You think you got it bad? Talk to the kid.
June 1, 2007 2:25 PM   Subscribe

"I have $334,442 in 'bad debt' (I’m not counting even my student loans in that figure). It’s likely that this blog will not last long, because its more likely that I am not going to make it." The journey of the "Debt Kid," who ended up with more than $300,000 of personal debt from playing the stock market. He's 23 years old. "I don’t have a choice to succeed or not. I have to succeed. To have any chance of a 'normal' life (wife, kids, ect), my business has to succeed. I’ve promised to pay my mother back (I owe her over 100K). I have to succeed." Suddenly, paying off a few thousand dollars in debt doesn't seem so impossible.
posted by jbickers (72 comments total) 6 users marked this as a favorite
 
I’ve felt bored with my life lately, and the pace with which it moves. How can that be? I’m losing a house, working crazy at my business, have a decent social life again…how can I be bored?
Because I’m not trading.
Sounds like he found a socially acceptable way to gamble.

it's tough reading these blogs. (Wasn't there one a few months back, a guy who'd tried to turn himself into a real estate guru and wound up holding a handful of unsellable houses?) Not because they're emotionally taxing, not because I'm a relatively empathetic person... but because most of them are dripping with the same kind of wheeler-dealer vibe that got these kids into trouble in the first place.
posted by verb at 2:32 PM on June 1, 2007 [2 favorites]


"To have any chance of a 'normal' life (wife, kids, ect), my business has to succeed."
This kid is terribly misguided. Since when did you need money to have a wife and kids? The rich get richer, the poor get children.
posted by mullingitover at 2:33 PM on June 1, 2007 [1 favorite]


How many Google Ads can one cram in such a small space? Click through, for the answer!
posted by kableh at 2:33 PM on June 1, 2007


Bring back debtors' prisons - if only to get these financially incontinent exhibitionists to shut the fuck up.
posted by rhymer at 2:36 PM on June 1, 2007 [13 favorites]


(wife, kids, ect)

Electroconvulsive therapy?
posted by hoverboards don't work on water at 2:37 PM on June 1, 2007 [6 favorites]


a whole lot of people are in the same boat, but there's an element of pathology in blogging about it. i'm holding out for a gripping day-to-day first person personal about a bout with gonorrhea.
posted by bruce at 2:38 PM on June 1, 2007


This guy is a total dumbshit. He what, traded 100k of borrowed money? So 100k of that "debt" is family debt that he borrowed from his mom, right?

Any margin department worth their weight wouldn't have let him go negative equity, so I guess I'm not quite sure exactly how this guy managed to fuck himself up so bad.

I don't understand how people trade themselves into non-existence, unless he owes all that money to the IRS.
posted by mckenney at 2:38 PM on June 1, 2007


All of these debt-related vanity blogs are really starting to grate on me.

Debt isn't a "shadow disease" that "creeps into your life." Fucking cancer is a disease. Absent any sort of medical catastrophe, a house fire, or identity theft, debt is the result of poor decision-making. I don't feel bad for these people. I'm getting sick of their sob stories.
You know what? You fucked up. Eat it.

Yesterday I was walking around downtown when I ran into my good friend "Kevin." Kevin and I were partners at a radio cluster, selling fm advertising. I was doing it because I thought it sounded cool and it got me a free tab at about a bazillion bars. Kevin was doing it for a totally different reason.
Kevin and a partner opened a rather fancy cafe in Atlanta, GA. Kevin's partner's job was to deal with the legal issues. He didn't. Kevin ended up eating $850,000 in debt. So he took a job in radio sales, a pretty shitty industry, but a place where you can work really hard and make decent money. Yesterday Kevin told me he was resigning.
It took him 14 years of selling radio, but he did it. He was taking a job in tech sales at a nice firm somewhere else. He was elated.
And that's how you do it, damn it all, that's how you get out from under your stupid mistakes. You work your ass off.

