Tech, Politics, and Whatever’s Relevant

As a starting note, I’m currently procrastinating on studying for my Network Theory Exam in 6 hours. It’s currently 2:32am and I’m at the JPL Library on the UTSA Campus. I’m tired, so this entry may not be as well written as I would like.

It’s hard to go anywhere (or watch anything on TV) and not hear the economy being mentioned in some way, shape or form. People are spending less, as a result corporations are earning less, and cutting jobs. As more people are unemployed (or scared to lose their job), there are less people to spend money, and it’s a vicious cycle. As many people may or may not know, I’ve always had an interest in finance and economics. Investing was something that I wanted to try but thought wasn’t really feasible unless I had a large amount of money to lose.

September came, and the stock market started to plunge. I had about $1,000 saved up from working over the summer that I wasn’t going to use immediately. I was considering opening up CD Savings Account to try and accumulate interest but wasn’t really sure if putting a grand away for a year to gain $20 in interest was really the way to go. As news started to be more and more focused on the economy and stocks losing value quickly, I started to consider looking into putting that money into stocks that I believed (more like hoped) had bottomed out.

As I researched stocks, I was looking to find a broker too. Everybody’s seen the e-trade commercials with the talking babies, so I was considering going with them if only for the brand recognition. While looking into review for them, I found Scottrade (www.scottrade.com.) Only $7 a trade (as opposed to $12) with no maintenence fee’s and a minimum deposit of $500 (as opposed to $1000.) Essentially I was just looking for somewhere that would let me make my own decisions.

So I opened an account using the minimum starting amount of $500, and the fun stuff begins. Initially I had chosen TMA (Thornburg Mortgage), Best Buy, Dell, MGM and NVidia. The first was a Mortgage company based out of New Mexico that was once trading at $250 a share, but was down to $1.50 a share. I think that Best Buy was a very successful and well run company that had been halved during the crisis so I felt that it would bounce back. Dell, MGM and NVDA were all stocks I felt were undervalued and would perform very well in the coming months. (Below you can see how well I did). Unfortunately I could only afford 5 shares of Best Buy, and 10 shares of Each Dell, MGM and Nvidia.

About two weeks after words my account dropped from $450 to around $370 and I did what probably anybody else would… I begun to wonder if I made the right decision to invest. In a bit of risk taking, I started to contribute more money and buy more stocks. I’ve always been a fan of Sprint, and upon hearing of the upcoming Palm Pre cell phone, I decided to purchase 50 shares of Sprint and 18 of Palm. Ford was doing the best out of all the US Automakers so I bought stock in them.

Finally amid the bailouts, values of many banks dropped drastically, so I started to buy shares of Wells Fargo.

So how did I do? Pretty well actually. With a total investment of $852, I’ve made a total of $459, a 53% jump in less than 6 months. What CD will get a rate like that? This gain was primarily fueled by Sprint, Palm and Wells Fargo. My portfolio is listed below. As with anything I have made some mistakes though…

Mistake 1: MGM. When I initially bought MGM, I bought it at $10/share. The share price rose to $12 among speculation of their new CityCenter project. At this time I felt like the price would not go much further, so I sold. The share price continued to rise and finally topped around $17/share. Had I sold then this would have been a $70 gain as opposed to $20.
Mistake 2: MGM Part 2. The share price fell to $9 amid speculation that they would not be able to pay for the CityCenter project. Thinking this was a bottom I rebought 10 shares. The share price fell all the way to $3.50. Smart.
Mistake 3: TMA. I thought this mortgage company would survive the housing crisis being that they only dealt with Superprime clients and jumbo loans. They wound up getting delisted and went bankrupt two weeks ago.

In closing would I recommend investing? Yes and no… If you have money saved that you would like to do something with, that you could afford to lose, then yes. If your like me and have trouble saving, money in stocks also has the added benefit of being less accessible, making you think twice about taking money out of your account. I wouldn’t recommend investing to my parents though only because I’d feel responsible if they lost a lot of money.
I’m not a market professional (obviously) and I’m not to be responsible for any losses you may incur.