Why New Investors Lose Money - AVOID These mistakes in the Stock Market

Hello, welcome back to a new investing

video. So today I want to talk about why

new investors almost always all lose money

and then get upset and quit the stock

markets, never to try investing ever

again. And it happened to me. So we're

currently looking at a stock called BNGO,

or Bionano Genomics, and this was a pretty

popular stock in 2020, which is when I got

into the stock market. I invested nearly

all of my life savings into this stock and

one other stock called Microvision. I

think I invested about 60% of my entire

life savings into this one penny stock.

And as you can see, it went up really

high. And guess where I bought the stock?

Yeah, I bought the stock almost at the

very high. I bought it around here. And

look at it now, it just went down and down

and down and down and down and down. And

now it's currently worth under $3.

So that was a pretty catastrophic loss.

Luckily, I didn't hold it until the very

end. I managed to sell out of it Around,

I think around here. So I bought in here

and I sold out around there, lost about,

I think nearly 60% of my initial

investment was completely lost. And I want

to make a video today to warn new

investors like myself back when I was new

to investing. I want to warn new investors

of the dangers of buying high and selling

low and getting caught in FOMO or fear

of missing out. So I personally got

interested in the stock markets back in

2020 when the markets were just going

euphoric and everything was going to the

moon. And then in the beginning of 2021,

there was that whole GameStop AMC thing.

And also Tesla stock was really popular

and all the meme stocks and WallStreetBets

on Reddit was really popular. And yeah, I

got suckered into all of that with all of

the other people who were dreaming of

becoming rich. And I honestly thought if I

put all my money into some crazy stock

like this, I'm going to go from like here

and then the stock's just going to shoot

up 10x and I'm going to turn my £20,000

into like £200,000 and I can buy a

house and I'll be rich and everything will

be amazing. Unfortunately, things didn't

turn out quite like that. So I did manage

to see some gains because I invested

around here and it did go up as high as

there. And I was pretty excited. I had

like 20% gains, I think, and my money was

going up and up. And then I woke up one

morning and everything just crashed so

fast, so hard, so quickly. But I kept

thinking, okay, diamond hands, I'm going

to hold, never sell, just buy more. I

actually bought more around here thinking

it was going to go up, and it did go up,

only to then keep crashing down and down

and down. And it did have a few rallies,

but these were just opportunities to sell.

These should have been opportunities to

sell, get out whilst you can. But I didn't

sell until like around here, probably.

And then I realized, yeah, I've lost like

60%. I don't really want to lose anymore.

I don't really see this stock going up

anytime soon. And the era of easy money

with meme stocks and penny stocks, I think

that's over as well because this isn't the

only penny stock that has a chart like

this. There's so many stocks from 2020

that were just booming that have like this

massive mountain going up and then coming

straight back down. And this is another

stock I was invested in. I had half my

life savings invested into this one called

Microvision, and they were developing some

kind of LiDAR, like a radar LiDAR sensor

for EVs. And people were hyping it up

thinking, oh my God, LiDAR is going to be

used on Teslas. Elon Musk is going to buy

out the company. And the stock and the

company just went so high. The value went

up so much. And I think I probably bought

in around there. I saw some gains around

here, but then it just kept crashing,

crashing, spiking and crashing. And I

probably sold out around there after

buying in like here. So again, I lost like

40%, putting a lot of money into this

stupid penny stock. And it looks like a

mountain, doesn't it? So many stocks look

like this. And unfortunately, that is just

a really hard lesson that a lot of new

investors have to learn the hard way

because everyone knows it's dangerous.

