This is my story and my plan!
October 23, 2009
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What is a man with no plan? Well, I have a plan for y'all!!! First my story up to today.
I am a student teacher. I also have a side job. I began investing during the summer of 2007, when I met a co-counselor at at summer camp in California who had me open an account with "25 free trades" at Zecco.com. Zecco swiftly lowered the number and then eliminated the free trades entirely, but that's another story. I bought some mutual funds from American Funds based on Morningstar research I did in my library... I remember American Balanced and American EuroPacific. I also bought some speculative stocks from an article I read about 25 stocks for the next 25 years. I recall bankrate being among them; I don't feel like looking into others... anyways, I didn't really touch any of those purchases until the Summer of 2008, when I had made some more money and was ready to invest 1-2K into stocks again.
I remember thinking, "I'm going to look back on this time (it was the summer olympics in China) as an amazing time to invest (watching the opening ceremony, feeling inspired blah blah blah!). I bought FXI, and for reasons that I'm through today unsure of a Singapore ETF, as well as Chesapeake Energy and a few others based on what I believed to be extensive research through Morningstar, my laughably ignorant "chart reading" (I had no freaking idea; I really don't have a better idea now) and through Jim Cramer's show and site. Alright, I'm in business!
Then last fall's events began. I sold out at about a 10% loss, not because I foresaw ANYTHING, but because I had so little to invest and had lost *so* much already, in addition to the losses I took in the American Mutual Funds. I felt that I was done with the stock market for awhile, money wasn't easy to make. Then last fall's events took hold. I watched in awe. I then bought some stocks on the way down, sold some on a bounce and some on a loss, never taking any losses or making any gains, through November, at which point I felt I HAD to buy stocks.
My main impetus (plural?) were two-fold; I felt that I had the advantage of having not really lost any money in stocks, and I loved Barack Obama and felt that he would bring *change* to the US and to stocks... blah blah!! (I still love B. Obama, but so much hath changed). I bought into a Matthews Asian mutual fund for 1K, as well as a USB scout for another 1K. Cha-ching! I sold both for about a 15% gain my biggest win in stocks EVER!!!
Then my foolishness not Motley-Foolishness began. After I sold the funds I watched the market continue to rise through January; how could this be happening. I didn't understand it; the economy still seemed screwed! I liked Obama, but I wasn't sure . . . of so much . . . and the market just *had* to go lower. I don't know how I got the idea, but this is where the foolishness began: I bought EEV, the ultrashort emerging markets ETF. I didn't have any idea what I was doing; I saw that previously it had reached sky-high prices and figured it had to do so again. I bought it and watched it decrease in value over the course of my Christmas holiday and into January; I doubled down, I had all of my non-cash money invested in this leveraged fund that I didn't understand in the faintest. I lost money. Then the market began it's decline, and like the novice I was (oh, looking back) I sold it after I was within 5-10% of my cost-basis, called it approximately even with the gains from my mutual fund buys, and felt OK.
Then the market trended lower, bounced, and trended lower, and harder. I bought stocks through Zecco. I did my research through Morningstar, started reading financial sites including Motley Fool, read a book on Warren Buffet, and got into stocks hardcore; I began reading the news daily. I felt like the market was coming down too hard. I bought BAC, it went to 5 bucks, I bought more, it went to 8 bucks, my largest gain ever, I didn't sell, it came down to $3.50, I had no money to buy more, it came up to $5.50 and I sold it. At the market's bottom in March I had all my money invested long in stocks, with BAC about half my portfolio, along with HMC, CBOU, AMZN, GOOG, BRK-B. I swear this to be true. The market rallied into late March and at the first 10% gain I had enough; I had lost more than that averaging down as the market dove into February and March, and decided that THIS time I was done for good. Little did I know. . .
The largest rally of my generation was about to occur. I watched stocks head higher through my birthday in April. I watched them head higher into June, and let the madness begin again. . . I began to short the market with DOG (short Dow, as I told myself I learned my lesson to avoid leveraged shorts!!!). I also bought some mutual funds "for the long term" and "just for the hell of it" expecting them to stay about even, or to make money in a number of years, but certainly not expecting short term gains. I watched over the summer as my casual mutual fund picks turned into my biggest winners yet (accidentally, honestly) and watched as my shorts continued to lose money and I continued to plow into them hard-earned money "knowing" that the market had to come down.
As I wrote a few weeks ago, since I began investing I've lost more money in DOG than any other trade by far. This brings us approximately to the present. I am wrapping up school, student teaching, and meanwhile have been earning a decent but hardly substantial amount of money at my side job, and have watched this enormous rally take hold. Despite my love of Barack Obama and my faith in the people in this country, I feel like I've never seen madness like this; I feel like investors don't understand that the world is changing; I feel like investors don't understand how hard it is for my peers to get jobs. I can't tell you how few of my friends who are graduating (from a pretty good school!) actually get or even aspire to real jobs with salaries; most are happy to be employed at an hourly rate by Barnes and Noble! Long story short, as you can read on CAPs, I started calling for a top to the market in September, at DOW 9400.
I wrote a few other "Market Top" blogs through September and into the present month, and at the beginning of this week wrote a CAPS that this is the moment we've been waiting for. I also expressed my belief earlier that we as a country are at the beginning of a Great Depression-like scenario, and that the low set in March won't be final, and that I'm interested in buying stocks when the DOW reaches 4000 and lower, and that I believe some bottom will take place around DOW 1600. Where did all these opinions come from? I was just a novice one year ago, without any idea, without a clue really! (I bet I still am now). Regardless these are my thoughts and opinions and I'm sticking to them.
On that note, my current holdings are my most aggressive since I began investing two years ago. I opened a margin account, and have a large stake in SH. I also have positions (woah doggy! the insanity is back! oye) as of this week in TZA, EDZ, and FAZ (~2k in each). I plan to buy another 2k each into DRV and TZA. Then I plan to wait until the market gets close to 4k. I've learned a little; not enough.
If you recognize your folly in my reflection, cheers! If you recognize any wisdom mixed with immaturity, cheers. If you think I'm a fool (not a Motley Fool, but a regular dopey-fool), cheers. If you learned anything from me, cheers. And if you're laughing at me then CHEERS! May you make money and be well and live a rich life regardless..
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