This is a spin off of a thread originated by Cpl Chaos.
http://ar15.com/forums/topic.html?b=1&f=133&t=514490

I had a lot of the same questions when I was his age, and no one to mentor me.  While officers generally had some good investment expertise, I knew of no enlisted that did.  Consequently, I really did not adequately understand or prepare financially for the time after I retired from the USMC in 1996 - and that's my fault.

Same thing for firearms - while I knew how to employ various weapons, breaking them down beyond the operator maintenance level and understanding the mechanics were foreign to me.  After I retired, I developed additional weapon skills and learned how to build AKs, ARs, FALs and other stuff.  

Lesson learned:  You can acquire additional skills in areas where you may have little or no knowledge.  

Investing is no different.  Knowing how markets work and what moves a stock is just another skill to acquire.  You can benefit from others mistakes by reading the financial pages of MSN Money and Yahoo for a start.

With all that out of the way, what do I want to do?

Goals:

1) Make money – and achieve at least 15% on the original investment.  
2) Spend money – on something my wife or I want in 2008

That doesn’t sound like much, but I’m just getting back into trading after a five year hiatus, so we’ll see how it goes.  Better to low ball it.  I’m also still digesting James Cramer’s “Mad Money - Watch TV, Get Rich”.  

Excellent read from a true market mercenary.  Love him or hate him, this guy will force you to think about what your strategy is for making money, (IMO).  Coincidentally, he recommends 10K as a starting point for investing, although you can start at any amount.

Objectives:

1) Learn from mistakes.  Not everything will go as planned.
2) Perform proper research, i.e. due diligence
3) Minimize tinkering, i.e. day trading or frequent trading of stocks.
4) Buy and hold dividend producing wallflower stocks that also have a growth component (8-10%)
5) Buy non dividend stocks or low yield dividend stocks with current or future high growth/high earnings potential
6) Diversify – (currently this portfolio isn’t diversified enough)

Risk tolerence:  High.  That doesn't mean investing in crappy companies.  It means taking a calculated risk on a company the street currently hates, like (NBIX).

Disclosure:  

1) I am not a professional financial anything.  However, I do have other investments, which will not be discussed further.  

2)             This experiment won’t impact my retirement or other investments at all.  If I lose everything in the 10K, it may piss my wife off, but it won’t otherwise factor into other preparations I’ve made over the years.

3) In the 1997-2000 period, I ran an original 8K investment up over 152K and right back down to -22K, only to barely escape with 5K in the end. (I won’t say it wasn’t fun, though, because it was).  I worked with a guy who had extensive trading experience and I witnessed him making $2,000,000 on tech, mostly on the back of a little known stock (WAVX).  It was incredible adreneline rush and I got caught up in it. Frankly, I wasn't in this guys league.  I didn't know when to buy and more importantly, I didn't know when to sell.  Eventually I got killed.

Lesson learned: I had no grasp of market fundamentals.  You must read, read, read and constantly research something you plan to invest in and you must know why you are planning to put money into the stock.  Even then you can still be wrong, but you will be wrong less often.

Otherwise, you are gambling and others who know how to game the system will take all your money.

Other:

1) I am willing to report on this for a one year period.  After that, I will reevaluate.
2) I buy what I want to buy.  I’m not looking for anyone’s tips.  
3) If you buy what I buy and it sucks, don’t blame me.  Do your own homework and come to your own conclusions.  I’m just going to publicly state how I’m doing – good, bad or otherwise
4) No shorting.
5) No buying on margin.  For those of you contemplating investing in the stock market for the first time, DO NOT GET A MARGIN ACCOUNT
6) Taxes are not factored in.
7) Trades will be performed at $10 buy/$10 sell
8) I will post purchase, sales, cash deposits and dividend deposits as soon as possible, probably the same day.  

The Stocks/shares owned as of 29 Dec 2006:

Dividend plays:

AHM/30
AHR/100
HTGC/100

Trades:

CHDX/50 3+ month time horizon
NBIX/55 3 month time horizon
LVLT/100 6+ month time horizon
RVBD/10 possible long term hold

Long Term Hold:

SAI/100 18+ month time horizon

Cash:  $1,974

Currently, I have too many stocks for the portfolio. By the end of the year there will be consolidation, with only 5-6 stocks remaining in the portfolio.  AHM, SAI, and HTGC will probably still be there at the end of 2007.  However, anything is susceptible to trade if it runs up fast enough and everything is subject for longer term hold if new information causes me to reevaluate.

