money To Help You Fight Inflation & Rising Costs Of Living
Why I am building $120,000 of cash reserves in Singapore Savings Bonds (SSB) & 5 reasons why I think SSB is a worthy low or zero risk investment that you can consider.
Why I Am Building $120,000 Of Cash Reserves In Singapore Savings Bonds (SSB)? | 5 Reasons Why SSB Is A Worthy Low Risk Investment
Sharing why I am doing Dollar Cost Average (DCA) into SPY and QQQ ETF for long term investments and a step-by-step guide to doing it automatically with Interactive Brokers.
Why I Am Doing DCA (Automatically) For SPY & QQQ For My Long Term Investment? (20% ~ 30% Upside Potential) | Step By Step Guide To Activating Automatic Recurring Investment On IBKR
*** FREE MOTIVATIONAL BOOK ***
If earning more money from your investment does not excite you anymore, you may be seeking a purpose that brings fulfillment and meaning in life. I have written a motivational book that may be useful to you in some ways. You can also download a free copy here:
https://learninginvestmentwithjasoncai.com/finding-the-magical-realm-of-happiness-motivational-book
Learning Investment With Jason Cai 