Kid “invests” $700k inheritance and loses $150k in hours.

Joost

Joost

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Heirloom
This one is a gem:

Kid inherited $700k from his grandma and bought all in Intel stock. Hours later the stock tanks and he’s $160k down.




He made a beautiful post with plenty of bullet points and a bunch of rationalizations on how it was a good bet (“investment”). Until it wasn’t.

I can see the arrogance in front of his parents. How smart he looked during his speech.

He’s coping just like the crypto bros; “I’m going to hold forever”.


The importance of such event is great because people should see that even when your bet seems good/rational, you can get rekt. McDonald’s yesterday (or the day before) had a bunch of bad results/guidance. People were betting the stock was going down at least 2% and guess what? The stock climbed 4%!

So even when you’re right, you can lose.

If you have money in the stock market, use puts as insurance. It decreases your gains but it can save you from ruin.

As for crypto, stay away from all those shitcoins. Even if you leave the Ponzi scheme in time, there are a bunch of victims who will lose money. Maybe they deserve it and will serve as a lesson but I despise people who commit financial crimes and you shouldn’t participate.

As for Bitcoin, I’m a big fan. Understand your risk tolerance before putting all your savings there. Do not listen to those guys saying price will be XYZ in few years. ALL investment vehicles have a fine print saying past performance does not guarantee future performance.

If the kid had invested in let’s say, Nvidia some months ago, he’ll be giving speeches on how to invest. Probably would be selling courses. Hopefully this kid will serve as a reminder of what survival bias is.
 
Joost said:
This one is a gem:

Kid inherited $700k from his grandma and bought all in Intel stock. Hours later the stock tanks and he’s $160k down.




He made a beautiful post with plenty of bullet points and a bunch of rationalizations on how it was a good bet (“investment”). Until it wasn’t.

I can see the arrogance in front of his parents. How smart he looked during his speech.

He’s coping just like the crypto bros; “I’m going to hold forever”.


The importance of such event is great because people should see that even when your bet seems good/rational, you can get rekt. McDonald’s yesterday (or the day before) had a bunch of bad results/guidance. People were betting the stock was going down at least 2% and guess what? The stock climbed 4%!

So even when you’re right, you can lose.

If you have money in the stock market, use puts as insurance. It decreases your gains but it can save you from ruin.

As for crypto, stay away from all those shitcoins. Even if you leave the Ponzi scheme in time, there are a bunch of victims who will lose money. Maybe they deserve it and will serve as a lesson but I despise people who commit financial crimes and you shouldn’t participate.

As for Bitcoin, I’m a big fan. Understand your risk tolerance before putting all your savings there. Do not listen to those guys saying price will be XYZ in few years. ALL investment vehicles have a fine print saying past performance does not guarantee future performance.

If the kid had invested in let’s say, Nvidia some months ago, he’ll be giving speeches on how to invest. Probably would be selling courses. Hopefully this kid will serve as a reminder of what survival bias is.
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Its no suprise at all, a kid who didnt earn his wealth himself but had it handed down to him isnt really gonna make the right choice, its like most lottery winners, within 2 years they have lost it all and are in even greater debt.
 
What a cesspool. Looks like everyone on there identifies as poor and disenfranchised.

This is kind of where I have sympathy for the boomers. They know their kids are pampered and will burn the cash. Might as well take a vacation or two.

This is really the fault of our culture, which in 2024 is basically youth culture. You ever wonder as an older person why so often you go out to eat and there's rap music blasting? The kids are running the show, culture wise. In this case, like myself, the kid heard about the magical world of "investing" where your money grows on it's own. Everyone is a genius in our culture. Making moves, grinding, hustling, setting themselves up. Really cool that we've evolved so much but yet it all somehow sounds like youthful arrogance to me.

Like is usually the case, he decides to invest into blue chip company, trending downwards so you maks even more during a bull run! Many such cases.

As far as I'm concerned unless you're very familiar with a particular industry, where you know the most obscure and random information, it's not worth it to invest in stocks. I do it for fun basically and most of them tank.
 

Benjamin Graham:“Over the short term the market is a voting machine, but over the long term it’s a weighing machine”​

If the fundamentais are right the stock should rebound.

Its -23% Today in pre market. He is going to take another hit.

Due to low interest rates (not as low as before) investing in real estate is the best option to create wealth.

He could turn 700k into 3,5M. With a loan. And make 5% rents. 175k/year. Minus taxes and loan payments. If he searched well enough he could get 10% rents 350ks.

Preserving is done by professionals. Or just investing in sp500 ETF. Normally through trusts.
 
Blade Runner said:
How does a young person not just buy BTC if he's going "all in" on anything?
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It takes a lot of work to get to, but once you do the work, it seems so easy.

