What to do after losing $117k in stock market?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Fountain84
Posts: 24
Joined: Tue Dec 12, 2017 7:25 am

What to do after losing $117k in stock market?

Post by Fountain84 » Tue Dec 12, 2017 7:48 am

Yes, I feel like the biggest idiot especially in this bull market. I only started investing 3 years ago and got involved in high risk stocks (oil and biotech). Made some really bad picks and took a massive lost. I try to ignore thinking about how much I've lost because I feel ashamed and embarrassed. I still owe $153k in student loans and have a $110k mortgage. I love reading and following the stock market. It is a hobby of mine and brings me lots of joy but it is also stressful and depressing because I seem to always pick the worst stocks to invest. I am lucky to have a stable $120k/year job. I am considering which path to take moving forward. Any opinion will be greatly appreciated. Thank you in advance.

Path 1: Get out of the market completely. Focus entirely on paying off my student loans (4.8% interest) and only consider investing after paying off my student loans. This will alleviate a lot of stress in my life but I will feel more depressed because I know I won't be able to win back some of my losses. Investing does bring me joy and excitement. Life will be boring.

Path 2: Continue to payoff student loans but invest modest amount ($600/month). This will bring me more happiness because I get to stay in the market and not feel like i'm missing out. I don't want to feel like i'm missing out in 2018 if the tax cut plan passes and stocks continue to rise. But this plan will make me feel guilty because this is an additional $600 monthly payment I could put towards my student loans and bring apprehension because I will constantly worry about losing more money (especially with my track record of horrible picks).

Jack FFR1846
Posts: 7436
Joined: Tue Dec 31, 2013 7:05 am

Re: What to do after losing $117k in stock market?

Post by Jack FFR1846 » Tue Dec 12, 2017 8:26 am

If these loser single stocks are in a taxable account, sell them and take the loss on your taxes. If they're in a tax advantaged account, just sell them.

Then buy a proper mixture of the 3 fund portfolio.
Bogle: Smart Beta is stupid

User avatar
market timer
Posts: 5927
Joined: Tue Aug 21, 2007 1:42 am

Re: What to do after losing $117k in stock market?

Post by market timer » Tue Dec 12, 2017 8:32 am

Ten years ago, I lost $210K while still in school (student loans and credit cards). My suggestion would be to contribute to tax advantaged accounts up to the limit, then put the rest toward student loans. It is nice feeling to see declining loan balances. It provides a sense of accomplishment that can't be taken away by the whim of the market.

goblue100
Posts: 589
Joined: Sun Dec 01, 2013 10:31 am

Re: What to do after losing $117k in stock market?

Post by goblue100 » Tue Dec 12, 2017 8:36 am

Fountain84 wrote:
Tue Dec 12, 2017 7:48 am
Investing does bring me joy and excitement. Life will be boring.
I submit the line above should be changed to "Gambling does bring me joy and excitement. Life will be boring without it."

Proper investing should be boring. The best use of your money is to pay down your student loan debt. If you have a 401k available, put in enough to get the match from the company into either some version of the three fund portfolio or a target retirement date fund. You will start to increase your net worth, which is what you should be doing.
Some people are immune to good advice. - Saul Goodman

beardsworth
Posts: 2089
Joined: Fri Jun 15, 2007 4:02 pm

Re: What to do after losing $117k in stock market?

Post by beardsworth » Tue Dec 12, 2017 8:39 am

Fountain,

It looks like you just joined the forum this morning, so welcome.

Said with respect . . .

I believe your quests for "excitement" and not wanting to feel "left out" of the possibility of easy money are among the main reasons why you have made some bad, i.e., impulsive, choices.

I suggest you read the links under "Getting Started," here:

https://www.bogleheads.org/wiki/Main_Page

UncleBen
Posts: 279
Joined: Wed Feb 19, 2014 8:43 pm

Re: What to do after losing $117k in stock market?

Post by UncleBen » Tue Dec 12, 2017 8:46 am

Invest minimum to obtain any 401k matching and attack the student loans with a vengenge with every extra dollar. Make it a game to see how fast you can do it to add some excitement.

User avatar
ruralavalon
Posts: 13503
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: What to do after losing $117k in stock market?

Post by ruralavalon » Tue Dec 12, 2017 8:50 am

Welcome to the forum :) .
Fountain84 wrote:
Tue Dec 12, 2017 7:48 am
Yes, I feel like the biggest idiot especially in this bull market. I only started investing 3 years ago and got involved in high risk stocks (oil and biotech). Made some really bad picks and took a massive lost. I try to ignore thinking about how much I've lost because I feel ashamed and embarrassed. I still owe $153k in student loans and have a $110k mortgage. I love reading and following the stock market. It is a hobby of mine and brings me lots of joy but it is also stressful and depressing because I seem to always pick the worst stocks to invest. I am lucky to have a stable $120k/year job. I am considering which path to take moving forward. Any opinion will be greatly appreciated. Thank you in advance.
I suggest reading different things, and investing differently.

I suggest that you read one or two books on general investing. Wiki article, "Books: recommendations and reviews". When I first stated managing my own investments, I found this tutorial very helpful in learning investing terminology/jargon and some of the investing basics. Morningstar, "Investing Classroom". Also take a look at the Boglehead’s wiki, the "getting started" link I give below.

Use mutual funds rather than individual stocks. In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".


Fountain84 wrote:
Tue Dec 12, 2017 7:48 am
Path 1: Get out of the market completely. Focus entirely on paying off my student loans (4.8% interest) and only consider investing after paying off my student loans. This will alleviate a lot of stress in my life but I will feel more depressed because I know I won't be able to win back some of my losses. Investing does bring me joy and excitement. Life will be boring.

