I wanted to share with you the story of the best stock trade I made in my entire life. The reason I am telling this story is because it is directly applicable to what is happening in the markets today. Because this is a trade I made during the worst part of the stock market crash in the 2008 – 2009 Great Recession. WATCH NOW!
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Let us do a couple of disclaimers before I start. I do not give any investment advice on this channel. Investing is risky and you can lose some, all, and in some cases even more than your original investment. If you are thinking of investing your money, please talk with a financial professional in your city.
Also, please do not blow this out of proportion. What I am going to describe is a pretty good stock trade, but I am not perfect. I have made good stock trades and bad stock trades just like everybody else. In fact, at the end of this video, I will tell you about my worst stock trade just to keep things in perspective.
Also, I am not trying to sell you anything here. I am not selling stock tips or consulting. I just wanted to share this information because I thought you might find it helpful to give you some perspective. We are all in the same situation right now, where we are in this crazy stock market and we are trying to figure out what to do with our stock portfolios.
Also, I want to give you a basic idea about how I manage my money. The bulk of my retirement savings is in an investment portfolio that is very conservative. Then I have a second portfolio that is much smaller where I make more aggressive trades, designed to be higher risk, higher reward. The trades I will talk about today are in that high risk portfolio. I am currently 39 years old, so I have a significant time to invest before retirement.
To start with, let us talk about what a good stock trade actually looks like. This is something a lot of people misunderstand. A good stock trade is when you purchase a stock for a long-term investment and then sell it several years down the road for 100%, 200%, 400% return on investment. Those are the kind of returns that are possible in the stock market where you are doubling and tripling your money. But you only see those kind of returns from long term investments.
I know there are a lot of day traders out there, but day traders never see those kind of returns. Day traders are focused on short term gains like 4%, 8%, or 10%. But in focusing on the short term, they miss out on the massive potential that is possible from longer term investments.
I will give you the most obvious example of this. Apple computer. Stock ticker AAPL. Apple announced the iPhone in 2007. Back then, Apple stock was trading at about $12.30. I do not know if anyone remembers when the iphone came out, but it was revolutionary. Fast forward to today, 13 years later, AAPL stock price is $310. That is over 2,000% return in 13 years, plus dividends. That is what I am talking about when I describe a good stock trade.
The key to making these types of trades is finding a good entry point. You really make your money in a stock when you first buy it, not when you sell it. Because the goal is to buy a stock when it is at a really good price. Because when it appreciates, you will be able to sell it for a gain.
The best stock trade I ever made was during the stock market crash in the 2008-2009 Great Recession. And it was actually two different trades. If you remember, the stock market crashed. It was horrible. People lost a lot of money. But I was looking around the market and realized, there were a lot of good companies that you could pick up their stock for a really reasonable price.
There were a couple of sectors that were really hit hard. One sector was the automobile industry. No one was buying cars. The two big car companies in the US are General Motors and Ford. I did my research on these companies and I figured one was going to go bankrupt and one was going to survive. I chose Ford Motor Company and I bought their stock.
The banking industry was also a disaster. But when I looked at the banks, the one I thought had the best chance of surviving was Bank of America. So I bought Bank of America stock.
Two weeks later, the stock market rebounded and continued to go up. Warren Buffet bought a ton of Bank of America stock. And it made more than 200% return in less than a year. In the auto industry, General Motors did go bankrupt, and Ford stock made over 400% return in less than a year.
Even in the worst market situation, there are opportunities out there to make money. You just have to keep your head about you and look for the opportunities.
Now I am going to tell you about my worst stock trade ever. This happened about five years later in 2014. The US stock market has had a fantastic recovery since the Great Recession. If you remember, something happened in 2014: Russia hosted the Olympic games.
I came up with a new portfolio strategy. I felt that since the US had experienced a great recovery since the recession, it was time (five years later) for international market to also start experiencing that recovery. I also did not want to miss out on some of the high potential growth rates from emerging markets. And I also thought the Olympic games was going to spur this moment of international recovery. So I diversified my portfolio to give me more exposure to international markets.
Well we all know what happened. Something I could never had predicted in a million years. One week after Russia hosted the Olympic games, Russia goes to war and invades Ukraine. I never saw that coming, and Russia going to war destroyed international financial markets. So for the following year, US markets did really well, while the rest of the world continued to lag behind.
So the lesson here is, nobody is perfect and sometimes you are going to make bad trades. What I really learned from it is that you have to be ready for the market to completely change for an unexpected reason. You can do as much homework as you want, but it all goes out the window when events change. And I also learned to be very careful when you are betting against the United States.
I hope these stories were helpful. I know we are all looking at the markets right now trying to figure out what to do with our own portfolios. I am not going to give you any specific advice, but I always encourage people to learn as much as they can about finance, be incredibly patience, and wait for the right moment to strike.
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Neither Zach De Gregorio or Wolves and Finance shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.