Until people have the combination of need, curiosity, and humility, their minds continually try to rationalize why they don’t own Bitcoin. Government will ban it, the grid will go down, the internet will be shut off, a meteor will hit…instead of allowing their minds eye to see. Most bitcoiners did not see it at first, even though it was staring them in the face.

Another piece, almost prerequisite to understanding Bitcoin is understanding what money is: why it is one of the most important technologies in human history (as important as spoken and written language), how individuals converge on a single money, and the history of proto money.

If The Bitcoin Standard was required high school reading….that would be profound.

“Bitcoin is the newest technology to serve the function of money—an invention leveraging the technological possibilities of the digital age to solve a problem that has persisted for all of humanity's existence: how to move economic value across time and space. In order to understand Bitcoin, one must first understand money, and to understand money, there is no alternative to the study of the function and history of money.”

Excerpt From
The Bitcoin Standard
Saifedean Ammous
 
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Sandalwood Peak said:
As far as I'm concerned unless you're very familiar with a particular industry, where you know the most obscure and random information, it's not worth it to invest in stocks. I do it for fun basically and most of them tank.
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Most people shouldn't be picking stocks but its not true that they shouldn't have equity exposure. There are plenty of diversified funds which you can buy and hold and will make you money over the medium to long term. And on average over long time periods those funds do not tank otherwise people would have made losses buying and holding index trackers over the last 30 years, which they haven't. It's very sub-optimal from a risk management/diversification perspective to invest your entire wealth in one particular stock but this kid could have picked a much worse stock. He happened to invest just before a large market drop, it doesn't mean he's lost everything.
 
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OrthoSerb said:
Most people shouldn't be picking stocks but it’s not true that they shouldn't have equity exposure. There are plenty of diversified funds which you can buy and hold and will make you money over the medium to long term. And on average those funds do not tank otherwise people would have made losses buying and holding index trackers over the last 30 years, which they haven't.
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You need an accurate measure, instead of an ever growing denominator…
IMG_1438.webpIMG_1440.webp

They are losing money, they just don’t know it…

 
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Thomas More said:
I think if you put $700k into bitcoin, you'd need to be able to weather a $150k downturn in the short term.
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That's correct but there is no cycle to look forward to for something like intel, there is no zooming out and seeing it only go up over time, and most importantly, the volatility implies a higher upside potential. His timing was bad, but a single stock right now that isn't at least something like TSLA that you can make a case for a 10 year hold and has been down for a couple of years? It's a weird selection beyond the fact that he didn't just choose some index fund to take lesser gains but lesser volatility, since he's got a large stake.
 
If he received 700k he should have never went all in. It´s retarded. Even if his young. He could´ve left something aside. The stock could´ve dropped 90%. And if he needs the money for college or buy a house. He can´t wait for it to rebound.

He could invest a small percentage in bitcoin. But real estate is the best option to grow wealth in a stable manner. Of course it´s more hardwork. You don´t just press two button on a screen. It´s also less passive. A friend of mine owns TSLA stock but he doesnt even own one car. He drives a Lexus.

The problem with bitcoin and contrary to the belief of some members here its mostly still an obscure investment. And of course people will say differently. But it is. This might be the advantage in buying now. Im not buying btc. Already bought gold bars one time. And it sucked. It´s dead investments. There´s no action in them. For now I like houses and tenants. Even though with time will transfer more to stocks and bonds. But with insiders knwoledge.

hbr.org

U.S. Commercial Real Estate Is Headed Toward a Crisis

The risks of U.S. commercial banks being overexposed to commercial real estate (CRE) have intensified as the global pandemic upended long-held economic assumptions of perpetually subdued inflation, low interest rates, and in-office work. An analysis from The Conference Board suggests that in the...
hbr.org hbr.org

U.S. Commercial Real Estate Is Headed Toward a Crisis​

The damage could metastasize into a full-blown financial crisis if scores or even hundreds of small- and midsize commercial banks fail simultaneously. A worst-case scenario might include contagion to other economies and banking deserts across the U.S.

Hundreds of banks hold an outsized amount of CRE loans on their books relative to capital. Small banks (assets of $100 million to $1 billion) and midsize banks (assets of $1 billion to $10 billion) have CRE loan values far exceeding risk-based capital levels at 158% and 228%, respectively, according to The Conference Board calculations using FDIC Institutional Financial Reports data. This is compared to 142% for large banks (assets of $10 billion to $250 billion) and 56% for the largest banks (assets greater than $250 billion). The smallest banks (assets less than $100 million) issue few of such loans.

