Re-Breathing

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Note from Tim: Earlier this week, I did a post called A Breathtaking Tale of Loss, which was simply a link to a story on the WSB sub-reddit that I found fascinating and horrifying. To my chagrin, after I did my post, I saw that the story to which I had hyperlinked had been wiped clean by the town fathers over at Reddit. Mercifully, a Sloper by the saucy name of qtbby69 had the mad skillz to unearth the article, which he provided. For the sake of its exposure, I am reprinting it here. Thank you!

The year is 2017, my parents had a successful real estate business with over a dozen rental properties and several fix and flip projects in production. Our assets totaled a million and a half after paying off all loans if we ever liquidated everything. Which we did, and that’s just the tip of the iceberg. 
 
My oldest brother made the brilliant decision that because he lost his job, he should start day trading. He quickly made $30k on Apple by yoloing his saving in shares before an Apple products release event. Excited by this, he made an entire PowerPoint presentation convincing the family to get into day trading. We were reluctant at first, and I wish it stayed that way. 

In the background he worked with my parents in setting up a family company and opening trading accounts and buying courses. Keep in mind my parents will do anything he says, completely wrapped around his finger. During this time I was getting into the house flipping business in full swing. Working on my parents’ properties and going to auctions for future projects. I had already set up in my mind that I was going to be a real estate investor because it was the only work I actually enjoyed doing, my parents were very profitable, and even after the 2008 housing market crash, when we lost everything, they were able to bounce back. Then one day everything stopped, my parents stopped working real estate and with no capital of my own I couldn’t continue doing it myself. 
 
They liquidated most of their assets and set up trading accounts with TD. They tried setting up weekly quotas and profit targets, which looking back, were really unrealistic. We needed 20k per month and sometimes more to cover loans from the very last rentals that hadn’t sold just yet. So naturally while they were on the market the quota for the month was 20k…for inexperienced day traders. It dawned on me that money is easy to make every month when a tenant gives it to you rather than we ourselves have to endure risk to make it, but my parents didn’t listen to me, it had to be my brothers way. 
 
You can probably guess what happened. Loss after loss made our account grow smaller and smaller; and the smaller it got the more we had to risk to make bigger profits. Which only happened once where I made nearly 50k trading Netflix on its highest volume day in 2018. That quickly gotten absorbed by bills. But. By 2018 we were already down some 200k and our bills had been quickly eating up our saving. All the way to the point we starting taking loans just cover expenses and continue trading. Then one day I lost 80k on Netflix when it’s earnings made it drop nearly a hundred dollars. If it went up well I’d be into real estate again. I nearly had a heart attack and stayed in bed for I don’t even know how long. If it weren’t for my girlfriend I think I might have killed myself. 
 
We were forced to live in our last property for a few months before selling it to avoid foreclosure and then my entire family moved into a 1 bedroom apartment my brother still had in Pasadena. Which is an urban city so the rent was 3k. Which was nearly impossible to pay. We did Uber Eats deliveries every single day to just try to make enough money to eat and did some trading with money we borrowed from our extended family. All of our credit scores were shot and there was nothing left to borrow on. Then we sold our very last property and made 100k on the sale. Which we lost. 
 
Nearly all of our losses were on options, and they were a direct result of our trading strategy, which was laughable. They set guidelines for the option expiration, loss tolerance, and investment amount(no swing trading). Which hey sounds great why not. Except that when our expenses were so great, the low risk meant we were burning more than we were making, the stress made me make some good and bad trades in an attempt to save my family from ruin.

On some trades I would have made literal hundreds of thousands if my parents and older brother didn’t force sell my positions because they couldn’t stomach swing a loss(16k in HD $215 strike bought at $201 and it reached $215 a day before expiration which would have been a $170k profit because instead was forced to be a $2k loss). It really kills your heart to see how much money you could have made, not because you took profits too early, because no one believed you and took a loss on your behalf. 
 
With no more options we packed up and moved to Maryland were my older brother got a 100k plus job coding websites. Things were good for a while and with no rush to cover rent or bills I was actually able to grow a small account from 4K to 17k. All good things must come to end sadly.

He developed MS because of the stress of losing hundreds of thousands in a few years and his relationship was failing as well. These things affected his ability to learn new programming languages or work efficiently so his job fired him. Then it was up to me to make enough to cover the expenses and slowly I saw the account cannibalized to 0. They blame me almost exclusively for losing all the money by the way. 
 
We moved back to California being forced to stay within the same apartment complex company because no where else will accept us. Now my brother is suicidal, he’s also diabetic and he’s tried killing himself by overdosing on insulin. His hope is at 0. I’ve matured more than any young adult should have from this ordeal so I feel like I can keep going. But moral is low. My parents work nearly 14 hours a day driving for Uber eats.

I can’t really help because I had my ankle fused back in July. My other brother doesn’t live with us anymore because of all the chaos that happened. My parents have real estate licenses and they are trying really hard to find clients. I wish there was more I can do. I learned I should have fought more for our family to continue real estate investing. Nothing made us happier than flipping houses. If I had the opportunity to flip a house I’m sure we could jumpstart that career with my parents’ experience.

I’m not against trading even after losing everything, sadly it took that much for me to do it half decently. I’m sticking to vertical spreads on ETFs and precious metals, which brings in some profits every few weeks but not enough to make living. Sometimes I’ll use around $50 on near expiration out of the money calls of puts to try to get lucky. Sometimes the temptation to let my whole account ride on naked options is strong. Not because I want to be rich, but because I just want my parents to stop working so hard in something they don’t even enjoy doing at their age.

I wanted to share my story because I saw how some of you guys shared similar experiences, and some of you were the exceptions that won in the end. Invest in real estate, it’s profitable if you work with someone who has experience and the market hasn’t tanked. I’m going to Texas in a few days to propose to my girlfriend and bring her back to California. If she says yes it’ll be the highlight of my life. 

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