I wanted to do a self-reflection on what went wrong during the Gamestop saga. If nothing else, this should be a lesson learnt. It is an expensive lesson, so I should look at my mistakes closely. Better to face up to blunders, and not sweep it under the carpet. There is still a long way to go on my investment journey, and I want to do better than this.
I had a good run recently, with pretty much all my stock picks going into the green. As a natural contrarian, I thought the hate against GME and WSB wasn’t justified. I thought everyone else was wrong and I was right. I was also flush with cash from the sale of my Square and Paypal stock. Itchy fingers combined with a belief that I could not lose led me to throw more money in than I should have.
While it is true that there was market manipulation and unfair media reporting, this is what happens most of the time. It’s not an excuse for losing money. You have to know how to play the game, instead of fighting a lopsided battle. When there is mania in the news combined with rocketing valuations, chances are that its too late. I had gotten in too late, thinking there was still room to run. Sometimes its true, but in this case it was plain wrong.
Its hard to judge when is the top, though the 1,000% over return in a month should have been a clue. I’m a little sheepish about slamming Bitcoin and calling stocks like Airbnb overvalued, when I was investing in GME at around $300. My emotions got the better of me, and the best thing I could have done is sit on the sidelines.
Getting caught up in the hype
I had bought into the whole crusade against the hedge funds. While my head knew that eventually the little guy would get smashed, my heart was the one who pressed the sell button. My desire for solidity among the community to have diamond hands was also foolish. We are all individual investors, and we have to look out for ourselves first, and not stay on a sinking ship.
In the end, we were all destroyed, and the wsb community has been crushed. The big money won again. And the little guy was gutted. Nothing new I suppose.
In investments, it is about earning a return, not fighting for social justice. While its fun and glorious to “fight back”, the harsh reality is that no one will clap for the poor and the dead.
I was tired of the roller coaster of emotions I was feeling. An investment should be easy, and not cause stress or false hope. I had woken up a few times late at night to look at the screen, and I usually didn’t feel good. When I let those stocks ago, I could sleep a lot better.
Not dead yet
The USD $22,000 lost is about 2.5% of my net-worth, so I will survive this debacle. You win some, you lose some. From now on, I’ll stick to what I’m good at, which I think is identifying and picking up growth stocks, especially during a correction. Have been lucky enough that other investments are able to make up for the loss.
But for someone who measures spending in plates of chicken rice, it is painful to lose almost $30,000. That’s like 10,000 plates of chicken rice, enough to eat it 3 times a day for 9 years.
I’ll still gunning for a 20% return in 2021, though this has made that harder.
Not a good sign to lose money around the CNY season, but I will take the time to enjoy family and friends.
Good thing that the big extended family gathering is cut now, as my ang pows will be a bit light.