A while ago I set aside $5,000 to buy and trade stocks. I call it my ‘play money’, as the rest of my portfolio is painstakinly allocated into index funds. But I really don’t do much ‘playing’ anymore. I just check the stock prices every few days, say silly things to myself like “Hmm… I guess that was a smart buy” (RIN) or “I wonder why nobody likes that stock anymore?” (PFE). Then I log off, forget about it for a while, and then the process repeats itself a few days later.
Exciting story huh? Yeah, I thought so. Anyways, for posterity and the voyeurs out there here is a snapshot of my current stock holdings. Feel free to make suggestions as to what I should do with it.
It’s kind of a weird mix of dividend-producing investments and large-cap stocks. The total value of my Play Money Portfolio including cash is now at about $5,700.
The stocks are all held in an Ameritrade I-Zone account, which used to be a FreeTrade account. I wouldn’t really recommend it over TradeKing, which has $4.95 trades and also you get to talk to a human when you want.
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INTC sucks dude, buy AMD thats the hot one these days in chipsets. MSFT will sink further thanks to its poor 2nd Quarter predictions. YHOO i think should be a good one by the end of this year. My two cents being a geeky SW Eng..:)
I did basically the same thing, starting in February. I’ve come to the conclusion that in lieu of well-known US stocks, I’m better off adding to my mutual fund portfolio than picking stocks based the information held by everyone else.
My brokerage portfolio now consists of a couple of US stocks that I think are cheap and poised to go up (meaning I’ve lost money on them) and four Russian stocks to go with my Russia ETF (CEE).
What is your annualized return rate?
I bought my first stock on scottrade. I am betting on Microsoft (purchased @ 23.60) and GE(purchased @ 34.80). Planning on holding for long-term. I am trying to focus on value and growth prospects. Microsoft needs to really work hard face the music from GOOG and Yahoo and rest of the world (SUN, Oracle). Mr. Bill wakeup its time to do your magic. As far GE is concerned, they have lot of stuff going on in China and India apart from US investments and alternative energy like wind. Right now I am not savvy enough to recommend these stocks. I am learning the trade with my little play money.
does it offer free dividend reinvestment?
That’s a good looking portfolio in my ridiculously unexperienced opinion. The stocks you own that are down should bounce back (MSFT PFE and YHOO) as most mature and stable companies are undervalued right now. The ones performing well show no signs of slowing. The only problem I see is your real estate ETF (VNQ). Real estate is overvalued right now, and in my opinion now is the time to get out.
I also like the idea of a “play” fund. But you are doing yourself a disservice by holding on to the stocks that have gone red. Think about how much those stocks will have to rise in order to get you back to even. Why not focus on the stocks that are doing well?
I just read a book by Phil Town called “Rule #1 Investing” and am about to start trying out his system. I’ve read great reviews about the book, and it’s the first investement book that makes sense to me. Town would scold you for holding on to your dogs; and would encourage you to only hold the 1 or 2 strong ones. His thinking is that diversifying is a myth. If you are confident in your stock picks and have done your homework, diversifying is just a crutch.
Anyway, I’m not one to talk. I haven’t started to implement “Rule #1” yet but am going to over the next few weeks (only paper trading for 2 months to make sure I understand his method and to see how it works).
Amendment to my previous comment (MSFT(-0.30) and GE(-0.40) stock). See now stock market is going down south. That is why it is a patient, long term and “know how” game. That is why i should stick to my ING CDs -; .
Hopefuly things will be better in long-term.
Looks like you’re doing pretty well. Are you planning on buying any more of the losers to catch the upswing? Or just minimize the loss?
Keep it up.
Jonathan, when did you buy these stocks and how much were the commisions? Basically, do you have a “money in vs money out” annualized rate of return? Just curious…
Cut your losses, and sell YHOO and PFE. I personally sell any stock once it reaches a 9% loss (done via a good till killed order when I buy them) so I’m not tempted to hold something longer then I should.
To the Previous Comments:
I would avoid the PC related part of the tech sector for the next few Qs, misses and poor performance by the big players (MSFT, DELL, INTC), suggest to me, despite the improving economy, spending is not improving (due to the lack of a reason (or waiting on a reason) to upgrade)
My play money account (Scottrade) uses the free screenings at pcquote.com. Its a throwaway account with the goal of taking $ 3,200 since Jan 06 (now at $ 4,600) and turning it into $ 10,000 by Jan 2008. Lots of microcap plays that are set-up as buy it and immediately set a sell based on a reasonable uptick, give it a month and move on. Just kind of fun and temptations to monkey with the 401K allocations….
