Did what I thought was very good "due diligence" and bought into a stock. Kept buying into it, though it started falling. Knew I should have been dumping it and taking the "small" loss but the emotion kept saying to hang on...going to be rich.
Well, it kept falling and I kept buying, even into $20,000 margin. Thought that I could pay the margin off and get all the benefits of the big bounceback that it just "had to do".
It didn't and I fell into a terrifying cycle of margin calls...about every two to three days. Of course, instead of dumping then, I kept saying (in a panic) that I had to make it up...it's going to make it up....it didn't.
At one point, my account went negative (because of the margin). It took a bounce and I had to unload...left me with $0.25 in my account. Had to call the broker just to ask them to not charge me margin interest meaning that I would have owed them just to get rid of the stock.
The hardest thing that I ever had to do was to go home and explain to my wife that I had just lost $59,000+ dollars. Expecting the worst, she gave me her best. The only condition for forgiveness was to promise her no more....an easy promise to make considering what I had just done.
My yearly $3,000 write off reminds me of that sad moment of my life each and every year.....for 16 more.
And what makes it even more sad is that I "KNEW" that I should dump it.....just emotion took over and lost all sense of logic. I have shed tears several times over the pain of that loss and also to the relief that my wife was far more loving and understanding that I would have give her credit for. A very painful and a true mistake that I will never forget....
:'🙂\:'(
I tell this painful story in hopes that it will somehow prevent someone from ever doing what I did and having the pain or the displeasure of telling your loved one that you lost so very much of what you both had worked so hard for.....
Not related to this thread.. but a personal note of mine.
My dad also lost a lot of money investing in Stock.
He just returned from an overseas job in 1983.. had a lot of money to spend.. and after spending some time doing research on where to spend his money.. started investing in the stock market(Bombay stock Exchange), along with having his social network expanded, made some more money. Then started his life as a stock broker in Hyderabad by 1985, giving stock advice and tips to his friends and colleagues.. and later they started giving my dad money to invest.
All my dad's investment had to be done by a broker in BSE.. and the only way to keep in touch with him was by phone(We were the first to have a land line in our block
😛).. he only got proof of the transaction next week by mail. It was smooth sailing until 1992.. in today's money his friends invested about $ 50K. In 1992..
this happened.. market fell 12% in a single day, the broker in BSE went bankrupt(He was probably involved with Mr. Mehta).. and went underground, leaving my dad to fend for himself. He was morally and financially devastated.. his only backup is his full time Government job that pays him $5K/year.
After that.. he worked his ass off for 12 years, paid everyone their dues with interest. In spite of that, he made sure his sons got a good education.. made sure not to let that affect our family life.
Although there are a few things which I don't like about him, I admire his perseverance.. the way he always tries to take the moral high ground. Now, at the age of 64, even though he got rich.. he never stops working.. I always wonder what makes him tick.
I don't think I will be able to tell him personally, but he will always be my inspiration.. and my life will be his legacy.
🙂:'(