What to do after losing $117k in stock market?
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What to do after losing $117k in stock market?
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).
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).
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Re: What to do after losing $117k in stock market?
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.
Then buy a proper mixture of the 3 fund portfolio.
Bogle: Smart Beta is stupid
- market timer
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Re: What to do after losing $117k in stock market?
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.
Re: What to do after losing $117k in stock market?
I submit the line above should be changed to "Gambling does bring me joy and excitement. Life will be boring without it."Fountain84 wrote: ↑Tue Dec 12, 2017 6:48 am Investing does bring me joy and excitement. Life will be boring.
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.
"Confusion has its cost" - Crosby, Stills and Nash
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Re: What to do after losing $117k in stock market?
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
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
Re: What to do after losing $117k in stock market?
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.
- ruralavalon
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Re: What to do after losing $117k in stock market?
Welcome to the forum .
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".
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".
I suggest reading different things, and investing differently.Fountain84 wrote: ↑Tue Dec 12, 2017 6:48 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 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".
I don't believe that either of those plans is wise.Fountain84 wrote: ↑Tue Dec 12, 2017 6:48 amPath 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).
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: Bogleheads® investment philosophy
Re: What to do after losing $117k in stock market?
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.
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Re: What to do after losing $117k in stock market?
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.
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.
Re: What to do after losing $117k in stock market?
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.
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.
Link to Asking Portfolio Questions
Re: What to do after losing $117k in stock market?
"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
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
Re: What to do after losing $117k in stock market?
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.
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
Re: What to do after losing $117k in stock market?
As others have said-no more gambling with individual stocks. Put money into target retirement funds.
Stop looking for easy street. Slow and steady works.
Stop looking for easy street. Slow and steady works.
Last edited by Dottie57 on Wed Aug 29, 2018 9:06 am, edited 2 times in total.
Re: What to do after losing $117k in stock market?
market timer-market timer wrote: ↑Tue Dec 12, 2017 7:32 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.
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?
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Re: What to do after losing $117k in stock market?
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.Fountain84 wrote: ↑Tue Dec 12, 2017 6:48 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.
It's independent of taking the standard deduction or itemized deductions.
JW
Retired at Last
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Re: What to do after losing $117k in stock 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.market timer wrote: ↑Tue Dec 12, 2017 7:32 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.
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Re: What to do after losing $117k in stock market?
beardsworth wrote: ↑Tue Dec 12, 2017 7:39 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.
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Re: What to do after losing $117k in stock market?
I would follow the white coat investor's advice in investing priorities:
https://www.whitecoatinvestor.com/stude ... investing/
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.
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Re: What to do after losing $117k in stock market?
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).
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Re: What to do after losing $117k in stock market?
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.bottlecap wrote: ↑Tue Dec 12, 2017 8:11 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
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Re: What to do after losing $117k in stock market?
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.DaftInvestor wrote: ↑Tue Dec 12, 2017 9:32 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).
Re: What to do after losing $117k in stock market?
Pigs get fat...hogs get slaughtered.
Slow and steady wins the race. Low cost vanguard index funds...dollar cost average...stay the course.
Slow and steady wins the race. Low cost vanguard index funds...dollar cost average...stay the course.
- ruralavalon
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Re: What to do after losing $117k in stock market?
What funds are you using in your 401k? What other funds are offered in your 401k? Please give fund names, tickers and expense ratios.Fountain84 wrote: ↑Tue Dec 12, 2017 9:34 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.
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: Bogleheads® investment philosophy
Re: What to do after losing $117k in stock market?
The word "should" indicates that you aren't ready to accept that fact yet.Fountain84 wrote: ↑Tue Dec 12, 2017 9:38 amI should just swallow my pride and accept that i'm not a good stock picker.
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
Re: What to do after losing $117k in stock 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.market timer wrote: ↑Tue Dec 12, 2017 7:32 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.
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!
Re: What to do after losing $117k in stock market?
