Making a Fortune in the Stock Market: Lessons Learned from a Farmer and a Mayfield Milk Man
Making big money in the stock market is most everyone’s goal, but when I troll the Reddit boards, I’m constantly seeing day traders make the same rookie mistakes again and again. But had these same folks spent any time with a farmer and a Mayfield Milk Man, they might realize how their daily actions are thwarting any chance of getting rich with equities.
For those of you who are new to this community, I’m very open about my struggles with mental health. I’m severely ADHD and dyslexic, and also enjoy the roller coaster of emotions/mania that comes with bipolar disorder, which is why I’ve had to learn to master my emotions when it comes to handling money. And when I think about assigning attribution to the little tips and tricks that have helped me, I know two of the biggest influences on my investment decisions came from the minds of a farmer and a milk man.
“A young man ought to have 25% of his portfolio in gold and silver and 50% in good stocks. Then, he ought to shoot the moon with the other 25%,” the milk man said. I stood there, listening to the milk man, like everyone else, because he had just turned $10,000 into $250k by betting on a near bankrupt penny stock/chicken-tender producer that today is trading for $47.
The milk man had bought Pilgrim’s Pride at $.15 cents.
And though I don’t necessarily subscribe to his 25-50-25 take on managing a portfolio, the milk man taught me the importance of setting up a portfolio in a way that gives the investor enough margin of safety to take calculated risks with small chunks of his/her net worth.
The only problem was, when I met the milk man, my coffers weren’t exactly overflowing with cash. And when the market bombed the following spring in 2009, all I had to invest was $400. I couldn’t even afford a newspaper, but I had an aunt who I knew read the Wall Street Journal, so I asked if I could borrow a few once she finished reading them.
That’s when I found Las Vegas Sands trading for $3, down from it’s all-time high of $133. But back then, I didn’t even have a trading account, and actually had to get help from my grandfather to put on the trade. He had a broker and I told the guy I wanted to put $400 on LVS. Gramps laughed about me wanting to bet on a casino, but within a week, the stock bounced to $11 and I told Gramps to call the broker back and sell.
My grandfather seemed annoyed. “You didn’t even stay in long enough for the water to get hot!” And had I only listened to the jeers of the wise farmer, I would have turned my meager $400 into $10,000, but instead, I made the rookie mistake of selling the golden ticket to a future fortune that could only be acquired through the misery of waiting.
Let’s face it.
The only reason there’s 4,000 people in this community today, which has grown by 1,200 in less than 24-hours, is because of a single trade that made $2.1 million. But what no one realizes is how much those two little lessons learned from a farmer and a milk man helped me to not only take the initial risk, but to stay in the trade long enough for the water to come to a boil.
But how?
Let’s take a look at the timeline.... From September until the election, nothing happened. I thought I had blown $72k, which is more than my annual salary. Then, on Nov. 11, ACHR started to move. I remember feeling physically sick at having my account move this much in a single day—nearly three times my annual salary.
Then, three days later, the correction...... Losing a full year's paycheck in a single day sucked, but I had learned through 8 other downturns that the only way to win was to manage emotions and stay put. I made the following post b/c I thought it was a real-time example of an instance that would have shaken most people out of a trade.
November 20: ACHR goes parabolic....
Nov. 21:
Nov. 22
Nov. 22
Nov. 27: ACHR makes 52-wk high the day after Thanksgiving.
Nov. 29: The following Monday....
On the day this happened, the whole world had something to say, and none of them said, "Let the trade play out." But how was $900k any different than the $92k the month earlier, or the smaller drops that I experienced the eight times before?
Simply put: if I hadn't learned from the farmer to stay in the water long enough for the trade to get hot, there wouldn't have been any screenshots to discuss. And if I hadn't learned how to take calculated risks as part of an overall strategy—with a huge margin of safety—like the milk man, I would have gotten shaken out of the trade. But here's a fund fact.... At no time during those huge falls did I actually "lose money." Because I bought so cheaply, my margin of safety still gave me $1M profit to stay in the trade despite nearly 10 days of agony.
Lesson learned: If you want to be King of the Hill, you've got to learn to stay in water and give your trades enough time to heat up!
-Tweedle
Posted Dec 20, 2024, 12:14 PM UTC