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Someone on another board wrote:

"I checked out how ... TMF might be able to help me get back into investing with stocks and ended up paying for a premium service. Bad timing, lack of research, and naivete, as well as poor guidance from MF, have resulted in a 15% loss over the past year in our portfolio. I lost 30k in the first month! The almost 200k we are now down ..."

One's first response should be sympathy. But one's second response should be scorn, especially when the median household income in the US for 2021 was $68k. How could anyone lose 3x that in just one year? Arrogance and a sense of "entitlement" are the obvious answers and the belief that "Of course, stock prices always just go up." Now that person is scrambling to fix a problem she created, not TMF.

Obvious lesson? Calling it "investing" doesn't mean it isn't just gambling if you over-bet your hand and don't know when to walk away from the tables. https://www.youtube.com/watch?v=4EFwXFuH64w
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was your quote from a free TMF board?

If so, which one?

Regards, JAFO
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You'll find the whole post on the board for 'Ask a Foolish Question'. https://boards.fool.com/exit-strategy-from-mf-portfolio-3509...

I was going to cross-post it post on the board for 'My Dumbest Investment'. But the censors are blocking me from accessing that board.

When TMF began many, many years ago and was hosted at AOL, the G Boyz scoffed and scorned the scams Wall Street was running, These days, they have become the scam, and a lot of naïve beginners are being hurt.

Arindam
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I am sorry but I highly disagree with your post. This person is courageous as they have started out on an investment journey of controlling one's finances.

Size of loss or gain is different for different people in different places of life. Depending on who you are 200k is a LOT of money or a LITTLE bit of money. That just depends on the person.

Just because the median household income of the US is 68k does not mean anything to individual investors or at least it should not.

The 22 year old that invested their first 5,000 dollars, that 5k is they're everything in terms of financial savings. The 70 year old retiree whom invested their whole life while living frugally may have 100x that saved.

Who is to say that the person that lost 200k did not give 68k away to charity this year? No one really knows what others have or have given or have lost.
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Retirementdough,

Thanks for disagreeing. But I'll double-down. That $200k loss was 15% of AUM. Do the math. That implies $1.33 million was being put at risk by someone who had no idea what she was doing. That's reckless and irresponsible.

Yeah, them just starting out on their investing journeys often have to put a larger percentage of their capital at risk than they will have to later as assets grow. That certainly was my case when I was trying to break into the junk bond market. Heck, I was even trading on margin, which is a real No-no. But I never, ever bet more on an issuer than I couldn't recover from with a couple weeks of work, and I never, ever, bet the whole of my capital on just one asset-class as that poster did, and I stayed on top of my exposures. She didn't, and it cost her $200k that she'll probably never be able to recover.

There's a trader's proverb that's apropos here. " If you don't who who you are, the stock market is an expensive place to try to find out."

By and large, TMF and its follower hate 'traders', and especially short-sellers. But those are the people that "investors' need to learn from, particularly how they manage risk. We can't depend on the Fed/Treasury cartel to keep propping up stock prices for us. We've gotta trade the here and now, and if we blow up an account, we're outta the game.

My prediction is this. The person she most admires and wants to emulate was someone who wildcatted TSLA with an all-in bet and got lucky. Read what Talib says about such idiots. Rarely do they survive more than one market cycle, much less a lifetime of investing/trading.

Nearly every stock TMF recommends Ben Graham would call 'speculative'. And how much of one's portfolio does he suggest should be allocated to such gambling? Zero to 5%, max. The poster was way over his recommended limit. Graham makes a further distinction that is worth paying attention to, the diff between 'Defensive' investors and their activities and reasonably expected gain and those of 'Enterprising' ones. Also, he argues the two mind sets and methods cannot be comingled. The poster failed on both accounts. She took a hands-off, laid-back, hope-for-the best approach to a basket of assets that needed very active management. That's just plainly irresponsible. If she wanted to let the market do the work, she should have indexed and been done it (as Buffet, Bogle, Mandelbrot, etc. argue).

