5 Confessions From Losing Over $5000 in a Penny Stock Course That You Need to Know

These will make you think again next time

A few years ago, I was looking for additional income to supplement my income as I was leaving the military. I knew my income would drop in half and didn’t want to work hard after 20 years in the Army. So I kept seeing an ad for a penny stock course from an investor who was making millions. I won’t mention the course but you may have seen the course before. We all have.

In fact, the very first article I wrote on Medium was about the penny stock course. This was a little over four years ago.

I never followed up about the course or wrote another article for several years.

Work was busy that year as I was still working in the Army, transitioning out, attending classes, preparing my cover letter and resume templates, move my mom to live closer to me, take a week-long work-related trip to Europe which was also Army related, and coordinate and attend my dad’s funeral thousands of miles away.

I was on the phone with the doctor that was operating on my dad when the doctor said my dad died on the operating table.

This was supposed to be a normal procedure but my dad’s internal organs were devastated by years of neglect.

So this year also wasn’t the best time to start learning about penny stocks. A lot of other factors got in the way.

My mind was there but I couldn’t give the course 100%.

Then on top of that, I was two hours off from Wall Street time which was also the time I took my daughter to school before heading to work. The timing of the market really threw a big detour sign in my penny stock trading. I knew this before I signed up but figured I could wok around it.

Sometimes it worked out. I was able to get in and out with little difficulty.

Other times it didn’t.

Then another issue popped up of course.

I just started working in a new unit on base and the wifi connectivity was nonexistent. The connection was very sporadic.

We worked in old World War II buildings as the rest of the base was fairly new.

The unit was the bastard children on base and we didn’t get much love.

So this didn’t help my trading either. I continued to do my best. I was making a few good trades. These were small trades.

Some earned me a couple $100, $47, and a $500 one. I had a few losses and they were pretty small.

While in the course, I thought I was doing pretty well. I couldn’t keep up with the lessons as best as I wanted to.

There were a lot of videos to watch. Too many videos for me to digest while also planning my second career. I would watch them as best as I could.

After a while, there was a lot of fluff in the video.

I have gotten to the point where I need an answer NOW. Not 20 or 30 minutes later.

The military changed how I digest information. In the military, there is a saying.

Bottom Line Up Front.

Military leaders don’t have time for small talk. They are on a mission to save lives.

So when you deal with someone in the military, get right to the point.

Don’t waste their time.

Time is one thing that gets used and can’t be replaced. So time is of the essence.

That’s how my brain thinks and some of the videos were wasting my time.

It was hard for me to sit there and pay attention as the speaker would ramble on about something not related to the topic. You might say, this also hurt me more than it helped.

I lost interest in the videos and started trading based on what I learned.

Cut your losses quickly.

When I invested, I used to be very bad at this and still am sometimes. I tend to hold on to trade longer than I want to but I have gotten a lot better. But I try to catch myself.

After the 2008 crash, I created my own trading/investing rules. After going through the 2008 crash, I sold some stocks at a loss.

The two stocks I remember holding were Visa and Starbucks. I sold these for a loss after the market pounded these and other stocks. Like many others, I was selling when I should have bought more.

I had never experienced a crash like this even though I invested during the Asian Tiger crash in the late 1990s and the 9/11 crash. These crashes were not big and I stayed focused during this.

Of course, my portfolio was pretty small at this point.

After the 2008 crash, I started to swing trade with stocks I bought in my brokerage account. I vowed to analyze my position and possibly sell once the stock reached a 100% gain.

This worked very well as I sold out of many stocks prior to the 2020 crash.

I made 100% gains with Facebook, LinkedIn, JPM Chase, Bank of America, and others. Also, I sold one stock earlier than my 100% goal and that was FitBit. I started to recognize there was a lot of competition heating up for FitBit.

Fortunately, I walked out with a 35% gain because FitBit soon tumbled in price. Apple Watch came roaring out with their next version and had many similarities to FitBit.

I don’t regret selling any of these stocks because I would be a little angry after holding these and the market taking them down 50% or more.

Investing is very psychological. Personally, I don’t like to lose.

So for me, I felt great. I made money off my trades and just reinvested the earnings in other areas. Compared to the 2008 crash with the 2020 crash, I feel 100% better.

Of course, technology has improved tremendously since then. Back then, I was watching a lot of CNBC and Jim Cramer since I was overseas at the time.

I couldn’t give my investments 100% of my attention. This time I had a lot of time to sit back, analyze, and think.

My $5000 venture in penny stocks did teach me a few lessons.

Yes, this was an expensive lesson but I learned from it. Anything in life can teach you a lesson.