I don't think this has really sunk in with "debtkid."
posted by Baby_Balrog at 2:40 PM on June 1, 2007 [28 favorites]


Someone smarter would have figured out they sucked at picking stocks after a much smaller amount. That they actually had.
posted by Many bubbles at 2:42 PM on June 1, 2007 [3 favorites]


Mad props to Verb for hitting it on the head.

If he's "bored" because he isn't betting on the market, he's got a gambling addiction. Thats all that "day-trading" really is anyway -- a socially acceptable form of high-stakes gambling. Its really no different than putting money on the ponies.

Poor kid.
posted by Avenger at 2:45 PM on June 1, 2007 [3 favorites]


I don't think this has really sunk in with "debtkid."
Yeah. That's the whole 'Gambling, but you can tell your parents it's a job' kind of thing. The vibe always comes across as, "I just need to make one more big score, and it'll come together!" or "What's my next hustle?"

Did some googling and found out that Casey whatever-his-name-is, the real estate foreclosure kid, was digging himself out via Google Ad revenue for the most part. That, and selling an 'information packet' about how to turn misfortune into profit.
posted by verb at 2:48 PM on June 1, 2007 [2 favorites]


I hink his new gambit is gambling on the "sucess" of Casey Serin. Good luck on that, kid.
posted by lekvar at 2:51 PM on June 1, 2007




verb, look down a few posts...
posted by MikeKD at 2:53 PM on June 1, 2007


young people, are HAMMERED with the idea that doing shit like this is simple.

I'm also hammered with the idea that drinking beer will make hot women want to hang out with me. I didn't need to blow 300K on booze to realize this wasn't the case.
posted by chunking express at 2:58 PM on June 1, 2007 [4 favorites]


chunking: but could you blow 300K on booze? I bet if you did, hot women would want to hang out with you.
posted by boo_radley at 3:03 PM on June 1, 2007


In a side note near the end of this post he talks about how crazy "that Casey Serin kid" is. On the plus side, this person at least seems to be making an effort (selling all of his stuff, paying off his creditors, etc.).

Still, hard to believe people get themselves into situations like this. Then again, my mom worked in finance and taught me stuff like how to balance a checkbook before I was 10 years old, so maybe I've just gotten it drilled into my subconscious at this point. I'd think stuff like "don't gamble away 100 grand that you don't have" would be common sense, though.
posted by infinitywaltz at 3:04 PM on June 1, 2007


We also have decided, as a society, that it is acceptable, if not actually responsible, to start life in debt. Nearly every single kid I know (I'm the mother of 2 college students) has $20K to $100K in student loan debt, even if they are majoring in obscure Asian poetry. I know of at least one family that can easily afford to pay cash for college that is requiring their kid to get loans "to teach them how to be responsible and manage money." Huh? by getting into debt with no source of income? When I tell people that I refuse to borrow money to put my kids through school, and that I have limited the amount of debt I'll let them take, people are stunned. It never occurs to them that it is TOTALLY FUCKED UP to ask kids to start life in debt.
posted by nax at 3:18 PM on June 1, 2007 [11 favorites]


There's a post about Casey on the front page right now.

Wow, very strange timing - somehow I missed that post.

The "debt kid" came to my attention through the Simple Living Discussion Forums, where the majority attitude seems to be "good for him for at least trying." (Very unsnarky community that is, though.)
posted by jbickers at 3:27 PM on June 1, 2007


I don't get it. Why isn't he declaring bankruptcy?

I have not bothered to read much of his wretched blog, btw
posted by doublesix at 3:28 PM on June 1, 2007


I'm also hammered with the idea that drinking beer will make hot women want to hang out with me. I didn't need to blow 300K on booze to realize this wasn't the case.

