[steve8918]

Sorry, but his stock trading seems bit hard to believe.

He's saying that he made money on stocks during the dot com boom and during the bust as well? I don't think that's possible, unless he was psychic enough to short at the top.

Anyone who made money on stocks during the bust got their heads handed to them during the bust. No one believed that the bust was going to happen. One of my coworkers turned 50k in 1999 into 250k by 2000, and then 6 months after the bust started, he was down to 20k. EVERYONE during that time thought they were stock picking geniuses, so when stocks went down, they thought it was a buying opportunity. I can't imagine there were any stocks you could have bought during the bust where he could have made money, let alone increase in value by 50%!!! During those years he went for 67k to 150k to 250k!

Unless he was shorting stocks, there really wasn't any stocks that survived the bust very well, especially if he was investing in the likes of Cisco, etc.

The same goes for 2008/2009. Unless this guy is some sort of stock trading guru, he would have lost 50% of his stock portfolio yet he made $35k. It just doesn't sound right.

[sunsu]

It seems pretty silly to me to assume "anyone who made money on stocks during the bust got their heads handed to them during the bust". Im sure that there's plenty of people that that quote does not apply to. Most people lost money in the 2007-2008 crash, but I got in an a triple inverse ETF in late 2007, so I didn't. Was I psychic? No, I was just paying attention, which most "investors" are not doing. Mr Money Mustache seems to be one who pays attention.

[driverdan]

Just because you don't know how to invest doesn't mean other people don't. In 1999/2000 I was telling everyone the market couldn't sustain itself and to get out, and I was just out of high school! I also called the dip in 2006. When the market tanked in 2009 I bought in & have made 50%+ on those investments.

The message is that there are plenty of people who can invest wisely.

[steve8918]

Everyone was calling for a crash, but it took years before the markets actually started crashing. Anyone can make a prediction when there's no money behind it. Obviously everyone thought the market was toppy in 1999/2000, but if you followed your advice and shorted it, you would have lost plenty of money from 1999 to 2000. It probably would have bankrupted you.

For the record, I also made money after the dotcom crash and after 2008, having avoided buying anything during the boom and buying blue chip in 2001. As well, I sold all my investments in Sept 2008 and picked up more blue chip in March 2009. Selling all my investments in Sept 2008 was more luck than anything else, I sold because I thought October was going to be the 80th anniversary of the Big Crash in the 1920s, but I was off by one year, it was 1929 not 1928. Better lucky than good.

My point is, anyone who made money on the way up, which it sounds like the author did, didn't believe that the markets would crash. The author didn't even show flat returns, it was always net positive before, during and after 2 crashes. It just doesn't sound right to me.

[krschultz]

Why do you have to short it and lose money for 2 years? You can exit somewhere on the way up, sit on the sidelines, wait for the crash, buy low, do it again. Not that hard to believe.

[16s]

Investing is easy. I follow two simple rules. They are all you need to follow:

1. Buy when people are desperately selling (Get in when people are getting out).

2. Sell when people are desperately buying (Get out when everyone is rushing to get in).

That has always made money for me.

[poundy]

What stock should I buy now?

[driverdan]

I'm not sure if you're serious, I really hope you're not. Don't ever directly take advice from a random discussion. Many people have no clue and many people have an agenda. Don't take advice from "gurus" like Jim Cramer the pumper.

Learn and understand how investing works so you can take advice with a grain of salt and research the recommendations yourself. You also have to have a strategy that works for you and fits your needs, risk tolerance, and bankroll.

[fredoliveira]

Wouldn't a strategy of investing in good long term stable stocks (for the good times) and shorting ETFs during the busts be solid? It takes timing, a bit of luck, and knowing the markets well enough, but there's probably a ton of people doing it successfully.

(this is more a comment on a possible strategy rather than on what the OP did, I realize)

[steve8918]

During the dotcom bust and during the 2008 crash, EVERYTHING went down. In stock trading, 80% of it is getting your timing correct. So sure, if you can get the timing down, then you'll make great money, but that's also the hardest part that not even 80+% of money managers get.

I'm not sure there's a ton of people who made money during the bust, especially those that owned mutual funds like what the author claimed. There certainly were people that made money but they are few and far between. One of my coworkers at my current company made $500k shorting 3COM and YHOO.

The point is that the author didn't even show a year of flat stock earnings... every year they went up! During 2 crashes! And he never got burnt enough to start thinking that stock investing was dangerous or foolhardy when he had no steady job. It just seems fishy.

[corin_]

Remember that this is one guy doing it. It's possible to make great money just by basing your buy/sell decisions on coin tosses. Is it likely that it will work out well every time, hell no. But if a load of people did it, there would be some with great runs. By extension, the fact that many people did terribly doesn't mean that others didn't do great.

And with your "80+% of..." - the 20% left weren't necessarily more skillful, many will have just been luckier.

[brianobush]

No idea why this was downvoted. Maybe because it is right? One data point may not reflect the broad market. If he sold before the crash and then dumped his money back in the market when the dow hit 6500 he would have made a killing.

[TDL]

Not everything went down in either crash. Also, 80% of trading any financial instrument is risk management, position sizing, & dealing w/ losses & gains. Stock selection & timing are a small percentage of trading, they are just easier to sell to the public.

Regards, TDL

[brown9-2]

The difficulty is in identifying "good" long term stable stocks.

[o_nate]

I agree completely. Either (A) this guy is a stock-picking genius (in which case this blog post is a missed opportunity because he doesn't say anything about his strategy, but just casually mentions eye-popping gains) or (B) there's something fishy in the state of Denmark.

[raarky]

Money coming out of falling stocks usually goes somewhere else.