Tuesday, May 23, 2006

You Want To Make Money? Then DO NOT Follow My Advice.

Really, it's that easy, if I say buy ABC. Sell it! If I say sell XYZ, buy it! That's usually the case when I invest. Trust me you could make fortunes by doing exactly the opposite of what I do. Everytime I decide to sell or buy stocks, the stocks usually do exactly the opposite of what I expected. For example, take Sony (SNE). I bought at around $35.00, held on for over a year, and finally sold in Dec 05 @ $36.00. Immediately after I sold, SNE shot up to $50 in 2 months. Another example, Hawaiian Airlines (HA). I bought HA in Jan 06 for $3.50 and sold about a month later at $3.40. A loss. Just 2 months after I sold, HA shot up to $5.00! Now let's hypothesize about my asset reallocation plans which were scheduled to occur on May 1 but didn't...had I bought 100 shares of each stock...Would my normal investment trend hold true? I would not be shocked to find out that I would have gained 10%. Or would my luck be changing and my portfolio be negative? Highly unlikely. For the sake of simplicity, 100 shares of each stock is much easier than calculatting the same dollar amount of each stock...so here goes... today's value / # shares / $amount / may 1 value / $change / (%) IBM 80.02 May 22 100 $8,002.00 81.93 -$191.00 (-2.33%) RTN 46.11 May 22 100 $4,611.00 43.69 $242.00 (5.54%) VZ 30.79 May 22 100 $3,079.00 32.81 -$202.00 (-6.16%) WMT 47.35 May 22 100 $4,735.00 45.77 $158.00 (3.45%) GE 34.07 May 22 100 $3,407.00 33.89 $18.00 (0.53%) MMM 83.73 May 22 100 $8,373.00 80.97 $276.00 (3.41%) DD 42.38 May 22 100 $4,238.00 43.30 -$92.00 (-2.12%) PG 54.28 May 22 100 $5,428.00 56.60 -$232.00 (-4.10%) JNJ 59.86 May 22 100 $5,986.00 57.91 $195.00 (3.37%) Hold your breath! I would be up $172.00 (0.36%). But wait, subtract commissions, (9x$7=$63), and my gain would be $109.00. Wow! Had I invested, my luck would have changed! Rrrright, just hold on until next month, when I check it out again...Oh, I'll probably be down a couple grand. Hah. Wow, $1000 on black please! Place your bets on red! Trust me. :)


Tim MMF said...

What was your reasoning for selling the Sony stock at only $1 above purchase price? Were you paying attention to company news? Seems like it was an arbitrary decision to sell.

Are you calculating the dividend yield in the percentage change of your stocks?

Btw, I like the new header graphic. Looks good. Kind of a nice way to "brand" your blog.

freedumb said...

I was paying too much attention to Sony news actually. It was right around the time that Sony had problems with the CD encryption issue and just didn't show as much potential as I thought.

No, no dividend changes included...just purely on stock price today vs. May 1.

I had to add something up there...it looked too plain before. Thanks for the feedback!