Path 2: Continue to payoff student loans but invest modest amount ($600/month). This will bring me more happiness because I get to stay in the market and not feel like i'm missing out. I don't want to feel like i'm missing out in 2018 if the tax cut plan passes and stocks continue to rise. But this plan will make me feel guilty because this is an additional $600 monthly payment I could put towards my student loans and bring apprehension because I will constantly worry about losing more money (especially with my track record of horrible picks).
I don't believe that either of those plans is wise.

More information is necessary in order to suggest a plan to follow. Please see this for information to add and for format to use: "Asking Portfolio Questions". Please simply add this to your original post using the edit button, so that all of your information is in one place.

Here is a general account funding/investing priority that usually works well for many people (when there is no HSA use):
1) Contribute to the work-based plans (401k, 403b, 457, TSP, etc.) enough to get the full employer match (the match is like free money, your best possible investment);
2) Pay off high interest debt (a guaranteed high return, the next best thing to free money),
3) Contribute the maximum to an IRA, traditional or Roth, depending on eligibility and personal circumstances;
4) Contribute the remainder of the maximum employee contribution to the work-based accounts; and
5) Contribute to a taxable investing account.
Please see the wiki article "Prioritizing investments".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

260chrisb
Posts: 192
Joined: Wed Apr 28, 2010 7:26 pm

Re: What to do after losing $117k in stock market?

Post by 260chrisb » Tue Dec 12, 2017 8:53 am

Welcome! You've learned what not to do! Your problem is getting into the market and experiencing a correction that will emotionally make you think you've failed again. The markets will correct, they always do and always will. If you have exposure to a 401K plan start to trickle money into it based on a 3-4 year plan and get the match, be diversified, and forget about it. At the same time with your 120K income start to pound out the student loans (in addition to paying your mortgage) and get them behind you in 3-4 years.

MathWizard
Posts: 2919
Joined: Tue Jul 26, 2011 1:35 pm

Re: What to do after losing $117k in stock market?

Post by MathWizard » Tue Dec 12, 2017 8:55 am

Recognize that you probably did not lose $117K, as most of that was likely a paper loss on volatile stocks.
Only count as a loss the money that you put in. Likely that was much less than $177K.

If you still have student loans then you are young, so there is time to recover. Think of the money you lost
as financial tuition. (You don't think of your college tuition as a "loss", correct?)

Going forward, acknowledge that you are not smart enough to pick stocks as a hobby and compete against
pros doing this full-time. (Do you think that a weekend athlete could compete in professional football and
not get seriously injured?) This is probably the hardest, since it appeals to vanity. Surely I am smarter than
most of the investors, so I can get better than market average. Unfortunately, the market average is weighted
by the amount invested by each investor, and little individual stock picking is done by poor amateurs, and they
get weeded out of the market because they lose all their money.

retiredjg
Posts: 33259
Joined: Thu Jan 10, 2008 12:56 pm

Re: What to do after losing $117k in stock market?

Post by retiredjg » Tue Dec 12, 2017 9:08 am

Welcome to the forum! Just about everybody here has had some permanent losses. Some of us have done stupid stuff. Some have paid "advisors" for poor advice. And, like you, some have gambled and lost.

Time to dust yourself off and start over. This time, invest rather than gamble. Read the links already provided. And keep reading the forum.

I'd attack the loans but I'd also save some for retirement - starting with your plan at work. If your work plan is poor and has no match, use IRA or Roth IRA. With more information, people here can help you get this figured out.

User avatar
bottlecap
Posts: 5689
Joined: Tue Mar 06, 2007 11:21 pm
Location: Tennessee

Re: What to do after losing $117k in stock market?

Post by bottlecap » Tue Dec 12, 2017 9:11 am

"Joy" and "stressful and depressing” don’t go together.

You perhaps enjoy the anticipation that gambling gives you. You might need to talk to someone about that.

Other than that, I would commit to investing in a target retirement fund inside a retirement account and commit to staying in it. Also pay down the student loan debt.

Commit to not doing this again. Thankfully, you can recover.

Find outside interests. Life won’t be so boring.

Good luck,

JT

User avatar
Toons
Posts: 12874
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: What to do after losing $117k in stock market?

Post by Toons » Tue Dec 12, 2017 9:15 am

Focus entirely on paying off my student loans (4.8% interest)

Exactly.Do The Above.
Learn From Your Investing Experience.
It is part of life.
Move On.
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

Dottie57
Posts: 3969
Joined: Thu May 19, 2016 5:43 pm

Re: What to do after losing $117k in stock market?

Post by Dottie57 » Tue Dec 12, 2017 9:17 am

As others have said-no more gabling with individual stocks. Put money into target retirement funds.

Stop looking for easy street. Slow and steady works.
Last edited by Dottie57 on Tue Dec 12, 2017 9:26 am, edited 1 time in total.

User avatar
goingup
Posts: 3152
Joined: Tue Jan 26, 2010 1:02 pm

Re: What to do after losing $117k in stock market?

Post by goingup » Tue Dec 12, 2017 9:25 am

market timer wrote:
Tue Dec 12, 2017 8:32 am
Ten years ago, I lost $210K while still in school (student loans and credit cards). My suggestion would be to contribute to tax advantaged accounts up to the limit, then put the rest toward student loans. It is nice feeling to see declining loan balances. It provides a sense of accomplishment that can't be taken away by the whim of the market.
market timer-
There's an epic thread of your market timing travails. Not to put you on the spot, but it could probably be helpful for the OP who seems to be on the path you traveled. What happened to you and how did you turn it around?

