£33k loss after 1 year

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Sharky

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From the Sunday Times..

A YEAR ago, John Urbanek made a life-changing decision to become a day trader. He resigned from his £55,000 a year job, swapped his large family home for a small, terraced property, and started buying and selling shares full-time.

He had £90,000 to invest and needed to make about £25,000 a year to support himself, his wife Lisa and seven-year-old daughter Lily. At the time, the stock market was soaring and technology shares were doubling in value virtually every week. But almost the moment Urbanek started trading, everything began to change. The technology bubble burst and stock markets around the world started on a downward spiral.

After 12 months, Urbanek is staring into the abyss. His portfolio has slumped in value by more than £33,000 after one of the stock market's worst years on record. He has also had to withdraw a further £20,000 of his capital to meet living costs. Instead of paving the way to riches, the past year has cost him more than £50,000. If you add in the loss of earnings, the true cost of the year is more than £100,000.

He says: "It's been far more difficult than I ever imagined. We now have to watch what we spend in the supermarket, and our living standards are intrinsically linked to the fortunes of the stock market. We have taken a really big hit and our lifestyle has obviously suffered."

Regular readers of The Sunday Times will already be well aware of Urbanek's weekly struggle on the stock market through his Diary of a Day Trader column. The Sunday Times pays Urbanek a small weekly fee - about the same as any freelance contributor to the Money section - which helps towards the cost of his daughter's education. But the newspaper is not compensating Urbanek for his losses.

He has therefore been a big victim of the market's 20% fall in value since he began. Some technology shares have lost more than 90% of their worth and most seasoned professionals have suffered. Since the new year, his plight has worsened and he has sustained average weekly losses of about £1000.

Shares in telecom companies have delivered the heaviest blows. In total, he has lost almost £6,000 buying shares in Redstone Telecom, £3,500 on British Telecommunications shares and £2,300 on Colt Telecom. Granada and Pace also racked up big losses for him.

Trouble in store: the falling price of BT shares cost Urbanek dear and his investments in Somerfield failed to pay off. However, Urbanek also made money from these shares during brief rises which often encouraged him to take big stakes as the companies' values fell. He was confident they would recover but the decisions often hurt - for example, BT has continued falling from a high of more than £13 to just over £5 in the past year.

But there have been successes - Reuters and Just Group, a media firm which owns the rights to the Butt-Ugly Martians, have both made him decent amounts of money.

He says: "Overall the year has been very disheartening and I have had many sleepless nights. The falls in the market, particularly over the past few months, have been relentless."

Over the course of the year, Urbanek has refined his investment strategy. He began by only buying shares in blue-chip firms and waiting for them to rise in value by 5% before selling. But in reality shares did not increase in value and often fell.

When these companies dropped in price he was left in a quandary, worrying whether to sell and crystallise a loss or hang on for a recovery. Unfortunately, this strategy quickly landed Urbanek in the red. He then decided to start buying bigger stakes in firms, some of which were relatively small. The aim was to take profits as soon as shares started rising. He stayed glued to the computer and traded constantly making a few hundred pounds, if that, at a time. He also decided to sell more quickly and crystallise a loss if a share was falling.

Urbanek says: "At the beginning of September, the market began to rally and this strategy began to quickly work out. From being about £7,000 in the red, my trading suddenly started paying off and I almost broke even. That's when the adrenaline really started flowing."

But the rally proved to be short-lived and by the end of that month he was once again down - by £10,000. Ever since, the market has continued to slide before dramatically crashing last month. In a bid to stave off the crisis, Urbanek began taking bigger and bigger risks on single firms. This culminated in Pan Andean Resources, a tiny oil exploration firm looking for reserves in Bolivia. Urbanek made thousands of pounds buying and selling shares in the firm during a few weeks in August. At one point, he had about £25,000 invested - almost half his entire portfolio.

In January, Urbanek was on tenterhooks as the company prepared to reveal whether recent drilling had located a big new oil field. He was hoping this would be "the big one" which would pull him from the mire.

But again the firm did not prove to be his saviour and the market was lukewarm about the find. He still holds 49,000 shares in the firm and his paper loss is now £7,500.

