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In the winter of 1995 after having our first child, my wife and I decided to finally buy our first home. I had already been in the work force for six years and had saved up close to $30,000 just for this occasion. It was enough of a down payment for a good home in a good neighborhood. We started looking at different houses with our real estate agent trying to find that perfect house. Meanwhile at work, two of my colleagues (and good friends) had made significant investments in a penny stock and were overjoyed with the returns the stock had delivered so far at that point. The stock had gone from $1 to $4 in just a few months and the momentum seemed to be pointing up. So after a brief (too brief) consideration, I gave in to temptation and plunged my entire home down payment into this stock. I thought to myself that it will be a long time before I would have $30,000 to invest with and all I wanted was to give the money a week to grow so I could make an extra few thousand dollars and still make the down payment.

A week later the stock had dropped to half of its value and I was looking at $15,000. Panic-stricken, I sold my shares and cashed out only to see the stock go right back up without me along for the ride. So I put back the $15,000 into the stock with the hope that stock was now poised to rise further, only to see the stock fall yet again, leaving me with only $5,000 when I finally cashed out. In a matter of three short weeks my $30,000 down payment I had worked six years for had dwindled to $5,000. Buying a home was now out of the question. As you could imagine that was a tough month in my life. The pressure, stress, anger, …