Greed is Good….. (pt. 1)
This is the beginning of an ongoing story, diary, education of me and my stock market expirience. (*Small disclaimer, I am buying and selling stocks with my own money, I have no formal training in any financial field, and anything I write here should not be taken as advice, instructions or even as a good idea. I started this venture considering it an education, and am fully prepared to lose every penny as the cost of the education I am trying to obtain… So basically I am not trying to portray myself as any sort of expert, and if you do what I do and lose all your money, don’t blame me!
Greed works.
Those are the two most famous lines from the 1980’s movie “Wall Street”. If you haven’t seen it, go rent it, one of the best moves to come out of the 1980’s. The reason I bring this up is because many years ago when I first saw that movie I knew back then, that the Stock Market is where fortunes are made (and lost). I knew that I wanted to figure it out.
When I was in my teens I remember reading an article in “Maxium” magazine about investment bankers, these twenty something Harvord, Yale, Ivy league grads that were living in NYC making 6 figure salaries and living this crazy 24/7 life; they were “Investment Bankers” what ever that means.
Well I never made it to Harvard, Yale, or even Vassar! Hell at this point in my life I haven’t even finished college (although I am close, and getting closer). What I am is 31 years old, I have a small 401K an even smaller IRA, and quite frankly like just about everybody else out there they are getting SMALLER (which is not the intent).
For the past 6 months I have been seriously considering making the leap from Mutual funds and just letting my money sit there and hope for the best, into out right purchases of stock in companies. Now understand me I do not have any grand fantasy’s of being the next Warren Buffet (Although I love Margaritavill!). I do know that this (the stock market) is where the truly wealthy play, or rather hire people to play for them. They take their money and make it “work” for them, they earn fortunes; penny’s at a time.
That was 6 months ago, about 3 months ago there was a key change in my IRA. ING Direct changed all their “investment” accounts over to “ShareBuilder” accounts, essentialy I now had an online brokerage account. After some initial laziness for lack of a better term I called ING’s customer service number and asked if I could do as I suspected, and “buy” stock with the funds in my IRA. I found out that is exactly what I can do. Now I had just want I wanted (or feared) money to play with in the stock market.
So now I have this money that isn’t really money, because it locked in this IRA and it was just a 401K roll over to begin with, so its not REAL money, its play money and if I lose it no big deal, it was never REALLY mine (or that’s how I have rationalized this so far).
Since I am trying to be transparent and open about this entire project I will start with my personal finances (as they pertain to this venture) 2 years ago when I left my former company I had about $5000.00 in my 401k, I rolled those funds in to an IRA with ING direct. Over the first few months it bounced up and down but stayed between 4500 and 6000 dollars. Then the bottom fell out of the market and like everybody else the value of my IRA fell too. When I started this venture it was worth about 2500 dollars. I owned 2 different mutual funds and my money was split about 50/50 between them:
- IDROX: one year ago = aprox $17.00 As of market close yesterday 7.61
- IDSGX: one year ago = aprox $14.00 As of market close yesterday 6.92
So after some fear, some uncertainty and confusion I decided to jump in. Having NO idea what I was doing, I started by liquidating (see big broker dealer word for SELLING) $500 dollars worth of IDROX. I chose IDROX …Because….Thats about as much thought as I put into it…This is the education from my first sale:
- Mutual Fund transactions post at the END of the day
- There is no fee to sell Mutual Funds with ING’s ShareBuilder
So that night after the market closed I learned that I now had 1000 dollars in IDROX, 1200 of IDSGX and 500 dollars in a “Money market” account that I could use to buy and sell stocks.
I dont know if anybody other then my friends who have listened to me babble about this endlessly, will read this, but here comes the “fun” part. For my first stock I chose to buy Las Vegas Sands Corp. (LVS). Now I can’t read all those fancy charts or really follow what the numbers mean (I’m trying to learn), but what I did know is:
- Casinos make LOTS of money
- LVS has HUGE expansion projects in place that will may COULD be online in the next year
- My brother works there (So I can tell him I’m now his boss)
- the stock price was at almost 150 a year ago, and now is trading at less then 10
- Sheldon Anderson has invested over 1 Billion dollars in the last 6 weeks; he believes in this company and I think I can trust him with my $500 dollars.
With that knowledge in hand I decided to place my first trade. So here is my first educational piece. I placed the trade after hours, my assumption was that when the market opened the next morning I would get the “closing” price (which was about 8.50 a share). I calculated how many shares to buy so that I could cover the cost of the shares as well as the 9.95 transaction fee. I was wrong…
- The Market close price is NOT the same as the market open price
- If you place an order for MORE then the funds you have it will go through
- There are no “overdraft” fees on a brokerage account at ING (Provided you pay them back at the next close.
Well when the sale went through I owned 55 shares of LVS, I paid 11.00 per share, more then I wanted, BUT less then the value I believe them to be.
Recap:
- IDROX: Buy = Unknown, Current =7.61
- IDSGX: Buy = Unknown, Current = 6.92
- LVS: Buy = 11.00, Current = 5.36
My next buy was TiVo. Everybody who knows me knows that I am a HUGE fan of this company, I think that TiVo is one of the greatest inventions of all time. I also read that they are working with DirectTV again. That was enough for me to try TiVo Next. So I sold $300 of IDSGX and bought 40 shares of TiVo so now:
- IDROX: Buy = Unknown, Current =7.61
- IDSGX: Buy = Unknow, Current = 6.92
- LVS: Buy = 11.00, Current = 5.36
- TiVo; Buy = 6.75, Current = 6.28
My most recent purches was Pfizer, cause well I figured everybody loves Viagra, who doesn’t to buy a product for your penis endorsed by former presidential hopefull (or maybe still hopeful) Bob Dole? So as I leave you untill next time here is my current portfolio (See I’m learning the terms!):
- IDROX: Buy = Unknown, Current =7.61
- IDSGX: Buy = Unknow, Current = 6.92
- LVS: Buy = 11.00, Current = 5.36
- TiVo; Buy = 6.75, Current = 6.28
- PFE: Buy = 16.30 Current = 16.73
So… Ive started, that much is clear…. but whats the score here? Whats next?