JW-Retired
Posts: 6825
Joined: Sun Dec 16, 2007 12:25 pm

Re: What to do after losing $117k in stock market?

Post by JW-Retired » Tue Dec 12, 2017 9:29 am

Fountain84 wrote:
Tue Dec 12, 2017 7:48 am
Yes, I feel like the biggest idiot especially in this bull market. I only started investing 3 years ago and got involved in high risk stocks (oil and biotech). Made some really bad picks and took a massive loss. ........

I am lucky to have a stable $120k/year job.
Maybe I missed it but did you realize these losses?..... that is sell all the losers? If you did, the IRS will share some of this $117k hit with you via annual income deductions on your 1040. See Schedule D & form 8949. You get to keep a loss bank indefinity and use it to cancel any future capital gains you might have, and also up to $3k/year of your ordinary income.

It's independent of taking the standard deduction or itemized deductions.
JW
Retired at Last

Fountain84
Posts: 24
Joined: Tue Dec 12, 2017 7:25 am

Re: What to do after losing $117k in stock market?

Post by Fountain84 » Tue Dec 12, 2017 10:22 am

market timer wrote:
Tue Dec 12, 2017 8:32 am
Ten years ago, I lost $210K while still in school (student loans and credit cards). My suggestion would be to contribute to tax advantaged accounts up to the limit, then put the rest toward student loans. It is nice feeling to see declining loan balances. It provides a sense of accomplishment that can't be taken away by the whim of the market.
You're right. It will feel amazing to see the loan balance go down. Reason i'm on this forum is because I'm struggling to resist the temptation to go back into the market to make some big gains next year and then throw it all into my student loans. I see major opportunities in biotech for example because it is so beaten down lately. I just feel like i'm missing out.

Fountain84
Posts: 24
Joined: Tue Dec 12, 2017 7:25 am

Re: What to do after losing $117k in stock market?

Post by Fountain84 » Tue Dec 12, 2017 10:25 am

beardsworth wrote:
Tue Dec 12, 2017 8:39 am
Fountain,

It looks like you just joined the forum this morning, so welcome.

Said with respect . . .

I believe your quests for "excitement" and not wanting to feel "left out" of the possibility of easy money are among the main reasons why you have made some bad, i.e., impulsive, choices.

I suggest you read the links under "Getting Started," here:

https://www.bogleheads.org/wiki/Main_Page


Thank You. It was a very expensive lesson for me on how risky individual stocks are.

Liberty1100
Posts: 237
Joined: Fri Nov 21, 2014 12:36 pm
Contact:

Re: What to do after losing $117k in stock market?

Post by Liberty1100 » Tue Dec 12, 2017 10:28 am

I would follow the white coat investor's advice in investing priorities:
https://www.whitecoatinvestor.com/stude ... investing/
1) Pay off high interest debt. Any credit cards or consumer debt at 8% or higher should be paid off ASAP. Honestly you should have never accumulated this. Live like a resident until it is gone.

2) Invest in tax-protected accounts. If you are a resident max out your personal and spousal Roth IRAs. If an attending, max out your 401K, SEP-IRA, HSA and any other retirement account that allows you full marginal tax rate deductions.

3) Pay off non-deductible loans between 5% and 8%. These include most current student loans.

4) Consider investing in other accounts that offer a tax break, such as 529s (kid’s college accounts), UGMAs, and backdoor Roth IRAs if your circumstances merit.

5) Invest in risky assets in a taxable account (stock mutual funds or investment properties).

6) Pay off loans with after-tax rates of 3%-5%. These include most mortgages.

7) Pay off loans with after-tax rates below 3%.

8) Invest in safe assets in a taxable account such as CDs, bonds, and savings accounts. If these types of assets return to historic norms (4-5% returns) instead of their current 1-2% returns, then it is okay to invest in these prior to paying off very low interest debt.

9) Don’t carry any debt into retirement. Losing the safety net of on-going employment income makes this a risky affair. It’s one thing to get foreclosed on when you’re 30. It’s entirely different when you’re 70.

User avatar
DaftInvestor
Posts: 3979
Joined: Wed Feb 19, 2014 10:11 am

Re: What to do after losing $117k in stock market?

Post by DaftInvestor » Tue Dec 12, 2017 10:32 am

Go with #1 - focus on getting out of debt and take a break from the market. When you do get back in - index and think of it as a long term commitment. Don't get caught up in all the water-cooler stories people are telling which is likely the problem you have today (since you are using terms like "fear of missing out" and "winning back some of my losses" - a very dangerous way to think by the way).

Fountain84
Posts: 24
Joined: Tue Dec 12, 2017 7:25 am

Re: What to do after losing $117k in stock market?

Post by Fountain84 » Tue Dec 12, 2017 10:34 am

bottlecap wrote:
Tue Dec 12, 2017 9:11 am
"Joy" and "stressful and depressing” don’t go together.

You perhaps enjoy the anticipation that gambling gives you. You might need to talk to someone about that.

Other than that, I would commit to investing in a target retirement fund inside a retirement account and commit to staying in it. Also pay down the student loan debt.

Commit to not doing this again. Thankfully, you can recover.

Find outside interests. Life won’t be so boring.

Good luck,

JT
Thank You. I will admit the thrill is sometimes addictive. I hate myself for losing so much money and trying my best to not repeat this mistake again. I already have 401k matching for employer but I guess the greed in me is always wanting more money which leads to high risk investment.

