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A Curious History of a Sucker

Once a friend of mine asked me why I named my website “Hello Suckers”. I told her it was because the web site was about investing and that all my investing career was one big disaster at that time. I invested like a sucker and I was losing money.

Jesse Livermore called these people “suckers”. I knew investing and trading wasn’t easy, but I thought I had found the holy grail of trading and wanted to share with other fellow suckers. Thus I welcomed them on my website and I wanted to show them how trading needs to be done to get rich quick with a very little account and very little effort.

The Birth of a Sucker

I was introduced to investing in 1996 right after I finished college. Before that, I had no idea what investing was. I read about it, but had very little knowledge, and didn’t know where and how to start. I had a strong desire to invest for a living. Ideally right away from the beginning.

What Goes Down Must Go Up, and I Will Make a Killing

My first lesson at that time was searching companies which fell from highs to their lows. I was buying penny stocks which fell from their 10s, 20s even 30s down to a few pennies. I was excited buying stocks for a few cents and see them returning back to their thirties as soon as I bought them. Pump and dump strategy was totally unknown to me. And I was a sucker taking all those traps, buying pumped and dumped stocks, hoping for their recovery, and losing money. I believed that what went down, must go up. I was totally ignorant about a fact, that some stocks went down for a reason and that they would stay there. Next time, learn the stock and strategy you want to buy and apply before you buy. Never buy hot tips or recommendations and always do due diligent work before initiating a trade. Always check, what’s behind a price drop or sudden hysteria.

When I finally realized that this wasn’t the right strategy I moved on to learn my second lesson.

Never Ever Let Anybody Trade Your Account

I started buying some stocks. I say some, because I do not know until today what stocks and why. I must have been lucky, because I was making money. A steady income and capital appreciation made me a king of the world. Then, a commodity broker called me that I can make even bigger and faster buck if I trade commodities. Their company offered a professionally managed account trading commodities. They presented me with their results, charts and gains I could get, if got to trade with them.

It was fantastic! I quickly realized that with a few bucks buying frozen orange juice, wheat, or pork bellies I could be rich even faster!

Mortimer Duke: This is not a *meal*, Valentine. We are here to TRY to explain to you what is we do here.
Randolph Duke: We are ‘commodities brokers’, William. Now, what are commodities? Commodities are agricultural products… like coffee that you had for breakfast… wheat, which is used to make bread… pork bellies, which is used to make bacon, which you might find in a ‘bacon and lettuce and tomato’ sandwich.

Mortimer Duke: Tell him the good part.
Randolph Duke: The good part, William, is that, no matter whether our clients make money or lose money, Duke & Duke get the commissions.

The broker luring me into commodity trading somewhat forgot the disclose the “good part”. So unlike William in Trading Places movie I was totally ignorant about commissions. And how it worked in that company?

Well, they performed a commodity trade analysis, then their Analytical Department called me to trade a wheat contract at some price with a stop loss at another price and whatever price target. Then they asked me if I wanted to take that trade to make x-hundred percent profit. Obviously a lame sitting duck sucker agreed to take the trade. They happily transferred my call to their Trading Department. When talking to a trade executive I dictated them the trade details I got from the Analytic Department to be executed.

Worked great! For them however.

My 30,000 dollar account shrunk to $4,000.

ScreamingScreaming I called the account manager telling him what the heck!? Why I wasn’t performing as promised? Where were my profits? He said that clients who had 30,000 dollar accounts were making money, but because I only had a $4,000 account I couldn’t participate on some trades and thus my performance wasn’t as great as theirs.

I thought I was dreaming. What did that jerk mean? Was he just trying to tell me to deposit more money into the account to maintain 30k level? And feed them with more fees?

When I told him he was crazy and that I was giving them a one more month to improve the results or I would pull the plug. He said not to worry, that he would personally review my case with the Analytic Department and that I would definitely be happy with the next trading results. They would tailor a special strategy just for me to repair the account.

