TO ALL: Be careful folks! Last year I had a long correspondence by email with someone who lost everything buying ZITL and VIAS on margin. In the past few days I have had similar email with a person who lost everything, including family money and borrowed money, shorting AMZN and YHOO. I have heard of other cases and there will be many more when the current frenzy crashes.
The sequence of events tends to be the same in almost all cases. Goes something like this:
1. Investment goes down, investor goes on margin and invests more.
2. Still goes down, investor liquidates other investments and buys more.
3. Goes down more, investor bails out with loss.
4. Investor borrows money, goes back into market looking for "big win" to get his money back. Thus chooses a very risky investment and goes big, all or nothing.
5. As expected with such risk, investor loses again.
6. Now desperate, investor borrows from family, uses funds not meant for risky investment, takes even higher risk looking to win it all back.
7. It usually comes to a very bad end.
If this sounds like gambling addiction, it is. If this sounds like the path you are on, get help now!
Real investors become more conservative as their portfolio declines, gamblers increase their risk as they fall behind. An investor backs away when he loses, a gambler doubles up. Be an investor, not a gambler. And remember that most gamblers are hooked by early wins.
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