A mathematics student who just started university wanted to do everything right and secure his future with a smart investment. He inherited a fortune from his grandmother, over 730,000 euros, and wanted to invest particularly wisely: it was to be Intel, a safe investment. What he didn’t know was that he was investing at completely the wrong time. For Intel had never had a worse day on the stock market in its 56-year history than August 2, 2024.
This is what the student said: In a reddit post from August 1, the young man explains his situation:
- He is studying mathematics in his first year at university and inherited $800,000 from his grandmother. She passed away two months ago. He is doing well; his parents are paying for his university, and he doesn’t need the money.
- Since he knows that many people squander their inheritance with foolish investments, he wanted to invest his inheritance wisely and promised his parents: He wouldn’t spend a cent of that money but invest everything in his future. $100,000 would go into the account, and he bought stocks of the company Intel for $700,000 right at the stock market opening on August 1. He intended to hold these stocks for at least 10 years.
- He then listed 11 reasons why Intel was a safe choice. The American tech giant spends a lot of money on research, is crisis-proof, and has positioned itself extremely well. In the first quarter of 2024, the company had also grown by 10%. He likes the stock, and currently, it’s very cheap.
Intel’s stock crashes almost immediately after he bought the shares
What went wrong? Even safe stocks are subject to price fluctuations:
- The price of Intel on August 1 was still €27.72.
- Today, on August 9, the company’s stock stands at €18.71.
So the young man has already lost 32.5% of his inheritance in stock value within 7 days. That amounts to about $227,500.
Why has the price collapsed so much? Intel may not be as crisis-proof as it seemed.
First came the news that the semiconductor giant was laying off 15% of its workforce.
On Friday, August 2, Intel then lost $30 billion in market value in one of the worst declines of the stock ever. The stock was sold en masse after weak financial figures were reported, and investors wondered if the investment in artificial intelligence would pay off.
The loss was the worst in the company’s history. In 1980, there was already a major drop – back then Intel had fallen by 18% in one day.
The price of Intel fell on that day, just one day after the math student fully invested in Intel, by 30%.
“My parents still don’t know what I’ve done”
What’s the discussion? A bit sheepishly, the young man admits: “Okay, that was definitely the wrong day to enter.”
The last two days have been the “scariest” of his life, he writes on the evening of August 2.
His parents still do not know that he has gambled away a third of his inheritance. But when he talks to them, they can clearly see how stressed he is.
This is how it continues: He still wants to hold the stock for 10 years – now it will be tough. He understands that.
Otherwise, he has little choice but to listen to the mockery and comments of other participants on reddit: “IT’S NOT MY FAULT,” he shouts at one point.
What did he do wrong? One of the most important rules that everyone who invests money should know is: Diversify your portfolio. Don’t put all your eggs in one basket; instead, choose several companies, several types of investments, and several countries to spread your risk more broadly.
In hindsight, there are of course even more recommendations that could be given:
- He should not have jumped in all at once but gradually built up his position.
- He should have known when financial figures would be published and waited for the numbers to come out before entering.
But ultimately, those are recommendations that can easily be given with the knowledge of the past days and the results. If Intel’s financial figures had been great, his approach might have been just right.
Stocks, even those seemingly safe, are an investment that can potentially keep you awake at night. Because the invested money is “in the fire of the market” and can sometimes get scorched or burned. Cryptocurrencies are considered even riskier. This hard lesson had to be learned the hard way by the German streamer Papaplatte: Twitch streamer Papaplatte sleeps one night, but loses 50,000 euros – Here’s how it happened
The title image is a symbolic image. It comes from Pexels from Pixabay.
