Some Lessons Regarding How I Lost Nearly $20,000.00 in the Stock Market Today $SRPT
The stock market is a place of hopes and dreams. However, sometimes those dreams turn into nightmares. Millions are made and lost every single day. The market will beat you to your knees if you let it, no matter how tough you think you are. Although I am young, I have seen more than $150,000.00 in profits pass through my accounts over the last two and a half years. On the flip side of that I have also seen more than $100,000.00 go down the drain from mistakes resulting in losses. Today was one of those nightmares as Sarepta Therapeutics Inc. ($SRPT) announced that the FDA told them that their NDA (New Drug Application) for Eteplirsen to treat DMD was premature. This meant no Accelerated Approval (AA), which sent the stock down to a low of $12.35 from its recent highs of $55.60 on 10/8/13 (-77.79%). This was a major blow to investors and more importantly the boys with DMD. Committing to full transparency with all of my trades, I openly shared that I was long a decent size position in $SRPT pre-blowup.
After multiple entries, exits, and option plays over the past few weeks.. I finalized a $19,405.00 loss today due to the bad news. This made it’s mark as my biggest loss thus far.
To put that into perspective…
This is about enough money to buy a new Chevy Cruze.
Or buy 40,000 doughnuts, which would have lasted me about 109 years.
Or I could have fed nearly 80,000 starving African children for a day.
Or 220 of those children for an entire year.
It sickened me. $20,000.00 is a lot for someone who is just 18 years old. A piece of advice is to never compare losses to tangible items, it only makes it worse.
As I sat there in front of the computer screen at 4:30am this morning, I was pretty beat up. I just wanted to get away from the feeling. My chest literally ached, I felt sick, and worthless.. I pondered how I am suppose to make a career out of this sick twisted game. I truly felt the pain of all my failures come down on me. However, one of my favorite sayings ran through my head a couple hours later when I was walking to my Econ class. Pain is temporary. If I quit however, it will last forever. This isn’t the end of the world for me, and it sure as hell isn’t going to stop me from trading. Yes, I failed on this play, but I won’t ever get anywhere feeling sorry for myself. Losers feel sorry for themselves.
My loss is a small price to pay considering I exited in the 20′s before the stock fell another 10+ points. I am sharing this with you guys not because I want sympathy, but hopefully for others to learn from a mistake that I have made. Let me clarify, yes this is a set back, but no I did not blow up my accounts. I am fine capital wise and will continue trading and building my wealth.
How could I have avoided a loss like this? There are a two main things to consider:
1.) Smaller position. This may seem obvious, but don’t over-allocate your funds into one play. Never put all of your eggs in one basket.
2.) Use a hedge. Again, obvious. Personally I had a hedge that I decided not to keep. I sold my 36.00 puts last Friday (ouch). Never hold a position into a possible binary event without a hedge. (Duh)
But cant go back now..
One advantage that young traders have is time. I have all the time in the world. I plan on playing the stock market for the next 60 years minimum. That presents endless opportunity. Being young and involved with stocks gives me a huge margin for error because I don’t have a family, kids, or bills to worry about. This is why I highly encourage kids to become involved in the market at a young age. Financial education is important and mistakes like the one I made today WILL happen. Yes, it sucks, but the flexibility I have because of my age will allow me to bounce back quicker then any adult with a life already established.
When all is said and done, today I watched people get crushed from this highly populated play. It more than likely caused a few margin calls taking people out of this game forever. I live to fight another day. Anyone who suffers a major loss MUST keep their head up. Depression gets you nowhere. Mourning gets you nowhere. Feeling sorry for yourself GETS YOU NOWHERE. You must continue working hard as you possibly can and you will succeed no matter how much the haters try to bring you down.
The market will hit you and bring you down. It is a guarantee. As Rocky would say, losers will try to gain revenge and wildly hit back. HOWEVER, winner’s know it is not how many times you hit back, its about how many times you can get hit and keep moving forward. How much you can take, and still keep moving forward. THAT IS HOW WINNING IS DONE.
KEEP MOVING FORWARD $$$.