Investing in the stock market is an emotional roller coaster sort of like gambling. One minute you are high on the hog and next minute you are getting slaughtered. June of 2020, a 20 year old investor by the name of Alexander E. Kearns committed suicide because his investing portfolio show a negative balance of $730,000. Although, it was a glitch in the software and he really did not owe this much, the emotion toll of seeing so much red had an extreme impact on his psyche, and he opted to take his own life. He left a note on his computer saying, “How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?.”
Losing any amount of money can be troublesome but losing $730k on a margin account would be absolutely devastating to a vast majority of retail investors. The emotional toll on losing money does not have to be that extreme if the investor only invests money they can afford to lose. Investing on margin is really risky business. Not only can you lose the money and owe a lot to a brokerage, but you also owe interest on the amount that you borrow! That will add up quickly. My rule of thumb, since I am a newbie, is to only “gamble” with money that is extra.
My investments have been on the down slope even as the market has hit an all-time high! The Dow Jones close over 32000 point on 03/10/21. The market jitters of the inflation risk was shaken off, but that still does not explain why my stocks have dropped. $LAC or Lithium America’s Corp was riding around 17 dollars a share when I decided to jump in and now is must have corrected to around 15 dollars a share. I had high hopes for this Canadian company that mine locally in Nevada. My first round of options expires on 03/19 so hopefully I start seeing some green or I might be in the depression part of the cycle of emotions. How do you feel about the risk of inflation? Do you think it will affect the overall economy?