This is How Much Money I Made as a Novice 21-Year-Old Investor During the 2020 Stock Market Crash
As the world started panicking over rising Coronavirus cases earlier this year, the stock market plummeted with the S&P 500 dropping over 34% from its peak. While everyone was panicking, the wealthy were going to accumulate even more wealth and I was going to follow suit.
To give you some context about me, I am 21 years old and graduated with my Master’s in Business Analytics in 2019 and a Bachelor’s in Business in 2018 from the University of Washington.
I have been working in the tech industry for a little over 2 years where I worked on projects with Amazon and Microsoft. I became interested in the idea of financial independence and found myself reading books like “Rich Dad vs Poor Dad” by Robert Kiyosaki and “Think and Grow Rich” by Napoleon Hill. I researched how Warren Buffet built his empire and watched hundreds of trading videos from YouTubers such as Ricky Gutierrez and Live Traders.
In business school, I was taught that recessions are cyclical and on average they occur every 5–15 years. By that virtue, there were investors like Warren Buffett who were anticipating a recession in the nearby future and was cash piling for the next potential investment.
When news spread that the United States was hit with the coronavirus, I knew that an event like this could spark a slow but continuous ripple effect on our economy for the worse. I live in the Greater Seattle Area, the area where the first coronavirus case was reported in the US so when the tech companies started reporting employees with COVID cases and telling employees to start from work from home — other companies followed suit and I found myself working from home early March.
As states entered the lockdown phase, fear brewed among us. It became more difficult to travel. Restaurants, theme parks, and small businesses started closing down one by one. It didn’t take a genius to recognize the terrifying potential that Covid-19 could become one of the most economically costly viruses the world has seen.
And yet, given all this fear, one quote kept ringing through my head.
“Be greedy when others are fearful, and fearful when others are greedy.” — Warren Buffett
When well-trusted companies like Boeing, Microsoft, Apple dropped 30–70% from what was for some, their all-time highs, it is hard not to notice the potential return on investment (Market Watch). To give you an idea of those percentages in dollar amounts:
S&P 500 plummeted from $336 on Feb 20 to $222 on March 23 ($114 drop).
Boeing from $347 on Feb 12 to $95 on March 20 ($252 drop).
Apple from $323 on Feb 20 to $224 on March 23 ($99 drop).
There was no denying that stocks were on discount. I had moved $14,776 (Little less than $15k) into my investment account by the end of February to start buying quality investments for pennies on the dollar.
Here were the stocks I invested in throughout March to June 2020:
Blue-chip stocks:
SPY (S&P 500), TQQQ (NASDAQ triple leveraged ETF), BA (Boeing), MSFT (Microsoft), AAPL (Apple)
Oil stocks:
TTI (Tetra Technologies), USO (United State Oil Fund), QEP, TLRY, XOM (Exonn Mobile)
Casino stocks:
GDEN (Golden Entertainment), PENN (Penn National Gaming), MGM, CZR (Caesar Entertainment)
Airline stocks:
DAL (Delta Airlines), AAL (American Airlines), LUV (Southwest Airlines), JETS (Airlines ETF)
Innovative stocks:
TSLA (Tesla), BYND (Beyond Meat), RIOT (Riot Blockchain Technologies), SDC (Smile Dental Club), GNUS (Genius Brands)
COVID Related Stocks:
CREX
Retail Stocks:
CNK (Cinemark), AMC, PRTY (Party City)
After investing in more stocks in March, the market experienced extremely volatile days. I’m talking 5–20% moves in one day. I closed out positions I believed were overextended such as TTI, an oil stock that popped after beating earning and other positions that I believed were only rallying temporarily for the short term. I took advantage of the volatile days by selling half or most of my positions during the rallies and buying into more positions when days were bloody red.
Just as the stock market had the quickest turnaround from a bull to bear market that we have ever seen, this was one of the quickest recoveries we have experienced. As confidence returned to the market, optimism for recovery, and promising COVID drug trial results came out — the stock market rallied and regained its yearly losses. My investments reaped the benefits from the recovery.
I started with just a little below $15k ($14,776) on March 1 and as of July 2020, my account has risen to $25,858. In these 4 months alone, I have made $11,437. That’s a 79% return on my investment (ROI).
Never would I imagine that I could almost double that kind of money within 4 months being a novice to the market. One thing is for sure — these situations and opportunities don’t come by often.
That being said, there are still companies that have not returned to its highest price peak in February. There are banks, airlines, oil companies, and entertainment companies that are still down 20–75%. With more COVID cases rising again due to the reopening of states, the market is starting to see consolidation and more red days. If we are in for another drop, that might just be another opportunity to do it all over again.
The biggest lessons I have learned these past 4 months of investing has been:
- You can’t time the market. Nobody knows when the stock market will hit the bottom. And hindsight is bullshit so the next best course of action is to invest incrementally whether that is weekly, bi-weekly, etc. Dollar-cost averaging is the way to go. Take advantage of days where the market is down and you are able to buy stocks at lower prices than you purchased it for.
- If you are investing in fundamental companies, do not panic sell. I have seen my account plummet down $1000 alone in one day, but it always seems to recover and then some. Warren Buffet compares owning stocks to owning a home: no one is obligated to sell their house for lower just because somebody asks for it at a lower price. Ever since March 23, the market has rallied and recovered its yearly loss. Don’t let emotions dictate your actions.
- Be patient if you are investing in the long run. There will be companies that will take longer to recover. Don’t get caught up with the short term losses because over the long run, the wait will be worth it once your investments start to rise.
- Don’t bet against America. Historically, the market has been bullish longer and generates moves greater than bear markets (CNBC). Only time will tell but America will recover and rise stronger than it previously was.
- Consumer behavior has and will change for the better. It is imperative to invest in companies geared toward this change. There will be companies that go bankrupt and others that will continue to gain popularity due to its significance and relevance in our lives.
*Disclaimer: I’m not a financial advisor. The contents on these articles are for informational and entertainment purposes only and do not constitute financial and accounting advice. *
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Natalie Garces is an analyst from the Greater Seattle Area. She received her BA in Business and MSBA from the University of Washington. She writes about investing and financial independence.