Fountain84
Posts: 24
Joined: Tue Dec 12, 2017 7:25 am

Re: What to do after losing $117k in stock market?

Post by Fountain84 » Tue Dec 12, 2017 10:38 am

DaftInvestor wrote:
Tue Dec 12, 2017 10:32 am
Go with #1 - focus on getting out of debt and take a break from the market. When you do get back in - index and think of it as a long term commitment. Don't get caught up in all the water-cooler stories people are telling which is likely the problem you have today (since you are using terms like "fear of missing out" and "winning back some of my losses" - a very dangerous way to think by the way).
Path #1 is where I'm leaning and I currently have a plan to knock off my student loans by 2020. I just don't understand all the people on twitter and other social media outlet bragging about making $50k-$200k in stocks. It is so difficult for me to even make a $500 profit. I should just swallow my pride and accept that i'm not a good stock picker. I do plan to invest in Vanguard Index Fund (Ex: VTI) later when i'm doing with my student loans.

p0nyboy
Posts: 102
Joined: Wed Aug 30, 2017 1:37 pm

Re: What to do after losing $117k in stock market?

Post by p0nyboy » Tue Dec 12, 2017 10:40 am

Pigs get fat...hogs get slaughtered.

Slow and steady wins the race. Low cost vanguard index funds...dollar cost average...stay the course.

User avatar
ruralavalon
Posts: 13503
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: What to do after losing $117k in stock market?

Post by ruralavalon » Tue Dec 12, 2017 10:42 am

Fountain84 wrote:
Tue Dec 12, 2017 10:34 am
Thank You. I will admit the thrill is sometimes addictive. I hate myself for losing so much money and trying my best to not repeat this mistake again. I already have 401k matching for employer but I guess the greed in me is always wanting more money which leads to high risk investment.
What funds are you using in your 401k? What other funds are offered in your 401k? Please give fund names, tickers and expense ratios.

About how much money (in addition to what you contribute to your 401k to get the employer match) do you believe that you can add annually to investing/debt payments?

Probably the better approach is part to debt and part to investing (an IRA or additional to the 401k).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

User avatar
BolderBoy
Posts: 3987
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: What to do after losing $117k in stock market?

Post by BolderBoy » Tue Dec 12, 2017 10:45 am

Fountain84 wrote:
Tue Dec 12, 2017 10:38 am
I should just swallow my pride and accept that i'm not a good stock picker.
The word "should" indicates that you aren't ready to accept that fact yet.

When you finally do completely own that fact, then the suggestions being made here will be of value.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

TSR
Posts: 689
Joined: Thu Apr 19, 2012 9:08 am

Re: What to do after losing $117k in stock market?

Post by TSR » Tue Dec 12, 2017 10:46 am

market timer wrote:
Tue Dec 12, 2017 8:32 am
Ten years ago, I lost $210K while still in school (student loans and credit cards). My suggestion would be to contribute to tax advantaged accounts up to the limit, then put the rest toward student loans. It is nice feeling to see declining loan balances. It provides a sense of accomplishment that can't be taken away by the whim of the market.
I agree with this advice (and highly recommend the very candid and informative post that market timer did about his experience). I am a fan of the "do both" strategy of student-loan repayment, which emphasizes getting whatever tax advantage you can from a 401k plan all the way to the 18.5k limit for 2018 while simultaneously paying off the student loans aggressively.

But let's be clear. You are not describing "sort of addictive" behavior. You are describing a full-blown addiction. The fact that you've just lost a large sum of money and want to go back at it is very, very troubling, or at least should be to you. I would strongly suggest that you need to go cold turkey. And here's the problem: one of the mottoes of this place is "invest you must," so it's basically impossible to go completely cold turkey and still be a boglehead. But you should go cold turkey on individual stocks, sector bets, and market timing. You can read all you want to here about why you should do that anyway if you actually want to make money, but I don't think that reading will do much good for an addict like you. My prescription would be (1) only index funds in the form of lifecycle/target-date funds that you never, ever sell; (2) only in tax-advantaged accounts up to the limit; and (3) the rest goes toward student loans.

Good luck!

Thesaints
Posts: 1390
Joined: Tue Jun 20, 2017 12:25 am

Re: What to do after losing $117k in stock market?

Post by Thesaints » Tue Dec 12, 2017 10:50 am

Fountain84 wrote:
Tue Dec 12, 2017 10:38 am
Path #1 is where I'm leaning and I currently have a plan to knock off my student loans by 2020. I just don't understand all the people on twitter and other social media outlet bragging about making $50k-$200k in stocks. It is so difficult for me to even make a $500 profit. I should just swallow my pride and accept that i'm not a good stock picker. I do plan to invest in Vanguard Index Fund (Ex: VTI) later when i'm doing with my student loans.
Those who lose $50k-$200k usually don’t write articles. However, to put things in the right perspective, at the same time as you lost 117k (investing how much, if I may ask ?), the world stock market returned +30%, on average. Therefore it is clear that you were not just the victim of chance, but there was something fundamentally flawed in the method followed.

For the future, how much is your student loan costing you after taxes ? If it is a very low number, perhaps accelerating its repayment is not the strategy that serves you best. On the other hand, investments in the financial markets are not expected to yield returns as munificent as in the recent past for the near future, when executed comme il faut.

User avatar
Silly Wabbit
Posts: 82
Joined: Sat Mar 25, 2017 9:54 pm

Re: What to do after losing $117k in stock market?