Jim

jim,

as noted in the thread you referenced, i am taking a low cost, mixed active/index approach to your $10K investment scenario.  to repeat the portfolio mix...  

my $10K portfolio is mapped out as follows, in 4 equal $2500 chunks:

25% international fund: DODFX, Dodge and Cox International Stock Fund
25% balanced fund: FBALX, Fidelity Balanced Fund
25% midcap value stock index: IJJ, iShares S&P MidCap 400 Value Index ETF
25% go-anywhere value find: TAVFX, Third Avenue Value fund

for you style box-literate folks, this works out to
20 15 14
19 13 10
04 03 02

the above portfolio currently holds 7.3% cash, 48.32% US stocks, 33.68% foreign stocks, and 10% bonds.  

the geographic composition is 63% US and canada, 14.6% europe, 10.4% japan, 2.3% latin america, and 8.8% pacific rim excluding japan.

the overall portfolio ER (expense ratio) is 0.67%.  put another way, you pay the fund managers a total of $67 per year.

the total commissions paid to get to this portfolio would be $20 (in and out of IJJ) at the above agreed-upon transaction cost of $10.

here is a single yahoo page with all four of the selections above:
finance.yahoo.com/q/cq?s=DODFX+FBALX+IJJ+TAVFX
click on the symbols to "drill down" for more detail.

here is a portfolio charting tool, an accurate one in that the pricing data accounts for fund distributions.  most other charts (e.g. yahoo and MSN) do not, and therefore can not be used to compare portfolios as the fund NAVs are not adjusted to account for annual distributions and resultant step function NAV changes.
stockcharts.com/charts/performance/perf.html?DODFX,FBALX,IJJ,TAVFX
note: use the slider along the bottom of the chart to expend the timeline.  

---

NAVs as of Dec 29 close per the Yahoo link above.  please note that if any of these funds have distributions during the course of the year (prior to next december), a straightforward calculation from the numbers below will no longer be possible.  if that happens i will make a new post with the adjustments.  nevertheless these funds will start the year at the NAVs presented below.

DODFX Dec 29 43.66
FBALX Dec 29 19.43
IJJ Dec 29 79.24
TAVFX Dec 29 59.46

---

i will only be modifying, if necessary, the above portfolio at mid-year (i.e., late June, early July).  

---

i would like to introduce a "balanced" benchmark to compare performance to, and i think that FFNOX is suitable...  

The investment seeks high total return. The fund invests in a combination of four Fidelity stock and bond index funds (underlying Fidelity funds) using an asset allocation strategy designed for investors seeking a broadly diversified, index-based investment. Its target asset allocation is approximately 55% in Fidelity Spartan 500 Index Fund, 15% in Fidelity Spartan extended market index fund, 15% in Fidelity Spartan International Index Fund, and 15% Fidelity U.S. Bond Index Fund.

note that this fund is composed of 4 index funds and therefore has a paltry 0.08% ER.  

i do not take credit for thinking up FFNOX as a suitable benchmark fund; the annual mutual fund contest over on Morningstar.com uses FFNOX as well.  (link)

---

again, best of luck with your stock picking jim.

ar-jedi


ETA: i created a tracking portfolio in my morningstar account.  i will post updates approximately every 3 months.  someone(tm) has to keep bumping this thread to prevent it from being moved to the archive server.  





---

ETA: and now the reference "portfolio" as well

Update:  

I purchased 150 more shares of LVLT today

Current holdings/shares:

AHM/30
AHR/100
CHDX/50
HTGC/100
LVLT/270
NBIX/55
RVBD/10
SAI/100
CASH/1126

Value:$9972

Update

Action:  Sold 55 shares of [email protected]

Portfolio:
AHM/30      
AHR/100    
CHDX/50    
HTGC/100    
LVLT/270    
RVBD/10        
SAI/100    

CASH     $1710

Total    $10,004

I plan on buying another 130-150 shares of LVLT on a dip.  That will finish out that position.  I'm also looking for a runup of CHDX soon.  If that happens, I'll trade that out and add to RVBD or SAI.  

