Learning to Avoid Investing Disasters

1. Avoid new products.
2. Too many investors never learn from history.
3. Never buy anything you don't understand.
4. Beware of institutional products repackaged for retail.
5. Greater returns always come with greater risk.

Besides these rules, the experience of making mistakes and the practice of failing will teach you the true lessons of investing.

I got introduced into stocks from my grandmother. I was always interested in finances and making money and with her, I was able to ask questions, receive real-world answers, and I was able to learn from her wisdom. Then, I received a book called "Stock Market Logic" by Norman G. Fosback from my grandfather. When reading it at a young age, it was very difficult to comprehend, and I only understood the basics of how nobody can consistently outperform the market and how everyone is the market.

At the age of thirteen, I started trading stock. I remember begging my father to allow me to start trading. I showed him my research and I told him what stocks I wanted to invest in, and finally he gave in. A week later, I went with him to see our family stockbroker at Charles Schwab with a check written out for $2,000.

Before we went into Nicollo's office, my father told me to sit there quietly and let him handle the business. My father handed Niccollo the check and told him that I wanted to add to my portfolio; the portfolio my parents and grandmother started for me when I was born. Then, Niccollo went on with advising us on stable, low-risk stocks that I should be investing in; turning his screen around to show us all of these graphs with an assortment of pretty colors and lines. (Back then, I did not know anything about trends and patterns so I was in a state of cluelessness).

I pulled out my numbered list of stocks that I had created and handed it to him. Long story short, I invested in three companies that day with one of the investments being a  recommendation by him: Amazon, Netflix, and Ford. As of February 15, 2018, Amazon has had a 327% unrealized gain, Netflix a 439% unrealized gain, and for Ford, besides their $.60 yearly dividend, I am currently at a loss. (Ford was the recommendation.)

In high school, I gained access to my portfolio and I started to trade with permission from my parents. I was exposed to risk, gain, and loss and I was loving it. I had my apps where I was able to track stocks, make predictions, and view data, and I bought stocks from that research. When I turned eighteen, I opened up my own individual portfolio and I learned the hard lessons of day-trading. I used to wake up every weekday at 6am right before the market opened to submit my orders. I was so active in trading that once I placed multiple trades using the slow, limited-access WIFI in a bus station in Bratislava, Slovakia. I could not get enough and I was hypnotized on the idea of getting rich quick. Having this mindset caused me to make many mistakes which include:

• Trading on margin
• Sell too soon
• Not be patient
• Trade too often
•  Not knowing my loss exposure so instead of setting up Stop-Limit orders, I would sell at a bigger loss

Now, I have learned from my mistakes and I have found my successful investment strategy. With time, experience, and knowledge, I learned how to avoid investing disasters.

The lessons to be learned are:

1. Start early
2. Learn from your mistakes
3. Have patience
4. Know the difference between gambling and investing
5. Do research
6. DO NOT TRADE ON MARGIN