Wait - you did figure out that you're supposed to give the 300K of booze to the hot women, right? 'Cause if you just drank it yourself, yeah - that wouldn't work.
posted by It's Raining Florence Henderson at 3:33 PM on June 1, 2007 [2 favorites]


It never occurs to them that it is TOTALLY FUCKED UP to ask kids to start life in debt.

nax: You might find this AskMe thread interesting, then.

posted by jedicus at 3:33 PM on June 1, 2007


Good god, I've never wanted to be a trader, but from the one or two books I've read about it (fascinating subject), the one bit of advice that always comes up first is some version of "don't double down."

In professional poker I believe they call it "going on tilt." How can this kid have even started trading without learning that one most basic rule?
posted by spiderwire at 3:34 PM on June 1, 2007


I've read through it. What the hell was his mother thinking giving him $120,000 to "invest"?
posted by jamesonandwater at 3:37 PM on June 1, 2007


Jeeezuz! He should have read (and taken to heart) the friggin' Kelly Criterion, and never risked so high a percentage of his bank roll that he ended up in this kind of debt. Poor money management and failing to accurately gauge your risk of ruin will crush you. I am sympathetic to his situation, but he has literally no one to blame but himself for the mess he's in.
posted by mosk at 3:51 PM on June 1, 2007


The best time to post a double is late Friday afternoon/early Friday evening. It can stay up for HOURS.
posted by spock at 4:01 PM on June 1, 2007


People who talk like this are the reason that I love to watch Deal or No Deal the Bush administration: they think that if you're determined enough, then you don't need a plan.

Fixed that for you.
posted by mhum at 4:14 PM on June 1, 2007 [4 favorites]


Time for someone to start selling cocaine!
posted by SweetJesus at 4:36 PM on June 1, 2007 [2 favorites]


Wow, I'd like to get $120k from my parents.. I'd be set for life, and I'd never have to shoot the craps in the market. Either buy a house for myself, and then use my job income for whatever I want, or get into the real estate market by buying a fixer-upper for renting/selling. No pity for this kid from me.
posted by triolus at 4:53 PM on June 1, 2007


I don't think you quickly make $300,000 selling cocaine, at least not at the retail level.
posted by TheOnlyCoolTim at 4:58 PM on June 1, 2007


fiction
posted by rakish_yet_centered at 5:00 PM on June 1, 2007


My parents gave me $120k to spend on some blow for my poor sister, who was really jonesing. Instead, I spent it on some magic beans. Cocoa beans, to be exact. Now all the mofos work for me.
posted by It's Raining Florence Henderson at 5:06 PM on June 1, 2007


The best time to post a double is late Friday afternoon / early Friday evening. It can stay up for HOURS.

Errrnt. Next. This post ain't no double.
posted by ericb at 5:08 PM on June 1, 2007


I spent it on some magic beans. Cocoa beans, to be exact. Now all the mofos work for me.

Jesus fuckin' Christ -- overthinking a plate of beans, he is.
posted by ericb at 5:09 PM on June 1, 2007


No. But you hope to make 1,000 times more than $300,000 -- U.S. Seizes $300 Million of Cocaine.
posted by ericb at 5:12 PM on June 1, 2007


It's the magical fruit. The more you stuff up yer nose, the more you need to toot.
posted by It's Raining Florence Henderson at 5:12 PM on June 1, 2007


It's the magical fruit. The more you stuff up yer nose, the more you need to toot.

Yeah -- because most of it is cut with Ex-Lax® . Or, so I've heard.
posted by ericb at 5:16 PM on June 1, 2007


I don't think you quickly make $300,000 selling cocaine, at least not at the retail level.

At the retail level, not that quickly, but probably a lot faster than most legitimate endeavors. Now at the wholesale/distribution level, that's a different story...

Powder cocaine retails for around $70 a gram. Wholesale prices are in the neighborhood of 20-22K per kilo, or $20 to $22 a gram. so $300K represents (wholesale) about 15 kilos (that's not even a whole load to a smuggler), and with a 350% profit margin, it doesn't take too long for 300 grand to be considered chump change.