I’ve 5K in a educational IRA that I’ll not need for at least 13 years. This is with TD Ameritrade and I am not planning to move it anywhere else. I also have 3 free trades from them upto $46 so that will include even the non-NTF funds. I want to invest these in moderately risky funds or ETFs. Any suggestions? Slightly off-topic but I can use some advice.
thx
You need to pick a percentage you’re willing to write-off–somewhere between 9% and 19% or so–and set stop loss orders. As someone once said to me: “if you’re not going to sell it after you’ve lost 10%, when are you going to sell it? When you’ve lost 50%? 75%? All of it?”
Sorry to keep harping on this, but commodities, commodities, commodities.
Gold, silver, other metals like copper, zinc, moly, and energy.
http://www.kitco.com
Sean,
Bill Cara has a nice blog site. He talks about different ETF’s as well.
http://www.billcara.com/etf/
You might review the daily entries to see comments on different ETF’s.
Well I can spot a few problems and make some suggestions:
Problem #1: You need to buy at least 100 shares of any given stock at a time if you can. (I’ll tell you why later)
Problem #2: You have too many stocks (there are different options out there for diversification).
Problem #3: Too many of your stocks don’t pay you money for holding them -that’s ok as long as you’re making money off them every month!
Suggestions:
#1 – Buy 100 shares of stocks so that you can trade options (covered calls) on them at the very least to earn some extra cash while you sit and watch the stock grow.
#2 – Diversification is good but too much in too small amounts is a bad thing IMHO. If you are after diversification I suggest you buy ETFs such at QQQQ (Nasdaq 100), XLE (energy), DVY (Dividends) – note that all of these ETFs trade options so you can squeeze out some extra money from them.
#3 – Try to pick stocks in industries you’re bullish on that pay dividends.
I like to hear about others are starting to play around in the stocks.. there is a lot of terminology and lessons to learn and it is better to do it now when the money, and therefore risk, is minimal…I’m in the same position and learning with some wins and some losses… I’ll preface my advice by noting that I bought GM before the end of the year.. just in time for it to tank 50%.. on the other hand I’ve done very well in commodities, so I have to agree with McCoy. My recommendation is to add some international funds, some commodities, and read the “Oil Factor” by Stephen Leeb. The “Oil Factor” will provide a perspective on the inevitable events coinciding with the increase in oil costs and the sunset of oil as our number one fuel source. Without being an expert in economics it helps to make some very interesting connections. Best of luck.
I should really calculate my annual return, but much of the time I just stuck to cash. I know I’ve beaten the S&P 500 since inception, but that really isn’t much of a feat since I started in 2001.
I-Zone does not have free dividend reinvestment.
I agree that with this amount of money I should probably focus on less stocks and try to make them winners. Getting a 10% gain on $500 is only $50 without commissions in and out.
Microsoft has no magic left anonymous, go read mini-msft’s blog if you still think they can come back. The best thing they can do for shareholders at this point is just to spin off XBox, because that’s the only part of microsoft that doesn’t suck right now. MSFT is weighed down by middle managers who are complacent and don’t know what they’re doing. I have classmates who’ve interned at microsoft, it’s not an engineering company anymore. That’s why all the best people are leaving for Google and they can’t ship.
There’s really no upside to owning microsoft. If they can’t ship vista to corporate customers by november they’re going to be screwed. If they do then they’ll just be in the same position they’ve always been, which has already been priced into their stock. Basically should something bad happen you will lose money, and it’s unlikely that their stock price will climb much higher without some major good news like Apple is taking over or something.
INTC sucks dude, buy AMD thats the hot one these days in chipsets.
Buy an AMD chip if you want to save yourself some money. Don’t bet on it as an investment.
AMD is up over $15 from last year. That’s the problem with following all the latest “hot” investments. The market figured it out a long time ago. Buying high and selling low isn’t exactly a winning proposition.
I assume your returns are ignoring dividends? PFE has a pretty heafty yield, which helps with those returns and might offset some of your losses.
I aggree with some of the other commentors, you need to pick fewer stocks to track, and make your investments in large enough blocks to reduce your expenses to less than 2% of the transaction. At Scottrade’s $7 you’d be ok, but at $19.99 or whatever Ameritrade charges these days, your expenses are too high.
what do you think about bankruptcy stocks for NorthWest Airlines and Delta Airlines ? Is it a good investment?
I have placed play money on them and on Krispe Kreme KKD. So far on my initial investment of $ 1500 and have made about $400 in returns before taxes and expenses.
I also need your opinion on GM stocks.
XM Radio (XMSR) is a bargain now … Other good buys at this time (Jun 19/06) are: ETFs > EWY (Korea) and ILF (Latin America). Wild card: SMDI. Cheers!
Did you sell some of the RIN stock you had when you saw it nearly doubled? That’s free money right there if you sold enough to cover your initial purchase price.