I thought I learned a lesson when I lost several thousands of dollars between 2000-2002 investing in the stock market during the dot com bust and vowed to stay away for a long time.
I did not get back to investing in the stock market until early this year and boy, do I have the smarts at picking the right stock!
I bought WaMu(WM) earlier this year when it was trading for around $20(saw it go down from $40 a year ago) and rode along with it until it got below $5 a share and sold it for a loss!!!
What did I do that you shouldn't? NOT PANIC..even though I felt like I was making an informed decision.
I was all along following the debacle of Freddi Mac(FRE) and Fannie Mae(FNM) and decided to buy FRE while it was trading around 4 bucks each(& to sell it when I had a profit of 10%) and had to watch it go down into $2-$3ish range...I sold it..
Now, I realized that I have lost so much that I really need to make it up fast..What do I do? Invest in Chinese stocks...I researched chinese stocks that had a business growth, earnings were increasing and was profitable..I narrowed it down to a list and decided to invest with China Nepstar Chain Drugstore(NPD). Guess what? Yes..you guessed it right..The CFO resigned the day after I purchased and the stock went down into the $4ish range..
I figured I have had enough of this stock market and decided to take one last gamble. Lehman brothers(LEH) was struggling to stay aflot and had lost about 50% the day earlier. I figured, how much more can it lose?(hear the amateur in me!) and bought a bunch of stock for about $8 and the next day it plunges another 45%...
Amen!
I think am going to stay away from stock market for the rest of my life and focus on paying down my mortgage, having a healthy emergency fund balance and funding my retirement(even though my 401k and IRA will contain stocks and bonds)...
Note: The money that am using to invest in the stock market is *play* money and made a wise decision not to invest thousands of dollars this time around...
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