Learning From Losses | The Follower

Before I started my trading journey, I told myself that this will be just pure investing. I'll buy stocks then leave it for God knows how long. But to be able to do that 'properly' I need someone to guide me there. Because before... wala tayong alam sa pinasok natin. Haha. (But I googled the basics naman. Read books.)

So I went looking. I stumbled upon recommendation groups. They are groups/persons that you pay in exchange for their stock recommendations. They tell you when to buy and sell. They tell you where to buy and sell. At what price. Sometimes they even tell you how many stocks you should have on your portfolio. Pretty neat if you would ask a non-suspecting newbie like me.

I read them all. I compared their fees. Read some reviews. Feed backs. But I wasn't convince to join any of them. Some are too expensive. Some are led by non-trader people. I kept looking. Until I found a certain group that was claiming that they are better than the rest. I've checked their rates, their reviews, their website. It was pretty OK but I'm still not fully convinced and time is ticking. And in investing, time is your ally. Or so I thought.

So I joined them. Lets call them 'Blue and Yellow'. I paid the annual subscription although there was a monthly option. Why you asked? Because the idea that I will be in this for the long term pushed me to go for the discounted annual rate. But later I realized I should've gone for the monthly and tried their service first. Because I realized I was just another blind follower.

Going back, once I paid the fee, I got access to their online platform. Everything was in there. Long term recos. Short term recos. Their so called 'mentoring'. Psychology. Newsletters. Starter guide. They choose their long term stock picks based on the stocks fundamentals. They based their buy-below-price on the previous day's price and volume distribution shiz. Yes, they try to explain how to read this shiz on their starter guide. But to the newbie subscribers, most of them will not give a f**k about this explanations and just buy the price recommendation. Because... that's the purpose of why people subscribe to this things in the first place. They don't wanna deal with the BS of when and where to buy and sell. That's why their are willing to pay people to do this shiz for them. At least that was my purpose back then when I joined Blue and Yellow. I have a 9 to 5 work. I can't monitor the market 24/7 so I wanted to pay someone who can do that for me.

So I bought 4 stocks from their list. I just chose 4 stocks with the biggest upside based on the stocks' current price and their target price. At first I was winning. But it was a downtrend for PSEi. Few weeks later my port suffered from paper losses after paper losses. One particular stock on my port was losing big time so I put my effort and money into averaging down on that stock. (You can read about this story from this link.) Which I realized later was a wrong move. Never average down on a downtrending stock.

I honestly thought the group is lacking on risk management side and focused instead on the buying side. Yes, newbies should do their own diligence. But I think if you're offering a paid subscription for stock recommendations then I guess you should also include reminding your followers of proper risk management. If you really care about 'mentoring' other people, you should really stressed it out to them about the importance of risk management first instead posting general advise like 'we have different risk tolerances, so we won't discuss that'. You should encourage them to protect their capital first and not capitalize on them. But then I guess, that's the purpose of these gurus and reco groups. To make money from this 'business' and not care if their members lose money.

Newbies/people who have limited knowledge on trading are susceptible to these 'subscription' thing because they thought that they will be given everything they need to be profitable. Spoon feeding. And some gurus take advantage of these 'weakness' of newbies and accept them to their group with open arms like wolf in sheep's clothing.

Okay, maybe not all of them. But still...

And yes... though my subscription is still active, I already stepped back from the Blue and Yellow.