JUST over a year ago, I quit my job with plans to retire early and play the stock market with the money I'd saved.
Back then, the Straits Times Index was soaring and I was making a few hundred bucks easily on most days. But it wasn't long before the bubble burst.
I still kick myself for not seeing it coming. Or rather, not wanting to see it coming. Surely, it was all too good to be true. Stock prices were escalating to record highs every day, and it was all too easy to make money.
If the stocks I bought dipped, it was almost certain to recover in a few days or weeks. Or so I thought, until that fateful period when everything just spiralled downwards and there was no looking back.
At first it was a matter of hanging on, and then hanging on some more, and then when it was clear the s*** had hit the fan, I had no choice but to grit my teeth and suffer the paper losses.
So call it foolishness, stubbornness, optimism or greed; this was how I got burnt. I am certain the financial crisis will subside one day because, historically, there has been no financial crisis that did not; so, logically, this should be the same. For now, I'll just have to practise patience and tenacity so my paper losses will hopefully be just that.
But all's not lost either; as investment gurus will tell you, a bargain-hunting opportunity like this doesn't come by every day.
I'm reading up as much as I can to figure out how to recoup my losses. To quote legendary investor Warren Buffett: "Be fearful when others are greedy, and be greedy when others are fearful" (Mr Buffett is currently picking up battered American stocks, like GE).
Also, cut your losses early - sell when stocks fall below 80 per cent of the price you paid for them; don't put all your eggs in one basket; and long-term investments are a better option than short-term speculative buying.
On the whole, this episode has taught me some valuable (albeit expensive) lessons.
I've learnt not to be so impulsive and greedy. I've learnt it's best to let go when I still have the opportunity to do so; stubbornness does not pay.
I've learnt to invest only what I can afford to lose. And I've learnt to diversify my investments.
Fortunately, my lifestyle has never been overly indulgent, so I haven't had to adjust too much. I know it'll take some time for everything to get back on track, but I've learnt that in life, sometimes you just have no choice but to be patient and wait for the right moment.
Wish me luck! This blog first appeared in Stomp. Go to www.stomp.com.sg to read what the other Star Bloggers say about the global financial crisis and its impact on them.
