I am going to clue you in on something: if you know how to play fantasy sports, stock trading is not that bad. I was always interested in investing in stocks as far back as 1999 when I was a college student. Even then, I remember asking my good friend Diggory's father about it. He was a good stock man and was playing with mutual funds, IRAs, and just regular stocks. I couldn't get in the game back then for money reasons. It seemed to me that you had to have at least five thousand to start with, if you really wanted to do anything. I was very close of getting into the Vanguard 5000 back then with help of my parents' money, but I decided against it since I would have had no real flexibility. I'd just put the money in and leave it alone. Unfortunately, Internet stock trading was just crawling onto the scene and I would have to wait ten years to get my chance again.
Now fast forward to 2009 and I -- let's refer to me as Mr. Potter -- have lots of free time on my hands! Not that I had a choice in the matter. Anyway, I decided to try my hand in stocks. I got some advice from some of my friends that were already mixed up in online stock trading. My friend Ron helped me immensely with deciding which stock website to go with. I mean, if you think about it, there are tons to chose from: Share builder, Etrade, CharlesSchwab, Zecco etc. I decided to go with Zecco. Ron told me it was the best of both worlds, you can trade as much as you want and they only charge you $4.50 a trade. Not to mention if you make 25 trades a month you get 10 free trades the next month. For me though, best of all, was there was no minimum to invest with so I started off with $500 of my own money while borrowing some from my father-in-law, my father and my brother. With my wife Ginny's blessing, I was on my way! The first advice came from my good friend Hagrid. We had both been doing fantasy basketball for years now and he gave me the best piece of advice. He said, "Treat stocks like fantasy basketball pickups! Look at Stats, word of mouth, daily news and trends to decide what stocks to pick up and what not to touch." Ron also told me not to get involved with a stock you know nothing about. A rule I would break later on.
I had a good framework and some confidence, but I was left ultimately asking myself, "What stocks should I go for first?" First I had to decide, "Was I a long term kind of guy?" Would I buy a stock that's low today and look at it five years later, praying it went up, or would I be a daytrader, looking to make quick profits and taking small gains. In the end, I cheated myself, saying "I can do both!" Well let me tell you, you CAN'T! Actually let me correct that. You can if you have the money, but if you're a guy with $800 to start with, then you can't. Anyway, I got my first stock tip from my friend Percy who has been a good friend of mine since my high school days. He had been mixed up with stocks for years and told me that banks were the way to go. For my first transactions, I bought 25 shares of Citigroup, Inc. and 25 shares of Ford. Both of those stocks took me on a crazy rollercoaster ride. They taught me not to get greedy and to take profits when you can. The last stock I purchased is the one I'll tell you about in Part 2 of this blog. My buddy Ron told me about it: AUY aka Yamana Gold, Inc. It saved my bacon in the early stages.