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.Fountain84 wrote: ↑Tue Dec 12, 2017 9:38 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.
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.
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Re: What to do after losing $117k in stock market?
There's a selection bias at work. Who's more likely to post: winners or losers?Fountain84 wrote: ↑Tue Dec 12, 2017 9:38 amPath #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.DaftInvestor wrote: ↑Tue Dec 12, 2017 9:32 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).
Don't believe everything you read.
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Re: What to do after losing $117k in stock market?
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.
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
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Re: What to do after losing $117k in stock market?
I would pay off the student loan and mortgage first.
Re: What to do after losing $117k in stock market?
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?
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Re: What to do after losing $117k in stock market?
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.
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.
Re: What to do after losing $117k in stock market?
Heh, my brother-in-law tells me all about his winners. My sister-in-law tells my wife all about his losers.Silly Wabbit wrote: ↑Tue Dec 12, 2017 9:51 amThere's a selection bias at work. Who's more likely to post: winners or losers?Fountain84 wrote: ↑Tue Dec 12, 2017 9:38 amPath #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.DaftInvestor wrote: ↑Tue Dec 12, 2017 9:32 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).
Don't believe everything you read.
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Re: What to do after losing $117k in stock market?
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%.Fountain84 wrote: ↑Tue Dec 12, 2017 9:22 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.
- sunnywindy
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Re: What to do after losing $117k in stock market?
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!
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!
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Re: What to do after losing $117k in stock market?
+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.
Re: What to do after losing $117k in stock market?
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.Fountain84 wrote: ↑Tue Dec 12, 2017 6:48 am I will feel more depressed because I know I won't be able to win back some of my losses.
Re: What to do after losing $117k in stock market?
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.
Time is the ultimate currency.
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Re: What to do after losing $117k in stock market?
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.
Just my 2 cents.
Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” |
-Jack Bogle
Re: What to do after losing $117k in stock market?
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
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
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
- ruralavalon
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Re: What to do after losing $117k in stock market?
Many of us are first telling Fountain84 to do some reading and become educated in low expense index fund investing.staythecourse wrote: ↑Tue Dec 12, 2017 10:55 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.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: What to do after losing $117k in stock market?
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.MathWizard wrote: ↑Tue Dec 12, 2017 7:55 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.
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.
- alpine_boglehead
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Re: What to do after losing $117k in stock market?
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".
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".
Re: What to do after losing $117k in stock market?
+1
I agree 100%. Invest enough to get the 401k match and then eliminate the student loans. Stay away from individual stocks and Bitcoin
Re: What to do after losing $117k in stock market?
I'll tell you what not to do: put everything you have left into bitcoin.
- market timer
- Posts: 6535
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Re: What to do after losing $117k in stock market?
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.goingup wrote: ↑Tue Dec 12, 2017 8:25 ammarket timer-market timer wrote: ↑Tue Dec 12, 2017 7:32 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.
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?
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.
Re: What to do after losing $117k in stock market?
Looking for excitement? The market is very boring when done right.
Re: What to do after losing $117k in stock market?
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
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
Re: What to do after losing $117k in stock market?
market timer,market timer wrote: ↑Tue Dec 12, 2017 11:42 amWhat 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.goingup wrote: ↑Tue Dec 12, 2017 8:25 ammarket timer-market timer wrote: ↑Tue Dec 12, 2017 7:32 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.
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?
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.
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
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
Re: What to do after losing $117k in stock market?
Quite a long thread, so may well have missed some key points along the way.Fountain84 wrote: ↑Tue Dec 12, 2017 6:48 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).
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 1:01 pm, edited 2 times in total.
'There is a tide in the affairs of men ...', Brutus (Market Timer)
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Re: What to do after losing $117k in stock market?
TSR wrote: ↑Tue Dec 12, 2017 9:46 amI 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.market timer wrote: ↑Tue Dec 12, 2017 7:32 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.
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.