HOW I LOST 00,000

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Well howdy guys it’s not the most fun video in the world to talk about today i kind of want to talk about losing a hundred thousand dollars a couple of years ago guys losing a hundred thousand dollars stock market trading and i want to explain marge and i want to explain what margin is to you guys fully and give my side of things on why you should never ever ever

Mess with margin because that is one of the main culprits on why i lost a hundred thousand dollars there were a few different factors but the main one was because of leverage because i was using margin money to basically invest and that’s how we got to this hundred thousand dollar loss basically i lost seventy five thousand dollars in 2015 stock trading stock market

Trading and i lost my wife twenty-five thousand dollars to combine we lost a hundred thousand dollars guys and the main culprits the main culprit was margin trading so i want to kind of explain this to you guys today exactly what that is and exactly why you always want to stay away from it i kind of always do to stay away from it i really did because i heard the

Guy look up to more than anybody warren buffett he always says if you’re smart you don’t need margin and if you’re an idiot you have no place using it so i always heard that and i was like i don’t ever want to mess with margin and then i did guys and i’ll explain why it’s so bad and why you never want to mess with it i know a lot of you guys you know are gonna come

Across this some time and you’re gonna think about it i want to give my review of it today so you guys kind of know what’s going on so margin trace guys let’s talk about margin and this is this is a main reason why i lost all that hundred thousand dollars so margin what does this mean this basically means for every dollar you invest you can invest another dollar of

Debt a lot of brokerages most brokerages out there you can you know td ameritrade fidelity scottrade e trade any of them they’ll let you set up a margin account as long as you have a certain amount of investing experience and a certain amount of time with them a lot of them will let you set up a margin account so for every dollar you invest you can invest another

Dollar so let’s say you got a hundred k in your account okay you had 100 k in your account and that’s or money right if you have a margin account you can invest another hundred k okay so now you have two hundred thousand dollars you can invest but really only a hundred thousand dollars is your money you’re taking out debt to invest at a hundred thousand okay that

Seems phenomenal that seems phenomenal and that’s why it’s so luring especially if you’re someone getting great gains i’ve gotten thirty to forty percent returns for like five years straight of course i’m like oh my gosh if i could have more money to invest so let’s say i had 200k at that time then you can invest another two hundred to take now i got $400,000 in the

Market and compound that take that a thirty or forty percent return and tell me what you get the problem is that’s not always the case you can’t always get those great games right so you you can that’s what that’s the basics of what margin is now where trouble comes in is when your stocks let’s say you got you know your 100k invested in another in another hundred

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On the debt the sort of margin right when your stocks start to tumble when they start to go down the money comes out of the margin first and then you get what’s called a margin call okay margin call and depending on how heavy you are on margin will depend on when that margin call comes out so if you’re super heavy and your stock goes down a lot that margin call is

Probably coming very very soon okay and if you i had was i wasn’t working at that time because i thought i could be a stock market trader at that time which i’ve always had success being a stock market investor it’s a big difference between being a stock market investor and being a stock market trader of traders looking at things very short-term and i and that’s

Not me i always look at things long-term but that year and mainly because of the margin it forced me to get a short-term mindset then well you could say well jeremy what if you only invest at 20k that’s actually what i started doing i started going a little smaller in margin at first but the issue is it’s so it’s so luring it’s like being in a casino for too long

Right you being a casino for too long you know you suddenly you see this machine you see that machine that’s like that dammit you know what maybe i’ll just throw five bucks in here and then you lose like oh no i can get that back it’s so luring it’s ridiculous guys it’s so hard to fight off i got some amazing willpower i could not fight it off it just gets to a

Point where you want to invest it you can’t just look at $100,000 just sitting there and being like no i won’t invest especially if you’re confident in your investing abilities right so you get what’s called a margin call and then basically the brokerage forces you to sell okay they force you to sell or they force you them to deposit more money into your account

Okay so unless you had that more money sitting around to deposit into your account then you’re gonna basically have to sell your position at a loss and if you’re someone that invest in stocks the way i do if your stock goes down amia as an investor i don’t really care short-term but when you’re on margin you have to care all the time here’s another huge issue with

Margin guys remember i talked about this money well guess what you’re usually gonna have to pay somewhere around a 7% interest rate on that money okay so seven percent seven percent interest rate okay so this thing about this you’ve got a hundred k out of margin you’re gonna have to pay in $7,000 a year in just margin interest so in and of course there’s different

Rates like some rates depending on your account size you might have to pay in ten percent eight percent if you have a ton of money if you have like a we’re a million in the market a lot of accounts you’ll only have to pay four or five but still you’re basically having to get at least that type of gain per year to even make it worthwhile right so you’re putting

Yourself in a situation where damn i have to get at least seven percent a year and let’s keep in mind that the markets on average only go up about seven and eight percent per year so basically you’re guaranteeing to yourself that you’re gonna at least beat the market every single year if you’re investing on margin every single year you’re at least gonna beat the