So, failing to do her homework, she trashed her account, but still is none the wiser, which is shame, because --by and large-- women are far better money-mangers than men, because they aren't as driven by hormones to take stupid risks.

Arindam
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One's first response should be sympathy. But one's second response should be scorn, especially when the median household income in the US for 2021 was $68k. How could anyone lose 3x that in just one year? Arrogance and a sense of "entitlement" are the obvious answers and the belief that "Of course, stock prices always just go up." Now that person is scrambling to fix a problem she created, not TMF.

I'm sorry Arindam, but I respectfully disagree.

I actually have respect for the OP. Her first line was: I am ready to cut my losses and exit the MF portfolio I started a year ago and would appreciate some advice. She originally was actively involved in investing, did work with MF and did fine. But life, as it does, got in the way and she got too busy to do it. Now she made the decision to go back to MF since it had worked before. She now identifies that as an error and was asking for help. I give her credit for asking for help. There is nothing bad about that.

Her exact amount being down is not absolutely clear (nor does it really matter). She stated they are down 200k but as an earlier poster was discussing, that has to be put in context with the total. She did make a reference to have resulted in a 15% loss over the past year in our portfolio. So maybe she is down 15%. The Nasdaq is still about 15% down after being down 20+%. If you were following Saul and those folks and invested heavily in UPST, you could be 70% down still. Point is, she has a TON of company and I don't feel needs to be stepped on. I applaud her wanting to ask for help.

We all have had issues in our journeys of investing, I see no reason to look at her journey as Arrogance and a sense of "entitlement", rather, an attempt to do the right thing that ended up wrong. And now she's asking for help to sort out the right path. If you have never, ever had a draw-down in your investing career, then consider yourself beyond lucky or that you have lied to yourself.

Lakedog
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Lake,

As always, there are many ways to view her story. My bet is she won't learn he lessons she needs to her losses. .

Me? No drawdowns? You gotta f*ckin' be kidding. Cumulatively, over the years, --37.5 to be exact of trying to pull money out of markets-- I've lost more than she has, and on some positions it was 100%, as when a company went BK and the workout yielded nothing. But if the position was just 0.25% of AUM and the expected failure rate of the tranche was 55%, but payoffs were asymmetrical such that the game offered a positive-expectancy, then those losses were just the cost of doing business.

That's where she screwed up. She over-bet her hand, both in terms of asset-class and position size. Yeah, she was encouraged to do so by the scammers who host this website. But the ultimate fault is her own, and until she masters the wisdom offered in such classic texts as Graham's, The Intelligent Investor, she won't turn herself around.

What's the diff between 'investing' and 'gambling'? Nada. Zip. Zilch. Both are an attempt to turn a profit from making predictions about the outcome of unknowable future events. Some investing games have a positive expectancy. Some don't. You gotta know which is which and when to walk away from the tables in the equity casinos. https://www.youtube.com/watch?v=7hx4gdlfamo

Arindam
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Arindam,

I don't have any issues with you lifting up my story as a cautionary tale. I wish I had read this story a while back. However, your tone in this thread is markedly different than your responses to my original post where you were generous and offered valuable information. Perhaps you reconsidered your initial response of sympathy as you suggest here. It does feel a bit duplicitous though.

Beyond sharing my story of what not to do, you make a lot of assumptions and judgments for which you don't have much basis. I don't feel like I need to counter your assumptions by explaining what actually is the whole of my capital, how many asset classes I am invested in, what was behind my choices along the way, or that this financial loss (while significant) was not the most significant loss I experienced this year. As a daughter of working-class parents and a first-generation college grad who choose a career focused on service to my community, this is the first time I have been called entitled. I will have to ponder that.

Unfortunately, this experience will make me hesitate before seeking information or input from this board in the future and that is my loss.

bloodking6
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Blood,

The Motley Fool is a scam that preys on the naïve. I'll do anything I can to destroy them. Unfortunately, you become "collateral damage". My apologies.