The problem, aside from the inherent law-enforcement sort of risks, is that people who are involved with coke tend to do a lot of coke (that 350% margin disappears real quick when you snort it!)
posted by krash2fast at 5:19 PM on June 1, 2007


that and it doesn't sound like this kid has too many connections into drug distribution networks!
posted by krash2fast at 5:20 PM on June 1, 2007


and for the record, IANA dealer; let's just say that an interesting life can lead to some obscure knowledge!
posted by krash2fast at 5:21 PM on June 1, 2007


The other thing I always notice about kids like this: during the whole "Oh my god I am bankrupt" stage, you still hear them talking about spending money, and they counter it by offering examples where they're saving money, and it's always retarded.

So like, for example, this guy has an office *and* a house? Um, get rid of both of them, move back in with your parents (yes, the mom who you owe the money too; yes it's sort of punishment for her but she deserves it somewhat for freely trusting her kid with $120k) and reduce your expenses as much as frikkin possible.

Also: get a normal job. Yes, if you succeed, you will pay off the debt. I have a feeling that if you're the sort of person that goes into 300k of debt, you are not the sort of person who is wise when it comes to running a business. You're also probably going to come off as desperate at all times.

Oh, and who wants to be a customer of a business whose president is in the habit of going 300k in debt?

Just stop the business kid, you fought the good war, badly, and you lost. Get a boring job, live on ramen noodles for a decade or so, and don't do anything that costs money.

So, that means don't buy some bizarro "hot pot" cooker and pretend that is you saving money.

On the plus side, this experience will mean that he probably will know more about bankruptcy law and financial instruments than 99% of Americans, but of course for all the wrong reasons.

Oh, and:
I worked from home a bit yesterday morning, (I have clearwire at home now, pretty fast so far, well worth the cost for the increased productivity of having internet at my house) and then came into the office around 2pm. I left at 2am. That’s what I’m talking about. I finally got in my grove again.
If you run a business, you should be there 9-5 at a minimum. Yeah, it's great that you were there till 2am in the morning. I've worked till 2 in the morning too (hell, I've worked all night). But you know what? The most important thing is to be there to get the call that comes in at 9:08 am.

Do I have excessive rage towards this guy? Probably. But then, I've never blown that kind of money on anything. I think there are two ways to look at money: make loads to spend loads or make a little, spend less. People who think in the first group tend to bug me a lot.
posted by Deathalicious at 5:26 PM on June 1, 2007 [2 favorites]


hardly obscure...
posted by Thoth at 5:33 PM on June 1, 2007


Good god, I've never wanted to be a trader, but from the one or two books I've read about it (fascinating subject), the one bit of advice that always comes up first is some version of "don't double down."

The consequences of the sunk costs fallacy.
posted by atrazine at 5:49 PM on June 1, 2007


Correct me if I'm wrong, but isn't the sort of stock trading he was involved in essentially a zero sum game? I know that in the (very) long run stock dividinds and whatnot make stock ownership non-zero sum, but he and the other day traders aren't in it for the long term.

But from what I understand (and I know next to nothing about the stock market), if I buy stock X at $4 and sell it a week later at $5 then I made $1 profit because someone else lost $1, right? It can kind of Ponzi for a while if the stock keeps going up in value, but eventually they either level out or drop, which means that somewhere along the line someone discovers that after they buy the stock it either drops in price or stays level so he can't make money by trading it.

Obviously the brokers make money becuase they get a cut on each transaction regardless of whether the stock goes up or down, and I suppose that some of the elite types with gazillions of dollars spread all over make money. But I wonder what percentage of day traders actually make any money and what percentage essentially give their money to the elites and the brokers.

Any day traders in the audience care to explain things to me? Because looking at it from the outside it really does seem a lot like socially acceptable gambling rather than investment in the traditional sense of the word.
posted by sotonohito at 6:05 PM on June 1, 2007


How many Google Ads can one cram in such a small space? Click through, for the answer!