Post by Silly Wabbit » Tue Dec 12, 2017 10:51 am

Fountain84 wrote:
Tue Dec 12, 2017 10:38 am
DaftInvestor wrote:
Tue Dec 12, 2017 10:32 am
Go with #1 - focus on getting out of debt and take a break from the market. When you do get back in - index and think of it as a long term commitment. Don't get caught up in all the water-cooler stories people are telling which is likely the problem you have today (since you are using terms like "fear of missing out" and "winning back some of my losses" - a very dangerous way to think by the way).
Path #1 is where I'm leaning and I currently have a plan to knock off my student loans by 2020. I just don't understand all the people on twitter and other social media outlet bragging about making $50k-$200k in stocks. It is so difficult for me to even make a $500 profit. I should just swallow my pride and accept that i'm not a good stock picker. I do plan to invest in Vanguard Index Fund (Ex: VTI) later when i'm doing with my student loans.
There's a selection bias at work. Who's more likely to post: winners or losers?

Don't believe everything you read.

staythecourse
Posts: 5813
Joined: Mon Jan 03, 2011 9:40 am

Re: What to do after losing $117k in stock market?

Post by staythecourse » Tue Dec 12, 2017 11:06 am

My suggestion as it is for ANYBODY is to do no more investing/ speculating and do some reading. Everyone's opinion is different, but in the end what sets most bogleheads/ passive investors is the true belief, in the end, that NO ONE can predict anything (which stocks to pick or what is best time or worst time in the market). The reason is the market is efficient enough to make a profit off such activities moot post transaction costs and fees. Eithe

After reading you will either believe it or not. If you are data/ science driven you will get it, but if you are emotion/ ego driven you will not. After reading if you get it then great. If you don't then I would separate out your portfolio to main and speculative. Leave 10% of your worth in the speculation portfolio if you must. I don't have ANY $ in speculation so don't advice it, but it is better then blowing your entire nest egg again.

Good luck.

p.s. You won't like to hear it, but the older I get I start believing more about Dr. Bernstein once saying majority of folks should NOT be investing on their own. I just don't think many have the temperament for it.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

flyingaway
Posts: 1771
Joined: Fri Jan 17, 2014 10:19 am

Re: What to do after losing $117k in stock market?

Post by flyingaway » Tue Dec 12, 2017 11:06 am

I would pay off the student loan and mortgage first.

GibsonL6s
Posts: 214
Joined: Tue Aug 29, 2017 12:17 pm

Re: What to do after losing $117k in stock market?

Post by GibsonL6s » Tue Dec 12, 2017 11:10 am

Hard to answer, was the loss due to margin, or you bought 500k of stocks that are now worth 380K. What do you have left in your brokerage account?

WhiteMaxima
Posts: 1220
Joined: Thu May 19, 2016 5:04 pm

Re: What to do after losing $117k in stock market?

Post by WhiteMaxima » Tue Dec 12, 2017 11:11 am

1st of all, just forget about your loss. That's over.

2nd: use 30% pay off student loan. That's 4.5% real return

3rd: invest 30% in broad based low cost index fund (like Vanguard), long term expected return 5 ~ 6 % next decade> don't gamble in individual stock

4th: invest 40% in short term bond , CDs as emergency fund. Currently 1.5% to 2% return.

User avatar
HomerJ
Posts: 11447
Joined: Fri Jun 06, 2008 12:50 pm

Re: What to do after losing $117k in stock market?

Post by HomerJ » Tue Dec 12, 2017 11:12 am

Silly Wabbit wrote:
Tue Dec 12, 2017 10:51 am
Fountain84 wrote:
Tue Dec 12, 2017 10:38 am
DaftInvestor wrote:
Tue Dec 12, 2017 10:32 am
Go with #1 - focus on getting out of debt and take a break from the market. When you do get back in - index and think of it as a long term commitment. Don't get caught up in all the water-cooler stories people are telling which is likely the problem you have today (since you are using terms like "fear of missing out" and "winning back some of my losses" - a very dangerous way to think by the way).
Path #1 is where I'm leaning and I currently have a plan to knock off my student loans by 2020. I just don't understand all the people on twitter and other social media outlet bragging about making $50k-$200k in stocks. It is so difficult for me to even make a $500 profit. I should just swallow my pride and accept that i'm not a good stock picker. I do plan to invest in Vanguard Index Fund (Ex: VTI) later when i'm doing with my student loans.
There's a selection bias at work. Who's more likely to post: winners or losers?

Don't believe everything you read.
Heh, my brother-in-law tells me all about his winners. My sister-in-law tells my wife all about his losers.

deltaneutral83
Posts: 807
Joined: Tue Mar 07, 2017 4:25 pm

Re: What to do after losing $117k in stock market?

Post by deltaneutral83 » Tue Dec 12, 2017 11:16 am

Fountain84 wrote:
Tue Dec 12, 2017 10:22 am

You're right. It will feel amazing to see the loan balance go down. Reason i'm on this forum is because I'm struggling to resist the temptation to go back into the market to make some big gains next year and then throw it all into my student loans. I see major opportunities in biotech for example because it is so beaten down lately. I just feel like i'm missing out.
You have a guaranteed rate of return at 4.8% (minus the interest you can write off) on your SL. With your income and your student loan + interest rate, I wouldn't be concerned about investing beyond your company 401k match into the cheapest total domestic index fund, or large cap if Total isn't available. Putting aside the fact that you seem bent on investing in sectors, you sound like you would have even more negative emotions if you invested (and let's assume it's 3F or 2F as you're young instead of risky sector bets) and the Domestic/INTL markets were collectively down for the next 2 years while your student loans continue at 4.8%.

