Evolution of an Investor: Lessons from the First Three Years : Small Time Blog
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Evolution of an Investor: Lessons from the First Three Years

by Bradley Voight on 10/24/14

In July of 2011 I opened a Scottrade account armed with $11,000, a dream of great riches and very little, if any, useful knowledge. I picked some good companies with solid earnings. I jumped right in....and out, and in, and out like a cricket on a hot blacktop driveway. Then came the promotional email penny stock news letters. I still have 3 "companies" the stocks of which are worth a combined $1.86 all thanks to boiler rooms run by wolves of wall street. Three times a fool was all it took for me to learn this valuable investing lesson: NEVER BUY A STOCK SOMEONE IS ADVERTISING VIA EMAIL OR ANY OTHER MEANS. The best way to avoid being sold to is to be a picky shopper. No one can force you to buy anything you don't want to own. Take my advice to heart here; find your own companies and research them carefully.

Having withdrawn $3000 to buy a truck I was left with $8000. From there I am now at $5800. That is minus $2200, but it is the best $2200 I've ever spent. It beats the hell out of the $29,000 I spent on college to no avail. It is what is referred to in the industry as market tuition. The return on that $2200 loss will be realized over time, but only if I heed all the lessons I've learned in 3 short years and keep an open mind to new knowledge. Investing is a humbling experience that teaches you to know thyself by exposing your weaknesses and neurotic tendencies.

I now have 3 accounts. One at Scottrade, one at TradeKing, and one at Vanguard. The Vanguard account is a traditional IRA and it is where the hard lessons learned from the other two accounts are being tested. 

By far the best thing I have done is taken Jim Cramer's advice and started trading/managing a simulator account. Investopedia.com has one but there are many out there and they are all free. The practice I am getting by 'paper trading' as it is known in online investing circles has sharpened my focus and awareness. When I have a large winner I start whittling in 1/4's. If I had 2000 shares and the stock goes from $10 to $14 I sell 500 shares; from $14 to $17, then I sell 500 more. 2000 shares @ $10 is $20,000; my two sales @ $14 and $17 net me $15,500 and I still have 1000 shares left that I bought for $4500, less than half of what I would have paid for 1000 shares @ $10!! I then hold that 1000 shares as a core position. That example was exactly what I did with ENPH, a solar company that I believe in in the long haul that had a quick jump to $17, I also own the 100 shares of ENPH in my IRA. Practice makes perfect in whatever you choose to try to master.

I mention Jim Cramer because his central message, beyond the hype and bells and whistles, is that you can manage a diversified portfolio of 5-8 high quality high earning companies. Building and trading around those core positions you can beat market indexes and over-diversified mutual funds. I am 100% convinced he is right on this one.

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Our primary mission is to reclaim valuable recyclables from the waste stream and bring attention to the wastefulness of America. Currently we are recycling metals and e-waste. We will show you that what looks like worthless trash can actually be invest-able capital. Our secondary mission, the Smalltime Model Portfolio, is a long term clean energy based portfolio that was born entirely from the trash. The portfolio is actively managed by me using all of the free information available online. The Smalltime Blog follows the SMP and is also a non political commentary on metal, stock, currency and other markets. The Smalltime Blog is also where the hard lessons of a self taught investor are discussed.
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