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  • Advice for a newbie

    Hi WCI members, I am a relative newbie to the world of finance in general. I am really hoping for some sound advice. I managed to pick the worst strategy and the worst times to invest (almost every stocks I chose and Active ETFs were at all time high when I started investing a month back)...and now in a matter of 1 month, I am staring at a 100k loss, out of an investment of 700K.

    1. While some of these stocks are stocks that I would own for life(like apple) and hence not too worried about it, I am not sure about the quality of others ...For example, FIVERR, APPIAN, SQUARE, PAYPAL, LMND, TTD, ROKU, MELI...and all the ARK ETF funds...I would say that almost 30 to 40% of my money are in the above mentioned stocks....and they have been crushed in the last 2 weeks!
    2. Astonishingly, when they started falling, I started putting more into these individual stocks in an attempt to dollar cost average....and need I say more..that turned out to be the most stupid thing I have done as it has left me worse off!!
    3. I have learnt my lesson and would not be looking into individual stocks in the future...Index funds it will be.....However, with regards to my current predicament, I would greatly appreciate any advice....Are the above stocks and ARK ETFs reasonably good enough for me to just hold, and would you recommend that I ride this out and be patient...or should I be doing what many seem to be doing, which is selling. Personally I dont want to sell, but I am not sure if that is the right thing or if I am just continuing to be stupid...If any one own the above stocks and/or Cathie Wood ARK funds, I would love to hear your thoughts..

    Thanks a bunch and sorry about the long post.

  • #2
    https://www.whitecoatinvestor.com/creations/
    Educate yourself.

    https://www.whitecoatinvestor.com/15...er-than-yours/
    Some examples

    Comment


    • #3
      TLH then

      Originally posted by rescuebot View Post
      Hi WCI members, I am a relative newbie to the world of finance in general. I am really hoping for some sound advice. I managed to pick the worst strategy and the worst times to invest (almost every stocks I chose and Active ETFs were at all time high when I started investing a month back)...and now in a matter of 1 month, I am staring at a 100k loss, out of an investment of 700K.
      -- you have been aware of WCI/Bogleheads for like 6 years.....
      -- what was your plan/strategy? you clearly had an entry plan, what was your exit plan?
      -- why havent you TLH yet? you are down 14% when the total market is down <2%.
      -- if you are married does your spouse know?



      1. While some of these stocks are stocks that I would own for life(like apple) and hence not too worried about it, I am not sure about the quality of others ...For example, FIVERR, APPIAN, SQUARE, PAYPAL, LMND, TTD, ROKU, MELI...and all the ARK ETF funds...I would say that almost 30 to 40% of my money are in the above mentioned stocks....and they have been crushed in the last 2 weeks!
      -- then why did you buy them? all the funds i buy i accept they can be with me through retirement....
      -- how are you going to address this FOMO behavioral aspect of your investing life?


      2. Astonishingly, when they started falling, I started putting more into these individual stocks in an attempt to dollar cost average....and need I say more..that turned out to be the most stupid thing I have done as it has left me worse off!!
      -- only when you sell at the bottom.....again, what do you believe?

      3. I have learnt my lesson and would not be looking into individual stocks in the future...Index funds it will be.....However, with regards to my current predicament, I would greatly appreciate any advice....Are the above stocks and ARK ETFs reasonably good enough for me to just hold, and would you recommend that I ride this out and be patient...or should I be doing what many seem to be doing, which is selling. Personally I dont want to sell, but I am not sure if that is the right thing or if I am just continuing to be stupid...If any one own the above stocks and/or Cathie Wood ARK funds, I would love to hear your thoughts..
      -- i dont know if its reasonable, i have never been in your predicament.
      -- assuming this is taxable, there should be TLH regardless.
      -- you bought high, and the only way out now is sell low. its a dangerous recipie.
      -- you dont list your other assets, NW, income, etc. maybe you are worth 10MM in which case this is play money so whatever....


      Thanks a bunch and sorry about the long post.
      Last edited by Peds; 03-05-2021, 07:21 AM.

      Comment


      • #4
        You don’t want more than about 5% of your money in individual stocks or very narrow sector funds like the ARK ETFs (or gold, or Bitcoin, etc.). That is the “play money” part of your portfolio, and you can do with it what you like. But the other 95% of your portfolio should be in low-cost index mutual funds or ETFs, and I wouldn’t put more than 80% of it into stock funds even if you’re young. That remaining 20% should be in bond funds.

        Read the two links Tim has provided, pick a reasonable asset allocation, then follow Peds’ advice and sell the bulk of your current holdings, claim the losses on your taxes, and re-invest the funds into your new index-based portfolio. Consider it an expensive lesion.

        As to which of the current individual stocks and ARK ETFs you hold you should pick to be in that 5% of your portfolio that is fun money, your guess is as good as anyone’s. No one knows which ones (if any) will be long-term winners. That is why individual stocks should never make up a sizable percentage of your portfolio.

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        • #5
          I did not look closely at all , but half the stocks you listed dont even have a P/E ratio which means either they are losing money or not making any. Some have astronomical P/E ratios like Square , which may fundamentally be a good company but not have the earnings to support it. If you have capital gains , you could sell one that made money and balance with a tax loss, and keep the best long term prospects. Either cut your losses and get out. Or try to sell on market swings, the market looks like it will continue to be quite volatile But holding for the long term and hoping the companies will grow up may be a losing strategy.

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          • #6
            Thanks so much everyone. Really appreciate you all taking the time for the feedback.

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            • #7
              I think the ARK experiment will likely end badly.

              Comment


              • #8
                Are you getting your investment ideas on Reddit? The list you post looks like a wall street bets roster of stocks with minimal earnings and no track record.

                Don't gamble your hard earned money on these stocks. Stick to broad ETF's like VTSAX to build the base of your portfolio. If you want to gamble with 5% of your money in the future, you can play some of those stocks at that time.

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