Why do people keep investing in these 5 horrible stocks? Clearly, they are losing value but what was the reason why they lost so much value?
How do you spend 2/3 of your life working and only give 1/3 of your life to spend money, and you are still broke?
This is what happens to Tom…
He is working in a boring office job, yet he is always broke. He is tired and frustrated by both until one day. He stumbles on a YouTube video that promises a way to escape his situation. The solution: best stocks to invest in
He takes his entire life savings, invests them into five stocks, and loses 90% of his investment. This result makes him lose all his savings and his future dream.
But what were these stocks? And what was the surprising reason why his portfolio lost so much value? So let’s analyze what happened so that something like this will never happen to you.
Tom is in a desperate situation. He has no choice but to yolo his saving. The stake is rising; he’s invested the last penny in his savings account and he just had a newborn baby.
His wife is furious at him because he’s gambling the money without consulting with her, and she threatens to leave him with his newborn child. Tom was not very honest with her in the beginning. He also takes his regular paycheck to fund the investment, now, he’s short on rent for his apartment, and his family might get evicted.
Every day Tom looks at his brokerage account, and the number keeps going down. Eventually, the market did not go in his favor, and he lost 90% of his portfolio value. Now Tom is back to 0 where he starts, completely shaming himself and mistrusting his ability.
Imagine you have two choices to eat. Which one do you likely to choose? I would grab a chocolate cookie because it is good for my soul. But this is what happens every day. People would love to listen to someone else and make a decision about their investment by ear vs. eating broccoli sprouts does not taste good at all but is good for your body. It is not fun to do your own research because it takes a lot of time, and it is hard.
The first problem is that he makes a mistake by not filtering the information, garbage in – garbage out. Watch youtube video, the best stock to invest in, and the top stock to buy right now.
He read an article like https://www.fool.com/investing/top-stocks-to-buy/ and then invest. This led to his second mistake.
He did not spend his time researching the company, the balance sheet, the cash flow of the company, and the intrinsic value of the company. He had to look the company trade before the pandemic to estimate the true value because the government gives money during the pandemic and it causes the price to inflate.
And one crucial part that makes him the ultimate failure is he has lack of patience when it comes to investing, a slow and steady approach will yield greater returns in the long run. He expects the portfolio to earn 10x quickly…This is a recipe for disaster.
Here’s the list of stocks that he was raving about and cast catastrophic to his account:
Netflix ——- drop 51% of it value
Meta ——- drop 66% of it value
Paypal ——- drop 53% of it value
Coinbase ——- drop 77% of it value
Etsy ——- drop 45% of it value
What could Tom do better?
If he would take his time to study each company he invests into, study their principle, and their balance sheet and cash flow. He’s taking his time, not timing the market price, and not being influenced by others.
If he sticks with this principle, his portfolio will increase by 90%, and his life will change.
In 12 months, I can see Tom absolutely 100x his portfolio, but one more mistake can drain your bank account quicker than Tom. Then check this video on how to protect yourself from it.