The following is a partial list of my significant successful and unsuccessful trades in the world's favorite casino which I think have taught me the most. I have been trading for only a few years, and since then I have seen a bull market, bear market and stagnant market. I will thank myself for this when I am 30.
The unsuccessful trades will be posted first, as they are what I strive to avoid. The lessons they bring are sometimes far greater than the lessons of your success'. Boasting of only your successful trades can make you cocky and catch you off guard.
Continental Airlines (CAL) - This trade was purchased with intent of holding for several years. The downfall of the airlines presented a great opportunity for me to snap up stock at fantastic prices, but with a catch. It was unclear how long it would take this industry to get back on its feet. I purchased several hundred shares of Continental at a great bargain, but the price kept slowly dropping. I had expected this to happen, as I know it is impossible to time the exact bottom, but this gradual dip in price eventually got to me. After about 6 months which seemed an eternity I set a limit order to sell the stock at the exact price I bought it. I would have been happy to even get my money back (minus brokerage fees) so I can put it into play elsewhere. Well my wish came, and it truly proves you must be careful what you wish for. While viewing my portfolio one day I noticed CAL was no longer present, it had sold for my designated price.....and then kept going up. The lesson is, if you are confident in an industry or stock (I was extremely confident that airline travel would eventually pick up) you should hold. My emotions got the best of me on this trade, and I missed out big. The stock has seemed to have broken its downward trend and is picking up momentum. While not a big loser, this trade could have easily been a big winner had I some more patients.
V.I. Technologies (VITX) - In my early trading days I subscribed to a stock picking service that would send out daily penny stock picks via email every morning. This was basically an impulse trade made because I had some excess cash laying in my account. The stock kind of moseyed around for a while, then started ever-so-slowly declining. After actually doing some real research on this stock I came to realize it was a dud. The company history, products and especially financials made me realize what I had got into. I could either wait several years to see if this stock was a hit or take my losses. I got lucky and caught a slight increase in the stock and sold, but ultimately losing 30% of my initial investment. The lesson here is to do your own research and don't try to go for the easy money. You may get lucky a few times by picking these random stocks, but history shows you will more than likely get burned. I look at every loss as an expensive lesson, and this lesson will truly stick.
Gateway Distributors (GAWY) - This trade was just plain silly. It was made when I first started trading, anxiously looking for penny stocks to cash in from. This stock was a sub-penny stock, trading for some ridiculous price like $.0008 per share. At the time I knew nothing about financials, market cap etc. When I think back I am embarrassed at what my research in this stock was. I did a Yahoo stock screen for the cheapest stock I could find, and my theory on this stock was, "If I buy it at $.0008 per share, and I have a million shares, I will make a killing if it goes up to even one cent!" So I bought several hundred thousand shares of this stock (which amounted to only a few hundred dollars worth) and waited. After it went down even more, I bought more. At one point I owned 1.5 million shares of this stock for under $1,000. Several months later when I properly learned about the company, how to read a balance sheet and just gained more general knowledge about stocks, I realized this stock was terrible. They had terrible products, terrible management and terrible financials. It looked like the IPO was intended to raise capital with no intentions of giving anything back to the shareholders. There were several lawsuits filed against the company, and they restructured...several times, and as a shareholder I paid a $20 restructuring fee for each attempt they made. The stock did several reverse splits, and in the end my 1.5 million shares turned into 2000 shares worth exactly $2.00. Yes, two dollars. Almost comical. I decided to sell this stock to avoid restructuring fees that were 10 times my total holdings in the company, and I was out over 100% of my initial investment. My losses were:
(100% of principal) - (Restructuring fees) - (Brokerage fees for 5 trades)
A complete waste of time and money, but I got a very BIG and EXPENSIVE lesson out of this.
Wheaton River Minerals (WHT) - Intended to be a long term position, after a holding period of several months it had partaken in the recent rally in gold prices. I decided to exit the position and take my profit. I plan on purchasing this stock again sometime in the future for my long-term portfolio. There were several hostile takeover attempts from larger mining companies, but Wheaton held its ground and survived, quite well I must add.
Pengrowth Energy Trust (PGH) - Boasting a double digit dividend return was only a bonus compared to the steady growth in price. Brought to my attention by a certain Mr. Lala, this stock grew at a rate I could set my watch to. Mass media attention of the rise in oil prices puffed up the price of the stock while I was riding its back. I sold when the growth rate of the stock got out of hand and was destined for a major correction. Shortly after I sold, the stock dramatically spiked upwards then surely fell. It was a great ride Pengrowth, and I plan on following your progress closely.
Syntel (SYNT) - With all the hullabaloo surrounding outsourcing of jobs to India, I thought I would capitalize on it. The big 3 outsourcing firms had already undergone a wild buying spree and high stock prices which had a good chance of falling. I found Syntel, a large company with a relatively small amount of media attention. Financials were excellent, debt was $0, business was good and increasing and the CEO had a $550 million dollar stake in his company. On the technical side of things, the stock price had a tendency to drop between earnnings reports, then spike back up. I personally think quarterly earnnings are not so important, but in this age of short term trading they tend make big moves in the stock price when announced. I had extreme confidence in this stock, even as it continued to fall. I made 3 subsequent purchases of this stock as funds became available, taking full advantage of the lower prices. I was in geology class one morning which happened to be the quarterly earnnings report day. I nearly choked when I looked at my portfolio balance and saw some extra numbers which were not there the day before! The largest stock position I had ever held had just paid off in spades. I made a quick run with my money and a big smile. I plan to purchase this stock again in the future. Lesson learned: Doing your research really does pay off (Of course Mr. Market can still play tricks on you).