User avatar
sunnywindy
Posts: 374
Joined: Sat Jan 18, 2014 4:42 pm
Location: Wilmington, NC

Re: What to do after losing $117k in stock market?

Post by sunnywindy » Tue Dec 12, 2017 11:21 am

You need to de-couple your emotions from investing. Unless you do that, you will have always have trouble with the market (you are a gambler, not an investor and there is a massive difference.)

And the way to de-couple your emotions from investing is more knowledge. Read this website and read some of the recommended books on this website and take the advice to heart. There isn't any other way, except for allowing someone else to manage the money for you like a robo account or a registered investment manager. Good luck!
Powered by chocolate!

User avatar
C4NT
Posts: 214
Joined: Tue Aug 23, 2011 12:30 pm

Re: What to do after losing $117k in stock market?

Post by C4NT » Tue Dec 12, 2017 11:26 am

UncleBen wrote:
Tue Dec 12, 2017 8:46 am
Invest minimum to obtain any 401k matching and attack the student loans with a vengenge with every extra dollar. Make it a game to see how fast you can do it to add some excitement.
+1

This would be my suggestion. This is what I did. In your 401k, invest it in the lowest cost broadest funds available or a target date fund.

Luke Duke
Posts: 721
Joined: Tue Jun 18, 2013 11:44 am
Location: Texas

Re: What to do after losing $117k in stock market?

Post by Luke Duke » Tue Dec 12, 2017 11:35 am

Fountain84 wrote:
Tue Dec 12, 2017 7:48 am
I will feel more depressed because I know I won't be able to win back some of my losses.
Don't treat the market like a trip to Vegas. Make a plan to earn back your losses through regular contributions, smart choices and discipline.

thangngo
Posts: 1144
Joined: Sun Feb 26, 2017 2:08 pm

Re: What to do after losing $117k in stock market?

Post by thangngo » Tue Dec 12, 2017 11:38 am

Learn from it. Don't pick individual stocks. You win some and you lose some, but you don't have unlimited amount of money to keep betting.

staythecourse
Posts: 5813
Joined: Mon Jan 03, 2011 9:40 am

Re: What to do after losing $117k in stock market?

Post by staythecourse » Tue Dec 12, 2017 11:55 am

I am not sure why so many folks are telling the OP to just stop speculating. It isn't like the human mind goes, "Oh okay x number of people told me to do y so now I will do y". That is the problem with behavioral finance and this thread is a perfect microcosm of it. Just because you tell the person doesn't/ won't change it. No different then telling someone to stop smoking or stop drinking or stop doing drugs. The ONLY way is to EDUCATE the person and hope they believe they are doing it for themselves vs. just being told to do it and let their actions speak.

Just my 2 cents.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

KlangFool
Posts: 9528
Joined: Sat Oct 11, 2008 12:35 pm

Re: What to do after losing $117k in stock market?

Post by KlangFool » Tue Dec 12, 2017 11:59 am

OP,

1) You are not the only one. I lost 50% of my investment by gambling on Telecom stock 10+ years ago. I learned my lesson.

2) I stop myself from gambling on the stock. I invest in the all-in-one fund like LifeStrategy Moderate Growth fund and Wellington fund.

3) Find a hobby.

4) If you want to gamble on the stock, limit it to less than 5% of your portfolio. Only gamble on the stock that has the potential to return 10X to 30X in 5 years. Or else, why waste your time?

KlangFool

User avatar
ruralavalon
Posts: 13503
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: What to do after losing $117k in stock market?

Post by ruralavalon » Tue Dec 12, 2017 12:06 pm

staythecourse wrote:
Tue Dec 12, 2017 11:55 am
I am not sure why so many folks are telling the OP to just stop speculating. It isn't like the human mind goes, "Oh okay x number of people told me to do y so now I will do y". That is the problem with behavioral finance and this thread is a perfect microcosm of it. Just because you tell the person doesn't/ won't change it. No different then telling someone to stop smoking or stop drinking or stop doing drugs. The ONLY way is to EDUCATE the person and hope they believe they are doing it for themselves vs. just being told to do it and let their actions speak.

Just my 2 cents.

Good luck.
Many of us are first telling Fountain84 to do some reading and become educated in low expense index fund investing.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

JBTX
Posts: 3614
Joined: Wed Jul 26, 2017 12:46 pm

Re: What to do after losing $117k in stock market?

Post by JBTX » Tue Dec 12, 2017 12:14 pm

MathWizard wrote:
Tue Dec 12, 2017 8:55 am
Recognize that you probably did not lose $117K, as most of that was likely a paper loss on volatile stocks.
Only count as a loss the money that you put in. Likely that was much less than $177K.

If you still have student loans then you are young, so there is time to recover. Think of the money you lost
as financial tuition. (You don't think of your college tuition as a "loss", correct?)

Going forward, acknowledge that you are not smart enough to pick stocks as a hobby and compete against
pros doing this full-time. (Do you think that a weekend athlete could compete in professional football and
not get seriously injured?) This is probably the hardest, since it appeals to vanity. Surely I am smarter than
most of the investors, so I can get better than market average. Unfortunately, the market average is weighted
by the amount invested by each investor, and little individual stock picking is done by poor amateurs, and they
get weeded out of the market because they lose all their money.
Stock picking is not like athletics or anything else where lots of practice can make you a pro. The vast sum of evidence is that pros are not any better at stock picking, and stock picking is mostly a fools errand.

OP - you need to change his view of investing. What you enjoy is essentially gambling. Your desire to be in the market is to get that gambling rush. As long as that is your motivation you will make bad choices and will come out on the losing side.

