Friday, March 11, 2005

A Little Background

I decided to post a little financial background.
On my 15th birthday my dad gave me a manilla envelope. Inside was one single sheet of paper that had some information. Some of the words I remember: Ruby Tuesday, 75 shares
I tried to act happy, but I had no idea what the hell the piece of paper meant. He then informed me that he received some shares of stock from an uncle and passed some on to me. He quickly told me a little (and I mean a little) about stocks and after a few minutes I was a little less confused. I now not only had a piece of paper with some words on it, I had a piece of paper worth about $250.
My dad told me that I could keep it or sell it, it was up to me. The first thing I thought about was the amount of basketball cards I could buy with $250! But in the end I did decide to sell it, but not for basketball cards.
I wanted to invest in another company since I had no idea what Ruby Tuesday did (RI: restaurant). During this time AOL was going through troubles and the stock was sliding. I read a few articles in the newspaper and I didn't think the news was bad at all. AOL was basically getting too many customers and their servers could not keep up with this huge increase in demand. Some customers complained, and articles were written about this fiasco. I thought this was a pretty good problem to have so I added some money I have saved, sold the RI, and bought 17 shares of AOL (I was unaware of the fact that by buying so few shares I was basically paying a 12.5% commission from Schwab). The price was in the low 20's and then it took off.
I sold after a couple hundred percent return, but if I held through most of the bubble- well, I try not to think about that.
I then started buying and selling various tech companies from very limited research. I would read trade magazines and if something sparked my interest I might buy it.
I made money through most of my high school years except when one tech company missed earnings my senior year. I then switched to energy stocks. Why? I can't really say because I didn't write any notes down.
This little background is turning into a big one, so I'll speed up a bit.
I did not really buy too much my first three years of college and a good chunk of my cash was going towards expenses since I only worked a little freshman year, none sophomore year, and some my junior year. During my junior year I got a new job at Scottrade and decided to really save my money and invest. In May of 2003 I had about $1,600. Since my savings was low, I did not start investing till August-September. I had a nice couple of months in REIT's due to the housing situation and I ended with a 35% gain through those last months of 2003.
My account ended the year at $8,331.
2004 led me out of REIT's (well most of them) and into some tanker stocks. I also switched jobs in February and became a portfolio management/stock analyst intern (this is my current job). My investments gained about 80% through most of 2004, but December was a hard month and I ended up +65%. My 2004 total was: $17,114 (throughout the year I also kept some cash in the account).
2005 has been a fairly good year. I haven't calculated my exact percentage lately, but the last time I checked I was up over 9.5%
YTD the S&P is down roughly 1% (exact is -0.97%)
Here are how my stocks have done (I've sold a few, which will be detailed in my next post- the returns are based on my selling price not today's ending price for the ones sold)
FRO: +22.50% (adjusted for dividends and spin-offs)
FBR: -4.43%
IMH: -7.4%
SFL: +10.73%
ELAB: +12.26%
NTE: +13.85%
My big mistake was keeping IMH (REIT) way too long, I should have got out around 25. FBR is a small position and overall my cost basis is fairly low when counting the dividends received.

I'll detail my current positions and some notes about them in my next post.


wannabe_ceo said...

Good work. I haven't gotten into stocks yet. Right now most is in funds which I'll detail next week. Feel free to check out my sight, although its more personal diary than money.

Alpha said...

hey thanks a lot for the comment, i'll definitely check out your site!