I've spent years on the sidelines watching the market off and on as stocks rise and sink, but refusing to participate because of memories of the dot-com crash and the Enron crash, when I was a teenager. A lot of people lost their savings and retirements. People lost their jobs and homes. It was a bad time, which instilled me with a strong fear of investing and a stuffing money in the mattress mentality.
Since then, I've watched and debated getting in the stock market. I've occasionally simulated stock picks with a pen and paper and watched returns with the imaginary investments over the years, but I've not actually put any of my money in except for a couple of 401ks. I simply have no trust for the big investment firms and even less for the big stock pundits like Jim Cramer or the Motley Fools.
Taking the Jump
Last week, I finally decided to take a jump and get involved in investing. So, what changed? Well, online brokers and online trading is what has changed.
We've come a long way from the days of calling your broker on the phone to trade your stocks. We have come a long way from the desktop stock trading platforms and online trading platforms. We have come a long way from getting charged fees for anything and everything involving stocks and retirement. It is now possible to not only take charge of your investments, but also the privilege of losing money, not because someone else is being an idiot with it, but because you are being an idiot with it. It is pretty freeing to be able to be an idiot with your money rather than requiring some kid off the street, a brokerage put in a suit, to push stocks at you.
So, here I was a week and a half ago. A fresh paycheck and debating on my future. I had known about Robinhood for a year and a half. So, I decided to give it a try. I spent the weekend reading, ordered a couple of books, and linked the Robinhood app to my bank account. By Tuesday morning, 7/27, I was ready to invest.
Because, I definitely know I probably don't know what I am doing, I decided to play it conservative on what I am willing to risk. I put $480 into my Robinhood account and decided to go from there. I don't need that money to eat or pay bills and it would have just sat in a savings account with the rest I've been sticking away. I know there are excellent chances I will lose it and I don't mind. I am pretending to myself it is tuition to teach myself investing. (If you wonder what the other $20 for, it was my book allowance for this adventure.)
Entering a High Market
The thing I noticed immediately, as I started looking at stocks, is the market is high right now. It is what I would call a lightly optimistic bull market. It is tempered with some very strong pessimism, but it is growing and has been for a few years now. That is not a good time to get into the market. The ideal would to buy low and eventually sell high. While stocks are still growing, there is a limit to how high they will grow before they decide to make a minor or major correction.
Knowing this is a high market and not a good time to be buy, I decided I would get a stock I don't mind losing money on. That led me to buying one share of Tesla (TSLA) at $330.25 on that fateful Tuesday. Elon Musk has a wonderfully insane plan to put people onto Mars, similar to how D.D. Harriman wanted to go to the moon. Every one of his companies is aimed toward that goal whether directly or indirectly. It will be difficult and highly improbable, but it might be possible to pull out despite all the roadblocks now and in the future. That is something I would be fine losing money on. I like a good dream, even if it only manages to bring us slightly closer.
I still had some money left over, so continuing the theme, I decided to invest in a few solar power related companies:
- Yingli (YGE) - Solar Power Module Manufacture - 4 shares
- ReneSola (SOL) - Solar Power Module Manufacture - 4 shares
- Q-Cells (HQCL) - Because solar power needs batteries. - 1 share
Solar is going to be growing a lot in the next few years. It is expanding rapidly now in the rest of the world. Whether the Solar Power Tarrif passes or not these companies are going to grow and make money. While it is odd a Chinese owned U.S. company is the one that is pushing for the tarrifs, I don't think it will affect the long run for these companies.
For diversity as I was shooting from the hip, I chose a share PowerShares S&P SmallCap High Dividend/Low Volatility Portfolio, (XSHD.)
All of that topped out what I felt like spending a time, hopefully got the, "being an idiot with my money," thing out of my system. The next stage of my plan was to sit back, read, study, and watch. I had picked up the latest revised edition of Benjamin Graham's, "The Intelligent Investor," and "The Essays of Warren Buffett," Fourth Edition. So, I sat back, watched, and read.
The Rise and Fall of Tesla
In that period I watched Tesla rise and fall while reading plenty article and comments on Tesla's stock during that period. I debated on sticking with it, but then became sure it was going to have a good sized correction. I was expecting the after-market earnings report yesterday to be quite negative. So, I decided this would be a good time to sell out, let it drop go through a correction the next month and pick it up later when it is much cheaper. So, I sold it that day for $338.86. I made $8.61 in just a few days, but that is not the type of trading I want to encourage myself to do.
Now I could have just left that money sitting, waiting to buy Tesla back, but I thought it was wiser to diversify and make sure I wouldn't try to buy back into Tesla back too soon. So, I picked up the following stocks, again mostly shooting from the hip, based on various articles I've read on here and other investing sites:
- Canadian Solar (CSIQ) - Solar Power - 4 Shares
- Jinko Solar (JKS) - Solar Power - 4 Shares (They have some good contracts in the works.)
- Advanced Micro Devices (AMD) - Semiconductor Manufacturer - 7 Shares - (They had a good quarter and are doing pretty well. I expect them to rise eventually, especially if the cryptocurrency craze picks back up.)
AT&T (T) - Telecommunications - 1 Share - (Largely based on the pending merger with remaining content arm of Time Warner.)
Ford (F) - 4 shares - (This was so I still have a car company in the list and Ford is cheap.)
- STORE Capital Corporation (STOR) - 2 Shares - (I wanted a REIT. REITs have worked well for me on my 401ks.)
- Kinross Gold (KCG) - Gold Mining Operations - 1 Share - (I figured a share in a mining operation or gold trust wouldn't hurt. This one is cheap. It might go up during a correction.)
The result from the past week is these stocks have gone up and down since last Thursday. The solar stocks have largely done nothing, because of the question of the possible solar tariffs. Meanwhile, Tesla had a surprisingly positive earnings report. (Stock shot up from the $311.22 it had dropped to $355.00 in the after hours trading.) It is sitting at $347.50 as I am writing this. My current portfolio is sitting at $477.17.
So, over the past week, I've made some fun, but rash decisions in the name of learning. I invested and sold a risky stock. I bought a bunch of other stocks and got my feet wet. I can't say I am an investor yet, because the ride so far has been entirely speculation. Should you do this? No. Should I do this? Probably not. It would have been wiser to wait and study before diving it.
The next steps will involve watching, reading, and waiting. I will post periodic updates on my progress in this adventure. Hopefully, learning from the mistakes I will make will help someone else when they decide to begin their journey.
Disclosure: I am/we are long The stocks in the article.
Additional disclosure: All stocks I have mentioned in this post I have positions in, except Tesla, which I pulled out of as mentioned. I don't plan any moves till next Monday or later. The plan is to sit, watch, and read till sometime next week.