What NOT to Do as an Investor

In Financial, Investing by DavidLeave a Comment

I had a client a couple of years ago that came to me and wanted me to personally coach him on how to invest his money. He had been investing for a number of years, but not really made any money. He was a millionaire, but his money was going nowhere. He was, in reality, losing money due to inflation.

The need to get started on the right track was pressing. A million dollars is a lot of money, but every year, with inflation, it will buy less and less. It doesn’t really matter how much money you have…a million dollars or only a couple of thousand…in order to make your money work for you, you have to do something. You can’t just sit there and hope everything turns out well.

He went through my entire program. I taught him exactly how I make money on stocks. I’ve been doing it for years and that’s how I pay my bills. For the first several months, everything went well. In the first 3 months, he made just under $50,000. But after the first few months, he started making some stupid decisions. He had learned about a company on tv that was supposed to have some new products coming out. He wasn’t really sure what they did, but thought to himself, “that’s gotta make a lot of money.” He bought a bunch of shares. He violated rule number 1 and rule number 3 in investing as well as violated the first step to successful investing at the same time.

A couple of months later, he called me in a panic. He had started losing a lot of money. When I asked him what was going on, he told me what he did. After I explained what he had done wrong by violating the rules of the system I taught him, I told him to get rid of the stock. His answer…”I think it’ll come back up. I’m just going to hang onto it a little longer.” He did. It dropped more. By this point, he had lost nearly $280,000! He had violated step 4 to successful investing and rule number two. He had other investments that were making money, but, in his panic, he sold some of those to cover losses by hoping to buy something that would make even more money. He got fearful and greedy at the same time. He wasn’t following what I taught him and refused to listen.

I fired him.

Six months later, he called me and begged me to take him back. Hesitantly, I did with the agreement that he would follow exactly what I had taught him. By this point, his account was down from just over a million dollars to just over $650,000 left. He went through and started building his list of investments to watch just like I taught him. He got back in and started making money again. In 6 months, he made just over $70,000.Everything was going great…until he called me one day in a panic again. He had been researching some investing strategies online and decided to try one. On the first trade, he made $12,000. The second trade he lost $10,000. He violated step 2 and step 3 in successful investing. By the time he called me, he was in a panic. He had lost another $100,000. When I asked what happened, he told me about this strategy he had found online that was supposed to be a huge profit maker. I knew the strategy well. It’s very complicated, but can be very profitable. The one thing he didn’t learn online was that the strategy only works on stocks that are  flat, meaning they’re not really moving up or down. He was using it on a stock that wasn’t in the list he built with my system. He violated rule 1 again. By this point, he had lost half of his money.

When I told him to stop using those strategies, his answer was, “it worked once. It has to work again. I need to make my money back.” I said, “you do realize that every time you followed what I taught, you made money, but every time you’ve veered off of it, you’ve lost money, right?” I spent 12 years developing and personally using the system I taught him. He refused to use it as I taught him and lost a ton of money. I fired him…again. I spoke to him a couple of weeks ago and his account is now at $260,000. He’s lost over a quarter of a million dollars by not listening and not following what he was taught.

It’s not that complicated. It’s not rocket science. It’s not magic. It requires following 5 steps and keeping an eye out for 3 common mistakes. If you’re an investor already or wanting to learn how to invest, do it right. He’s been on my mind a lot lately since I’ve been developing a video course on everything I’ve taught him. Every client I have that has followed what I’ve taught has ended up making far better than average returns…by not following the proven system, he’s lost most of his wealth. When I asked him about it a couple of weeks ago, his answer was simple…”lesson learned.” It’s going to take him a lot longer to get back where he was because he violated the rules and he made the mistakes I warned him to avoid at all costs. He’s working on getting back on track. Time will tell.

I’ve been working on a video program teaching exactly what I do to make my money in the market. I’ve been using it to pay my bills and provide for my family for years. If you would like access to some of my free training videos, fill out the form below and I’ll send you out some info as soon as they’re ready.

 

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