My Approach to Stock Speculation in 2014 [Grow Your Dough Throwdown Part 1]

Today is the start of the Grow Your Dough Throwdown. I’m competing. This is my post sharing my investing strategy for the Throwdown.

The Throwdown is a fun challenge my friend Jeff Rose from Good Financial Cents cooked up. It’s simple. Take $1,000 at the beginning of the year and invest it in whatever you want: stocks, mutual funds, ETFs, real estate, a business, gold…whatever. Whoever has the best return at the end of the year is the winner.

Feel free to join in on the Throwdown with your own investment. Here’s what I’m going:

Over the past year and a half I’ve started dabbling in individual stock speculation. You may remember my IPO purchase of Facebook (FB) stock in May of 2012. I ended up picking it up for $32 and held it till this past October, when I sold it at $52, profiting roughly $250.

Then I purchased Zone Technologies (ZHNE) for $4.02, and sold it for $5.53 on December 31, 2013. All in all, my initial $450 investment in Facebook has turned into $1,000 cash, which I’m now going to use for this Throwdown.

I’ve decided that to have a shot at winning this Throwdown, I’ve got to enact a more active, short-term, speculative approach.

My plan is to stick to the method I used for the ZHNE pick. That method is to choose a stock that has positive momentum. I simply visit Barchart.com and review the top signals stocks page. After several minutes to hours of looking at charts and latest news articles I get comfortable with one stock. I then head over to Sharebuilder.com, where I have a broker account, and place a $6.95 trade to purchase the stock.

My plan will be to hold the stock until it gains 35%. Then I will sell. If the stock dips by 10% then I will limit my losses and sell and look for another stock. If the stock does not reach 35% in one month I will sell and look for another stock.

Sharebuilder Trade Confirmation

My Jan 1st trade confirmation for $1,000 worth of ADEP

First up, I ended up picking Adept Technology Inc (ADEP). It’s currently trading at $16.89. I’ve already purchased it and I’m now holding. Following my strategy, I will place a limit order in Sharebuilder to sell at $22.95. Alternatively, I will place a limit order to sell at $15.20.

While I’m using this approach, the Throwdown isn’t meant to encourage speculation or the idea that you can get rich quick with risky, short-term investing. You are more than welcome to use the Throwdown as an excuse to get going with your own tax-advantaged retirement investing – something that should always take precedent over taxable investing.



Last Edited: January 2, 2014 @ 9:58 am
About Philip Taylor

Philip Taylor, aka "PT", is a husband and father of two. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

Comments

  1. Hi Philip, glad I found your page via financial mentor. :) Being CPA ( non US but OZ) myself as well, I excited and look forward to read more of your sharing in investment ! This new year I set my self a 100% goal, start with as little as $1000 and find 10 opportunities in share market having profit return of 100% to attain the below:
    Capital
    1000
    1000*100% = 2000
    2000*100% = 4000
    4000*100% = 8000
    8000* 100% = 16000
    16000*100%= 32000
    32000*100%=64000
    64000*100% = 128000
    128000*100%=256000
    256000*100%= 512000
    512000*100% =1024000 (achieved *wink*)

  2. @jazz  Nice to meet you, Jazz. Wow, you’ve got a nice plan there. Send over those opportunities when you find them. Good luck!

  3. Philip I wonder if you might answer a question for me, I’m wondering at what point in retirement planning should you begin doing some individual stock speculation? We are going to be maxing out our Roth IRA contributions starting in May and I’m wondering if at that point it would be good to begin trying to do some speculation with stocks. Your thoughts about that?

  4. Sounds interesting. I also tend to prefer using technical analysis rather than fundamentals. I also use different moving averages to help me decide