My First Trade - A Trade That Started My Real Investment Journey
There is no easy path to any profession or long-term endeavor you want to undertake. The same goes for anyone who wants to seriously embark on investing whether in a personal or professional capacity. Along the way, you will make tons of errors. And some will seem incredulous when you look back. But we should all embrace it as part and parcel of the journey. There are no blunders that are too big. Whether you are a beginner or an experienced investor, we are all students of the market and we will make mistakes. But just be chill, learn from it, and enjoy an occasional good laugh.
I usually write only about the markets or investment stuff, but this time round, the post will be something more personal. Just want to share how I started the journey. My first trade played a pivotal role and it also happened to be my most disastrous trade. Now, in terms of the amount I lost, it wasn't much, but when it comes to sheer stupidity, it definitely tipped the scale 🤣.
Here Goes The Story ... Once Upon A Time
My First Trade - Lure of the Dot-Com
I made my first trade more than 20 years ago when I was still a university student back in the 90s. That was during the boom of the dot-com days. My friends often talked about their victories in the stock market then. It was like you can throw a dart on any internet stock and see it fly! Sounded like really easy money and that got me hooked.
So, I went down to a local brokerage and opened an account. Those were the days when you need to buy shares in lot size of 1000 and the minimum commission is around $30 for Singapore stocks. So to put on just one trade, you will need much more money than what is required today for it to make economic sense.
Armed with two thousand bucks, which was painstakingly saved over years and almost my entire net worth then, I picked what I thought was an internet stock and whack it all in. From then, I watched my position closely every day. It was nerve-wracking watching the price move up and down. Whenever the price moved down, I stared hard at the screen and concentrate intensely in the hope that the price will reverse and move up. And whenever it did, I felt a false sense of accomplishment as if that happened because of my sheer willpower 😁. Yes, those were the days ...
But anyway, it didn't disappoint me, the price kept rising. What is driving it? I don't know and I don't really care then. All it matters is the position is making money.
With the Dot-Com I Rose, With the Dot-Com I Fall ...
I thought smugly to myself I hit the jackpot and am on my way to earn my bragging rights in front of my friends. But months later, the price headed down and down and down...
It was really painful to watch my profits vaporizing. But I didn’t sell because that will dashed any hope of recouping and be even more painful. Deep within, I still harbor the hope that things will turn around. And I sought the opinion of a friend who had more experience with the markets. I only told him my dilemma, but he doesn't know the details of my trade. Based on that, he told me to hold and wait for the price to come back, and meanwhile don’t look at the prices if that freaks me out. I felt relieved when he told me that because deep within I didn't want to sell at all. I just wanted someone to support what I already subconsciously decided.
Now, this was a piece of perfectly simple advice. But it was incredibly hard to follow. Because it took me immense effort to not think about my position. And I remembered being physically present in classes, but my mind and spirit are somewhere else.
And When The Day Comes, It Is One BIG WTF MOMENT!
But I did manage to suppress the urge and only log in to check many months later. And guess what? What happened just blew my mind away. But it was not because the price dropped. Neither did the price rebound nor stay flat. So how could it be the case where the price neither fell, rose, nor remained where it is? Surprised? Because there wasn’t even a price to check at all! My position vanished into thin air. It was a WTF moment for me! I was totally clueless about what happened. Did my broker just scam me? I called them up in a rather heated manner to demand an answer.
The Moment of Truth Revealed - I am One Big Idiot
As it turns out, I am the idiot. What I bought was not even a stock in the first place. It was a call warrant. That was the first time I heard of that term. For those who are not familiar, a warrant works just like an option except that it is issued by a specific company. All warrants have an expiry date and a strike price. If the price of the stock trades below the strike on its expiry date, the call warrant basically becomes worthless and expires. And that is how my precious first trade disappears into emptiness 😭.
There Is Always A Lesson You Can Learn
Till today, this is my most memorable trade. I can look back and laugh at it now, but it definitely didn't feel that way back then. I made a fool of myself and paid heavily for the lesson. But it was one that I well deserved. I rushed in due to greed and fear of losing out without even doing the slightest homework. I have practically zero basis for putting on the trade and no conviction whatsoever that I could speak of. My pathetic plan can be summed up in one short line - Buy an internet stock and get rich! And the best part of it, what I bought wasn’t even a stock to begin with.
But that moment I issued myself a challenge to make the money back. And that got me the real first step into my journey with the financial markets. There are always things the market will teach us whether you are a newbie or a veteran and it can be a really humbling experience. So for those who are starting out, don't give up, take every fall you make as an opportunity to learn and challenge yourself.
In time to come, you will also be looking back and laughing off your own stories.
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