Nishanth S Coontoor
6.30 am. 4 May 2020. Monday. Casually scrolling through Facebook…
‘Aparna and Nagesh are engaged.’ Alright, here’s a like.
‘#TBT,’ says Varun’s status. A picture of the beach under it. TBT? Dude, today’s a Monday.
‘This stock could be the next Amazon. Click to find out.’ Oh cool. Oh, its an ad.
6.45 am. Still a Monday.
‘Aparna and Nagesh are celebrating their wedding!’ Already?
‘Man who predicted Bitcoin rise has this advice. Click to find out.’ Its an ad. AD. AD.
7.00 am. Monday still.
‘Aparna and Nagesh welcome little Leela, our munchkin.’ Wait, whaaaat? Couple goals, I say. Here’s a share.
‘Top 5 Cannabis stocks to invest in right now. Click here.’
Alright, I’ve had it with these ads and the bald man in it and his smirk face. If this old man can do it, maybe I can as well. I should check it out.
I click the link. It opens a webpage. I start reading.
And I read. I read. I read on…
I’m now 2000 words into the piece, much like this one, and there is no mention of the said company I should put the $10 I will borrow from my sister.
I continue reading…
This reminds me of The Old Man by The Sea.
I continue reading…
Will you get to the point already?
I continue reading…
This isn’t going to work.
*
I tried my hand at day trading y’all. And it was exactly what they say. You know – volatile, risky, stressful and I don’t know what I am doing.
I started small. I invested the borrowed $10 and $2 I found in a kitchen cabinet into Penny stocks. I was able to buy a few hundreds with this, which I thought was very cool. Imagine if this stock goes up to $2 like the man in the picture promised me, it will be a good investment!
But unfortunately, although the stock had volatility, the only return it seemed to give me over a 2 hr timeframe was enough to buy Mango bites for the family. And here, I wanted to be able to buy a Mango tree.
I held on. Constantly hovering over the graph to see my “returns.” As soon as it hit a profit of $2, I sold it!
I told my family I had made a profit on my first trade. They seemed excited as well! Oh, to be the proud parent of an engineer beta with student loans, right?
How much, my dad asked, clearly shaking his head sideways.
A 17% profit, not including Uncle Sam’s cut, I remarked. Yeah, like I was going to tell him 17% equaled $2. Duh.
Okay, I am getting a hang on this. Buy low, sell high. Quite straight forward. Time to YOLO the shit out of this one, but with caution.
‘Companies to invest money in right now.’ Google, go, go, go!
And I hit jackpot. A Reddit page called wallstreetbets!
Reddit is a social media site that contains news, discussion forums and other user generated content. Almost all topics you can think of has a community on the platform. There is a, relatively speaking, responsible version of Investing community on Reddit and then there is the YOLO, go big or go home version of the same called wallstreetbets.
You may know where this is going. Unfortunately, I did not. But I was intrigued.
The community is full of posts where users invested several hundreds and thousands of dollars in the stock market and managed to take their portfolios either to the moon or to $0.00. The Bulls and Bears were constantly trying to make money or tendies (as in Chicken tendies) as they describe it. Their belief: stocks only go up.
They work with Options.
Options trading is a form of investing where you contract to buy shares in increments of 100 at a price you think it will reach in the future. If the share reaches the price, you make a profit, otherwise you lose out the complete money or the premium you paid to buy or sell that contract. Its not as simple as this one, but this will give you an idea.
So, if I had to go big, it had to be options. And I chose to buy an option of a popular wholesaler. All that toilet paper buying should mean good earnings right?
I opened the laptop the next day. At 11 am, I bought an option expiring 2 days into the future. For simplicity, and so I don’t have to live through this again, let’s say it costed me $100.
11.13 am. I am still staring at the screen.
11.40 am. I am now staring at the screen, but from the kitchen. Did my stock go up?
12 noon. I am staring on my phone screen from the loo.
At about 12.30 pm, the value dropped to $60. There was news on possible store closures due to the virus. Oh, the betrayal!
At about 2.30 pm, the value increased to $200! There was a news on home deliveries spike. YAY!
But did I sell? No. Did you forget greed? 😀 If it went up to $200, it may go even higher, right?
At market close, the value dropped to $70. There was an announcement by the Fed.
It’s okay. I would have spent $30 loss eating out today. Ashtak-ashte. (That’s all) After hours trading volumes are low. Tomorrow is a brand-new day.
I logged off from the constant screen staring. I logged back to look at stock futures.
The thing with options is that its value can drop the closer you get to the expiration date because the price prediction and direction becomes ‘predictable.’ The value I keep talking about is how much other traders are willing to pay for a contract you have prior to its expiration.
The next day, now closer to the expiration, the value sank further. After a choppy morning session that resembled the ECG of my heart during the day with its constant ups and downs, the chart flattened out at $0.01. Yeah, a cent.
And poof! The monies gone. But I think I found a place in the wallstreetbets community. That’s gotta be worth something right?
Quick note:
- The objective of the story was to take you through the roller coaster ride that this experience can be. It isn’t an investing advise. Do your own research.
- There are several resources online that has helped me learn what works best for me based on your short term or long-term investing goal. I’ve listed a few I found useful.
- Most of us are already investing for the long term through 401K plans. I recently found an app called Acorns fit well for my long-term goal. It invests spare change from purchases to buy fractional shares of ETF. ETF is an exchange traded fund.
- Of course, you can also simply buy and hold on platforms like Robinhood and e-trade.
Referral links: Both of us will get a referral reward if you open an account using these links.
- Acorns: https://acorns.com/invite/G5PMAT
- Robinhood: https://join.robinhood.com/nishans32
Resources:
- The Intelligent Investor by Benjamin Graham
- morningstar.com
- A fellow blogger’s writing I’ve enjoyed so far: https://justfinvest.blogspot.com/
Legal Disclosure:
I am not a financial advisor. The information contained in this blog/website is for information and entertainment purposes only. It is not professional financial advice. Before investing, please consult a licensed professional. I will not be liable for any losses you may incur for investing and trading in the stock market.