There is only one basic rule to follow if you want to lose your shirt in the stock market: Buy high, sell low. It’s easy, anyone can do it. Learn a few simple technical terms and you can start losing money like a financial pro – almost overnight.
The first term is “market day.” A “market day” is any day on which the stock market is open, available for you to lose money on. On weekends and holidays, you must go to a casino or a horse track to lose money – as the stock market is closed.
A “buying opportunity” is a way for you to lose even more money than you already have. Let’s say you bought 100 shares of stock that you overheard a guy sitting in the cubicle behind you call “the next Microsoft” at $20 a share. Yesterday it fell to $10 a share. Now you have a “buying opportunity” to jump in and buy twice as many shares as you did before – for the same amount of money. Imagine what an “opportunity” you’ll have when it goes down to $5 a share! Or $2!
As a general rule of thumb, anytime someone you barely know calls a stock “the next something,” buy it. The next eBay, the next Google, the next Wal-Mart, the next Starbucks. Why buy into a growing, thriving business when you can buy into an unknown, untested one? This is called a “stock tip.” Never let the sun go down on a stock tip without acting on it.
I bought “the next Apple” and within a week our kid’s college fund was nearly wiped out. Now they’ll have to work their way through community college mowing lawns and washing dishes. It’s my gift to them. They’ll learn so much more than they would’ve by being coddled. I’m only sorry I didn’t let more of my friends in on the deal.
The guy who passed the tip to me, Bob Ferguson, had to sell his house and move in with his wife’s parents.
And now they’re getting a divorce. At least they won’t have long, drawn-out battles over how to split their assets. They don’t have any. It cuts down on the lawyer’s fees, too. It doesn’t get any better than that.
Besides bus stops, hair salons, topless bars and cable TV shows, a great place to get stock tips is off the Internet. I guess if we know anything about the Internet, it’s that it’s swarming with do-gooders. It’s a community where everyone helps everyone else, where the random acts of kindness just never stop. It’s like a digital Woodstock. Lost your password? Here, use mine. So when you get an e-mail from someone you don’t know saying that some company you never heard of is poised to rise 300 percent by Tuesday, don’t worry. They are just trying to help you lose lots of money.
Extra Bonus Tip: Remember, the less you know about a company, the better. You don’t have to know what the company does or even know a company’s name to invest in it – all you need to know is its market symbol. Try it, you’ll lose money faster than you ever thought possible!
Some people prefer not to lose their money all at once. They are called mutual fund investors. In a mutual fund, stock market “experts” pick a group of stocks they think will go down over a long period of time and let you buy into the package. For this service, they charge you a small percentage. It means you can start losing money right away without having to wait until that company whose stock you bought announces that it has “missed its numbers” or “revised its quarterly earnings estimates” or “our CEO has been led off in handcuffs.”
Now get out there and lose some money!
Jim Mullen is the author of “It Takes a Village Idiot: Complicating the Simple Life” and “Baby’s First Tattoo.” You can reach him at firstname.lastname@example.org
Copyright 2008, Newspaper Enterprise Assn.