Investing is boring. Invest in low fee index funds and leave them there for decades.

If you REALLY think you can change your view of investing, then start investing in tax deferred retirement plan vehicles and pay off your debt concurrently. If you still think you are going to chase the rush, then pay off your debt.

Perhaps a compromise is to start modestly funding some retirement accounts with low fee index funds and get in the habit of leaving them alone whether they go up or down. If you can get comfortable with that then continue to increase your boring retirement investments.

User avatar
alpine_boglehead
Posts: 211
Joined: Fri Feb 17, 2017 9:51 am
Location: Austria

Re: What to do after losing $117k in stock market?

Post by alpine_boglehead » Tue Dec 12, 2017 12:33 pm

OP, joy and excitement may be nice, but long-term satisfaction when you are seeing your finances prosper is worth more in the long run.

What really keeps my own hands out of individual stocks is the realization that with efficient markets, buying individual stocks just gives me the same expected return as the overall market, only with more risk. And that's an awful lot more risk, google "the capitalism distribution".

Yankuba
Posts: 71
Joined: Wed Dec 07, 2016 10:45 am

Re: What to do after losing $117k in stock market?

Post by Yankuba » Tue Dec 12, 2017 12:37 pm

UncleBen wrote:
Tue Dec 12, 2017 8:46 am
Invest minimum to obtain any 401k matching and attack the student loans with a vengenge with every extra dollar. Make it a game to see how fast you can do it to add some excitement.
+1

I agree 100%. Invest enough to get the 401k match and then eliminate the student loans. Stay away from individual stocks and Bitcoin

Houe
Posts: 103
Joined: Wed Jun 29, 2016 9:04 am

Re: What to do after losing $117k in stock market?

Post by Houe » Tue Dec 12, 2017 12:39 pm

I'll tell you what not to do: put everything you have left into bitcoin.

User avatar
market timer
Posts: 5927
Joined: Tue Aug 21, 2007 1:42 am

Re: What to do after losing $117k in stock market?

Post by market timer » Tue Dec 12, 2017 12:42 pm

goingup wrote:
Tue Dec 12, 2017 9:25 am
market timer wrote:
Tue Dec 12, 2017 8:32 am
Ten years ago, I lost $210K while still in school (student loans and credit cards). My suggestion would be to contribute to tax advantaged accounts up to the limit, then put the rest toward student loans. It is nice feeling to see declining loan balances. It provides a sense of accomplishment that can't be taken away by the whim of the market.
market timer-
There's an epic thread of your market timing travails. Not to put you on the spot, but it could probably be helpful for the OP who seems to be on the path you traveled. What happened to you and how did you turn it around?
What got me out of the hole was first accepting my new reality (took almost a year), to the point where I wasn't trying to get back to "even" via the market, then taking each day one at a time, and trying to retain some sense of control over my life.

Psychologically, it would have been painful to use my savings entirely for loan repayment. So I used every trick I could to defer loan repayment and build a cash cushion in case I lost my job--this was during the recession. I'd wake up every day and take mental stock of what I would do if I were laid off. How long could I survive with no income if I stopped paying rent on my apartment and maxed out my credit cards? This pattern of thought became ingrained over several years and I still have a habit of negative visualization.

Luckily, despite a conservative allocation, I managed to earn enough and save enough to feel comfortable with my responses to these negative visualization scenarios. If I stopped working today and the stock market crashed, my family and I could maintain our current standard of living.

User avatar
midareff
Posts: 5658
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: What to do after losing $117k in stock market?

Post by midareff » Tue Dec 12, 2017 12:49 pm

Looking for excitement? The market is very boring when done right.

User avatar
William4u
Posts: 1302
Joined: Fri Jun 01, 2012 3:02 pm

Re: What to do after losing $117k in stock market?

Post by William4u » Tue Dec 12, 2017 12:57 pm

You are lucky in this way: you learned you lesson earlier than I did. I owned individual stocks and learned my lesson. Go with index funds, sleep easy, and find your excitement elsewhere.

Here are some articles about why individual stocks are mostly losers:

Most individual stocks are outperformed by treasury bonds...
https://www.irishtimes.com/business/per ... -1.2969824
https://www.reuters.com/article/us-mark ... SKBN15G5KX

Why Most Stocks Are Stinkers (and What You Can Do About It): A handful of stocks is responsible for virtually all the gains in the stock market since 1926...
https://www.kiplinger.com/article/inves ... about.html

KlangFool
Posts: 9528
Joined: Sat Oct 11, 2008 12:35 pm

Re: What to do after losing $117k in stock market?

Post by KlangFool » Tue Dec 12, 2017 1:02 pm

market timer wrote:
Tue Dec 12, 2017 12:42 pm
goingup wrote:
Tue Dec 12, 2017 9:25 am
market timer wrote:
Tue Dec 12, 2017 8:32 am
Ten years ago, I lost $210K while still in school (student loans and credit cards). My suggestion would be to contribute to tax advantaged accounts up to the limit, then put the rest toward student loans. It is nice feeling to see declining loan balances. It provides a sense of accomplishment that can't be taken away by the whim of the market.
market timer-
There's an epic thread of your market timing travails. Not to put you on the spot, but it could probably be helpful for the OP who seems to be on the path you traveled. What happened to you and how did you turn it around?
What got me out of the hole was first accepting my new reality (took almost a year), to the point where I wasn't trying to get back to "even" via the market, then taking each day one at a time, and trying to retain some sense of control over my life.

