I was working as a manager in an audio store at the mall. I had actually started working for my friend and mentor in his record store next door. There was an audio department in the back of his record store that I had started taking a special interest in. The audio store was moved out of the record store to its own location.
When it was moved I was promoted to assistant manager. Shortly after I was became the manager. While I was manager, my friend started playing in the stock market. He was so excited his traditional investing in stocks, he gave me the play by play accounts for his activities. After having lost all of my money just years earlier, I really had no interest in ever getting into that, but his stories were always, at the least, entertaining to me.
I have to admit that I remember being a little bit envious while his picks were doing well, but there always seemed to be about the same amount of time when they weren’t doing so well and that made me feel better about not being involved.
Hot Tips and Cold Feet
Christmas was coming and my friend got a “hot tip.” Coleco was just introducing the Cabbage Patch Kids for Christmas and my friend thought this was going to be the stock to make a pile of money on. He dove in deep, researching everything he could. The more he looked, the more he found nothing but great information about the company and about the Cabbage Patch Kids.
As much as I tried to keep my vow of never wanting anything to do with investing in the market again, my friend was making it really hard for me to not want to invest in Coleco and the Cabbage Patch Kids. His excitement was just so contagious and the fear of not wanting to miss a great opportunity, not wanting to miss out, had me actually considering purchasing some shares of Coleco.
Back then you had to call a guy to buy and sell stocks and the only way that you could purchase certain stocks was by buying them in blocks.
I purchased a block, a block was 100 shares of Coleco. It was around thirty dollars ($30) a share, so I spent about three thousand ($3,000) plus commissions, being caught up in my friends enthusiasm and stamping out the fear of missing out. My stomach ached with both the excitement of being a part of this little experience and with the fear of possibly losing everything again!
Going to work now brought about completely new feelings for me. My stomach was in knots in anticipation of the daily reports. The news of the stock price falling stressed me out tremendously while the news of the stock price rising somewhat calmed me.
But I was still intrigued with the whole experience.
Now the dilemma I struggled with was ‘when’ would I sell. The price, although the overall direction was up, kept bouncing up and down. Just a one dollar difference in a share price would mean a one hundred dollar difference in price overall. (Since $1 times 100 shares = $100 dollars).
The news didn’t help either because it swayed back and forth with rumors mixed with facts about Coleco releasing other lines of toys that would skyrocket their stock prices. I wanted to sell at the best possible time and struggled with if I should sell now or if I should hold on and potentially make even more money.
What Do I Do?
The hot tip was just what it was. Cabbage Patch Kids dolls were all the craze that Christmas. They were featured in the newspapers; we heard all about them on the radio. TV news stories covered the outbreak of shortages as well as the wild stories of what people were doing to get them. There were even fights in the long lines of people waiting to get one.
The hot tip was paying off. Coleco’s stock price began to climb. Unfortunately, they were not able to produce the Kids as fast as they were being sold.
The lure of making more money combined with the fact that I usually take longer than most people to make a decision kept me holding onto Coleco. The stock price never did go back up to the high price it was at Christmas that year.
The broker called and wanted to know what my plans were with Coleco. I decided to sell it and get off of the emotional roller coaster ride… get out of the casino. While I had made a few dollars, when tax time came that year I was further educated by my accountant. I had to pay taxes on the earnings I had made on my investment. I was definitely done with traditional investing!
What Did This Experience Teach Me?
- The grass is not always greener on the other side of the fence. What I mean is that there is always going to be someone or something that is better, stronger, faster, etc. and one of the hardest things that I have had to learn is to not be envious or jealous of someone else because you may never really know their whole story. My father used to say that if everyone threw their troubles into the middle of the road and then they were told to go pick troubles back up out of the road, everyone would pick their own troubles back up. Meaning, in comparison to others, sometimes our troubles don’t seem as bad as someone else’s. I continually try to remind myself to be grateful for what I have and not be envious or jealous of someone or something else.
- Investing in the (stock) market takes special skills. Not only does it take special skills but it also requires you to have certain qualities. You have to be able to make quick decisions. You have to be able to disconnect yourself from the situation emotionally and act rationally. You have to be able to accept the fact that you could lose all your money. You have to be able to deal with (emotionally even) the waves of downward market turns as easily as the upward market turns, without it stressing you out. You have to be able to accept and even enjoy partaking in risk.
- The only people that are guaranteed to make money are the licensed people, the ones who broker your buy and sells. One of the most infuriating aspects of ‘investing’ is that the only one who bears any risk in investing is the investor! Simply look at virtually anything associated with investing in as far as the disclaimers, the disclosures, and all the rest of the warnings and notices posted for you to read, understand and agree to. The investor bears the full responsibility, takes all the risk, but the licensed people get their money regardless of/even if the investor loses all of their money.
- Taxes are applied and charged on the money I make. While I thought that I ended up making a few dollars, even after paying the broker to buy the stock and then paying him to sell the stock and then the fees and who knows what else, I then was notified that I had to pay the government their share on the money that I made.
What’s the point?
I was over it. Investing in the market?
No Thank You! Not my cup of tea.
For all the effort, for all the stress, for all the worry, for all the risk, for all the… everything, I was DONE! Calculating out what I actually had left in my pocket after the whole ordeal was disheartening. Do I – can I even apply an expense for my time?
There had to be a better way to apply my time and money to something that would grow guaranteed, not incur any risk, and not be taxed.
Of course I found it!
For Your Best,