The finance community can be divided into two groups, active investors and passive ones. Passive investors put their money into historically reliable companies, and hire people to look after their portfolios for them. Active investors take a more hands on approach, and swing for the fences. They must combine an extensive knowledge of the market with a lot of research, in order to make the right choice when it comes to riskier stocks, and with this higher risk, comes the possibility for higher reward. 23 year old New Yorker Ryan Packer recently decided to embark on the lifetime journey of becoming a successful active investor, but discovered that the “learning by doing” method was not the best when it came to money.
“Remember that Nike commercial where Michael Jordan says that the reason he succeeded was because of how many times he failed?” Packer asked over Zoom, “yea that doesn’t really apply to finance. I mean, a missed layup always counts for zero points, but some of my misses this past month counted for -5,000 points. And by points I mean American dollars.”
Packer had bought a diverse assortment of stocks, after hearing that diversification was important when it came to investing. “I invested in a wide variety of companies,” he explained, “everything from pharmaceuticals to cannabis. What I didn’t realize though is that if you invest at the wrong time, the entire market can go down. Normally, active investors have a six month safety net saved up in case something like that happens, but I didn’t know you were supposed to do that, so I had to sell and take a giant loss, just in order to pay my rent. Lesson learned!’
Sadly, this wasn’t the only lesson Packer learned the hard way. “I knew that sometimes the best time to buy a stock is when it’s going down, so I put thousands into a uranium company based out of Malaysia. Unfortunately I didn’t know what I didn’t know, and that was that sometimes companies go down and continue to go down until they file bankruptcy. The more I know now!”
The world of cryptocurrency and NFTs imparted similar wisdom, when Packer lost what money remained in his portfolio. “That’s the amazing thing about learning,” he continued. “Sometimes when you think you’ve learned everything there is to know, you suddenly find out there’s a whole world of education you didn’t even know about. The only problem is that all of my education was tied to brutal financial losses, and I won’t have enough money to invest again for a long time.”