I'm doing pretty well so far this year, and here's how I did it.
I sold some stocks at a loss in late December so I could have a tax write off, but so far this year is off to a great start. I originally started this blog with the intention of investing only $1,000 and seeing how well I could do. I soon discovered that it was alot easier to make decent money with $2,000-$3,000 in start up funds. Anyway, I wound up selling off so I could end the year with a tax loss of about $600 (I had capital gains coming from real estate, so I figured a small loss wouldn't hurt anything). I wanted to unload BRLC, and the unloading for the tax loss seemed like a good way to free up the cash and get back in the market with other stocks. So, I bought back in during early January.
Basically, I've been dealing with about 4 stocks, two winners and two losers. Let's start by looking at my two losers, and then my two winners.
1. AAPL (Apple) - I bought in at $160, which I thought was cheap since the stock had been at above $200. I thought AAPL was overvalued to begin with, so I didn't sink much money in this one. I only bought six shares, and I'm still down on AAPL. I'm losing on AAPL right now, but it might be a buy at current prices for the patient investor. Personally, I see AAPL potentially dipping to the low $100 or $110's before rebounding back to it's glory days. It's down in the $120's today, and I would consider buying at that level to average down, but AAPL is too much of a large cap stock for my meager portfolio to be putting more $$ in. Small caps are my favorites.
2. BRLC (Syntax Brillian) - I got burned on BRLC last year. This stock was the primary cause of my loss last year. The company is trading at less than book value right now and has had a host of problems in the past. I'm confident that they will eventually hit $5-$6 without much problem. However, owning the stock was too risky for me, so I bought an option (that i'm still down on). As options for Jan 2010 are fairly cheap ($90-$165, depending on when you buy), I bought one option on BRLC. By 2010, these guys should have their act together, and hopefully be trading at a $8-$9 range by then. For a $100-$150 investment for two years of time, I felt like they were worth the risk. Earnings come out soon, and if this quarter is bad, I can still wait until 2010. The way I see it, this company is either going to go up or get bought out.
Here are my winners:
3. AFSI (Amtrust Financial) - One of my favorite stocks. I bought in around $13.50, averaged down at $12.98, and the lower $13's. I sold at over $15.60. Investor's Business Daily mentioned them, so the price popped, and I sold for about a $600 profit. The market went down over 300 points the next day, so I re-bought on a 7% dip during the day at $15.09. I re-sold for $15.54 the next day for another $50-$60 profit.
4. AMSF (Amerisafe Inc) - I found this stock while doing research into other financial stocks. They were beaten up, and with the Fed rate cut obviously coming, I thought I'd look more into financial stocks since I'd had luck with AFSI. Like AFSI, this company is fairly young and has a solid history of beating earnings projections. It seems like this company *might* turn out to be another AFSI in the rough. (Although AFSI doesn't have a long history as a publically traded company either). Anyways, I bought in at around $13.44 after doing some research. $13.44 looking like a fairly low price based on their chart, and with financials popping, I bought in. So, the stock hit $14.53 the in the next couple of days, and I sold for another $200+ in profit.
So, to re-cap, with roughly $2,500 (give or take another $100-$200) that I started the year with. I've managed to make about $850. I'm down a total of $276 on my other investments (AAPL and the BRLC option). So, by my math, I'm up about $574 for the first 35 days of 2008. That's what, about a 22% gain so far this year?
With my luck, I'll lose my shirt in the next couple of weeks, but my profiting in the tough market has been a real confidence booster. I've done best by avoiding stocks that have heavy volume, and instead, investing in smaller companies that have low volume, good management, and beaten expectations. I've been careful to buy at prices that I consider low, and have taken my profits as soon as I've made a couple of hundred, instead of trying to hit a "home run". Also, I've been careful to invest smaller dollar amounts in my initial investment in a company, unless I'm very familiar with the stock. Take AAPL for example - at $160 a share, I could have loaded up. But I decided against that because I wasn't overly familiar with the stock and my intuition said it might drop lower. I was right, and now I'm stuck with that loss, even if it's small, until I decide to sell or the stock goes back up.
Anyways, the market has been tough lately, but if you're careful, it's still possible to make money without risking loads of money. I've been using a few different web sites to do basic research and pick a few new stocks, and when I do, I'll try to post about them too.
--I don't have much room to brag. I'm not trading with a fortune and haven't made a fortune, but as a beginning online trader in a rough market, I thought making a decent gain in a difficult market was worth blogging about. I might "lose my shirt" on my next trade, but so far, 2008 has been good to me.
Disclosure: I don't reveal my portfolio on tradeking, but I might eventually. However, I do allow other users to see my trades/certified trades, if anyone wants to look and verify my trading.