Psychologically, it would have been painful to use my savings entirely for loan repayment. So I used every trick I could to defer loan repayment and build a cash cushion in case I lost my job--this was during the recession. I'd wake up every day and take mental stock of what I would do if I were laid off. How long could I survive with no income if I stopped paying rent on my apartment and maxed out my credit cards? This pattern of thought became ingrained over several years and I still have a habit of negative visualization.

Luckily, despite a conservative allocation, I managed to earn enough and save enough to feel comfortable with my responses to these negative visualization scenarios. If I stopped working today and the stock market crashed, my family and I could maintain our current standard of living.
market timer,

Sorry to hear that.

I lost 50% of my investment. Then, my employer had quarterly laid off of 5% to 10% for the next 5 years. By the time that I was laid off, 80% of the employees were laid off. So, I had been through the similar experience.

KlangFool

magneto
Posts: 951
Joined: Sun Dec 19, 2010 10:57 am
Location: On Chesil Beach

Re: What to do after losing $117k in stock market?

Post by magneto » Tue Dec 12, 2017 1:37 pm

Fountain84 wrote:
Tue Dec 12, 2017 7:48 am
Yes, I feel like the biggest idiot especially in this bull market. I only started investing 3 years ago and got involved in high risk stocks (oil and biotech). Made some really bad picks and took a massive lost. I try to ignore thinking about how much I've lost because I feel ashamed and embarrassed. I still owe $153k in student loans and have a $110k mortgage. I love reading and following the stock market. It is a hobby of mine and brings me lots of joy but it is also stressful and depressing because I seem to always pick the worst stocks to invest. I am lucky to have a stable $120k/year job. I am considering which path to take moving forward. Any opinion will be greatly appreciated. Thank you in advance.

Path 1: Get out of the market completely. Focus entirely on paying off my student loans (4.8% interest) and only consider investing after paying off my student loans. This will alleviate a lot of stress in my life but I will feel more depressed because I know I won't be able to win back some of my losses. Investing does bring me joy and excitement. Life will be boring.

Path 2: Continue to payoff student loans but invest modest amount ($600/month). This will bring me more happiness because I get to stay in the market and not feel like i'm missing out. I don't want to feel like i'm missing out in 2018 if the tax cut plan passes and stocks continue to rise. But this plan will make me feel guilty because this is an additional $600 monthly payment I could put towards my student loans and bring apprehension because I will constantly worry about losing more money (especially with my track record of horrible picks).
Quite a long thread, so may well have missed some key points along the way.
A few thoughts :-
+ Am puzzled as to how complete losses incurred, if the stocks still held?
+ There is good debt (against appreciating assets) and there is bad debt. Try to classify. Work on reducing the bad debt progressively to at or near zero.
+ At the risk of being accused of market timing, see little reason for you to fret about being out of the markets today. If the S&P was yielding say 3%+ might then to a degree share your urgency to get back in.
+ Bearing in mind the poor stock-picking performance skills shown to date, when re-entering (with stocks more reasonably priced) maybe use a core and satellite approach. The core being whole market trackers, the satellites the 'inspirational' own choices, but keep the latter to a bare minimum so as to not jeapordise your financial future.
+ If not already read, expend the pent up frustrated energy reading the authors recommended here.
My own favourites for reading and regular re-reading include Frank Armstrong, Ben Carlson, Howard Marks, Benjamin Graham, Wm Bernstein.

"Investing does bring me joy and excitement. Life will be boring."
Know the feeling.
But try and make a sea change to let investing become as boring as possible.

Good Luck
Last edited by magneto on Tue Dec 12, 2017 2:01 pm, edited 2 times in total.
'There is a tide in the affairs of men ...', Brutus (Market Timer)

Fountain84
Posts: 24
Joined: Tue Dec 12, 2017 7:25 am

Re: What to do after losing $117k in stock market?

Post by Fountain84 » Tue Dec 12, 2017 1:54 pm

TSR wrote:
Tue Dec 12, 2017 10:46 am
market timer wrote:
Tue Dec 12, 2017 8:32 am
Ten years ago, I lost $210K while still in school (student loans and credit cards). My suggestion would be to contribute to tax advantaged accounts up to the limit, then put the rest toward student loans. It is nice feeling to see declining loan balances. It provides a sense of accomplishment that can't be taken away by the whim of the market.
I agree with this advice (and highly recommend the very candid and informative post that market timer did about his experience). I am a fan of the "do both" strategy of student-loan repayment, which emphasizes getting whatever tax advantage you can from a 401k plan all the way to the 18.5k limit for 2018 while simultaneously paying off the student loans aggressively.

But let's be clear. You are not describing "sort of addictive" behavior. You are describing a full-blown addiction. The fact that you've just lost a large sum of money and want to go back at it is very, very troubling, or at least should be to you. I would strongly suggest that you need to go cold turkey. And here's the problem: one of the mottoes of this place is "invest you must," so it's basically impossible to go completely cold turkey and still be a boglehead. But you should go cold turkey on individual stocks, sector bets, and market timing. You can read all you want to here about why you should do that anyway if you actually want to make money, but I don't think that reading will do much good for an addict like you. My prescription would be (1) only index funds in the form of lifecycle/target-date funds that you never, ever sell; (2) only in tax-advantaged accounts up to the limit; and (3) the rest goes toward student loans.

Good luck!

It is very difficult to resist the temptation to get back in the market. After losing $117k, it is very hard to walk away and accept the mistake even though it is for the best. I was very hard-headed thinking I can outsmart other invetors and the whole market. In the end it was as a wasted of time and energy. Index fund is the way to go for sure.

Post Reply