The Wednesday Wellness threads are meant to encourage users to ask for and provide advice and motivation to improve their lives. It isn't intended as a 'containment thread' and any content which could go here could instead be posted in its own thread. You could post:
-
Requests for advice and / or encouragement. On basically any topic and for any scale of problem.
-
Updates to let us know how you are doing. This provides valuable feedback on past advice / encouragement and will hopefully make people feel a little more motivated to follow through. If you want to be reminded to post your update, see the post titled 'update reminders', below.
-
Advice. This can be in response to a request for advice or just something that you think could be generally useful for many people here.
-
Encouragement. Probably best directed at specific users, but if you feel like just encouraging people in general I don't think anyone is going to object. I don't think I really need to say this, but just to be clear; encouragement should have a generally positive tone and not shame people (if people feel that shame might be an effective tool for motivating people, please discuss this so we can form a group consensus on how to use it rather than just trying it).
Jump in the discussion.
No email address required.
Notes -
It's me again the guy who posted here three weeks ago about investing his small and modest trust fund into the stock market. Yup.
https://www.themotte.org/post/1695/friday-fun-thread-for-february-21/300977?context=8#context
I bought at the literal peak and feel like shit.
I'm angry at Donald Trump, myself, but most of all at the market for not pricing in Trump's clearly telegraphed idiotic decisions.
I picked the absolute worst date to start investing in the last three years and am experiencing no small amount of self-pity. Others at least get to have a few months of being in the green. I had one fucking day.
I put 16,000€ into the S&P 500, 500€ into Nvidia, 1,500€ into tech ETFs, and 500€—I shit you not—into an S&P 500 10x leveraged option trade I did for entertainment. Lost it all, of course.
Overall, I'm down 2000€ (~15%) right now.
I have no income stream to buy the dip with, as I'm still a student. I never had more than 2000€ in my bank account before this. I wanted to be really dilligent about not spending this money.
Woe is me. I know the market will recover, this is just a blip on my journey, all that bullshit. Still, it feels awful knowing I could have just waited one week. All that time researching Bogleheads stuff, and now I'm left wondering if I got in right at the end of the gravy train.
I still believe in my reasons for investing (I'm convinced AI will lead to an extra 1 percentage point of growth year over year).
But goddamn. My whole family was against me doing this (the money was in gold before), and ah man, it's all so fucking unfair.
(Yes, I'm a whiny upper-middle-class student who doesn't have a job, but hey, hedonic adaptation and all that. My problems are just as real as those of you who are less tall and handsome.)
Ok, dropping anything in a 10x leveraged index trade was stupid. But if the money was in gold before? Man, you'll be in the green inside 5 years. Don't sweat it.
More options
Context Copy link
Well I put $450k into the market at the same time. Proceeds from a real estate sale. I'm only down 6% but....
Hopefully that puts it in perspective. I'm frustrated at the same people you are, it'll end up in the wash!
More options
Context Copy link
Don't worry about it.
https://www.hartfordfunds.com/practice-management/client-conversations/managing-volatility/timing-the-market-is-impossible.html
Ok, that's bullshit AI blogspam. "Best days" don't matter, trends do, and it doesn't do anything to support its claim.
I doubt it's AI given that the earliest snapshot on IA of this page is from August 2022 and chatgpt released in November of that year.
I doubt it's bullshit given that other people have done similar analyses and found that the best days of trading have outsized effects on long term returns, even if the exact effect size varies depending on the parameters of the analysis.
But if you have analysis to the contrary I'd be interested in seeing it.
And his results are very different than theirs, you'll notice.
Yes, his result is that you lose about a third of your returns rather than 50%. It's not clear if the original post assumed monthly investments or one lump sum at the beginning, which is why I said the exact number depends on the parameters of the analysis.
Would you really not have said that the original article is bullshit if it said you lose merely a third of gains if you miss out on the ten best trading days? No matter how you slice it, it seems clear that "best days don't matter" isn't true.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
Don't worry about it. I first started my 401k in 2006. A year later I saw a shit ton of it poof and vanish in the 2007 financial crisis. It might have been $6000-10,000. That shit hurt. I panic sold the bottom, left it in some inflation protection fund for too many years, and missed out completely on the recovery. Learning this lesson is best when you are young, so by the time you are middle aged and have real assets, you have developed diamond hands.
Now I have a seven figure portfolio. I'm down almost six figures. I honestly don't give a fuck.
Let the S&P 500 and the tech ETF ride. In 20 years you'll be alright. Don't sweat the $1000 you put into relatively riskier plays, so long as the 10x leveraged option can't wipe out the rest. Leverage can be scary like that.
