My blunders in Speculation

My first investment was in a stock called Hindustan Oil Exploration company (HOEC) with money loaned to me by my father.

This was the days of the early 1990s during the glory days of Harshad Mehta when we had crooked brokers and the market ran only on tips and the madness of ignorant investors like me. 

There was no online trading and the only prices were those listed in the Economic Times the next day.

My friend gave me the tip of HOEC.  His father’s broker had given it to his father.

I did not invest in the MRF IPO in the early 1990s, even though my good friend recommended it to me, because who wanted to invest in a boring tyre company when I could strike gold tomorrow investing in the far more exciting field of oil exploration. 

Also why trust a good friend who also happened to be an alcoholic, when you get hot tips from stockbrokers who are supposed to be far more knowledgeable about the stock market than anybody.

I bought HOEC at I think Rs 55/share and within a week the crooked broker told me to sell and he said he sold it at Rs 95/share.  I was thrilled.  

The next day after the sale, I went to my crooked brokers office, and I saw the closing price was at I think Rs 125/share. 

I was upset with my crooked broker. But there was no way to prove at what price he actually sold since he said he sold earlier in the day before the price finally closed at Rs 125/share.

This set me on the road to ruin.  Looking back I should have lost money on my first trade. 

Then I would not have been so reckless and stupid in the future.

Then in 1997, I went to the USA to do my Master’s in Engineering at the University of Florida.  I did not start to invest till I got my first job in late 1999.

My father had given me $20000 for my education.  I missed the whole dotcom book and kept that money in a savings account earning 0.5% per annum.

In late 1999 when I started earning my own money, I began to short the market.  I shorted Amazon and made money during its collapse in 2000.

That further set me on the road to ruin.  But I was still very careful of losing money.

Then March 12, 2003, where I my vision of the prophecy of the advent of the Satyuga happened and due to the wonders of the Baker Act I was introduced to the horrors of fraud gutter pseudo “science” of Psychiatry.

Just before the Zyprexa was forcibly introduced to me I came across a golden opportunity in Healthsouth. 

It had fallen to a lifetime low of 30cents a share and I bought $13,000 worth of shares. Healthsouth was expected to go bankrupt but I did a thorough analysis and knew it would come through.

Healthsouth did not go bankrupt and within 18 months my Healthsouth investment was worth $400,000.  I took out this money and put it all of it into Calpine (before it went bankrupt) which had fallen to an all-time low. 

Calpine suddenly shot up and within a day I had made $100000.  So I had more than $590,000 in early 2006. 

By this time the Zyprexa had completely raped my mind and body, but I felt like the God of the stock market.

I hated to borrow money, I had never borrowed a single dollar in my life before I was forcibly introduced to Zyprexa due to the wonders of the Baker Act .

After I got addicted to Zyprexa, I started to borrow great amounts of money and also gamble in options, the most risky form of trading in the stock market. 

I started to gamble in options because I wanted to make money the fastest possible way to buy out my father’s share in his company, since he told me if I gave him the money he put into the company he would let me run it.

Looking back that was the second most foolish decision I made in my life.

I also got involved with a girl who I met on the internet and who I would not have even glanced at if I were in my normal senses.

I got involved with her because an Internet website matched us up saying that we were perfectly compatible and we both were fans of Mr Spock of Star Trek .

In fact in 2006, I put my entire life’s savings (around $500,000) and even borrowed $100,000 from my credit cards, for a total of $590,000 and put it all on options and I lost all of it.

Looking back in 2020 at what happened in 2006, I laugh at it as a tragi-comedy.

I did not lose $590000 in a single put, I lost $216000 in a single put.

But overall I lost $590,000 in just 3 months gambling in options because I was forcibly put on Zyprexa due to the wonders of the Baker Act in Florida, and this seriously impaired my judgement and sense of risk.

In May 2006, I had gambled $216000 on LNG puts and was underwater by $200000 by June 2006.

I still had hope till expiry day in June 2006, but unfortunately on expiry day I had an entanglement with an alcoholic loser girlfriend who did not understand the stock market.

I was in a 5 star hotel in Goa, India at the time and it was 8pm in the evening, just past 930am opening time in USA.

I saw the LNG puts go up and wanted to stay awake the whole night till 2am in India which would be closing time in the USA.

The LNG puts started to pick up volume and I knew I would recover my fortune.

My loser girlfriend had drunk 8 beers from the hotel minibar ($$$) and was drunk and screaming for me to sell in our hotel room and in panic I sold just to calm her down and went to bed with just a $15000 gain for the day.