He's done his AdSense homework.
posted by hal9k at 6:11 PM on June 1, 2007 [1 favorite]


sotonohito: people are opening and closing positions in the market. One's person's loss is not another's gain, unless we're talking options.
posted by Heywood Mogroot at 6:25 PM on June 1, 2007


sotonohito writes "if I buy stock X at $4 and sell it a week later at $5 then I made $1 profit because someone else lost $1, right?"

No, it means the stock is worth $1 more due to what the market considers the value to be. This is generated wealth, and nobody loses money because you make money. Of course, the purchaser of the stock at $5 instead of $4 is not gaining in the same way as the seller, but the purchaser is not losing money by buying the stock at an increased value. If the stock loses value later, sure, then there is a loss.
posted by krinklyfig at 6:26 PM on June 1, 2007


I have six-figure debt. Maybe I should start a blog.
posted by Mr. President Dr. Steve Elvis America at 6:39 PM on June 1, 2007


krinklyfig I think what I meant is that in order for me to make money day trading someone *outside*the*market* has to put money into the market. In the time we're talking about the market doesn't generate the money I'm taking out, but rather the money I take out of the market was put into the market from the outside economy, right?

And, eventually, the stock will either fall or remain stable (which for a day trader seems to be nearly as bad) which makes it seem a bit like a game of hot potato. Again, I'm talking strictly about day trading, not the more long term type activity.
posted by sotonohito at 6:42 PM on June 1, 2007


I’ve promised to pay my mother back (I owe her over 100K).

Yeah fuck you. I owe my mom $73.12 and I'll be damn if shes getting it back.
posted by wfrgms at 7:01 PM on June 1, 2007 [4 favorites]


sotonohito writes "krinklyfig I think what I meant is that in order for me to make money day trading someone *outside*the*market* has to put money into the market. In the time we're talking about the market doesn't generate the money I'm taking out, but rather the money I take out of the market was put into the market from the outside economy, right?"

Why is it different in the short term or the long term? You are the "outside economy" as much as any other purchaser or seller. The stock wouldn't exist without it. It's not really outside. The stock will command whatever price people are willing to pay for it, and no more. It may be overvalued and the market may not accurately reflect the real value of the company. There is no different market for day traders, just a lot more risk, because, for example, the value of a blue chip may fluctuate in the short term, but in the long term it's likely to gain.
posted by krinklyfig at 7:11 PM on June 1, 2007


I'm six figures in debt I guess. If you "own" a mortgage on a house in a major market like Seattle you are essentially six figures (or more) in debt.

You only realize this debt if you have a major Real estate market downturn... but that is looking likely at some point in the near future.

I am not really surprised that there are kids this young out there in such debt. I know a 26 year old woman who is about $170,000 in credit card debt. Basically she bought a car, furniture, and five our six lavish vacations on credit. Didn't take long. Like maybe four years.

I've said it before its this insane drive for material success we consume consume consume (I think the obesity epidemic in another manifestation) it's how people gain esteem and status... by consuming. By "owning" a bunch of shit.
posted by tkchrist at 7:14 PM on June 1, 2007


krinklyfig I assume that there is a difference in the long term because of dividinds and other such payoffs. Not that it seems to make that much difference (last time I checked you'd have to save the dividinds from a share of MS stock for around 80 years before they amounted to the price of that share).

I don't argue that price on the stock market, like all markets, is a reflection of what people will pay. But that doesn't seem like "wealth creation" to me. I'm not an economist, so I'm probably saying something stupid there....

I'll confess that there's also an element of classism involved. I see the stock market and its activity as a game indulged in by the truly rich, and a means by which those aspiring to be rich (like the blogger in question) are fleeced by the brokers. Not that the idiots losing their money on the stock market have anyone but themselves to blame, it isn't as if anyone forced them to play the game.
posted by sotonohito at 7:24 PM on June 1, 2007


Did some googling and found out that Casey whatever-his-name-is, the real estate foreclosure kid, was digging himself out via Google Ad revenue for the most part. That, and selling an 'information packet' about how to turn misfortune into profit.

