My first experience with investing is kind of an embarrassing one, but was vital to my interest in investing and to my success investing now-a-days.
It was around November of 2015, so last fall. I basically had no knowledge of the stock market at all, except for maybe watching a few movies like The Wolf of Wall Street (probably not the best movie to learn how to invest from). I was taking a business class, when an opportunity came to join a state wide competition in a Stock Market Simulation. I decided to join, because I thought it would be fun and that I would be good at it. Well I wasn’t.
I had no clue what commissions were, so I would constantly buy a stock and sell it after a few minutes and a minor gain. In my mind, there was no way I could be losing money if I was buying at a lower price than I was selling it at. Because hey, the stock went up right? Well the profits I was making from my trades weren’t nearly as large as the fees from commissions, and I started to become increasing frustrated by my losses. How was I losing money?
I started looking up information on the stock market, and finding investing blogs to read. I found few good ones and a few bad ones, but probably learned the most from a few beginner ones. I had no background knowledge in investing, so I learned a lot about things that seem silly now. Things like what a limit trade is, commissions, what an earnings report was etc…
After about a week or so of reading, I decided to give investing another try. Sadly, we were so far into the competition that I only had a month left to invest. At that point, I was in 343rd place out of 563… Pretty bad right? Well I decided to take very large positions in two companies I read were supposed to grow. Well they didn’t. That’s when I learned a few other lessons on investing. Diversification and sifting through promotional investment articles.
Obviously most people reading this article know what diversifying is, but if not it is basically best put by, “Not putting all of your eggs in one basket”. So putting your money in more than one place, or stock, so that if one stock does bad you will lose less than if everything was in that stock. Also I learned about promotional investment articles. I am pretty sure this isn’t what they are called, but this is what I will call them. We will go with PIA for short. Well in my opinion you can lose lots of money through PIA. These articles are basically a company or person promoting a stock for their own self gain. They are getting everyone excited to buy a stock, so that once that stock grows, they can sell their own shares of that stock and make a profit.
Anyways, I learned a lot from that Stock Market Simulation. I was really grateful I took the opportunity to try that out, so that once I turned 18 and wanted to start investing with real money (like I am now), I wouldn’t make critical mistakes that could cost me in the long run.
I am a competitive person, and I wasn’t very happy with “losing” in the game. So I decided that until my 18th birthday (about six months away), I would consistently watch the stock market, look at stocks, and read investing articles until I felt I was prepared for when the time came. Well when the time came, I felt I was ready.
Now here I am today, more knowledgeable than ever before.
Comment below any embarrassing investing stories you have!