Well, they improved from 4,000 dollar account to 1,000 account and I finally pulled the plug and took the remains of my cash out.

The best part was, that at the end when I was withdrawing my 1,000 dollars he blamed me of my bad trades. I was wondering whether their Analytic Department and their Trading Department talked to each other and that he had an idea that those trades were their own recommendations. He probably was also ignorant.

But the idea was great. This is how you should do the scam business!

Be Aware of All Sorts of Offers from Scammers, Review Those Who Are Offering You Services Before Committing Your Cash

The Analytic Department told me to buy or sell a crap, but it was ME who called or was transferred to the Trading Department and I dictated the trade details to them. Who cared it was their recommendation in the first place! They had my phone order recorded, not their recommendations.

I didn’t want to sue them anyway, it was my idiocy giving them my money. But they were lucky enough that I wasn’t nearby otherwise I could end up in jail for murder of the first degree. So next time, never ever let anyone trading your account.

If Everything Goes Wrong, Stop Trading or Investing, Turn Off the Computer and Walk Away for a While

Then I stopped trading or investing for a while. I was recovering my loses. Or better to say going over it and moving on. First I had to calm myself down how mad I was. Mad at myself. Can you imagine where I could be if I knew what I know today and invested that 30k in high quality dividend growth stocks? I do not even want to think about it, so do not even ask.

If you think that this lesson finally transferred me from being a sucker into a wise savvy investor, you are mistaken. The curious story of this sucker continued even after I returned back to trading.

I always wanted to invest into stocks or trade them. I always liked people who traded for a living. I enjoyed movies about traders and trading or investing and I always wanted to be like one of them. But I wasn’t patient to get there.

I had a friend who became a full time trader. He lived with his family in his own small house. One day he converted his garage into a trading room. He woke up every day early morning sat behind the computer and studied the market a bit. Then he placed his orders and for the rest of the morning and afternoon he was free and he could do whatever he wanted. Time to time he checked the computer. In the evening he closed some trades or let them go overnight if needed. He became a successful day-trader.

Be Yourself And Do Not Try Mirroring Other Traders or Trade Someone Elses Strategy Unless, Create Your Own

I admired his way of living. One day he made 30k dollars, another day he made 100k. A few days later he lost 50k and it went on and on. But overall, he was profiting and he lived off of his trades. I wanted to be like him. I wanted trade for a living and let the money and Mr. Market do the job for me. When I returned back to trading in 2006 I started mirroring my friend. But I had a small account and wasn’t approved for day trading, so I decided to go for swing trading. When I lost another 10,000 dollars I learned my another lesson. Always work on your own strategy. Never copy anybody. A strategy of others may work great for them, but may be totally bad for you. You have a different style and risk aversion than others. Before you jump into deep waters of investing, test the waters first or you may hit the bottom very quickly. You can of course review and test strategies of others. You may modify them. You may adopt them, but only when you completely understand them and you know for sure that you are comfortable using such a strategy.

It took me 6 years and a lot of money to finally find out that it the dividend growth investing strategy makes me feel comfortable and I was actually profitable in it every time I applied it. When I changed the strategy into something else, soon I felt I was doing something strange and that my trading was a lot like predicting from a crystal ball.

Be Patient

Many novice investors and traders want to skip the basics. They do not want to learn them. They want to jump into investing or trading right away and make money immediately. I was like that as well. And in many occasions I catch myself acting like that even these days.

I am trying not to repeat my errors. When I catch myself too excited about a trade I always try to calm myself down.

Don’t repeat my mistake of a sucker who refused to give my new acquired skills time to develop and improve to perfection. Whenever I read a book about investing strategy I went to trade it without thinking, proper implementing and testing it. I just went out and traded the strategy. Immediately after a first problem occurred I started searching for a new strategy. I was foolishly convincing myself that if I pertain searching, I will one day break through, find a miraculously working strategy and start making money.

The Death of a Sucker?

