Ok so here I go, charting new waters, delving into the blogging world. Maybe it’s because I am so bored during this Covid-19 quarantine, but this has always been something I’ve wanted to do so I thought why the heck not!
Over the past year, I have used the alias “The Young Investor” to publish a lot of my market commentary on Twitter (@youthinvesting) but in reality, I’m just a Chemical Engineering graduate fresh out of University and wondering what on earth do I do with my life.
Anyways enough about me let’s get into some juicy content. Financial markets! What on earth are they and why do so many people get rich from them? I remember the first time I asked myself that question I was around 15 years old and I had just watched a documentary about the great investor Warren Buffet who became the world richest man from just investing! Since then I’ve been interested in this idea of investing and watching my money grow, and I’m sure I am not the only one.
Let’s now fast forward to when I actually did dip my toes in the water whilst at University in 2017, one of my best friends, J, and I sat on our couch in our apartment and spent all night learning about this investment that was being talked about by everyone called BITCOIN!
Aha! Now I divide the masses. Some may say it’s a scam, others argue otherwise, but let’s save that debate for another time. Of course, it would have been more logical to invest in the stock or bond markets or something less risky, but there was so much hype and the FOMO (fear of missing out) behind crypto was real.
To be honest, the main reason we started research this was because of a pop-up article on Snapchat which we both saw, titled – “The Winklevoss twins are now Bitcoin Billionaires.” Well, us being the type of eager, young students, had just watched ‘The Social Network’ the night before and obviously this article had to catch our attention. It’s crazy sometimes how what appears to be crazy coincidence or Deja vu makes us notice thing we would have normally just swiped past (overlooked). Seems like I am getting sidetracked here but let’s get back to the story.
So, I had another friend, R, who I went to high school with, who from his Instagram stories was making ‘big bucks’ from this thing called cryptocurrency, so we thought he was the perfect person to go to for advice. Over fifty WhatsApp messages and ten long voice-notes later, we thought we had a good grasp of the basics of Bitcoin and were both eager to invest. Now, herein lay my dilemma, we were in students London, but I’m not a British citizen, meaning there was very limited ways for a me to purchase cryptocurrency fast (this thing was increasing at like $1000 a day). So, I turned to what I thought was the next best thing crypto mining. J and I agreed that we would only put in, what we were willing to lose.
Now most finance professionals reading this post must surely think “what noobs!” and that’s exactly what we were. Not a clue what we were doing but just in it because it was the hype.
So, we both initially invested combined close to £1,000 and of course we had ‘to feel to learn’, meaning when the dust all settled we lost pretty much all of it succumbing to the ‘hot hand fallacy’ (the hot hand fallacy is a basketball analogy whereby a player scores a bunch of free throws and because of the winning streak there is the expectation that he will always score). At one point in time we were up close to 200% but there’s always this feeling with a new investor that this investment could be the “one,” the life changing point, the million-dollar investment, you get my point.
Moving forward now, the above is a clear example of poor risk management and as some experienced traders have said, sometimes blowing an account is the best way to learn. As a student however, that was quite a painful reality. Needless to say, I spent the majority of 2018 learning as much as I could and networking with fellow young investors on how to make sense of cryptocurrency, whilst dollar cost averaging (the process of buying on the way down to lower my break-even) my positions which were in a huge loss.
The main reason I decide to kickstart my blog with this story is because after this point my interest in Finance and Investing snowballed into what it is today. Over the next few weeks, I aim to share some more of my stories and tips on what it’s like getting into the world of investing. I also want to share some other experiences on what it’s like and how important it is to invest in yourself, because like the saying goes “you are your biggest asset” and be it through expanding your knowledge or adopting a better lifestyle, it’s always great to be dynamic and open-minded.
*Vector Illustrations Credit: Freepik