Lottery winner lost money after investing fundsPrevious TopicNext Topic

Isn't this the kid who was on one of those Lottery curse TV shows or something?...If its him, it showed him at the stock exchange wearing a high priced suit. When I seen him on TV, I said to myself that this kid is doomed. No real basis behind it, just a feeling. Hope i'm wrong though. Seems like a good kid...

why are there no dates in this article?

he won back in July - 07 i think.

DIFFERENT STROKES FOR DIFFERENT FOLKS!

A lottery winner deciding between choosing a Lump Sum vs Annuity like investing in stocks, bonds or planning retirement plans,  is not one size fits all.  Some people may be better with an annuity.  Maybe  they have not been successful with money matters in their past or are reluctant about having to plan  large sum of money at one time, etc.

Lump sum may be preferable for those interested  investing over the long term or living off the interest and re-investing part of interest.  A Good Financial Advisor assesses the clients risk leve, what they want the money to do for them, etcl then recommends strategies for savings, investments, spending plans, etc.

ONE SIZE DOES NOT FIT ALL!

My personal choice for a lottery win would be Lump Sum payment. live off of 1/2 or 1/3 of the interest and re-invest the other portion of interest.  Money invested doubles every seven years.  I'd risk Investing rather than annuity payments.

This kid was on TLC's Lottery Changed My Life. He was going on and on like he'd won 100 million. I have a feeling he'll be broke by the time he's 25.

The stat about 70% of winners ending up broke can't be right.

interest on savings in USA 3.8% then there is the whole will my bank fail? when can i get my money ?

$330k sure isnt retire early, not a care in the world amount. at 3.8% thats $12.5k a year. dunno how thats taxed, but anyone here think of retiring on $12k a year?  hes still got 330k and a degree, just dont tell your prospectivbe employers you won the lotto. 

good luck kid

Judging by my weakness for giving in to family members that need to "borrow" money when I don't have it to loan out in the first place, I would take the annuity option.  It's safter for me because then I can say sorry, I only get a check once a year and I've got to live off of it...no lump sum in my bank account to give you money. 

Plus, judging by my fiances at the moment and in the past....I'm playing it safe....money just goes too darn fast for me and I'd be severly depressed 5 years down the road looking back at how I blew 1 million or more in a short amount of time because I had it all handed to me at once.  So for my sanity...I'm taking the annuity option.

The problem is the stock market is a scam to take money away from retail investors, the average investor doesn't understand what goes on, and investing in individual stocks today is just like going to Vegas, it's a gamble, not an investment.  This lottery winner may have purchased good quality stocks, but lost money anyway to short sellers.

Did you know that your broker lends your stocks out, without your knowledge, and then it is sold by the borrower, and then the borrower has to give it back to the broker in a certain amount of time, buying it back at the lowest price possible to return it and make money?  The individual stock owner wants his stock to go up, while the person (short seller) who borrowed it wants it to go as low as possible, and many things happen behind the scenes to force your stock price lower so the short sellers make money, then you panic and sell your stock when you see how low it went, and the short seller gets rich because he wiped out your stock value!  The worst thing that was ever put into place was 401K's, the short sellers robbed the middle class of their savings.  Barney Frank (Rep. Mass.) promised to regulate short selling after the market downfall, but nothing has been done so far.

If you are an average retail investor, keep your money out of individual stocks until short selling restrictions are put in place by our government.  Short selling in not illegal, but immoral. With all this talk about Ponzi schemes, short selling is an outrageous scheme to con the average investor out of hard earned dollars and it should be outlawed, IMO.

Example of short selling:  Borrowed shares from broker/indivdual stock owner of XYZ company are sold for -     $100.00

                                        Stock price falls, borrower (short seller) buys it back to return it to broker -                  -  25.00

                                                                                                                          Borrower makes profit-                     75.00

                                           -

With stocks, for every buyer there is a seller (and a commission collected from each).

When Trader Adam makes that "historical average of 10%", it is because Trader Bob has lost that amount; and each pays a commission when they buy and again when they sell, whether or not the trade is a 'win' or 'loss' to the individual.

CEOs on TOUT-TV saying they think their company's stock could go up another 30% ... meanwhile they're selling.
(Sure they might go to jail, later, but the folks who lost money don't get it back)

Commentators promising that things are "fine" at a company that goes bust within a week.

Going to the casino can be fun and profitable; just know that it's a casino and the money to pay the winners (and the house) comes from the losers.

My daughter is a graduate of Towson University. Believe me, it would have been nice if she could have had that scratch off win while she attended Towson. Although, I doubt that she would have a cent left now. (she is the ultimate shopaholic)

At the time he invested, his mind was moving in the right direction. Trying to invest on his own, without professional help, while attending college is a big gamble. Too many things to concentrate on at once.

His best bet would have been to put it all awayin a safe place such as a bank, drawing interest until he finished school.

