Tracking Finances: Riding the Dot-Com Bubble
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In the late 90’s when the world was ablaze with dotcom millionaires and it looked as though the stock market could make me wealthy too, I bought a lot of technology stocks — including some start-ups and IPOs (Linux, Red Hat, Pilgrim Technology Fund, EMC and others that I have since become an amnesiac for, thankfully). I rode them all up on a wild ride, and then rode them all down again. When I was tracking finances, I was riding a roller coaster
The actual dollar cost I lost wasn’t too traumatizing, but not selling when the P/E ratios were in the stratosphere was a big mistake that has cost me in the neighborhood of $100,000. To add insult to injury, during this time I came across a beach area lot that I bought, because of its terrific price… but of course, the proceeds I used were from selling my highest-quality investments, and I was left with the speculative garbage or what remained of them. Sell the losers and the low-quality first, and keep the long term winners.
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This is definitely a tough story, as many people I know (including my mom) have also rode the dot-com bubble up and down (and some just straight down). Thankfully I was too young to start investing during that time; because if I wasn’t, knowing my purchasing decisions, I’d have most likely load up on my shares of speculative junks too.
I suppose I’ll also share my story of keeping the loser and selling the winner. Basically, I own (and for whatever reason still own) shares of a speciality electronics retailer. If you know how well Circuit City is doing lately, imagine how this smaller chain feels right about now. I’ve had a few chance to sell the shares at a “meager” ~7% lost… but I held on, all the way till the recent 70% drop in value.
Like the original poster, I also sold some winner during the time frame because I needed some extra cash flow… and of course, about a week after I sold my shares of the winner, it reaches its all time record high.
The really funny (or not so funny) thing in all of this is the fact that, before I started buying individual stocks.. I read plenty of suggestions and advice about selling the losers, keeping the winners… not letting emotions and the market get in the way of my buying/selling decision — but I went and let all of them influence me anyway.
Definitely learning my lessons.
This is exactly why I like to keep my money out of stocks. When I was in high school, I started an investment club. I was up about $12k (a TON of money for a 17 y/o) and I rode it all the way back down to $2k, My original investment. Seeing this happen to myself so young made me realize that 1) You’ll never time the market, ever, period. and 2) stocks are too risky for what I want to accomplish. I’m liking my mutual funds now
My dad lost a boatload on Amazon during the burst.