Mathematics student invests his grandmother’s inheritance in a bomb-proof tech company – chooses the worst day ever to do it

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A mathematics student who had just started university wanted to do everything right and make a smart investment for his life. He had inherited a fortune from his grandmother, a good 730,000 euros, and wanted to invest particularly wisely: it had to be Intel, a bomb-proof investment. What he didn’t know was that he was investing at completely the wrong time. In the 56 years of its existence, Intel has never had a worse day on the stock market than August 2, 2024.

This is what the student says: 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 died two months ago. He is doing well, his parents are paying for his university, he doesn’t need the money.
  • Because he knows that many people squander their inheritance on pointless investments, he wanted to invest his inheritance wisely and promised his parents that he would not spend a cent of the money, but would invest it all in his future. $100,000 went into his account, and he used $700,000 to buy shares in Intel as soon as the stock market opened on August 1. He wanted to hold these shares for at least 10 years.
  • He then listed 11 reasons why Intel was a foolproof choice. The American tech giant spends a lot of money on research, is crisis-proof and is extremely well positioned. In the first quarter of 2024, the company also grew by 10%. He likes the stock and it is currently very cheap.

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    Intel’s share price collapses almost immediately after he buys the stock

    What went wrong? Even bomb-proof stocks are subject to price fluctuations:

  • Intel’s share price was €27.72 on August 1st.
  • Today, August 9, the company’s share is at €18.71.

    • This means that the young man has already gambled away 32.5% of his inheritance within 7 days. That is about $227,500.

    The stock goes down sharply just as “our” student gets in.

    Why did the price collapse so much? Intel is not that crisis-proof after all.

    First came the news that the semiconductor giant was laying off 15% of its workforce.

    Then on Friday, August 2, Intel lost $30 billion in market value in one of the stock’s worst declines ever. The stock was sold off en masse after it reported weak financial results and investors questioned whether the investment in artificial intelligence would pay off.

    The share price loss was the worst in the company’s history. There was a major slump in 1980 when Intel fell by 18% in one day.

    Intel’s share price fell by 30% that day, one day after the math student had fully invested in Intel.

    “My parents still don’t know what I did”

    What is the discussion? Somewhat contrite, the young man admits: “Okay, that was definitely the wrong day to get started.”

    The last two days had been the “most terrifying” of his life, he wrote on the evening of August 2.

    His parents still don’t know that he gambled away a third of his inheritance. But when he talks to them, they can see exactly how stressed he is.

    This is how it continues: He still wants to hold the shares for 10 years – now it’s just going to be tough. He understands that.

    Otherwise, he has little choice but to listen to the mockery and comments of the other participants on Reddit: “IT’S NOT MY FAULT,” he shouts loudly at one point.

    What did he do wrong? One of the most important rules that everyone who invests money should know is: spread your assets. Diversify. Don’t put all your eggs in one basket, but look for several companies, several types of investments, several countries in order to spread your risk more widely.

    Looking back, one can of course give even more recommendations:

  • He should not enter all at once, but build up his position gradually
  • He should know when business figures are published and wait for the figures before getting involved

    • But ultimately these are recommendations that can easily be made with the knowledge of the last few days and the results. If Intel’s business figures had been great, his approach might have been exactly right.

    Stocks, even supposedly bomb-proof ones, are an investment that can potentially keep you awake at night. The money you invest is “in the fire of the market” and can smolder or burn. Cryptocurrencies are considered even riskier. The German streamer Papaplatte had to learn this the hard way: Twitch streamer Papaplatte sleeps one night, but loses 50,000 euros – this is how it happened

    The cover image is an icon image. It comes from Pexels from the Pixabay site.

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