That's not accurate at all. His google ad account was killed with $3k in it. Anyway.
posted by delmoi at 7:31 PM on June 1, 2007




So like, for example, this guy has an office *and* a house? Um, get rid of both of them, move back in with your parents (yes, the mom who you owe the money too; yes it's sort of punishment for her but she deserves it somewhat for freely trusting her kid with $120k) and reduce your expenses as much as frikkin possible.
When the dotcom bubble really and truly hit bottom, the 16 year old consulting company I was working for vanished in a puff of smoke and muttering that '9/11 just hit everyone hard.'

I was a fortunate kid who'd landed a job at the tail end of the 'Can you write scripts? Do you know what a server is? Here's an office' era. I realized that there were people suddenly hunting for jobs who had (easily) a decade of experience on me. I fell back on doing contract dev work for about a year until I landed something full-time, and let me tell you: I realized very quickly how lucky I'd been and how stupid I'd been not to save for the lean times.

But y'know what? I spent that time living in my parents' basement, doing pick-up jobs, and NOT making $150 trips to Borders on the weekends the way I had when I was stupid and living on the fat of the land. I did not try to score the Next Big Thing, I did not get myself satellite internet because it was 'A great investment,' I did not go out and get a new laptop so I could 'Work at client sites.' It was just a long stretch of trying to keep up on what bills I had and avoid sliding into debt while job hunting in a rough market. Eventually things picked up.

A few years later, after I'd moved out, my father's homegrown consulting business ended up grinding him ~20K into debt. Nothing like what this guy ran up, but it wasn't mind-boggling stock speculation, either. What did my parents do? They buckled down, dropped their cable, stopped going to movies and eating out, hunted for fulltime work and put their noses to the grindstone. It sucked, but they were pretty serious about not wanting to carry that burden around.

If you are serious about surviving and getting out of debt, and you're NOT stuck in a scary no-skills-no-support-network situatoin, it's possible. If what you are REALLY serious about is being seen as The Successful Superstar Dealmaker again, and the debt bothers you only because it's a demonstration that you're not That Awesome Guy, then you will only dig yourself deeper while you pay lip service to 'fixing things.'
posted by verb at 7:48 PM on June 1, 2007 [1 favorite]


sotonohito There are two ways that an investor expects to profit from buying, holding, and eventually a stock: dividends and stock appreciation (capital gain). If you think about it, in an efficient market, both of these represent wealth creation in the corporation. Dividends are paid out of profits, of course, so it's easy to see how they're due to wealth creation. In an efficient market, though, stock will only appreciate if the value of the corporation increases, since each share of stock represents a fractional interest in the corporation.

Now, your intuition about short-term gains isn't unfounded. A lot of people believe that, due to the operation of the market, stock prices actually wander randomly around the intrinsic value of the stock. This random wander isn't important to the long-term investor, since it's just as likely to wander up as down, and it will always wander around the intrinsic value, so the the long-term investor is really betting on the intrinsic value increasing. When someone buys diversified portfolio and holds it for a while, they're basically expressing positive expectations about the long-term course of the market.

When someone buys and sells repeatedly and quickly within a day, they're expecting to take advantage of these random (or if not random, quite difficult to predict) fluctuations that are simply an effect of a constantly self-adjusting market.
posted by Mr. President Dr. Steve Elvis America at 7:50 PM on June 1, 2007 [1 favorite]


That's not accurate at all. His google ad account was killed with $3k in it. Anyway.
Huh. Thanks, I hadn't spotted that.

