I've recently decided to participate more actively in my finances, so I've started looking at the stock market. I'm starting out small-scale and conservative, until I get some experience, and have a better understanding of How Everything Works. (I even bought a book!)
Last week, I ran across a startup mining/ore-processing stock that looked promising (and slightly undervalued), so I decided to buy a few shares in it--not enough that I would miss the money much if they got wiped out, but enough that I might make a decent profit if they Made it Big.
On Monday, I put in an order to purchase, but I set the limit price too low, so it expired. So, Monday evening, I put in another order, at $0.54 per share. When I checked my account on Tuesday, I discovered that my order had been filled...
at $0.30. Before the market opened, the company had issued a report that they had reassessed their progress, and that although construction was on schedule, they were about $300 million short on their cost estimates. The stock had crashed.
The price had rebounded by mid-morning, so I sold enough at $0.34 to recover my initial investment, the transaction fees, and make about $200, with a small amount of stock left over.
This was the worst possible outcome.If I had got in one day earlier, I would have lost 37%, learned my lesson, and learned it
hard. As it stands, I made 7% in one day, and part of my brain insists on framing this as a success, and wondering if I can do it again, even though it was actually just a confluence of raw stupidity and pure dumb luck.
Come on down to the secret casino tonight
Indulge yourself in a fool-hearted game for once
But if you get addicted, it might start getting scary
It's a habit-forming kind of ecstasy
Russian, Russian Roulette
--Russian Roulette (Nakahara Meiko)I think I'd better finish reading the book before doing anything more. It seems to be treating "people are basically irrational" as an axiom, and saying things like "smarter people that you have lost money on the stock market," so it's probably on the right track.
