Hey everyone, I'm back from vacation, and feeling refreshed. I'm currently sitting in 100% cash as of Friday and loving life. See my
Portfolio, by the way. All of my trade history will be listed there for full transparency.
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If you couldn't tell, I'm relatively new to this whole stock trading thing. It's all part of a greater ultimate plan of being more knowledgeable about how money works and how to successfully invest it. One day, if I can have my way, I will become financially independent.
At the beginning of this year, I decided that my New Year's Resolution for 2011 was to try to save as much money as possible in cash. My concrete numerical goal was to stockpile at least $40,000 so that when my lease expires in July 2012, I will already have enough money saved up to make a 20% down payment on a $150,000 house with money to spare. In New York City, where I currently reside, $150,000 can only buy me an antiquated, unsanitary shoebox apartment dwelling that also hosts bedbugs and rats. No thanks. However, in many parts of the country, $150,000 can go a lot further in terms of buying property. I'm still on the fence about whether I actually want to do this, but I would prefer to keep my options open, and having a hoard of cash allows me to accomplish this.
I was a little more psychotic about saving money at the beginning of the year. I went as far as eating ramen noodles for lunch or carrying in a home-cooked lunch to avoid the $10-15 daily eating expense. There was nothing particularly wrong with this at the time, and I did indeed save money, but I think I burned myself out somewhere along the way by skimping out.
I also stopped paying my student loans so that I can save more of my cash. Don't worry, though. I aggressively paid them down from $25,000 to $10,000 last year, therefore I am not obligated to pay again for a while. And the interest isn't a huge deal; the interest only costs me somewhere in the realm of $1 a day.
In addition, I got involved in the stock market. As I watched my favorite bank, Ally Bank, flip me off with anemic annual percentage yields for my online savings account (currently 0.89%), I decided that enough is enough. There is no way I can ever get rich my just throwing my money in a bank account or even 10-year CDs. So I put $2,500 into a brokerage account and another $2,500 into a Roth IRA and joined the casino that is the equity market.
My early trading days consisted of picking Cisco (CSCO) because of all their free cash flow. I, on the other hand, didn't have much free cash flow when they lost 15% after an earnings call. Additionally, I invested in the five-star Fidelity Canada (FICDX) mutual fund and watched it tank during the recent downturn. I also made a little bit of chump change my passively investing in the no-commission ETF (with Fidelity), IWB (Russell 1000).
Then it happened. Standard & Poor's downgraded the U.S. debt from AAA to AA+ and the catastrophic selling commenced. This was it. This was my opportunity to buy the blood since I wasn't around for the 2008-2009 debacle. I added the second $2,500 to max out my Roth IRA for the year, I increased my 401(k) contribution from 6% to 15%, I tripled the available funds in my brokerage account, and opened another brokerage account that approved me for trading options. I kicked my risk-averse conscience aside and started getting aggressive.
During the wild swings that occurred afterward, I followed up on a suggestion from my girlfriend and started a financial blog. She even came up with the name Greedy Puppy. She doesn't like when I talk about money all the time, so instead, I am now using this outlet as a way of expressing my ideas to complete strangers. Oddly enough, she also reads my blog and gets concerned when I go a few days without posting. Consequently, I signed up for Twitter/StockTwits and officially became a swing trader.
So there you have it. A medium-term goal for me is to create a web application that performs some of the interesting analyses that I come with in my mind, and don't feel like paying someone else to do it for me. I'll tell you guys about this at a later date. This will be a multi-year project, but I hope to become a better trader and a better software engineer in the process of building this, all while trying to achieve my ultimate goal of becoming financially independent. Stay tuned.
