Back in February I forwarded some messages from a guy called
mgmitch about how he was putting all his money into CMGI options:
http://impressive.net/archives/fogo/[email protected]
I discovered this followup the other day:
http://boards.fool.com/Message.asp?id=1080158007958000
> Author: mgmitch
> Subject: They Finally Wiped Me Out
> Date: 4/17/00 7:54 PM
>
> Recommendations: 336
>
> Well, it looks like the powers that be finally wiped out my trading
> account. I learned a lot in the past year and a half, but after
> riding margin down and paying taxes, etrade sold the rest of my
> margin off at 2:08 pm eastern time today leaving me with 300 bucks.
> Thats right, they sold me out right before the market rallied big
> time in what would have left me with a close of at least 5K in the
> account. So is life, live and learn I guess, and I learned margin
> is the devil and am getting sold out at what is probably the
> begining of a massive rally. I'll give you a little background of
> my career and what I learned for those interested in reading.
>
> Well, I started approximately 1 1/2 years ago in the stock market
> knowing absolutely nothing. I just read everything I could get my
> hands on and started learning as I went. I learned a lot too. I got
> started right in the middle of the 1998 crash and lost 40% to in
> the first couple of months on my original 6K investment. At this
> time I didn't even know what margin was fortunately or I would have
> been close to getting wiped out then.
>
> By mid January of 99 I had a portfolio of 25K in value. I was one
> happy kid until the nets crashed sending me plumetting down to 7K
> which I held at throughout the summer before beginning to make a
> little back, finally getting to 12K or so by October. I still
> didn't have a margin account although I knew what one was at the
> time.
>
> Around this time I found XLA, the stock of the decade in my
> opinion. I went in 100% and stirred up the Fools message boards
> when I made my announcement. I got responses like "double or
> nothing eventually leads to nothing," and "I hope you lose it all
> because if you don't lose it all this time, you will eventually
> lose it all in another stock going in 100%." Well needless to say
> XLA had a great run taking my portfolio to nearly 50K by years end
> and I was trading in and out of that stock like crazy so I will
> eventually have to pay my taxes on those gains. Also needless to
> say, you guys here on the fool are 10 times smarter than me. You
> told me it would happen and I wouldn't listen. I have learned my
> lesson now though.
>
> Well I continued to do well in the early part of this year and
> began using a little marging. In late Febuary I decided I would
> take a little off the table if I hit 100K in the market and buy me
> a new SUV so I would have something to show for my investments even
> if I lost it all. Well on march 10 I hit my high of 97K and
> unfortunately never got my new SUV.
>
> About a week later I was at around 45K and decided to go 100% into
> CMGI. I kept my 200 shares and bought some JUNE 125 options leaving
> me with a little in margin. I thought I was safe. I thought CMGI
> wouldn't go below 100. Boy was I wrong. Oh yeah, I also posted it
> on this board and got the response "double or nothing eventually
> leads to nothing." Man should I have listened.
>
> Well, I took about 6K out to pay taxes late last week and went on
> margin to do it, and now etrade sold my assets at 2:08 this
> afternoon leaving me only 300 bucks when at the close I would have
> had 4-5K. Disappointing to say the least. With 5K, I could make a
> comeback, with 300, I am dead in the water.
>
> Okay thats my history and now lets see what I have learned and
> hopefully others will learn from my mistakes.
>
> 1. MARGIN IS THE DEVIL
> There is now no doubt in my mind margin is the
> devil. I will never in my life use it again. I
> will invest what I have and only what I have. Do
> not use margin if you wanna continue investing
> throughout your life because you will eventually
> get called.
>
> 2. Double or nothing eventually leads to nothing
> Very true, I found out first hand
>
> 3. Don't put all your eggs in on basket
> I did it many times before, don't think I will do
> it ever again, although it does have its advantages
> in realitively small accounts
>
> These are the three biggest things I learned and is the best advice
> I can give to anyone wanting to prosper in the market. I spent my
> time learning options and looking for trends and figuring how I
> could make a million before I was 21 and not enough time focusing
> on the basics. I should have focused on diversifing and buying high
> quality companies and don't forget taxes. Yes, long term buy and
> hold does have its advantages. Taxes were a killer for my and my
> short term trading taxes.
>
> I guess this will be my last post for a while as I leave the market
> for a time. At least I will be able to focus completly on school
> better.
>
> Don't worry about me though, I will be back. It will take time, but
> I will be back. My goal is to slowly accumulate 100K before I
> graduate which is probably 3-4 years away since I am co-op'ing at
> GT. I will sock away all the money I can into this market gradually
> buying the leaders. I will not only invest in tech but also old
> economy to get diversity. I had the false since that holding one
> B2B play and one Infrastructure play was diversification in this
> market, but now I know it isn't. I will not use MARGIN, i plan on
> opening a new account and not applying for margin because if it is
> there I will want to use it and I don't need that again.
>
> I bid these boards farewell for now though, but hope to see you all
> again in the future. I feel like it was best for me to lose it all
> now at the tender age of 19 rather than lose it all 15 years from
> now. I guarantee that it want happen again, thats for sure. I have
> time on my side and the knowledge I have gained may be worth more
> than all the money I have gained and lost.
>
> Good luck to all and for Gods sake stay off of MARGIN
>
> By the way, I'm not the greatest writer, so hopefully it wasn't too
> hard to read if you actually read this far.
--
Gerald Oskoboiny <
[email protected]>
http://impressive.net/people/gerald/