SuccessLast year, in the middle of 2012, after I had a short correspondence with Dave Landry I finally stopped my madness. I still was under a quest of finding a new working strategy when I read Dave’s book The Layman’s Guide To Trading Stocks and decided to contact him. When I told him about my troubles trying to be successful in investing and trading I mentioned that I was making money when investing into dividend paying stocks, but when trying to trade advanced options or trade stocks it always was a crystal ball predicting to me. What advice could he give me?

He said, that if dividend investing works for me, why I do not stay with what works for me?

I was thinking about his words. Heck that man was right! No more gambling, predicting, searching, and wasting money.

Today, I am comfortable with my dividend growth investing strategy and incredibly enjoy it. I have nice sleeps every night. Any great excitement I have is when a stock of my interest starts falling, because I know that I will be buying more shares. I recovered my account and now I head towards new phase of accumulation.

Also my options trading improved when I learned how to do it the proper way. I gave it some time to learn the basic strategies trading options and learned to have a plan before I execute a trade. I no longer need to search for answers to my question how to trade options successfully. No more gambling, predicting, searching, and wasting money.

I hope my story would be helpful to you. If you are new to investing, learn from my mistakes and do not repeat them. If you are an experienced investor already, I hope you had a great laugh.

 

Image courtesy of stockimages / FreeDigitalPhotos.net





8 responses to “A Curious History of a Sucker”

  1. […] A Curious History Of A Sucker by Hello Suckers […]

  2. […] Hello Suckers brings us the origin of his site’s name and a list of trading mistakes to avoid. […]

  3. Martin says:

    @Marvin, I am glad I am not alone who was making those costly mistakes. That makes me feel better :)

  4. Martin says:

    @MFIJ, yeap it really happened although now many years later it is unbelievable. I still kick my ass for it when it comes to my mind. Well, today I am mostly laughing as well.

  5. Martin says:

    JC, it is not easy for beginners to create a plan, that’s why we are probably doomed to repeat those mistakes. Every young investor I knew made the same mistake of throwing money at every idea they came across. Although there is a lot of info and advice on this we still do it. Looks like this is an nontransferable experience.

    I remember the episode too. My ex-wife was actually laughing at me at some point saying what we would be doing with hundreds of gallons of frozen orange when the semi truck delivers it in front of our house.

  6. Martin says:

    @DGI, I didn’t know about the commodity brokers turnover. That explains a lot. Well, at that time I didn’t know a lot of things at that time either.

  7. I swear our investing careers mirror each other! I chalk it up to investing in my financial education and while I hate every bit of it, I’m glad I had those experiences because I now know not to ever do those things again.

  8. That is a great story. The issue with commodities brokers is the rapid turnover in their client base. Commodity Futures are heavily leveraged instruments that individual speculators do not understand, and can lose money on even if they correctly “predicted” the trend. That is why brokers try to suck the commissions out of you as quickly as possible.

  9. You really do need a plan in place. I started off just kind of throwing my money at ideas. Luckily I didn’t have much free capital at the time so I didn’t lose too much money from it. I find that the options strategy I use satisfies my speculative itch since I can always buy them back early to “trade” them. Of course I feel that it’s a casino but I’m the house because I sell puts on companies where I can get a 10%+ annualized return or buy them at a price I want to purchase at anyways.

    Your story about the commodities reminded me of an episode of Saved by the Bell where Zach ended up buying a bunch of potato futures and then had a whole bunch of potatoes to deal with after his plan went bad.

    Hopefully anyone starting out investing will be able to learn from your mistakes and not repeat them. They don’t have to go with DGI, but will at least have a plan in place.

  10. I can’t believe that company took you from 30K to 1K. That’s horrifying.

    I’ve made a number of investing mistakes myself – almost all of them originate from some version of not having any kind of general guidelines for investing.

    Much like you, I’m pretty comfortable with dividend growth investing right now. It’s not exciting. But I don’t really want exciting, I want predictable and profitable.

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