This year, Urbanek embarked on a third, even more risky strategy. He has now begun trading so-called contracts for difference, a type of derivative. These allow him to profit from shares rising or falling in price, but so far results are mixed.

In the past 12 months, Urbanek has become something of a celebrity in the financial community. His latest exploits and decisions are regularly discussed in City boardrooms and everyone has an opinion.

Last year, professional investors Nicola Horlick, Jeremy Batstone, Jayesh Manek and Paul Kavanagh were all keen to offer advice to the struggling day trader in The Sunday Times. Hundreds of readers have also written in with tips.

But, over the past few weeks and months, Urbanek has become increasingly disheartened by the stock market and its wild undulations. Before leaving full-time employment, Urbanek said that he would decide after 12 months whether to return to work. Virtually everyone expected him to stop this week but as Urbanek's column, right, reveals, he has decided to carry on trading.

He was buoyed by largely protecting himself from the crash in the market the week before last. He lost just a few hundred pounds while others were panic selling.

He says: "I really don't think it can get any worse. Now would be the worst time to sell and I have decided to have one final push. I will reconsider at the end of the month."

So unless he starts making some serious money he will hang up his trading boots.
 

Uncle

Established member
671 2
What can one say, other than a lesson for everyone.....regular readers of this BB should not have suffered such fate, if they followed the advice promulgated by many regular contributors, on here and its forerunner CI.

John
 
While I have some considerable sympathy for anybody who makes a loss I must say that Mr. Urbanek may well turn out oto be a good contrarian indicator.
 

troyresearch

Active member
132 0
Maybe we should be following his portfolio for a weekly watchlist of potential shorts :)

Sorry, cheap joke.

Troy
 

Lily1994

Junior member
12 1
As his daughter I can say he definitely hung up his "trading boots". His losses didn't just include money however, he also lost his family. Have to agree with you all.. What a fool!
 

shadowninja

Legendary member
5,524 643
Sorry it broke up your family. Not the first and won't be the last, sadly. What brings you to T2W then?
 

Mr. Charts

Legendary member
7,367 1,184
I gave up my dental practice back then to day trade US shares and have never looked back. I used to read your dad's column in sheer disbelief at his approach. I'm afraid he was an accident waiting to happen.
I'm sorry to hear that "he also lost his family."
That must have been very hard on you, Lily, and the rest of your family.
I trust your appearance here does not mean you are going to follow in your father's trading footsteps.
I'm sure you won't make the same mistakes - or any others :)
Richard
 

shadowninja

Legendary member
5,524 643
I feel strangely saddened, suddenly. I mean, you hear about traders losing everything all the time and you may even speak to the trader himself... but you never speak to the family who are the true victims of one's recklessness!

On the flipside of things, perhaps Lily is here to learn to trade and will make a success of it. That would amuse me. :D
 

donaldduke

Experienced member
1,665 256
I gave up my dental practice back then to day trade US shares and have never looked back. I used to read your dad's column in sheer disbelief at his approach. I'm afraid he was an accident waiting to happen.
I'm sorry to hear that "he also lost his family."
That must have been very hard on you, Lily, and the rest of your family.
I trust your appearance here does not mean you are going to follow in your father's trading footsteps.
I'm sure you won't make the same mistakes - or any others :)
Richard

Yeah the guy should have become a Vendor like you did.

See my recent thread, All Failed traders should become Vendors.
 

donaldduke

Experienced member
1,665 256
As his daughter I can say he definitely hung up his "trading boots". His losses didn't just include money however, he also lost his family. Have to agree with you all.. What a fool!
His trading losses probably weren't the problem. Lost money doesn't have to effect your standard of living if you can still get a job and work for more cash.

The problem might have been he that sold his house and downgraded.

That is a tangible loss, along with being skint also made it even worse, i would guess if your mum is like most women, that would really of effected her.

The really sad thing, by not taking on debt to fund his trading he was being sensible and not a fool,
 
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wackypete2

Legendary member
10,229 2,053
wow, 10 years after the last post on this thread his daughter shows up to tell us he hung up his boots?? I lost interest 9 1/2 years ago.

Sad for the family though.

Peter
 
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