Posted on March 15, 2016 by
Sometimes I wonder whether it’s better to write in the first person or to relate an article as a story. But then again I started this blog in the first person way back, years ago it seems, so on the pretext that an article written in the first person will gain more empathy, we’ll give it another try. As I said, my job is a financial accountant and that makes me a numbers man. I’m the sort of guy that tells you that you should never dip into your principal. It’s good advice and on this occasion, you should listen to me.
Generally, human beings are quite reticent about discussing financial affairs with strangers but that’s the situation I find myself in many, many times. If nothing else folks know a little bit more about me and that I like to travel, dislike cats, but have a fondness for iguanas. People tend to think that a person in my position would be very clever with money, but I’ve made some crazy mistakes in my investment life too.
I used to have a penchant for investing in technology stocks which, as you know, peaked in early 2000. If I’d had the tools available to me, or, at least, somebody on my side such as IFCM CFD broker than I probably would have been made aware of impending doom. I had bought shares in a parcel of dot-com stocks amongst them Microsoft, Intel, and Cisco. It’s not as if I needed the money for anything like a lung transplant, so I figured, what the heck, how bad could these shares get? By the end of September, I was sitting on a 22% loss.
Things can only get worse. You can’t have rewards without risk. If you’re trying to find value on the stock market, it’s not enough to buy low. You want to find stocks that are cheap relative to earnings, if not other value measures. Oh, for some geWorko trading instruments back then. I’m sure some super analytical stock market measuring instruments would have saved me a lot of money and pain.
And here’s a bit of advice that I give to all my clients. I held onto my stocks assuming that sooner or later a rising economy would lift the stricken tech sector. And I was absolutely right. It was a matter of hanging on for long enough because the recovery took almost 6 years. When you’re talking about investing in stocks and shares and the value of your stocks go down, you actually only lost money if you sell those shares. If you’re financially well off enough to withstand extreme fluctuations in the stock market, in the long run, you will be much better off. It still remains a puzzle to me how desperate some investors get if there is a stock market drop seeing their money is locked in a share portfolio. Conversely, if the stock market goes ‘bear’, then they are all smiles but no better off in hard cash unless they sell their investment. People are funny!