Moving Forward with a Purpose

This is the start of a new chapter in my life and what better way to celebrate it than blogging about it right?

The purpose of this blog will be to document trades I make, why I make them and how they turned out. I will then reflect on these trades and see what can be learned and applied to the next trade to help myself improve. I hope my thoughts and reflections will also eventually help other people learn to trade better by saving them some of the same mistakes I have already made.

First I will give a background on where I have come from. My grandparents were nice enough to start a stock portfolio for me and my siblings so that it will someday help us financially later on in life. My Grandma had the most knowledge and experience in the stock market so she basically chose the stocks and oversaw our accounts(and of course paid a broker to make the trades and do nothing else). I think we have had the accounts since 2000. In 2004 I became somewhat interested in the stock market and was always curious about it seeing my Grandma watch it constantly while we were on vacation. She was eager to teach me and I wanted to learn and open my own account.

So I opened a TDAmeritrade account(at that point just Ameritrade) and I put some money in along with some money she gave me. Overall, I think there was about 5,000 in the account, not too bad for a college student(or any account for that matter). I was currently studying in Hawaii at the time, and only had class 2 days a week So I had time to watch the market given that it opened at 4am there and was done by 12pm.

Basically what I proceeded to do was nothing more than gamble and make fairly uneducated speculations on stocks hoping to make a profit. As you can imagine this did not work too well, my best day I think was a 500 dollar profit on ticker symbol MAMA which had a short revival of the dot com days. My one good call managed to make me 500 and my grandma about 30,000, which she then lost a short time later making similar speculation.

The result was I lost 2,700 of that 5,000 trading for only a short time. What was even worse was at the time I didn't really think to question anything my Grandma was doing and basically thought all the stock market was just a gamble. Afterall, she had at least 20 years experience over me so I assumed she would have it fairly figured out.

So that turned me back off of it for a while. I continued focusing on my other passion of cars, which is a terrible financial investment but was a great educational one in my opinion.

Around March of 2007 I took an interest again, I had seen how I was fairly lucky to be in a situation where I would come out of college with little to no debt and wanted to be smarter with my money and have my money generate more money. I looked at my account my Grandma had for me and did some calculations and realized I had earned less than a 2% return per year, most of that came from Best Buy stock. I knew I could get an even better return in a CD and figured there had to be something being done incorrectly.

I have always considered myself a Do-it-yourself type of person, I feel I am smart enough to do anything and if someone else can make decent returns in the stock market, I am perfectly capable as well. So, I decided to start reading many books, I also began watching Mad Money with Jim Cramer on CNBC, which I do have to give a lot of credit for getting me excited about making money and learning about investing. So after reading a few books I felt I had a good idea on how to value and pick stocks in my own portfolio so I took over my account.

At this point when I took it over I had about 32,000 in stocks. After a fairly successful trip to Vegas I put in another 4,500. Once I sold to re-allocate my balance was $37,403. I am giving actual dollars because I think it is useful to see real money at stake and to give people an idea of what type of account I am working with for their own references.

So I sold out of everything and went about picking stocks based on fundamentals, more of the Warren Buffet style and what I had learned from Jim Cramer's books as well. This was in mid April at this point. I chose a few stocks based on what I thought were good fundamentals and were diversified. I chose ACH, FCX, HERO, RIG, TCK and a few other tech stocks(funny thing is if I had held those till now I would have an average of 50% return for the year, but I'll get to that later).