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Passing the Seven Million Dollar Mark

October 2, 2005
Passing the Seven Million Dollar Mark

Hey there!
Thanks for hanging in there with me. Once again, I believe I may be authoring one of the worst sites on the World Wide Web. I realize that some of the material I present on this site is rather dry and very disorganized, but there was almost no excuse for the piece of shit that I last published. I swear I am going to figure out what it takes to make spreadsheet data come out right on a web page. Let me give you a rundown of what I have going on right now. I got involved in the Virtual Stock Exchange (http://www.virtualstockexchange.com/) way back in April of 2004.
In the 1990’s I worked at a number of electronics companies. One of which gave me the opportunity to contribute to a 401(k) retirement program. I came to realize how limited my knowledge in investing was as I was only having limited success with my 401(k).
I learned a little bit about betting on stock split companies, paper trading - testing your strategies by making imaginary stock market trades, part of what the virtual stock exchange is about. You can learn more about paper trading by cruising to channeling stocks.com (www.channelingstocks.com).
What the devil is a “virtual portfolio” good for if you can’t really retire on it?
Well, you can use the performance as a model for your future investment vehicle.
Let me explain by example: I started out last year with a fantasy portfolio of one million dollars ($1,000,000.00) and by making certain decisions I was able to build it up to a little over seven million dollars ($ at last count).
Of course neither myself, nor most of my readership has a million dollars to throw around for a portfolio, but if you can divide by ten (or in the case of a typical starter portfolio divide by one hundred) you can take the examples made earlier in the year and apply them to a portfolio of anywhere between $100,000.00 to $10,000.00 - respectively.
You could be well on your way to an early retirement, one would think.
Or not. To get the performance I had these last few months I did a number of trades in succession, buying and selling sometimes on a daily basis. I didn’t day trade, but I didn’t buy and hold either.
When you are starting an investment program with an itty-bitty 401(k) program or a small fund you can start on www.sharebuilder.com you probably can’t afford to make those kinds of rapid fire trades. What you really need is a solid portfolio of strong issues that will make sense in today’s screwed up economic market.
Which is what I would like to address really quickly before my wife begs me to get to bed tonight: I am not so sure the damned market is going to be as safe as it once was. I have nothing to sell to you about it and I can’t really base my dire predictions on anything but the bullshit that some of the crackpot gurus offering newsletters and courses I can’t afford to take on are trying to sell me, but my gut is telling me to tell you to watch it out there.
I got rid of an awful lot of dead weight from my fantasy portfolio lately. I also changed the rules a bit and made it a point to only bet the largest amounts of money I can on the safest stuff possible – 2 for 1 stock-splits for example. Another newsletter is urging me to invest in companies that operate shale or oil sand conversion into energy like oil and gasoline. I am not going to name companies outright here. It would behoove you to do your own homework on this one.
You can, of course, paper trade any market strategy wish. You can get a lot of information about issues from your online broker – I use etrade.com, though there are others out there with better perks, like lower trade commissions - consider ameritrade or Brown and Co. (surf over to Google –http//www.google.com – then cut and paste the company names in the search engine) or just surf over to quotes.com.
Write to Motley Fool for me and ask them for guidance on that.
My point is this (in my humble opinion) when you are starting a portfolio by committing, say, $200.00 a month (one hundred every two week pay period, if you are so lucky to be employed nowadays) you don’t want to squander those precious funds on issues that may not be worth as much in 2 to 5 years because they are out of style.
Buy and hold may not be entirely on the mend, but I can’t call it “dead” either.
That’s about it. I hope I haven’t bored you to tears. I also hope that I didn’t misrepresent myself or the fine people and organizations I have quoted in this piece.
If it turns out I that I may have, just remember this:
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS,
SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE
THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT
THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN
ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK AND
NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.

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So there!
Good night!