Hi George, Thanks for filling in some of the details, it helps for me to understand you. I am very impressed that you are able to get on the internet and access SI using only an IBM/PS2. That is an older system and not very powerful compared with systems available today. Your brother must be some sorta technical hotshot to pull that off!
I wonder how responsive your system is ?
I like the selection of NOVL, personally for a variety of reasons. Its also very good that you have a reasonable timeframe and price objective for that investment.
I hope you understand that playing one or two stocks with your money is much riskier than putting the same amount of money in a diversified mutual fund. What do you know about mutual funds ? There are many really well managed mutual funds that will grow in value over time, and your only risk is timing, deciding when to switch into the fund and when to switch in cash equivalents for greater security.
In stocks like mutual funds timing is critical. Buying high and selling low is the easiest thing to do. Everybody does it, some more often than not. The additional problem of just picking one stock is that you can pick a good stock but lose money because it becomes managed badly, or the business sector it is part of becomes an undesired sector or general economic conditions can affect it also. A mutual fund helps to shield you from these sorts of risks.
If you have considered this and think trading stocks is still for you, you are on the right track with your father's picture. You must be very vigilant about your stock and listen and look at things both real and imagined, like future things which can affect your stock. Reading about the general market conditions and about the business segment is important so that you can learn how these will affect your stock pick. You will spend the rest of your life learning, and that is good, because it will come back to help you in many ways.
Another thing you must do is learn a lot about yourself. Are you a risk taker or a risk avoider ? This is something that you grow to realize with time. It is good that you are starting at an early age, because you will probably make some mistakes in your stock selections and its best to make these mistakes when you are young enough to recover from them, and with smaller amounts of money. If you think about, its much easier to recover from losing half of your investment money if you are 21 and have only lost $1500 dollars than being 60 and losing say $100,000. At 21, it will only take you a year or two to recover the loss, whereas if you are 60 and lose so much more, you may never earn enough to recover the loss.
A couple things about your timeframe and goal. I think you may be a bit unrealistic in thinking you can grow your $3K into $10K in just one year. This is a very aggressive goal. Of course its possible, anything is possible, just not very realistic. A lot of people would be quite happy to grow their investment money at 20% per year, year after year. Its good to have an aggressive goal when you are young and you may in fact get there, but don't be surprised if you don't realize that goal. And don't feel that your strategy and tactics were unsuccessful, because I can tell you from years of experience, this goal of yours is extremely aggressive and might be very unrealistic, especially with current market and world conditions.
Another thing, if the market and or stock moves against you, its good to have patience. Sometimes it can take several years for a bad situation to turn around. Also it is probably true that the most amount of money can be made by longer term investments and not by short term trading. Just look at CUBE and how many months its been since it was at its relative peak. CUBE is not a "bad" stock, but timing is everything and someone who bought it say in mid 1996 would have been down a tremendous amount by now. If they are patient enough and hold long enough, they may well recover it all. But for now, they have lost a lot of their investment. This can happen to you, too. Its always good to set a mental "loss limit". For instance on your NOVL, if I were investing in that stock, I would mentally tell myself to sell it off, if the price declines to $10, assuming a $12.50 purchase. Its usually far better to take a small loss than to ride a stock down in the sometimes vain hope to recover your initial investment. Small losses have a way of becoming staggering losses, as many people around SI can surely tell you from experience. There is an old saying that rings very true, and it goes something like this: let your winners run and cut your losses early. More on this later, but think about it and make it something that your firmly believe in, it will help you to reach your goals. Another thing to train yourself, is to never be in a hurry to make an investment. These should be like marriages. Don't rush, check her out from all sides, and look at her parents, too. Remember the girl you marry today may someday wind up looking like her mom. I know this is a sexist analogy, but it works both ways. Give the investment a chance to prove itself before you spend your hard earned money on it, after all you want to keep it there for a good long time, and you want to invest in it wisely. This takes practice, in time you will get the hang of it.
As for the special computer terminal that you have seen, I don't know much about them, but these are leased by brokerage firms and have a high monthly cost associated with them. If you progress in your stock career, perhaps you can enter a training program with a brokerage firm and gain access to such a terminal. But remember those things are not magical. They have no special powers, they can provide a limited amount of information about momentary status of bid and ask price and volume, but this doesn't give the broker much insight for the longer term. And you can compensate by developing your sense and knowledge of many other tools that are available to you.
Finally, I have to side with your father. Formal schooling is very important. It helps train your mind, and gives you skills that will help you throughout your life. Its an investment in your future. Probably the most important investment you will ever make. Make it wisely and improve on it with time, just as you are planning to do with your stock investments.
I hope all of this helps you, and I will write more later if you want more. Let me know.
Regards, Mike |