This is a very risky business. If you put

money into things that are already really

high, then there's a high chance it's

going to crash down, you're going to lose

all your money. But when you get caught up

in the hysteria and the euphoria, it's

really hard to remember those warnings,

and you just kind of get sucked up into

the whole mindset of, oh my God, I'm gonna

get rich overnight. It's easy to see now

in hindsight how badly the stock has done,

but imagine you couldn't see this bit and

it just looked like this. And there's like

a massive spike. And now you think, oh my

God, it's going to spike even bigger. And

what happens is you get caught up in FOMO,

fear of missing out, because you see the

stock going up and up and up like this,

boom and boom and boom. And you're

thinking, oh my God, I'm so stupid. Why

didn't I put money into this? Now I'm

missing out on all of these gains. So you

think, well, this isn't the end of the

upside. I'll just start investing here and

surely it's going to go up even more. And

it's not too late. I can still get like

20% gain. And you think that and maybe you

will get 20% gain. But then what happens

is you don't sell because you think,

okay, I'm so lucky now. I'm going to get

60-80% gains and you think it's never

going to end because you get greedy and

you think this can keep going up and up

and then you get scared of selling because

then you think, well, if I sell now, what

if it goes up another 100% and I've just

missed out on even more money and then you

don't sell. And you kind of become chained

to the stock thinking that you're like

trapped with it now. I have to see it to

the end. And it's when you start thinking

like that, it's kind of an indication that

you should get out because loads of other

people are thinking the same and you've

probably bought in near the top. And yep,

I did buy in pretty much at the top and

not just with this stock, also with things

like crypto and Bitcoin. I did the same

mistake and I'm sure many other people did

as well. The problem is once you're

experiencing all these amazing gains and

you've got like a fully green portfolio

with +50%, +80%, you truly feel

like a god, like you're some kind of stock

market trading genius guru who is lucky

enough to be so good at this and so

fortunate. And you're going to be like one

of those guys who, you know, those guys on

Reddit who screenshot their portfolios and

they're bragging about the +2,100% gain on

some penny stock they invested in 5 years

ago. You want to be that guy, don't you?

And you think, OK, I can actually be that

guy. I just have to be brave enough and

put enough money into the one penny stock

that's going to make me rich. And it makes

you feel invincible. You wake up every

morning, your portfolio is completely

green. You've made so much money and you

truly feel like nothing can bring you down

until one day the market reverses and all

the meme stocks come crashing down like

they did in, I think it was like the

beginning of 2021 after the whole GameStop

and AMC thing. It was like spring 2021. I

remember waking up and all of my meme

stocks were just down 20%. And then I woke

up the next day down another 10%. And it

was just down, down, down, down for the

next few weeks until I couldn't take it

anymore and I had to sell out. And I'm

glad I did sell out because if I never

sold out, I think I would have lost all

the money. I wouldn't have just lost 50%.

Or nearly 60%, I would have lost like 95%.

So really glad I decided to fold and

sell out everything because sometimes you

just take too much of a beating and you

just have to, you have to put your hands

up and say, okay, I lost. You beat me.

I'm done. Now, the problem is the

psychology of winning on the markets and

doing well and actually making money goes

against the very human nature of what is

natural. So we kind of naturally are

inclined to want to buy at the top like

here. When everyone is really positive

about the stock and the stock's going to

the moon. That's when you want to buy

psychologically. And for some reason, we

want to sell our stocks like here at these

bottom dips when we really shouldn't be

buying. We really shouldn't be selling

here and we really shouldn't be buying

here. We want to flip that around to

actually make money in the markets. You

kind of have to trick your brain into

doing the opposite of what it naturally

wants to do. Your brain has a fight or

flight mechanism. Here it wants to fight,

here it wants to flight. That is not how

you're going to make money on the stock

market. You need to flip that mentality.

And here you want to be scared. Like when

things are going to the moon and it's

looking like a mountain peak, then you

should be scared. You shouldn't be all

like brave and ready to go

to the front lines of war here because, I

mean, you start investing here and it's

extremely risky. The potential upside is

very small or basically nonexistent. And

the potential downside is just massive.

There's only down to go. If you're that

high, the only way left to go is down.

And then for some reason, when stocks

crash and they're really low, like down

here and down here and down there, no one

seems to want to buy anymore and

everyone's scared. But this is exactly

when you want to buy. You want to buy here

when all the negativity is coming out.

And everyone's scared and everyone's

selling it and the market's all red.

That's when you want to buy, even though

it feels like, yeah, I mean, I don't want

to buy now. I mean, when I see stock come

crashing down like 50%, I'm not exactly

thinking, oh my God, I want to buy it now.

