Written by R. A. Stewart
Prior to the 1987 sharemarket crash, which was named “Black Monday,” investors were rushing to buy shares and as the price rose and the value of their portfolio increased, people borrowed money to purchase shares using the value of their holdings as capital. When Black Monday arrived, the value of their portfolio dived, the result being that investors who borrowed money found themselves in the position of owing more money than their shares are worth.
The problem with using borrowed money is that the crunch comes when you have to pay it all back plus interest.
Jumping on a bandwagon can be very costly. In the case of the 1987 sharemarket crash, the price of shares did not reflect their true value but rather the amount of money which went into the market.
It reminds me of the old saying, “Something is only worth what others are prepared to pay for it.”
We have seen similar examples of companies on the share market which have seen their price rise then come crashing down quickly. Many who jumped on the bandwagon got their fingers burnt.
If you are going to try your luck at making a killing, then this needs to be done with your discretionary spending money and not with your retirement funds or your deposit for a house fund.
The reason being that investing for a killing is a short term speculative investment.
Once in a while you will hear stories of someone who made a killing by investing in such and such but you never hear about those who tried the same thing and lost. It is likely that such people ended up losing their profits.
Here is another saying worth keeping in mind, “Whenever there is an opportunity for a capital gain there is an opportunity for a capital loss,” that is the nature of the markets.
But with the right investing strategy you can achieve your goals whatever the markets are doing. If you have invested according to your risk profile then the state of Wall Street should not be a concern to you.
A windfall is only as good as how it is being used. It is not much good if it is being frittered away. Use it to your best advantage according to YOUR OWN GOALS and not what others think you should do with your life.
Following the crowd can destroy one’s chances of financial prosperity; Just take a look at how much money smokers are paying for their addiction. And where did it all start?
As a teenager when someone was offered a cigarette by their peers and because they were people-pleasers they accepted.
It is rather mind-boggling the amount of money smokers are burning through per annum. That money could have been put to better use. Not to mention the health aspect of smoking.
Set goals that align with your values and not ones which others have tried to impose on you. If someone has limitations then they will impose their limitations on you. Take heed of wise advice but use your common sense to discern whether the advice is good or bad. If you are unsure then ask a number of adults for their opinion. Don’t be afraid to ask and never be so puffed up with pride that you never take advice from anyone. “Pride always comes before a fall.”
About this article
The content of this article is the writer’;s own opinion and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website, or ebook.
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