Anyways, I feel dumb for the earlier mention of 'that guy' when there was a FPP like, three links down. heh.
posted by verb at 7:50 PM on June 1, 2007


sotonohito writes "I don't argue that price on the stock market, like all markets, is a reflection of what people will pay. But that doesn't seem like 'wealth creation' to me. I'm not an economist, so I'm probably saying something stupid there....


Well, the assumption is that the company is also growing and generating its own wealth. Also that the value of the stock will lift the company's value. I'm no economist, either.

"I'll confess that there's also an element of classism involved. I see the stock market and its activity as a game indulged in by the truly rich, and a means by which those aspiring to be rich (like the blogger in question) are fleeced by the brokers. Not that the idiots losing their money on the stock market have anyone but themselves to blame, it isn't as if anyone forced them to play the game."

Anyone who thinks they'll get rich by playing the market is not looking at investments in a realistic way. Sure, there are people like Soros who figured out how to really play a segment of the market, but it's much smarter to invest for the long term in something like index funds and not try to beat the odds. You don't really have to be an economist to figure it out, if you read enough financial advice from different sources. Doing it any other way is gambling and not investing, but there are those rare geniuses and lucky bastards that make people think they should try to play it like Vegas.
posted by krinklyfig at 7:53 PM on June 1, 2007


It's time for Bono to make the case for First-world debt forgiveness.
posted by longsleeves at 8:05 PM on June 1, 2007


I think his only move at this point is to buy a diamond encrusted skull and sell it on eBay for a cool profit.
posted by mazola at 8:44 PM on June 1, 2007


krinky, the first part of your advice is sound, but second is oversimplified. You can do a bit better than the S&P 500 over the long haul without gambling via value investing. See for example Berkshire-Hathaway over the past four decades.
posted by zippy at 8:51 PM on June 1, 2007 [1 favorite]


1 year, 8 months, 5 days.

On my current plan (likely to be better than that, because I budget conservatively), that's the date I will be completely out of debt. No student loans, repaid the (foolish) retirement savings loan, real estate paid off......everything else is already paid off.

What did it take? A few years ago I decided not to gamble so much with my future. It's a shame more people don't learn that. It's even more of a shame that people don't learn it earlier than I did...like before they get in trouble in the first place.
posted by Kickstart70 at 9:14 PM on June 1, 2007


I think it's amazing that people are giving him the "advice" to write down everything he spends money on for a month. Yes, that might be a great plan and it would really help him out a lot - IF and only IF he were actually prepared to make real sacrifices. He's rationalizing spending $30/mo at the gym because it "helps him." Yeah, great, glad it helps. Go run around the block for free. Or get a used bike.

My mother has talked to me a lot about debt, both hers and the (relatively small) amount I've gotten myself into in the past year, and no matter how much you "know" you're in debt, until you actually fully realize OK, THIS HAS TO END RIGHT NOW, it never will. Running your own business to "make the money back" is not ending the cycle that got you into debt in the first place.

I am in a mere fraction of the debt that this guy has, and I am eating ramen right now. (Actually, it's just because I wanted ramen, but you catch my drift.)
posted by grapefruitmoon at 9:34 PM on June 1, 2007


wrt various ^, value is not wealth.

Money buying stocks can come from the carry trade from Japan (people borrowing yen at 0.5% pa), or from someone who's recently cashed out real estate.

In either case, the stock valuation has been driven up not by "wealth creation" but by MONEY creation.

And just because eg. Apple Inc has a > $100B market cap ATM doesn't mean there's $100B+ of money shared among its investors. Any rush to the exits to cash out AAPL would very likely see the price take a major hit, at least until the company's ability to pull together $1B+ quarters is firmly established.
posted by Heywood Mogroot at 9:38 PM on June 1, 2007


Heywood Mogroot It's true that the money that individuals use to purchase stock can come from any number of sources, but that in itself doesn't mean that rising stock prices aren't largely caused by increases in the corporation's value due to the creation of wealth.

A rational investor isn't going to pay more than he thinks the stock is worth, regardless of where he got his money. A whole efficient market of rational investors won't either.

