“Price is what you pay. Value is what you get.” – Warren Buffett
My intelligence was validated by my very first investment success (Check it out here). I certainly was on fire. I went off on finding my next mission. Yes, this time I am making a big bet (keep in mind this is a broke student talking).
One of my good habits is reading and one of my bad habits is reading the wrong book. I came across a book on investing (Titled, I think, “How to be a millionaire”). Perhaps it was written just for me. Here is the summary of the book – buy the cheapest penny stock out there and if it goes up a dollar, you are a millionaire. At that time, the only thing debatable to me was whether I was going to buy a boat or a house with that money.
Here is the summary of the book – buy the cheapest penny stock out there and if it goes up a dollar, you are a millionaire.
My rifle was loaded and I went on penny-stock hunting. Thanks to the Merrill Lynch, they required an access code to trade penny stocks. For this, you needed an electronic device which they will send by mail. I was not ready to wait for a few days. I wanted to be a millionaire the next day. So I decided to buy Urban One Inc Class D (NASDAQ: UONEK), the closest thing to a penny stock. It was selling for around a dollar per share. Till this day, I do not know what that company does nor their financial situations. The only criteria I had was its listing price and I picked the first one from the bottom. I bought and sold gazillions of time for months with a few hundred dollars. The stock price did what it supposed to do. It went up and down. My excitement is the only thing going up all the time.
I sold my car, the only asset I had, for six grand (I was moving places for a new job). And, guess what? I bought more ROIAK with that amount. Contrary to my expectation, the stock price started its journey towards the bottom. Towards pennies. I was restless. Sound sleep was a thing of the past for me. I borrowed three thousand from the credit card promotional offer and bought more of it hoping that I will recover the loss from my earlier trade. The sliding of the price continued.
The only good thing about this trade is I lost merely three thousand dollars.
I checked my investment every few minutes and I am not even exaggerating. I did not like the red color. After a few years of torture, my loss aversion side of the human aspect kicked in and I sold all of it. I lost one-third of my total investment. The only good thing about this trade is I lost merely three thousand dollars. This sounds trivial to Wall Street. We have no shortage of people and institutions losing millions and billions in bad investment.
I was an expert on buying high and selling low.
More than the actual amount, my biggest loss was the opportunity cost. I had the opportunity to earn a handsome amount but all I did was lost my borrowed money.
I was an expert on buying high and selling low. Had I waited a year or so I could have more than quadrupled my investment. My regret of not holding it a little longer continue till this day, not to mention buying it in the first place.
Disclaimer – No position.
Arrow of Performance 
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