How to lose $50 bucks in 6 Months

Needless to say it was a humble beginning...

Needless to say it was a humble beginning…

In June of 2011 I was able to scrap together an extra $200 in personal money. By December of 2011 I had already had paper losses of over $50 dollars (hence the headline). At the time the stock market was experiencing some real lows. People were convinced (I think they still are convinced) that everything was going to come crashing down. I remember gold and silver were at a all time high. The real estate market was still crashing. People (including ourselves) were walking away from their homes as they realized their houses were never going to be worth the mortgages they had on them. Companies were also still crashing but the big ones were being bought out by the government.

I must be the ultimate contrarian, but for some unknown reason I decided that was the environment I was going to stake my claim into the world of stock investing. Any investment advisor with half an ounce of respect would have STRONGLY encouraged me not even bother with such a little amount of capital.

I mean what was I even going to buy? Nothing big, that was for sure! Being the crazy person I am I decided the best thing to do was to buy not one, but three stocks…

The first stock I bought Ford ($F). I figured it was large stock. Unlike other companies, it did not have to rely on bailouts by the government. It also had good sales numbers. Unfortunately, what I learned was that because it was not bailed out by the government, the government had good reason to push down the price of the stock. I wouldn’t call it a conspiracy, but it seems extremely odd to me that despite way better sales numbers by Ford, GM stock rose and Ford stock didn’t. I got out lucky however, because I did end up selling later for 15.75. With dividends I think I ended up with a $25 dollar gain. Lesson learned: don’t fight the trend or the government.

The second stock I bought was Forward Industries ($FORD). For those not familiar with the company (just about everyone except for me), what it does is it makes the kits that diabetics put their medicine in. I thought it would be a good stock because I could see that the medical profession was going to boom. I bought 10 shares at a cost of $39.55. At the time I bought the stock it was going for $1.60 a share. Problem was my broker fee was $20 dollars a transaction. Factoring in that to the mix my cost per share was $3.96. Let’s just cut to the chase and say that stock never got remotely that high. I ended up selling at $1.78 and with another transaction fee got about $8.00 back. Lesson learned: always watch the numbers.

Then there was CalAmp ($CAMP). I heard about CalAmp because they were in the news because they were facing bankruptcy. Right there it should have been a red flag, but it was technology and like a fly heading toward the light I had to learn more about the company. Everything I read about it was bad. The numbers were bad, the management was bad, the product was bad, not one analyst I read had anything good to say about it. I don’t know why but for some reason I was fascinated by this company. Then buried in some research report I read about this patent they had. The patent had to do with satellites talking to each other, networking. I know about networking, I knew at that point the company wasn’t going under. I initiated my buy at $4.24 a share and started accumulating from there. Long story short I sold my shares at a little over $16 (currently the stock is worth $27, so I guess I still sold short). 400% gain, it was unbelievable. Lesson learned: research is gold.

Well, that was then and this is now. Now is going well. I have learned a lot more about stocks since that first $200. I will not say how much I have in stocks now, but let’s just say it is ALOT more than $200 dollars. I don’t have enough to even consider quitting my day job right now, but at my current rate it could happen sooner than most people think. Then again it could all crash down into a big ball of nothing. That is the way stocks go, but the difference is I am doing something while most people I know are doing nothing.

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