The fact that stock markets aren't perfect and corporations are sometimes undervalued or overvalued doesn't change this underlying point.

The impossibility of every shareholder of a large corporation simultaneously selling all of their shares into the market at the previous day's market price is an entirely different issue, and it's kind of a silly hypothetical. If AAPL is worth its market price, why on earth should everyone decide to sell? If it's overvalued, why should all the shareholders be able to expect to sell at the market price? If everyone did decide to sell, the market would quite reasonably register this as a widespread reevaluation of AAPL as overvalued and adjust its market price downward accordingly.
posted by Mr. President Dr. Steve Elvis America at 10:08 PM on June 1, 2007


A rational investor isn't going to pay more than he thinks the stock is worth, regardless of where he got his money. A whole efficient market of rational investors won't either.

Hey, 1929 is on the phone and wants to have a word with you.
posted by spiderwire at 1:01 AM on June 2, 2007


I think it's reasonably cool that the kid is trying to dig out, even if he's not making some good decisions along the way. He refuses to sell his newish car and get a beater, for example--even if he's underwater on it, it would still save him money in the end to axe it.

I'm kinda curious what his internet ad business is. He says he grosses about $7K a month, and is essentially a sole proprietor.

The most annoying thing to me about these type of blogs is that they often list negotiated settlements with their creditors as "paying back" the debt, when in reality they're paying pennies on the dollar.
posted by maxwelton at 2:25 AM on June 2, 2007


"kids, wife ect" at least in the relentless throes of his vast naive disappointment he got "kids, wife" correct, though they don't come in that order, but when it's money that matters who cares, eh? We get the cash, the kids, the wife will follow. Whatever. I feel fuh yuh.
posted by ronin21 at 5:30 AM on June 2, 2007


the one bit of advice that always comes up first is some version of "don't double down." ... How can this kid have even started trading without learning that one most basic rule?

I had to make that mistake no less than three times before I finally (I hope) learned my lesson. Only a matter of luck that I didn't do so badly as to end up in debt (more than I already was, that is). It's quite easy really... in order to believe that trading stocks (as opposed to investing with the expectation of some much lower profit through continued dividends and growth) is worth doing in the first place, you have to believe that you know better than most of the other people trying to do it. In some cases that's true, probably in most it isn't. We can see that the market isn't likely to be perfectly rational just by the fact that there are people like this in it. But if you try to be a trader you must believe you're among those select few who've figured out something the rest of them haven't. There is plenty of bad advice out there. So it's only natural to believe that anything you hear on the subject that doesn't jive with your own expectations is just more of it.

True that it's just the same thing as gambling in the sense that playing poker is. There too, you have some professional players who can rationally expect to make a profit, and consistently do. And you have a big pool of people who think they might be able to do the same, most of whom fail.
posted by sfenders at 9:59 AM on June 2, 2007


Just stop the business kid, you fought the good war, badly, and you lost.

The not-so-funny part, as many others have noted, is that it's not a "good war." Let it go.

I can understand the appeal of gambling away the debt. We have an incredible ability to contort expectations positively. That darkness on your soul that's been dragging you down for years? Imagine it doubled. Instead of work/blah/ramen for 7 years, now it'll take 14. C'mon. Double or nothing?

The other not-so-funny part is that it works out for some people. We only hear about the winners and losers, not the even Stevens. They're out there, and maybe not really that different from this guy.

Unless it's health related (e.g. you need $100K for a black-market kidney or something) whatever you're trying to make money for isn't worth it.

The most interesting part of the whole thing is the public fascination.

Get in deep debt -> let people empathize/rage -> profit! (assuming anyone out there clicks on adwords, which seems more and more dubious to me).
posted by mrgrimm at 11:45 AM on June 2, 2007


"Neither a borrower nor a lender be, For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry." — Poor Richard
posted by Twang at 2:44 PM on June 2, 2007


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