Deep in red – get lessons

An investment in KNOWLEDGE always pay the best INTEREST.

Benjamin Franklin

Benjamin Franklin has taught us the most important lesson in investing. Without knowledge, we all are gamblers not investors.

I did join the market from 2007, the time when my mind was sooooo fresh with huge enthusiastic and optimistic about making money, on the stock market. 🙂

In my country we have a common word when we talk about stock market is “playing”, not “investing” or “trading”. Does he/she play stock these days? Look like he/she made a big fortune. That kind of stories convince people jump into the market for playing. But the game in reality is not that FUN. =))

Have to admit that I am a person who loves to play hard and join stock market with mentioned playing attitude above. Easily to see, I lost all my money there about 6,000$ within a year, from 2007 to 2008. A huge legacy for fresh graduate!

#1 The painful lesson I have learned: NEVER BUY STOCK ON THE RUMOR

As human being, we are thirsty information and love beautiful ideas behind success stories.

I did spend days and nights just reading all financial news, stock forum, business reports, looking for inside information, internal rumors…where people discuss, recommend others which stock is on up trend, which stock is cheap to buy and hold for long term, which stock is being make up by sharks etc.

Sinking in sea of rumors, I didn’t recognize that where have SHARK there also have QUARRY.

#2 BE HURT BUT MUST CUT LOSS

As a human being, we tend to avoid emotional pain and keep hoping in pointless way.

In 2007 when my portfolio decreased  50% value, I were not brave enough to sell it out for cutting loss. I naively believed that price would soon to be recover following market rule of up and down. My belief is not wrong, but I didn’t know that there has another rule more important than up-down market rule is “time is golden”. Then I’ve been waiting for 2 years after the market crash and losing all money.

As you can see the chart below, the market have taken A DECADE to recover back at peak again.

VN-INDEX update on 28 July 2019

Based on my painful experience, I have noted down myself some highlights in investing:

  • Do research myself over the market and on stocks I want to buy. Try to answer the question WHY I want to buy it.
  • Set cut-loss percentage and do it strictly. I’ve set 10% for now.

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