JuniorDepot5 – Learning Pain of Loss with GoPro Action

Elle, a 7-year old girl, insisted last month on investing in GoPro. Now she has to learn the pain of losing money.

In our latest post about Elle's investment decisions we reported how she insisted on purchasing GoPro stocks. I warned her about the risks but actually found the trade not so bad. In the beginning it was really good: in spite of recent turbulence on the market the GoPro stock remained stable and even grew ... till the 20th of March 2018, as I had to trigger a stop-loss.

Ironically, I have, in a sense, exceeded my authority since we agreed with Elle that I will sell the stock if it drops below $4.3 (being just 7 years old Elle cannot yet perceive the stop-limits in terms of percents and the maximum drawdown).
However, I dared to commit this action since the support level at $5.0 was clearly broken and the current market sentiment is generally bearish (Donald Trump may provoke a trade war with China).
"Fortunately", GoPro stock continued to fall thus it was not too hard to explain to Elle that a "premature" stop-loss was likely for her own good.

Account statement looks like this
Date Product ISIN Description FX Cashflow Balance
23-03-2018 ISHS CORE DAX UCITS ETF DE0005933931 Buy 1 at 102,92 EUR -102,92 EUR 1,74
23-03-2018 receiipt of payment EUR 100,00 EUR 104,66
21-03-2018 ETFS MET.SEC.DZ07/UN.XAG DE000A0N62F2 Buy 8 at 12,557 EUR -100,46 EUR 4,66
20-03-2018 GOPRO INC. - CLASS A US38268T1034 currency-exchange 1,2267 USD -110,22 USD 0,00
20-03-2018 GOPRO INC. - CLASS A US38268T1034 currency-exchange EUR 89,76 EUR 105,12
20-03-2018 GOPRO INC. - CLASS A US38268T1034 Broker-fee EUR -0,50 EUR 15,36
20-03-2018 GOPRO INC. - CLASS A US38268T1034 Broker-fee EUR -0,07 EUR 15,86
20-03-2018 GOPRO INC. - CLASS A US38268T1034 Verkauf 22 zu je 5,01 USD 110,22 USD 110,22
28-02-2018 GOPRO INC. - CLASS A US38268T1034 currency-exchange 1,2213 USD 118,36 USD 0,00
28-02-2018 GOPRO INC. - CLASS A US38268T1034 currency-exchange EUR -97,01 EUR 15,93
28-02-2018 GOPRO INC. - CLASS A US38268T1034 Broker-fee EUR -0,50 EUR 112,94
28-02-2018 GOPRO INC. - CLASS A US38268T1034 Broker-fee EUR -0,07 EUR 113,44
28-02-2018 GOPRO INC. - CLASS A US38268T1034 Kauf 22 zu je 5,38 USD -118,36 USD -118,36
23-02-2018 receiipt of payment EUR 100,00 EUR 113,51

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What one can extract from this badly readable table is the following:

1) we had to pay twice the broker fee of (€0.5 + €0.07), i.e. €1.14 in total, which is not negligible in relation to this small stock position. Additionally we will have to pay about €0.3 for a so-called modality fee by DeGiro.

2) We won a little bit on currency exchange rate but since currency conversion is also not free of charge, we made an additional small loss.

3) Our total loss is 89,76-2*(0,5+0,07)-97,01 = -€8,39. This may be easily checked by subtracting the balance on 20.03.2018 from the balance on 23.02.2018, i.e. €113,51 - €105,12 = €8,39. In relative terms it is about 8.7%, i.e. pretty much! And the modality fee will be charged extra.

That's why we decided (and Elle agreed) to stick, so far, to the "free" ETFs on XETRA (XETRA is the domestic stock exchange, so there are no modality fees for it according to DeGiro term and conditions).
Buy the way, as you can see from the statement of account, the money that we got from selling GoPro stock were successfully invested in a Silver ETC (and we already won back 1,5%). We also invested the March installment in a DAX ETF (iShares CORE DAX UCITS ETF, DE0005933931).

Of course it does not mean that we completely refrain from stock picking. We merely postpone it until we accumulate enough capital to disregard the broker fees and until Elle will, herself, be able to read the cryptic account statements that you have seen above :).

Like this post and wanna learn more? Have a look at Knowledge rather than Hope: A Book for Retail Investors and Mathematical Finance Students

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