The clock is ticking for banks delaying recognition of CRE loan losses, and the timing of the financial market fallout — potentially starting later this year — could be during a vulnerable period for the economy. The Conference Board expects that U.S. real GDP growth may be weaker, the unemployment rate slightly higher, and interest rates still near multi-decade peaks, when a cascade of banks begin reporting losses.

It´s been said for a while commercial real estate is a falling knife.


This guy has been saying this since 2016 I think.

The problem is if it will spread to residential. Which it most likely will. Everything will come down.

A friend of mine just told me a palace in Sevilla was sold for half the price announced last month. 1,4M. Sold for 700k. Might go there to check things.
 
When people suggest you invest your money they don’t tell you about the time commitment and the counter-intuitive logic that is required. In a way investing is kind of cool as long as you keep working forever. There is a piece of mind of having a bunch of money locked away that you’re scared to touch that is not completely static and in fluctuation.

If that stock moved upwards he wouldn’t have sold. The stock tanked, and he’s not selling. It’s really that simple folks. Just invest and that money is gone for a very long time. So ask yourself, what if the guy made 50k over the course of a year, would he have sold? Why? To buy TSLA when Intel is performing so well? Probably not. Unfortunately in a lot of cases that profit taking window doesn’t last forever.

That doesn’t stop people from enticing you using that logic. If you bought Microsoft 20 years ago, you would be a billionaire. Only problem is; most of the time if you buy a stock when it goes public, assuming you’re not first, you will basically lose all your money.

Nothing about the stock market works the way a person thinks. It’s very hard to “logic” your way to big money. The other members are right, better to play it safe. I’m pretty sure most big names say the same thing.
 
To the guy saying he should have put all in Bitcoin:

The chances of Intel tanking 33% in 2 days would seem impossible to most people. I bet waaaaay more “impossible” than Bitcoin going down. So his bet was “safe” in theory. Bitcoin could reach ZERO. I doubt it but not impossible.

$700k is more than the average American can save in his entire life. People take 30 years to be able to save less than that.

He should talk to a PROFESSIONAL to see his options.



Another case of retardation is the Doge coin Millionaire. He took money from family and bought $200k that turned to $2 million. Those finance (scammers) influencers told him to sell PART to secure his future and ride the rest. He bragged about having diamond-hands (hold) and didn’t take profit. Doge went down and now he has a YouTube channel (no subscribers) trying to make money by shilling shitcoins.


All goes down to that Mike Tyson phrase about everybody having a plan until they get punched in the mouth/face.
 
chance vought said:
You need an accurate measure, instead of an ever growing denominator…
View attachment 10962View attachment 10963

They are losing money, they just don’t know it…

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It's really not that complicated. The S&P 500 has returned around 1100% over the last 30 years, or over 450% adjusted for inflation. That's not losing money. Over 5 years its returned 88% or 54% or so adjusted for inflation. That's also not losing money. The fact that Bitcoin has returned 294% unadjusted for inflation over the last 5 years means you would have done better holding Bitcoin. You can decide to benchmark every other investment against Bitcoin but it doesn't logically follow that every instrument that has returned less than Bitcoin is losing you money. It's fine to be a proponent of Bitcoin but you lose all credibility and actually are giving very bad investment advice by implying that you only make money with Bitcoin and only lose money with every other asset class. Accepting that you don't know all possible outcomes and that there is in inherently uncertainty is one of the key characteristics of a good investor; hence the need to diversify. It's a major red-flag when people are as sure and categorical as you are about their chosen investment and dismissive of everyone else ("they are losing money, they just don't know it").
 
How can you adjust for inflation?

- The average growth in the money supply for the last 60 years is about 8%, about the same as the returns of the S&P over the same time period.

- Or look at a chart of the S&P priced in oz of gold, the trend is flat, not more valuable. Gold didn't get more valuable - the dollar just buys less gold, and less S&P shares.

- Government CPI is not the inflation rate - it's a "basket of goods" aka the cheapest garbage they can substitute for food, heavily weighted with deflationary computers and HD televisions (adjusted for "increased utility")

- Ask the US Treasury or Federal Reserve how much money is in circulation. They don't know.

The stock market gave real returns over a long period, the last 100 years, but in real terms has been flat since 2000. Yet there are downside risks, that could take years or even a decade to recover...at least until the revolutionary Greenspan Put. Now people expect money printing, and our market looks like the Argentine Stock market.

Not everyone should be an investor. The average firefighter, teacher, professional whatever should be primarily saving, not investing in things they know nothing about. Why are my inlaws on edge every time the stock market nose dives? Because they think have no real way to save, only invest (and thus no savings.) Bitcoin is that solution.

Bitcoin provides people a way to save what they've already worked for, instead of putting it at risk again in the stock market. How novel is that?
 
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