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In my 20’s, I had an obsession with buying. It’s all that I would think about. I would wake up in the morning to check out my favorite websites to see the latest trends, consuming as much as I could before work. Then at work, I’d daydream about my future purchases.
I was pathetic. While at work, I wasn’t able to make online purchases. So, I’d call my Mom to make these purchases on my behalf. On my drive home, I eagerly anticipated arriving back at home to make sure the purchase went through correctly. After the high from that purchase subsided, I would repeat the cycle all over again. I spent most vacation days sitting on my computer, trying to discern the next best thing to buy. The addiction was real.
What was I addicted to purchasing exactly? Stocks. The stock market sucked all my time and energy under this one pursuit. That’s probably why I didn’t have a girlfriend in my 20s. I’m honestly not sure I would have ever even met my wife without divine intervention (thank you, God!).
Love at First Sight
In college, my love affair with the stock market started. I was infatuated with the ability to make money by purchasing shares of a company.
Since I was singularly focused on this endeavor in college, I poured all of my time and resources into learning as much about the stock market. While my friends were out partying at night, I was reading textbooks on technical analysis, momentum investing, value investing and contrarian investing. Yes, I was a complete nerd. I can’t deny it.
Of all the material that I consumed, I loved learning most about technical analysis. It seemed much more of an art form than hard math. It included reading the charts, predicting based on analysis the trends of the market, and understanding what volatility did to the prices of securities.
During my junior and senior years of college, I created my class schedule to start after 4pm every day. That meant that I could watch the market all day and trade and then attend class without missing any opportunities to buy.
Life was pretty wonderful for those two years. I was trading options. The recession in the early 2000s had hit, so volatility in the market was rampant. Prices of securities were bouncing all over the place, and I was able to buy and sell options quickly.
On top of that, I was exceedingly good at it. I was able to take a portfolio that started with $5,000 and build it up to $50,000 within two years. Sure I made a mistake or two along the way. I lost $5,000 in one afternoon. But overall, I made more money that I lost.
Unfortunately, like all good things, it came to a screeching halt when I graduated college. No longer could I sit at home all day and trade. My parents were insistent that if I was going to move back into their house that I would have to get a job. They didn’t approve of me day trading for a living.
Even though I was making thousands of dollars a month, I knew that health insurance and living on my own would basically eat up all of that money. Thus, I would be unable to make any real traction building up my account.
Pushing My Luck
Like any freshly-minted 22 year old, I decided that if I really wanted to succeed in day trading that I had to make a huge move. I decided to buy the S&P 500 options. I utilized over half of my available cash thinking that I would be able to live off of the winnings for a year, if I traded correctly.
To make a long story short, the market had started off in my direction. But I pushed my luck. I kept thinking, what if my returns rise a bit more? Like a pig, I eventually got slaughtered. I lost the whole investment.
My Dad has a saying when it comes to investing: “Be happy in Seattle; don’t crash and burn trying to make it to Hawaii.” In layman’s terms, be happy with the profit that you make on your investment; don’t try to push your luck and potentially lose it all.
Focusing on a “Real” Job
Since I clearly wasn’t heeding my Dad’s advice, I had to obtain an actual job. But that didn’t stop me from day trading on the side. I’m sure I wasn’t as productive as I could have been at work with one eye on market activity at all times. My heart was yearning to be a trader.
Even with the reduced amount of time spent on trading, I was able to continue growing my portfolio to $80,000. I decided to allocate those funds towards a downpayment for a house.
I figured that while I was successful day trading, I needed to diversify my income stream. After I purchased my house, I rented out rooms to housemates. Then, once again, I became obsessed with trying to build back my portfolio.
So the research continued. I needed to make the wisest decision in each stock pick. You may ask- if I was so good at trading, why didn’t I try to get a job on Wall Street?
The honest truth was I was terrified.
In my 20s, I dealt with debilitating anxiety. The thought of going to work with strangers all day was scary enough for me. I couldn’t engage the thought of leaving the cocoon of my family and friends to start a life in New York City by myself.
My anxiety was so bad that most of the time I just stayed home instead of venturing out with friends. New situations would flood me with anxious thoughts and left me feeling extremely queasy.
It was hard to admit that I was suffering with anxiety at the time. In your twenties, you are suppose to be invincible, right? I began to seek treatment from a professional by my late 20s, after another friend of mine received a mental health diagnosis and sought treatment. I saw the tremendous impact in her life from receiving help and that was motivation for me to do the same.
Once I started to receive therapy, I began improving. Through counseling, I realized that I was using the stock market as a crutch to avoid having to socialize with real people. So, I took some drastic action.
A Passive Index Strategy
It was time for me to step back and start enjoying the world. I decided to pivot from actively managing my portfolio to utilizing a passive index strategy. I moved 90% of my portfolio into passive index funds and then left 10% of my portfolio to trade once a year.
Since 2010, when I started the strategy of only actively trading 10% of my portfolio, I’ve done quite well.
Could my net worth be higher if I had stayed actively day trading? Sure. Every once in awhile, those thoughts creep back into my mind. But you know what? I’m much happier these days.
As humans, we were designed to need human interaction. Even us introverts 🙂 I feel healthier now. I have a wife, a son and another on the way. Instead of researching stocks when I return home from work, I get to wrestle with my son and go on walks with my wife. I am able to really enjoy the people that God has placed in my life.
While I love trading the stock market, I am so much happier today. I’ll take a healthy lifestyle over a higher net worth any day.