I'm actually thinking, thank God I didn't

buy it. I mean, look how crap this stock

is. It's so rubbish. It just crashes. I'm

staying away from it. But that's actually

a mistake. And actually, that's when you

might want to think, about buying it the

most. Human beings are just very strange

creatures. When they see the crowds or the

masses of people around them getting

excited about something or running in one

direction, you kind of want to join in

because you've got that kind of herd

mentality built into us. We want to join

in with the crowd because it's like safety

in numbers. And for example, imagine

you're just walking down the street and

then suddenly a massive mob of people are

running in the opposite direction. What

are you going to do? You're going to

ignore them and keep going towards the way

that they're running away from, or are you

going to join them and like run away from—

I don't know what even they're running

away from. You're probably going to join

them and run away even though you don't

even know what you're running away from.

When you see a stock going to the moon and

there's so many people excited about it,

you think, wow, if there's so many people

so enthusiastic and excited and positive

about the stock, then surely they must

have a point and I'm missing out if I'm

not jumping on with them. And this just

sets an extremely dangerous precedent

because these people could be running to

the edge of a cliff and you would have no

idea because you're just kind of like

behind the pack and you can't really see

what's in front. You're just going to

follow them all off the edge of the cliff

and then dive into the sea, and that's not

going to look very good. So you really

want to avoid doing what everyone else is

doing because if everyone else is jumping

onto this stock and it's already up here,

then it's probably too late. You want to

get into the stock when no one's talking

about it, like down here. And then when

you see it going up, then you've got to

start thinking, yeah, this is getting kind

of crazy. I'm going to get out here and

take my profits. Now, the second phase to

this phenomenon is panic selling. So

you've bought here and you're running with

the crowd, but now it's crashing down.

What are you going to do? Most people

panic and they panic sell. So not only are

you buying at the top, you're now selling

at the near bottoms because Once it's

crashed so much, it's too late to sell.

You should have sold earlier. If you sell

now and the market's just going to rally

and then you're going to miss out on the

relief rally because you already sold out.

At least if you hold on, held on until the

relief rally, you could have made back a

little bit and then sold out there. But

again, people just have the wrong way of

thinking and the wrong mentality when it

comes to approaching the markets. You

don't, you don't want to sell when it's

crashing. You want to buy when it's

crashing. But only if you think or know

that it's a good company with a good

future and you've done your research.

Don't just buy a crashing stock because

it's crashing, because it could be like a

rubbish meme stock with no future and it's

crashing for a good reason. Sometimes

stocks do crash because they're just

rubbish stocks and they deserve to crash.

Doesn't mean you should buy into it. You

should only buy into a crashing stock if

it's like something you actually believe

has a future and this crashing is not

really warranted and it's going to bounce

back even stronger. So the reason why

people lose so much money in the stock

market is because they only seem to want

to buy when things are going up and then

they've bought at the top of a peak or a

bubble or mountain. And then they only

seem to want to sell when it's crashing

down. So of course, they're not going to

make any money this way. They have to flip

that way of thinking. And for most people,

that's just impossible. People are scared.

Money is very important. It's very painful

losing a lot of money because we had to

work hard to make that money. And if you

run out of money, then you're screwed.

You're going to go homeless. You can't buy

food. So obviously humans place a huge,

massive importance on money. And there's a

lot of fear and greed that revolves around

money, which ultimately influences people

to make terrible decisions when it comes

to managing money on the stock markets.

And it's why people have To— people have

to go to university and study master's

degrees and bachelor's degrees and PhDs to

know and learn how to manage money as a

professional. And even those people lose

loads of money. Professional hedge fund

managers and investors and portfolio

managers, they lose billions of dollars

and they're supposed to be the

professionals. So how are us retail

investors even supposed to make money?

Well, the sad fact of the matter is the

majority of us are never going to make any

money doing this. And it's basically just

like a game. It's like gambling, bit of

fun, bit of entertainment. But at the end

of the day, we're not really going to make

anything. It's just a bit of fun, just

like going to a casino. Trying to make

profit off this over the long term is,

for most people, basically impossible.

But if you research and study enough and

you really get into the nitty-gritty of

it, Then maybe you'll be part of the 5% of

people who can actually turn this into a

job and actually make a living out of