I think the tough or expensive lessons really teach you a lot because you can really remember these lessons because of how painful they are. I’m sure if you lost $5000, you’d remember these lessons as well.

The key thing is to learn from your lessons. Everything in life can teach you a lesson if you sit back and think.

What did I learn from this?

This is another military lesson they teach and I apply to my life. In the Army, they call them After Action Reviews or AARs.

When there is a training event or exercise, we conduct AARs to find out what was supposed to happen, what did happen, what went well, and what can be improved upon the next time.

So I use this in my life sometimes. I may not go into all of the steps but do a quick summary in my mind.

What can I do better next time?

The next lesson I had with the penny stock course was I charged this to my credit card. I thought I could pay this off in no time.

Of course, I was wrong. My expenses were piling up.

• The penny stock course.
• A last-minute flight to my dad’s funeral.
• Hotel costs.
• Rental car.
• Funeral home costs.

Then when I moved my mom several months later, there were more costs. Hiring a mover to ship her stuff to where I lived and then plane ticket for us.

Then the apartment I picked out didn’t work as I planned and I took a loss breaking the lease.

My credit card was hitting new highs and before I was very good at paying this off with no problem.

Life does that to you sometimes. These little surprises sometimes come out all at once.

Then on top of that, I had my 20-year college reunion as well as my 25-year high school reunion. I hadn’t seen a lot of friends since we graduated so I had to see them.

Of course, this was more money than I put on my credit card.

• Plane ticket.
• Hotel.
• Rental car.

My credit card was seeing a lot of use in such a short time period. But it doesn’t end there.

I took on a commission-based job as a life insurance agent following my retirement. They had a rule where every male agent had to wear a suit and tie.

So, of course, I had to dress to impress.

I spent a couple of thousands of dollars updating my wardrobe at Men’s Wearhouse and Jos A. Banks. Little did I know these places have sales. So I bought my first couple of suits at full price.

Ouch.

Lessons Learned

After all of this, there are some lessons to take away from this.

I hinted at what a few of these were throughout the article.

On top of what I mentioned, I didn’t mention I also had a few rental properties that I had to keep track of.

These are all under property managers but I still had to make sure my pay from the renters were still coming in every month as well as any unplanned repair costs that pop up from time to time.

Fortunately, there were no big issues during this time.

There may have been a change of tenants but these never last very long before a new renter is found. So I had to pay the mortgage for a month or two which came from my rental fund.

I try very hard not to mix personal with business expenses when it comes to real estate.

These are the top lessons I learned:

1. Have a plan to pay off your credit card — I won’t lie. I got in over my head investing in the penny stock course. I thought I could pay it off with gains from the course but so many things happened that prevented me from doing well with penny stocks.
2. Life happens — Many things popped up for me that were out of my control. My dad died. My mom moved. Both of these cost me money out of my pocket. Things in life happen without your control. You can’t plan a lot of these but you may have a general idea. As for my dad, this was a complete surprise. I had no idea he was in the hospital. I’m sure he wasn’t feeling well and he didn’t have a cell phone so there was no way for me to contact him when he was in the hospital.
3. Time — the two hour time difference played a big part in me trading along with the stock market. I was busy getting my daughter ready for school as well as heading off to work. It sounds minor but time can really play a big part in what you need to do especially when you don’t control the systems that are at play.
4. Seeing old friends — I hadn’t seen many friends for years. We still don’t keep in touch so then you think were the trips even worth it? There was no earth shattering news or anything to be gained other than seeing how people looked as compared to when you last saw them in school. Will I go to the next reunion? Possibly. I think I’m in a better situation now than I was a few years ago. The next reunions should be in 2021.
5. Money spent on the penny stock course — I’m not sure if I would say this was a loss. Yes, it did cost me $5000 but I did learn a few lessons. It’s hard to say if I would have made the same trades if I hadn’t have taken the course since I am always learning and changing my routines. I don’t change my routine too much so I could have possibly have used the $5000 to pay off my credit card bill. I would have had $5000 less that I owed. So this one I probably could have done without course and still would be fine. So I guess I answered my own question.

Life is funny.

Events we go through in life can be expensive. After going through these events, we learn something from it and can share it with others.

These events can be painful and it could always be much worse.

Fortunately, everything worked out.

I’m still here, still investing, but making more careful moves now.

I really think hard if I need to buy a course because it could end up wasting more money that I could use for something else.

I encourage you to check out these other articles:

What is the most recent lesson you have learned?

Tom Handy is a top Investment and Bitcoin writer on Medium, and the father of two kids. He retired from the Army and sits on several non-profit boards. He’s on several social media channels and you can find him on Twitter @tomhandy1 and Instagram @tomhandy1.

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.