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Market you’re not gonna have any stocks that happen to go down anything’s like that kind of unrealistic guys kind of unrealistic sometimes you’re gonna get one that goes down for whatever reason out there may be something unifor see maybe some bad luck who knows what the reason is guys same thing you’ll have some stocks that go what way more than you ever dreamed

That’s gonna happen sometimes but that’s a tough situation and that causes you to get very much a short-term mindset rather than a long-term investing mindset which is something i have which i preach on my channel right because now you’re thinking yeah i need to get at least 7% game on all my stocks otherwise i’m gonna be losing money okay then you compound that

With the lure of let’s just go all-in a margin or something close to it then what happens if your stocks go down you get margin calls guys it’s no fun it’s no fun at all now when i first started on margin when i first started on margin it went good at first it did i it actually pushed my account to all-time highs within them about the first month or two of using

Margin and then one of my stocks started to slip up and then i started to go heavier margin heavy or a margin i was like well this is such a no-brainer at this price and it just happened to go lower and lower next thing you know i had margin calls i was forced to sell and then i just started doing more and more activities that were short-term in nature playing

Earnings calls doing all this stuff that i don’t do that’s not my style and i lost money and i lost money and next thing you know i had lost $100,000 guys $100,000 at age 25 you know that’s like all the money in the world at age 25 100k like come on like that’s way that’s insane i look back and it’s just insane i’m not like i don’t feel sorry for myself because i

Knew what i was doing i really don’t feel sorry for myself i knew what i was doing i knew i shouldn’t be getting in that and i still got in it guys and it was the greed that caught me in the end because all i could see was wow all the money i could be making all the money i could be making the greed got me the greed got me guys one of the one of the most important

Rules of investing what is it one of the most important rules of investing preservation of capital preservation of capital meaning it’s not just important about getting great games absolutely we all love to get great games let’s make more money right but just as important is not taking huge losses like i did that year because that’s it’s you so far back behind the

Ball is that you so far back that’s 100 k i cannot get back that’s 100 k that was a loss that money was law it was long gone guys and so for me when i ended up getting down to a certain amount of money i actually sold off all my socks i didn’t invest in any stocks for at least a few months because i had to start businesses some of you guys probably know that i

Started my real estate marketing company was the main business i started then i started the financial education channel a few months later and that just blew up over the past year so i never expected this to become a business but it ended up just working out that way but you know it all worked out in the end but at the same time a hundred thousand dollars guys a

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Hundred thousand dollars at age twenty-five that’s like like all the money in the world so that’s basically the basics of margin margin is when you invest more money than you actually have you invest debt you have to pay interest on that guys think about how idiotic that is even to do in the first place think about that guys pain is seven percent some of you guys

Would probably be paying more than seven percent because i know a lot of you guys have probably less than a hundred thousand that are watching this video and usually the the interest rates on those is like eight to nine usually if you have over a hundred thousand somewhere around a seven percent on most brokerages think about that because that’s 80 on it that you

Are so cocky you’re so confident oh i’m gonna get at least seven percent to make a con my margin money and no i don’t have to worry about margin calls no because all my socks are gonna magically go up absolutely not guys that’s just not the right way the world works so take it from me take it from me guys a very very good investor don’t ever margin trade trust me

On it guys it’s deadly its deadly you have potential to lose so much capital it is insane so even if you’re such a great investor even if you got all the confidence in the world just don’t mess with it take it from me don’t even take it from me take it from warren buffett take it from the oracle omaha one of the richest guys ever in history guys take it from what

His opinion is on that guy’s if you want to invest more money find some damn passive income stream start a side business get a better job so figure out something like that that your income goes up so you can invest more money don’t just think of it as you know i’ll keep working my job or stop working or whatever and invest on brokerage money because that’s just

Gonna be a losing proposition for you guys over the long term maybe you’ll have some success in the short term and i get some comments sometimes from you guys you know all largent ratings aren’t that bad i just started a month ago i just started two months ago and i’m already i don’t know $1000 or whatever yeah guys you know anything can work out on the short-term

I could go to the casino today and play some game that has terrible odds and maybe somehow win and then be like oh this is the greatest game ever it’s a losing proposition guys trust me on it i’ve been through it i’ve been through it i love to talk about it i mean i don’t love to talk about it’s no never fun to talk about losses but i like to talk about it to you

Guys so you know what’s going on so you know you can you can learn from me you can learn from someone that’s been through the game and been through the rigmarole guys so i hope you enjoyed this that’s margin trading for you that’s how i lost $100,000 guys just a messy situation just don’t ever mess with the guys trust me on it please don’t please don’t it’s just

Gonna be bad for you so anyways i hope you guys enjoyed this today thank you for watching and have a great day

Transcribed from video
HOW I LOST $100,000 By Financial Education

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