Everybody wants to make a killing in the stock market.Remember slow and steady wins the race.When i win the lottery i'll put my money in index funds and conservative dividends stocks.

Wow, he lost alot of weight as well.  Lottery winners should be like this guy.  Unfortunately, many lottery players are low-income and received poor eduation so they blow it all away after they win.

"One cant lose that which they do not place up for risk"

I guess you've never heard of inflation. Assuming you didn't lose money to  a fire or theft, over the past 20 year you still would have lost about 3% every year. That means that every dollar you "safely" saved by not investing 20 years ago would be worth about 55% of what it was when you stuck it in your mattress, and you'd have about a zero chance that it would ever recover. For those who think that "investing"  their money in a bank is safer, consider that in many years inflation was as high as the bank's interest rate. Then after that lets your money just break even for the year, taxes reduced the "earnings" so that you had a net loss in purchasing power.

"He started his investments when the stock market was doing good then when it went belly up he should have pulled his money out"

It must be nice to always be able to buy low, sell high, get out at the beginning of a downturn and get back in at the beginning of the upswings. In reality, you can't lose a dime unless you sell, or the stock truly becomes absolutely worthless. The market always goes up and down, but over the long haul it goes up. Selling early in a downturn and buying back early in an upturn is a great theory, but in practice it seldom works. In some cases, including this one, things tank so fast that a lot of the damage is done by the time you can make a rational decison.

"Can anyone tell me why they would put their money in the stock market, EVER? "

Sure. Warren Buffett can tell you.

"It is STUPID to invest in ANYTHING, market or otherwise that can turn down on a whim."

What's stupid is investing in something because you think it's foolproof. Anything can lose value.

"Another shocker is that the "financial advisor" quoted in the articlesaid you'd do better to take the annuity then to take the lump sum -I've never heard that before."

That's not what he said. He said that  most winners lose the money if they don't take the annuity. Of course many winners have sold the annuity on their way back to the poorhouse.

"No difference in betting on the Colts or Jets this week. In fact atleast with betting, I am always aware of my risk/return, not so withthe market.."

With any investment  you always know that the worst possible outcome is exactly the same as betting: you might lose all of your money. Unlike betting, though, the chances of that hapening are  far less than the roughly 50% chance with sports. Another difference is that the potential upside is huge, vs the doubling of your money that would be typical by betting on sports.

"When Trader Adam makes that "historical average of 10%", it is because Trader Bob has lost that amount"

That would be true only if the long term average value of a stock never changed. In reality, somebody making a profit on a stock simply means that the seller didn't make that same profit on that same stock. If a stock was worth $50 when it was first issued and is worth $100 the people who invested in it have an average net gain of 100%.

It sounds like this kid is in it for the long haul, and he's getting a good education. Odds are he's going to do just fine.

Although I realize everyone is different I think his first mistake was to start giving some of the money away.

In the article he states putting the bulk of his money in the stock market which was his second mistake. Anyone who knows anything about the stock market knows it's a risk. If he had done his homework he would have put the biggest chunk in safer investments and/or hired his financial team to start with.

All in all I think he's still doing pretty good! Face it most 19 year olds would have blown most if not all of it before they realized it was gone. He still has a nice chunk to work with and hopefully can look forward to an early retirement in life.

The problem I have is the average investor doesn't understand what short selling is and what the actual  risks in the market really are.  If I bet on the JETS and know the spread, I know what has to happen in order for me to win money, unless the game is fixed.  Some people think the stock market is fixed and the odds are against the retail investor to make money, so we have three things in the market to cause an investor to lose money on individual stocks; company fundamentals going downhill, short selling, market manipulations.  I would suspect that most investors, like our young lottery winner here, know nothing about short selling, market manipulations, and are buying stocks based solely on company fundamentals.

The poster who made the comment regarding buying dividend paying individual stocks can purchase dividend paying mutual funds for an added element of safety, but not an Exchange Traded Fund which is traded like a stock during the day and can be short sold. I purchased two open-ended mutual funds when the market tanked in 2009, and I have done very well, they yielded over 30% for me in capital gains and monthly dividend checks in 2009, and I'm safe from the short sellers because the funds are priced at the end of the day, after the market close.  Even if some of the stocks in the fund were short sold during the day and their price per share went down, the loss to the fund wouldn't be so devastating like it would be to an individual stock because of the diversity of the fund. The funds I  purchased are tax-advantaged also, so I'm getting to keep more money from these investments from the tax man.

Don't forget, an added risk to any individual stock investment are the Exchange Traded Short Funds (2X and 3X bear), they will erode the value of individual stocks very fast, I would never own an individual stock again with the advent of these funds, and there are many more of these short funds coming to the market in the near future.

Warren Buffet may have made tons of money in the market, but don't forget, he was probably hedged against losses, the average investor usually isn't a sophisticated enough investor, or have enough money to pay for hedging strategies like short selling.

LETS GO JETS!!!!!!!!!!