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John Chernoff
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I'm a musician who is very new to trading and making pretty much every mistake possible.
  • How To Fail At Trading While Really Trying 2 comments
    May 9, 2013 12:35 PM | about stocks: SCTY, AMD, TSLA

    Full Disclosure: This is my first Article/Blog on SA, so I should definitely explain who I am and why I'm here. First off, I'm a musician in my 30's, somewhat poor, though fairly frugal and somehow with a job at a local university. My contributions to the economy have been pretty minimal outside of rent, take-out food, and shaving cream. Also, and perhaps more importantly, I'm from a family of more or less old-school socialists for whom the stock market is a Ponzi scheme at best, a lecherous social anathema at, well, worse. I have yet to tell them I've been investing in stocks and if you see them please don't let them know.

    Basically, I'm in the stock market because I feel very stupid having my money sitting around becoming less and less valuable. On the other hand, after trying to invest for the last two months, I can't say I feel any smarter. Let me begin my sad story at the beginning.

    On March 15th 2013, I had an idea - I would try and invest in the market for the first time ever. I've 40K saved, and the window of opportunity seemed to be closing as the market soared near past historic highs. Using the high powered financial software package known as Notepad.exe, I drew up a list of stocks I liked for various reasons, either financial, personal, magic-9-ball-related, and so forth. Here is the list in full (I'm not making this up, btw, this is absolutely true):

    AMD, Tesla, Cemex, Sprint, IAC - $500 (2500)
    HTC, Intel, Disney, Orbital - $1000 (5000)
    Virgin, Progenics - $2000 (4000)

    12 trades total, $11,500 stocks

    ***

    GAME, SONY, SCTY, XOOM
    PF?
    MRIN?

    PEIX??!

    ***

    TSLA, DDD, SNE, SCTY, SNTS, MEET

    I can say with some confidence that this textfile is the high-water mark of my financial career. I then boldly proceeded to invest in five of these companies: AMD, TSLA, INTC, ORB, and PGNX, and a few weeks later, SCTY, and have since accomplished the seemingly impossible: I've actually lost money. (Actually, for the sake of complete honesty, I should also point out that I bought one share of APPL at 450 and sold at 400 or so, but I'd like to not think about that so please don't bring it up in the comments section).

    First step in the path to perdition: AMD

    My feeling with AMD was that it was massively undervalued and suffering from a soon to change general perception of it being a "loser" company. For one thing, it has sentiment behind it, as there's a growing number of Gen-X buyers in the market who may remember AMD with a certain degree of nostalgia from its epic turn of the century microchip tilts with Intel (unless of course they bought stock in them, that is). Also, I (and everyone else) knew it was going to be used in the upcoming Playstations and XBoxes and figured it was only a matter of time before the market began to think of it as the next Sprint/Blackberry/etc. However, in spite of all of that being completely and utterly correct, weeks went by and AMD went from 2.5 to 2.3, at which point I figured that none of this apparently mattered and that there must be a reason that I, as a mere peon in this giant game of global bumperstocks, simply could not fathom, and thus I gave up and sold at 2.3. About ten minutes later, something rather bizarre happened and a HUGE purchase of the stock prompted it to immediately jump to 2.6 or so. Soon after everything I thought would happen happened, but of course without me in any way profiting from it (though I did later buy around 2.8, sold at 3.3, regret selling, bought again at 3.7, sold at 3.6, will probably buy again at 3.8 if it falls that far, etc.).

    Next step in the path to perdition: Tesla

    As I write this article many massive opportunities to become fantastically wealthy are passing me by, but only one is happening in a window next to this article I'm trying to concentrate on, and that's Tesla, which I bought around 41, sold at 49, regretted selling, bought again at 51, immediately freaked out, sold at, well, 51, bought AGAIN at 55, AGAIN freaked out and sold at 54, and so forth. I'm quite sure I will now jump on at 70 and lose everything. Basically, the rule here is don't sell Tesla, but I get the feeling that rule at some point turns into don't buy Tesla, and the simplest way for all of you to know when that will happen is when I next buy in.

    Third step in the path to perdition: Solar City

    I'll keep this one short, as it is much like AMD and Tesla: I bought in modestly at 19, sold at 24, watched it soar to 28, regretted selling, bought much more at 26.5, whereupon it immediately dropped to 23 on earnings of a different company (NASDAQ:FSLR). I see it is now climbing back, probably due to earnings of yet ANOTHER company (Tesla, I would guess), and I should probably sell except that of course I won't due to my painful post-selling experiences with AMD and Tesla (and APPL as well, but let's not go there).

    Conclusion:

    I'm an idiot. Don't make the mistakes I've made.

    Sincerely,

    - Me

    Themes: What not to do Stocks: SCTY, AMD, TSLA
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  • jackl1956
    , contributor
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    Great article John. I wish you well.
    12 May 2013, 12:05 PM Reply Like
  • John Chernoff
    , contributor
    Comment (1) | Send Message
     
    Author’s reply » Thank you. :)
    15 Jun 2013, 09:36 AM Reply Like
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  • For those feeling bad about missing this, a blog of me managing to lose $50 w/ $TSLA/SCTY/AMD over the last 2 months: http://bit.ly/10lckYt
    May 9, 2013
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