I Was Sure I Picked The Right Stock. Then It Tanked 50%

What I learned from this expensive lesson

Photo by Siora Photography on Unsplash

When I first started learning about investing, I had no idea what stocks to buy.

At the time, there was one piece of advice that stuck with me: “Buy what you know. Invest in the products or services you already use.”

It made sense. If I’m already using it — and love it — I probably understand the business more and am interested in researching for it.

So I went for it.

Little did I know that this stock would drop by over 50% of its value compared to when I purchased it.

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You can still lose money with the right strategy

In 2023, I started my Etsy store selling digital products.

I was only doing it part-time, but sales were great. I hit a magic number very soon, and it felt like a platform with great potential. As a seller, I could see Etsy’s unique market proposition. It wasn’t trying to compete with Amazon or eBay — it was its own thing, focused on handmade and personalised gifting products.

I liked some of the promotions they were running to attract both sellers and buyers, and I felt they were doing the right things to grow.

So when I learned how to invest and took up others’ advice on buying into companies or brands that you are already familiar with, I naturally thought of Etsy (ETSY).

I followed what I was taught to research the stock, played around with the Fibonacci retracement, and observed the stock for 2 weeks before I invested in it.

I did all the right things - and so I thought.

I was so confident that I even invested a few thousand dollars into it (I normally start with a small amount, so a few thousand dollars was out of character), ready to see the return.

Well…it wasn’t what I expected.

Etsy’s stock price tanked—and it kept trending down.

It’s now down over 50% from when I bought it. That means I’ve lost over half of what I invested.

It sucked to see a big chunk of your money… vanish. I had moments where I was obsessively checking the stock price, praying it would bounce back. “Just go above this price, and I’ll sell,” I told myself.

But I didn’t.

Every time the price crept up a little, I wanted it to go higher.

It’s easy to say you’d just sell when you’re not the one holding the stock. But when you’re the one losing money, selling at a loss is a hard decision to make.

Looking back, I’ve learned that even if you think you’ve done the research, you can still lose money. And the only way to minimise your loss is to do the following:

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1. Always set a stop order
   I had no plan for when to sell. I just thought I’d “wait until it goes up.” So when the price nose-dived, I got so emotionally involved that I didn’t want to give it up. I learned it the hard way: Always, always, set a stop order, regardless of how much you love that stock.

2. You can’t always win — and that’s ok
   Not every investment will work out. That’s why diversification matters. I didn’t put all my money into Etsy (thankfully), and it reminded me why spreading risk is so important.

3. Only invest what you’re ok to lose
   This one is real. And it’s easier said than done, but it’s also extremely important. I didn’t invest money I couldn’t afford to lose, even though I definitely felt the sting.

4. You can still be wrong after doing research
   Even Financial Analysts have less than a 50% success rate after they have done all the research. The market is unpredictable, and timing the market is a losing game. That’s why most people suggested dollar cost averaging, and about time in the market, not timing the market.

5. Don’t just follow everyone’s advice

   This one seems counterintuitive, but what I found is that when I listened to everyone's advice, I’ve (subconsciously) already decided on whether I should or should not buy the stock. So even though there were red flags, I couldn’t see them. You can definitely take others’ suggestions as a point of reference, but try to take your emotions out of it.

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So, after all that I’ve been through… have I sold my Etsy stock?

I know you’re expecting a smarter answer after I shared how to minimise your loss. But I haven’t. I’m still holding on.

Etsy’s chart is a bit messy and I can’t really say for sure, but $37 seems to have strong support. There’s also some promising news — like the high tariffs costs from China to the US will make Etsy’s marketplace less vulnerable to competition, and the recent introduction of a performance-based structure for their new CFO, Lanny Baker, raises expectations for new strategies to boost revenue.

So for now, I’m staying put to see what’s next.

I’ve already lost over half of what I invested, and I'm fully prepared to lose more. I just want to see this one through.

I don’t expect the price to return to what I paid, but if I’m right this time, I might be able to recover some of my losses.

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I'm not here to convince you whether Etsy is a good or bad stock to buy. I only want to show you that sometimes, even if you have done your homework, you can still lose money. But this shouldn’t stop you, because there are ways to manage risk, and in any portfolio, some stocks will go up while others drag you down.

Have you had a similar experience? Which stock taught you an unforgettable lesson?

Happy investing!

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Disclaimer: Information shared in this newsletter is not financial advice. I may buy Etsy and lost money, some might bought it low and now making money. Every decision is unique and you need to decide based on your own situation, no one else’s.

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