But I was underwater $185000 out of which $100000 was borrowed from my credit cards.

The sad part is that the next morning when I woke up, if I held on to those puts till closing, I would have recovered all my losses and made over $150000.

That was the lowest point in my life in financial speculation and it was all God’s plan to teach me about Karma.

I and the alcoholic loser split up soon after that.

Only my dad’s intervention and valuable bailout funding saved me from bankruptcy. I am extremely grateful to him for that, but that does not cloud my judgement about him as a person.

I returned to Bharat for good in 2009 and started to speculate in the Bharatiya stock market.  Based on my success in the USA, I only looked for beaten down stocks. 

In 2011, I saw Arvind Mills at around Rs 28, but preferred to buy Surya Pharma at 30 paisa.  Surya Pharma went bankrupt and Arvind Mills went to Rs 300 by 2017.

In 2014 I got Rs 80,00,000 as my gratuity from my old company and also a gift from my father.  I was still on fraud psychiatric drugs.  I was still following my USA success model of buying beaten down stocks. 

I put all of it on a fraud stock Rasoya Proteins.  I was really stupid, during the same time I also identified Morepen Labs, Confidence  Petroluem, Mawana Sugars and Ludlow Jute, but instead of diversifying my bets, I got greedy and put it all on the single fraud stock called Rasoya Proteins because it was the cheapest of all my picks.

Fortunately, I learnt the from the bitter USA experience of borrowing and investing and never borrowed to invest in this stupid bet on Rasoya Proteins.  Unfortunately, I also advised my true friend to do the same and both of us lost all our money.  

I should have spread my bets across Rasoya and the other stocks that I had identified.  My Rs 80,00,000 would have become more than Rs 5 crores by June 2020.  I also started gambling in options because I made Rs 8,00,000 in one day in 2015. 

By early 2018 I had lost all my money.   

But the good thing was I had started practicing ध्यान (Dhyana) or what is loosely translated as meditation in 2015.  This gave me the courage and confidence to get out of the clutches and to recover from the fraud gutter pseudo “science” of Psychiatry by late 2018.

I would have never dreamed of doing what I did with the risky bets in stocks, and my romantic misadventures before being forcibly addicted to Zyprexa and Risperidone, but such drugs are just mind numbing and mind, health, and life destroying curses.

They make you a drug addict, sleepy, put on lots of weight, get panic attacks, have poor short term memory and lethargy, poor concentration and prone to diabetes and also you lose all sense of what is dangerous. 

By late 2018 I was completely drug free.  I started to think again just like I used to in 2000.  I had a sense of risk and discipline again.

But this time in mid-2018, I went back and looked at all my major trades both in the USA and Bharat right from the days I started investing in the early 1990s. 

That is where I saw the mistakes that I had made by not investing in MRF, Amazon and Apple even though the opportunities to do so came and bit me in the face.  That is where I saw the foolishness of my gambling in futures and options.  That is where I saw to foolishness of putting all my capital in a single trade.

I have learned the end result is its always better to buy and hold than gamble in futures and options and short term trading.

AAPL was trading at $8 in 2006. It is now $364 as of July 1, 2020.

My $590,000 in 2006, would have become around 27 million in 2020 if I just bought AAPL instead of gambling in options way back in 2006.

Oh well thats the follies of youth – falling for quick thrills and excitement instead of safety and stability. 

The foolishness of falling for the excitement of oil exploration instead of choosing the boring stability of boring tyre companies.

I would like to think I am older and wiser now.  Only time will tell, but my results since early 2019 upto July 1, 2020 have been very encouraging. 

In early 2018 I started investing in gold ETFs.  I knew the market was going to tank and knew that gold was the safest investment.  My bet proved right and as of June 2020, I have returned more than 50% on my investment in gold ETFs.

Now in investing and in any financial investment or business I get into now, I look for safety, stability, and a return more than inflation. 

I no longer try to double my money in a week.

For excitement I do ध्यान (Dhyana) and when I get a chance to do skydiving again I will do that also for excitement.

This publication is for informational purposes only, it should not be considered Financial or Legal Advice.

Investments are subject to market risks and you could lose all or a significant portion of your investment.

Consult a financial professional before making any major financial decisions.

Before you take their advice, make sure the financial professional has a significant portion of their own, and if possible also their children’s net worth, in the investments that they are recommending to you, just like I have done, and publicly displayed at www.artofrealwealth.com.