Jim

Originally Posted By omar: Action:  Sold 55 shares of CHDX [email protected]

ar-jedi

The stockcharts.com link was great (and an old scool tag)

And just a comment about making the money is not so difficult... keeping it is another story

Originally Posted By ar-jedi: Originally Posted By omar: Action:  Sold 55 shares of CHDX [email protected] ar-jedi

Correcto.  

I meant NBIX, not CHDX.  NBIX closed at $11.54 on Friday, btw.  No regrets, though.  Although there's a catalyst in place to push it higher, there's better opportunity elsewhere.

Overall, I'm pretty happy with the makeup of the portfolio for the next three months, once I sell CHDX.

Jim

Update:

Bought an additional 130 shares of LVLT @ $6.3491

Portfolio:
AHM/30
AHR/100
CHDX/50
HTGC/100
LVLT/400
RVBD/10
SAI/100

CASH $875

Total $10,229

CHDX ran up 17% on no news at six times the normal volume yesterday.  There is either favorable surprise earnings or a catalyst that I'm unaware of.  It may just be institutional buying.  I almost sold this yesterday, but perhaps this will run to $26-27 in the near term.  If so, I'll sell and buy back if it falls to 17-18 again.

Jim

I too want to get into CHDX, I have a friend over in China working w/ one of China's healthcare startups, and mentioned being in a board meeting w/ some chdx members.  

Originally Posted By kansaskid: I too want to get into CHDX, I have a friend over in China working w/ one of China's healthcare startups, and mentioned being in a board meeting w/ some chdx members.

I would hold off at present.  I don't know why it is running, other than there's a possibility of a significant upside earnngs surprise in the next week or so.  

If that's the case, it will probably sell off a few days after the earnings announcement and you can get a favorable entry point.  

At the current price, it's trading at 73x earnings, which is on the high side.  

Perhaps a buyout is in the works, but I've seen no indications of one.

Jim

Update:

Sold 50 shares of CHDX @ 23.99.  This was unintentional, as I had a preset limit order in place to sell at that amount that I forgot to remove.  

CHDX ran up again for the second time in a week, closing at $24.01/+14.33%, but not before climbing to a record high of $24.87.  This is still happening on no news and unusually heavy volume.

I expect CHDX to continue upwards on momentum into the earnings announcement.  I was planning to ride it all the way to the day before earnings and sell.  I'll pick it back up again if it drops back to 18-19/share.  I might be able to trade it two or three more times this year, but next time I'll get 100 shares.

I may buy some Halliburton (HAL) or more LVLT under $6; RVBD under $28; or SAI under $15-16.  I'm also interested in Rite Aid (RAD), but that or more LVLT would give me more speculative plays than I'm comfortable with, since LVLT is already a big chunk of speculation.  

LVLT announces earnings on 8 Feb and will probably move upwards as well.

Portfolio:
AHM/30
AHR/100
HTGC/100
LVLT/400
RVBD/10
SAI/100

CASH $2,065

Total $10,228

Jim

Update:

Bought 40 shares of Halliburton (HAL) @ 29.25 while people ran for the exits about the earnings report.  A catalyst for HAL is coming this spring and this is a 90-120 day trade, not a long term investment.  RVBD, SAI and AHM were not at entry points that favored adding to those positions (i.e. they went up, as did everything in the portfolio except HAL).

Portfolio:
AHM/30
AHR/100
HAL/40
HTGC/100
LVLT/400
RVBD/10
SAI/100

CASH $884

Total $10,452

Jim

data for the 4 fund portfolio, YTD period ending 31 jan 2007:






summary: the 4 fund portfolio is up a shade over 2% YTD inclusive of all trading costs.

ps:
the FFNOX reference portfolio is at $10,145.68, or about 1.45% YTD.

ar-jedi

Update:

AMERICAN HOME MORTGAGE (AHM) has paid a cash dividend.
Amount: $31.80
Paid on: 01/30/2007

Portfolio:
AHM/30
AHR/100
HAL/40
HTGC/100
LVLT/400
RVBD/10
SAI/100

CASH $916

Total $10,573  
Dividends for AHR should post in the next day or so.

