All Educations Are Expensive

It took me nine years to pay off one my student debts, and I never attended college.

A formal education was never a good fit with my learning style. I’m more of a hands on, learn from your mistakes, kind of guy.

One of my most expensive educations came in 2007 and 2008. I have been fascinated with the stock market since my high school civics class, when we were given $100 of pretend money to buy stocks. We have all heard people say, "if you would have invested $1,000 into Amazon in 1997 it would be worth $10,000,000 today."

In the summer of 2007, I had been following the market and watching everything I could on CNBC. I thought I could trade, it's easy right, just watch any number of shows, as they all shared the secrets. I approached my wife with the idea of borrowing $70,000, so I could trade. At first, she wasn’t on-board because of the risk. I started a spreadsheet outlining phantom trades I would make.

The first month of phantom trades and we would have made $10,000. She agrees to let me borrow the money. Money in hand, I set-up a Charles Schwab trading account and I’m off buying stock. Now it’s real money and I’ve made $10,000 in about 30 days. I did it, this is easy! Like most 20 somethings that made more money in a month than I did in a year as a teenager, I was picturing Lambos and Ducatis. We went to the mountains and rented a large $500 a night cabin with a swimming pool in the basement.

One the way home that weekend my BlackBerry was blowing up with alerts, the market is crashing, and there is nothing I can do. This was before the days of smartphones and trader apps, I was 400 miles and 6 hours away from my computer. I don’t recall call how much money I lost that day, I remember the feeling of panic, and I must get that money back. I made a risker trade the next day to try and recover, I picked a loser again. The next day, a riskier trade, because I had more ground to make up. Before long the $70,000 was zero, I just lost a new Corvette.

Over the past decade, I have reflected on that education and have found many flaws with my execution.

We all see the obvious mistakes, borrowing money to risk in the stock market and not educating myself. However, both of those would have been overcome if I would have realized my more hidden mistakes.

First off, I was chasing money, the visions of Lambos and Italian sport bikes clouded my mind. Money isn’t a plan, it's at most a goal and the poorest of reasons to decide to do something.

Secondly, I panicked and made emotional decisions. I should have stopped, no one was dying, and came up with a logical game plan.

Lastly, and most important, I wasn’t patient. I didn’t need to become an overnight millionaire, I should have focused on the future and enjoyed the process.

If I would have put the $70,000 in Amazon in 2007 it would be worth about $1,600,000 today.

After this experience I started using the phrase “all educations are expensive," this one certainly was.

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