Arindam
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Fair enough, Arindam. I can support that mission.
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Bloodking,

You are being more than gracious. Thank you for your tolerance.

Permit me, if you would, to explain the chips I carry on my shoulders and the axes I have to grind. My parents were blue-collars, as were their parents all the way back to the 1700's in their respective home countries. I'm what the Brits would call 'working class' for whom easy access to wealth and financial markets didn't/doesn't exist. But I was a bright kid and wrangled my way on scholarships, first to a private, then all-men college and later into UC Berkeley where I did my grad work, intending to teach English. But to whom do the plum jobs go, then as now? To those that them hiring recognize as being "one of their own". So I went right back to the steel mills and shipyards where I had worked to put myself through school, where they, too, were suspicious of me --because I wasn't "one of them".

But one of the things schools can teach --or used to -- is how to learn, and I ended up becoming one of the best marine mechanics on the west coast, able to overhaul everything from ferry boats to aircraft carriers. (E.g., my rep with the ship sups was so good, they'd wave inspections when they learned I was running the job.) But I've never forgotten my roots. My sympathies are with "the poor folk" of this country for whom financial markets are a mystery and who are constantly being preyed upon by the like of the G BoyZ, who lie about their returns and who don't care about the damage suffered by those who try to follow their "advice".

All the G Boyz care about is fees collected from subscribers. You were a victim, as have been hundreds of others, and I'd like to put an end to that. The first myth about investing that needs to be dispelled is that that the game is easy. It's not. Your counter-party to every trade you made --and all "investments" are just trades-- is faster, meaner, better informed, and better capitalized. He (or she) intends to pick your pockets and to eat your lunch. To defend against such foes, you've gotta bet widely and small, so you can survive long enough to find a niche for yourself in markets where what is happening is interesting enough to you that you're willing to the needed work and where the risks are within your ability to tolerate them.

Investing isn't "a job' where you can get paid just for showing up. (My quarrel with indexing, as laid out by Ben Stein.) Instead, investing is a small, owner-operator business that requires (1) a sound plan, and (2) persistent, often decades long effort, and (3) ruthless attention to managing risk.

What's the G Boyz mantra? You gotta hold 3-5 years and all will be well. Sometimes, maybe most times, that's true enough. Prices do return to former highs. But has one's purchasing-power been restored on an after-taxes, after-inflation basis? Right now, US debt to GDP is running 130%. (90% is the "red zone" beyond which recovery is unlikely.) Using the same metrics as were used in the '80's to calculate CPI, inflation at the household level is running 20%. Recently, Russia pegged the ruble to gold and a commodities basket. Other countries are looking to do the same. That signals the end the $US as the world's sole reserve currency. When our dear Congress can't spend, because the Fed/Treasury cartel can't print, the US economy crashes, as does our over-bought stock market, housing market, etc. Then value investing, as laid out by Ben Graham, will be the only thing that makes sense, and the current Nifty 50's scam -- the FAANGS-- will be shown to be the fraud that it is.

When does "small/mid-cap "growth" investing makes sense? In the early part of the business cycle. We're way past that now, as the chart in the middle of the article suggest.
http://davidmcwilliams.ie/the-view-from-germany/

Arindam
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Arindam,

I can see where your background and experiences would have naturally aligned you with the plight of "poor folk." I feel similarly and focus on this in my work. My parents came from deep poverty and my Dad had only a 5th-grade education. I saw my parents get preyed upon with insurance scams and oil leases where they lost their little investments every time.

I appreciated the article and included chart!

bloodking6
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bloodking,

Your quandary on how to navigate the current market is the same all of us are facing. The US economy being kept on life support by the interventions of the Fed/Treasury cartel. The Big Crash hasn't yet arrived. But it's coming. When? Who knows? But it's coming, and the unprepared will get hurt.

Arindam
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