My first Big Win!

Thank you rumor mill. Yesterday you made me a ton of money!

So I wanted to do a post about this while it is still fresh in my memory. Yesterday I woke up in the morning and got ready to go to work. Like always, I get up, open up a browser to my google homepage (now called iGoogle apparently) and check my watched stocks (mostly all tech, the ones I’ve been in and out of)

To my extremely pleasant surprise, Yahoo! (YHOO) jumped up 20% to 33.5x ish. I was about 5000 invested in this stock before the jump and afterward I was at a total equity of about 6030. It was an awesome morning and it all started because apparently the New York Post wrote an article about how Microsoft had once again entered into formal talks to purchase Yahoo! for 50 BILLION dollars. Apparently it is all because both Microsoft and Yahoo had failed to acquire the online advertising company “Double Click“. In fact, Google acquired them. Now Microsoft and Yahoo want to perhaps team up to battle the online advertising giant Google.

I always get really scared when I’m about to sell a stock because I’m afraid it might continue to skyrocket and I’ll miss out on a lot of growth. In fact it is this that has led me to a lot of downsized wins because the stock ended up going down instead. In this case however, I decided not to be greedy and just sell. I locked in all the money and I felt good about selling at the top of the day. BUT!!! What made me feel even better was that later in the day, the talks were stopped and the deal stopped right there. This means, and I’m guessing (and maybe betting) that Yahoo will fall right back down to where it was before and possibly even lower prior to the huge jump. After all, now they have no reason to have jumped so high in the first place right? Here’s a snapshot of my Yahoo! related play:

05/04/2007 11:02 AM	Sold	80 YHOO@$33.55	$2,683.95	Executed
05/04/2007 11:02 AM	Sold	100 YHOO@$33.55	$3,354.94	Executed

05/01/2007 1:01 PM	Bought	100 YHOO@$27.60	$-2,760.00	Executed
05/01/2007 09:56 AM	Bought	80 YHOO@$28.06	$-2,244.80	Executed

Interestingly enough, Microsoft had very little change, in fact they dropped a tiny bit. Very interesting, I’ll have to learn why that happened.

So thats that, it concludes my first huge win in the stock market and I’m currently up about $1300 from an initial investment of $7000 – thats 18.x% return within 2.5 months if I stop right now, which I probably won’t so we’ll see if I can keep up the performance throughout the rest of the year.

I’m definitely not going to take credit for this sweet call as it was mostly a random piece of news that attributed to the gains. However, I would like to explain why I was in Yahoo in the first place and give a little reasoning to how I pick and choose stocks that I own. I’ll put that in the following post!

This describes my feelings at the moment…

Yahoo by Roy Jones Jr.

Picking Individual Stocks as a Beginner: A look back over the last 3 months

So I started my Zecco account just less than 3 months ago in order to start playing with individual stocks. I started out with $3000 and within about 5 weeks I felt it wasn’t enough so I put in another $4000 putting my total cash investment $7000.

Before I started I had only read Jim Cramer’s book “Real Money”. It was full of good introductory information if not a little bit too self-promoting (I’ll get into it later) but it definitely gave me a lot of the confidence and ground rules that I needed to get started. Slightly less than 3 months later, I am about $400 up which is a good 2-3x what I would have made in a traditional high yield savings account like HSBC or ING Direct and a good 100% ahead of a few major ETFs that track the SP500 (like SPY) so I’m pretty pleased. Zecco has been really good too because the commission cost is free so I don’t get like 7-15 dollars eating away at each transaction so keep that in mind!

Some of the stocks I’ve invested in over the last x months are as follows

Real Networks - I bought this as my first stock because I used to work here. Didn’t know much about the stock but it had just dropped like 28% overnight before I got it so I figured it was a good buy. Over the next several weeks it alternated quite a lot but mostly dropping lower and lower, I bought more and more until I was about 300 dollars invested in this one stock. It wasn’t looking good so I finally sold it one day when it jumped up for whatever reason. I broke even and even made a nice double digit profit. Not too shabby for my first stock.

Yahoo! - Yahoo! is a fantastic company and I was fortunate to buy it at a good bottom. I held it for a long time – almost 2 months – before I sold it. Incidentally the next morning they released their predictions for the next fiscal year and the stock dropped like 12%. I picked up a couple thousand dollars worth again at this point and started buying it as it went down lower and lower as a result of overreactions to their prediction announcement. I’m currently holding this having bought at 27.6x and it’s doing well for me so far! I’m hoping for this stock to go as high as 29-30 before I’m willing to let it go (having got it at such a sweet price!)

Google - They had some good jumps in the last week or so but I largely missed that. I bought 2 shares as my second stock purchases after Real Networks at 439. It was about as low as it got/has been for the last couple months. I sold it again when it hit 465 so I made a good 40 bucks or something. It stayed around there for a long time before it jumped to 480+ this week, now its back down around 460-470 ish… GREAT Company, one of my favorite and most respected companies in the world. But they just aren’t growing as fast as they used to when they first started. The high price tag (although somewhat meaningless) makes this stock difficult to speculate off of now, which is a good thing overall for the company and its customers, but a bit more difficult for us investors. Props to you Google for stabalizing your hot stock!

Vonage – This is my horror story. But I also learned so much for owning and selling this stock. I bought at a terrible time, right when they dropped a ton and still had much more to drop. Also, they were in real danger of having their entire business swallowed up by their legal troubles. I bought it at 3.38, sold at 3.08 or something terrible like that losing around 150 dollars. My biggest loss. 2-3 days after i sold, it sky rocketed to 3.70, which would’ve made me 400 dollars or more if i had stuck to it. Oh well! Lesson learned, know what you’re looking for when you go in and when it satisfies that condition or doesnt, then get out. Don’t wait around trying to hedge your losses. That’s called escalation of commitment. DOH! Like i said though, lesson learned for sure!

Marvell - Kind of a boring stock. Held it for a super long time, hoped for much more but finally sold it today at a decent price making around 70 dollars or so. I think it wouldn’t be a bad idea to hold on to this for a few months and see what happens because there’s definitely an opportunity, I just don’t know when or where it’s going to happen.

Well that’s all for now, I just wanted to give a little insight into my stock trading (a intro actually) life. It is very interesting and exciting and I’m learning more everyday. I’ll be sure to make another post later about exactly what i bought at what price and when so u can see the whole transcript. Also I’ll later do a post about my actual strategy, which will be mildly insightful (I’m still new!)

Stay Tuned!

Here is a good song that stays to the theme of these stocks… Guess what it is!!
Technologic by Daft Punk