You're a student, and provided your degree is of any actual use, you'll have your entire adult life with an income to keep contributing to a portfolio. There will be more bull markets, there will be more dips. Investing is a marathon, not a sprint.
I was going to ask how the Nvidia ride was for you last month, since I know you stayed heavily into it.
How often do you reallocate? I've always been jealous of people with most of their money in 401ks and IRAs, because dealing with cap gains is a nightmare for my money with no tax protection.
I've just let it ride. Im still up over 20x. I may rebalance at some point this year and divert some into my S&P fund, but paying the 15% cap gains tax doesn't seem worth it at the moment. I may harvest some losses off Intel with it though.
Just think, if you'd only put $1000 into Intel in 2000, you'd have almost $300 now!
At least when something drops like this you get to say things like "Intel's up 16% this week!"
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
You can't time the market, you should come up with a strategy of investing X of your income every Y months and completely ignore the stock numbers. As for right now, don't panic sell.
More options
Context Copy link
At least you didn’t go all-in on Bingus-Token.
More options
Context Copy link
You might be overallocated into tech without realizing it.
For example you may be convinced that you have 500€ in Nvidia, but you really have about 1,400€ in it because it makes up 6% of the S&P 500 right now.
I want to be "overallocated" in tech as I see that sector benefiting most from Ai advances. I'm fully that the snp is already very tech-heavy.
More options
Context Copy link
More options
Context Copy link
Hey it's me the guy who encouraged you to use leverage.
You mention Bogleheads so I'm sure you know holding is the best move. Do not sell. Your family's advice was garbage and mine is good: do not sell. The S&P 500 is a good investment, though I personally prefer VTI!
Some are claiming this was the fifth-fastest selloff since 1950! Wow! Lick your wounds. What happened to you was marvelously unlucky. Keep in mind that all we've done is return to price levels last seen in September, a mere 6 months ago. I put a slightly smaller amount of money aside in its own account when I was your age and have never touched it, and it's been magical watching it grow.
I do still believe you should learn to trade derivatives with a responsible portion of your wealth.
Definitely not planning to sell. Sadly, my play money got burnt up by the sudden downturn, I wanted to use it to learn and do slightly riskier things. Cant afford that any more.
So ... done, and done? Congrats!
It sounds like I'm mocking, but I'm serious. My first investment account was a whopping 4 figures of "play money", split between one stock that promptly quadrupled and another that went bankrupt, and I'm really glad I got a nice lesson in diversification well before it was time to invest with kids' college money.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
Two thoughts. One, every time you invest you should always (always!) have at least a rough timeline in mind. If your timeline is >3 years, great! You're still, historically speaking, probably going to be fine. If it was less, this is a valuable life lesson about stock volatility many have not learned and you might gain some lifelong net-benefit, even literally. Carefully evaluate your timeline and beware of panic selling depending on said timeline.
Two, sometimes it is emotionally easier to "structure" investments (and their sale as well). Although in theory, it is best to invest it all at once and sell it all at once, as soon and as late as possible respectively - this is due to the tendency of the market to go up - in practice as you have learned it can be difficult and full of self-doubt or recrimination. "Structuring" in this context means that you stagger any and all entries and exits into the stock market, effectively 'averaging' the price points. This means, maybe you have 30k to invest, you put in 10k one month, wait a month, 10k the next, wait a month, 10k the next, or something like that. This way, you can at least emotionally free yourself from trying to "time" the market, since the timing effects are diluted (they don't go away entirely, but it's a lot easier to stay convinced that your entry or exit was deliberate and rational). This also means your gains are averaged too, might be good or bad. Like I said, I personally consider it an emotional-management technique, but emotions are a valid and real factor in investing. You can always park the to-be-invested money in a high yield savings account temporarily while you wait.
My timeline is 7 years. I specifically did lump sum investing because it's clearly the best. I trust myself not to sell, which I was right on. I underestimated the emotional pain of it, though, I guess structured investing would have helped against that.
More options
Context Copy link
More options
Context Copy link
It'll bounce. I bought a batch late 2021 that spent all of 2022 25% down, and didn't break even until the end of 2023. We're not even close to that yet.
Nvidia's up almost 7% today alone, and is basically flat on 6 mth.
Throwing everything in all at once always runs the risk of hitting a local peak. Sometimes the tells aren't reliable either: the surge of redditors and streamers talking about playing the market last year made me pull out early and miss a lot of recent gains.
More options
Context Copy link
Addendum:
I still appreciate the interesting anecdotes about your trading/investing experiences from last post!
More options
Context Copy link
More options
Context Copy link