Lessons Learned from Short-Term Trading Failures
Contents
- 1 Lessons Learned from Short-Term Trading Failures
- 2 Discovering U.S. Dividend Stocks
- 3 The Turning Point: The Future for Investors
- 4 Starting My U.S. Stock Investment Journey
- 5 The Joy of My First Dividend Payment
- 6 The Growth and Risks of Dividend Investing
- 7 Finding Your Investment Style—There’s No “One Size Fits All”
- 8 A Glimpse of What’s Next: Navigating the COVID-19 Crash
- 9 Conclusion
In my previous article, I shared my experience of losing $140,000 in short-term trading, where my initial investment of $300,000 dwindled to just $160,000.
At the time, I was chasing quick profits, reacting emotionally to market fluctuations, and repeatedly making poor decisions like panic selling. These mistakes taught me the harsh realities of stock trading. Mentally exhausted, I found myself at a crossroads: should I give up on investing entirely, or should I search for a new, more sustainable approach?
Despite the setback, I knew I needed to grow my assets, so I decided to give investing another try. That’s when a chance encounter with a book completely transformed my perspective, leading me to adopt a stable, income-focused investment strategy centered on dividend growth.
For more details, you can read the full story here. In summary, my biggest mistake was allowing emotions to dictate my trades, coupled with a lack of proper risk management.
Discovering U.S. Dividend Stocks
After my experience with Japanese stocks, I sought a way to build wealth with less emotional stress. This search led me to a book I stumbled upon at a local bookstore: “How Even a Fool Can Earn Money with High-Dividend U.S. Stocks.”
As I read, I learned about the potential tax hurdles with U.S. investments but discovered that foreign tax credits and filing annual tax returns could help offset them. What captivated me most was the appeal of high-dividend U.S. stocks and their ability to generate stable income over time.
The Turning Point: The Future for Investors
One of the books referenced in my initial reading was The Future for Investors by Jeremy Siegel. This groundbreaking book reviews historical data to emphasize the critical role dividends and reinvestment play in generating long-term returns.
Siegel’s analysis demonstrates that, over the long run, the stock market consistently outperforms other asset classes in delivering returns. He argues that investing in companies with a history of stable and growing dividends is an effective way to manage risk while growing wealth.
This book’s focus on data-backed insights into the power of dividends became the foundation of my investment philosophy. While some of the data may not be up-to-date, the timeless principles within the book remain highly relevant. It was eye-opening to view dividends from a historical perspective, making this a must-read for anyone interested in dividend investing.
Reading The Future for Investors helped me shift my mindset from chasing short-term market movements to focusing on steadily growing my wealth through dividends.
Starting My U.S. Stock Investment Journey
In 2019, I took my first step into U.S. stock investing. Having learned from my mistakes with Japanese stocks, I prioritized stable returns and selected well-known dividend growth stocks—companies that consistently increased their dividends for decades.
Here’s a list of the companies I invested in:
| Ticker | Company Name | Business Overview |
|---|---|---|
| PM | Philip Morris | A global tobacco giant, known for its IQOS heated tobacco products. |
| MO | Altria | A major player in the U.S. tobacco market, offering high dividend yields. |
| CL | Colgate | A household name for oral care and hygiene products with stable demand. |
| ABBV | AbbVie | A pharmaceutical company famous for its blockbuster drug, Humira. |
| XOM | ExxonMobil | One of the largest oil and gas companies, with decades of strong performance. |
| PEP | PepsiCo | A global leader in beverages and snacks, competing directly with Coca-Cola. |
| KO | Coca-Cola | The world’s largest soft drink maker, boasting a long history of dividend growth. |
The Joy of My First Dividend Payment
Shortly after investing, I received my first dividend payment of around $30, deposited in U.S. dollars into my SBI Securities account.
“This is the first time my money has made money for me!”
Although $30 may not seem significant now, at the time, it was a transformative moment. It made me realize that my investments were actively working, creating a steady income stream. That moment marked the beginning of my journey as a dividend investor.
The Growth and Risks of Dividend Investing
Back then, my monthly dividend income was around $100. Today, it has grown to approximately $20,000 per month. While this growth is exciting, it also serves as a constant reminder of the risks I’ve taken to achieve it.
Every investment carries risks, but the steady growth I’ve experienced highlights the long-term potential of a consistent, disciplined approach.
Finding Your Investment Style—There’s No “One Size Fits All”
One of the most important lessons I’ve learned is that there’s no single “correct” investment style.
Some examples include:
- Index investing: Broadly diversifying across the entire market.
- Concentrated investing: Betting on one or two high-conviction stocks.
- Dividend investing: Focusing on stable, income-generating stocks.
- Diversified portfolios: Holding 30+ stocks to mitigate risk.
What works best depends on your unique circumstances, such as income, location, family structure, and risk tolerance.
In the early days, I often relied on influencers and market trends to make decisions. However, I’ve since learned the importance of developing my own judgment and sticking to a strategy I truly believe in.
In 2020, the COVID-19 pandemic brought about one of the biggest market crashes in recent history. Many investors were forced to sell, and some quit investing altogether.
Had I been focused on short-term trades, I might have done the same. However, thanks to my dividend-focused strategy, I remained calm and weathered the storm.
In the next article, I’ll share how I navigated the COVID-19 crash, the lessons I learned, and how those lessons continue to shape my investment strategy today.
Conclusion
Transitioning from a short-term trader to a dividend investor has been a life-changing journey. From earning $100 per month in dividends to $20,000, I’ve learned the importance of steady growth, risk management, and maintaining a long-term perspective.
No matter your investment journey, I hope my story inspires you to find the approach that best suits your goals and circumstances. Stay tuned for the next chapter in this series!