In the late 90s, I was making a great salary, aggressively saving, living frugally, but for investing was risk averse, by nature. I did not want to lose money I had earned and saved. I still don't.
Full blown dot com mania rolled around when the globe dot com went public in late 1998. I played around with an ETrade account during the .com bubble, making harmless $5k trades, no options, took profits way too early, but followed the market action very closely. I dabbled lightly and did some IPO trades, some premature shorting, and mostly used it as a positive learning experience. No harm, no foul. I was mostly a coward, happy to have my money safe on the sidelines, CDs and bonds, but the dot com bubble was spectacular on the upside and the downside.
However, the experience left me very distrustful of the entire game. Investment banks underwriting bogus websites with no earnings to sucker bagholders which turned out to be mom and pop mutual funds, pension funds, and day traders who didn't actually daytrade. Insiders cashing out of bogus IPOs to the retail sucker. The whole thing seemed like a huge scam. A bullet that I dodged since I didn't get too caught up in the game. I had a day job and did not quit it, and kept earning and saving.
The moral of the story is that I never really went full hog into the stock market. I am one of those people. Missed out on tons of tech gains for the next 20 years. All due to the skepticism developed during the dot com bubble. Threw the baby out with the bathwater. And I didn't even lose any money!!
Fast forward to COVID bubble, and some new investors have gotten clobbered in the last year. Meme stocks, SPACs, and scam IPOs are down 50% to 75% of peak values. It's the exact same thing. A lot of people will hold underwater stocks until $0 or until they die, if they never break even. But, that's another conversation.
I get the feeling this recent bear market will scar some of the victims for life. My advice is to learn from your mistakes (avoid options, avoid meme stocks, invest in normal boring ETFs, etc) ….Whatever you see as the lesson for you and move forward with your financial lives. Do not throw the baby out with the bathwater and stuff cash in your mattress for the rest of your life. Because there are a bunch of people reading this who are at risk of doing exactly that, which to be fair, isn't the worst thing in the world.
I am happy to answer any further questions about the pros and cons of overly cautious investing, LOL.
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