Happy New Year! As you may remember, I dabbled in stock speculation in 2014. It was all part of a “Grow Your Dough Throwdown” in which I competed with other financial bloggers to pick investments for the year.
Turns out, I won! My initial $1,000 portfolio appreciated by 327.05. That’s a 33% return on my money. Not bad, right!? Here’s how I did it.
- Jan 2 – Buy 59 shares of ADEP for $1,007.59
- Mar 17 – Sell 59 shares of ADEP for 1,029.68
- Mar 20 – Buy 161 shares of MGPI for 1,030.91
- June 30 – Sell 161 shares of MGPI for 1,258.51
- Sep 25 – Buy 46 shares of WTW for 1,253.55
- Dec 19 – Sell 46 shares of WTW for 1,327.05
My portfolio and strategy was called the signal speculator because I used the stock signals chart here to find a suitable stock for purchase. If the stock rose by 35% or lost 10% or neither for one month then I would sell.
The thought process behind the strategy is simply to capture any remaining gains a stock might see once it’s on the way up.
In other words, if you see a stock rising, catch a ride and capture some of the additional gain, then jump off when (1) the gains reach a certain point or (2) if you lose a certain amount or (3) if it flat-lines for over a month.
It’s pure speculation. Gambling. Thankfully though, I’m lucky it seems.
As you can tell by my trades I didn’t exactly stick to my strategy 100%. For the first sell (ADEP) I sat around for three months on a flat-lined stock. I should have sold it off earlier.
For the subsequent two sells I actually sold before 35% was reached. This worked to my favor with WTW as it went on to finish the year at a loss compared to my purchase price. But I really lost out when it comes to MGPI, which actually ended the year at more than double my purchase price.
So what’s the lesson learned? None really. Investing in single stocks with a significant amount of your portfolio is incredibly risky. I would never advise anyone to use anything close to this style of investing with anything other than money they are 100% willing to lose.
If you’re looking to get started in investing, then focus on your retirement needs. Use tax-advantaged accounts (IRAs, 401Ks) with someone like Vanguard and invest in their low-cost funds. That’s what I do with 99% of my money.
For those curious, I executed my trades using Sharebuilder. Sharebuilder does allow you to set “limit” orders, which would help you stick to a similar 35%/10% strategy.
For 2015 I’ll be competing in another stock picking challenge. This time I’ll be using $500 of someone else’s money. More details to come on the competition. But if you’re curious, I’ll be using a similar strategy for my picks.
Did you speculate on stocks or some other investment in 2014? How did you do? Did you beat my 33%?