Jim

Update:

ANTHRACITE CAPITAL INC (AHR) has paid a cash dividend.
Amount: $29.00
Paid on: 02/01/2007

Dividends were reinvested through a Dividend Reinvestment Program (DRIP), requiring no brokerage fee

2.12143 shares were purchased

Portfolio:
AHM/30
AHR/102.12143
HAL/40
HTGC/100
LVLT/400
RVBD/10
SAI/100

CASH $916

Total $10,594

I'm probably going to sell RVBD on the runup to 7 Feb earnings report.  

I'm also contemplating selling AHR or AHM and buy 60 more shares of HAL.  

Finance is to heavily represented in the portfolio, but the original intent was dividends, not share price.  

I want to catch HAL before it starts running.  If AHR goes to $16, I'll probably chuck it.

Jim

Update 7 Feb 2007:

Sold 102 shares of AHR@$13.85  For some reason, the transaction didn't include the partial share of .12143, so I still have that.  I may buy back into AHR later on in the year.

Sold 10 shares of RVBD@$34.41.  RVBD is on a strong growth path and I plan on getting back into this a little later on if it doesn't run and drops to $29.  I'm still puzzling over a proposed secondary offering they announced with earnings.

Additionally, I plan on buying 60 shares of HAL next week if in the $29 or lower range.

HTGC had blowout earnings today as I suspected it would.  
biz.yahoo.com/bw/070207/20070207006162.html?.v=1
I plan on keeping this stock into the forseeable future and adding to it on dips, which are few and far between.  This one is slow and steady, with little day to day drama.

LVLT reports before market open tomorrow, which is why there is a current runup in the stock.  Additionally, Bear Stearns reiterated their buy and increased their price target from $7.75 to $8.50.
biz.yahoo.com/ap/070207/level_3_communications_mover.html?.v=1

I also had placed a sell for the day for all 400 shares at $7.50 that expired at close of trading today.  I figured it would pull back to $6.25-ish next week and I would buy more shares.   If it runs at open tomorrow, I will still sell at $7.50.

As it currently stands, I still expect LVLT to pull back after a favorable earnings announcement. I don't think I'll be seeing a big run for a while and it will probably trade in the $6-7 range, barring no catalyst.  

I would like to add to this a ltttle further down the road if conditions permit, before the next earnings report.

Portfolio:
AHM/30 Long term hold
AHR .12143 my screwup
HAL/40 3+ month hold
HTGC/100 Long term hold
LVLT/400 6+ month hold
SAI/100 Long term hold

CASH $2,653

Total $10,821

Jim

Edited to add:  Apparently, I just needed to request liquidation of the partial share, which I just completed.  Because it was a DRIP, it was a separate transaction.  This will sell tomorrow at no additional brokerage fee and I'll be completely out of AHR.

Update 12 Feb 2007:

Bought 60 shares of HAL@$29.64  

The market got a haircut and so has the portfolio.

Portfolio:
AHM/30 Long term hold
HAL/100 3+ month hold
HTGC/100 Long term hold
LVLT/400 6+ month hold
SAI/100 Long term hold

CASH $866

Total $10,347

Its interesting to watch this.  I just don't have the knowledge to pull this off.

Omar, do you do this as your full time job?

--Scott

Omar, do you do this as your full time job? --Scott

No.  I'm an analyst, just not in the financial sector.

I've followed certain stocks for years and used to daytrade.  

I research their financials through SEC filings.  Companies must provide full disclosure about their company.  With the proper research, I believe one can do well in the stock market.  I have however, been in the house of pain more than a few times.

Today the portfolio closed at $10,625, erasing three down days.

Jim

Update 27 Feb 2007:

Bought 50 shares of LVLT @$6.26

The major carnage exhibited in the market today will probably extend into Friday.  I wasn’t expecting this until April and I wanted to be in more cash after selling HAL in March-April.

It’s times like this when you want to have cash on the side to pick up something.  

Sort of like a fire sale.  

Corrections are not to be feared, they should be expected and part of the normal market cycle.

People with margin positions probably saw their entire portfolio bleed today.  While mine bled, I’m under no pressure, since I don’t have a margin position.  When I say margin, that means they bought the stock on credit, using their stock as collateral.

Most brokerages probably allow you to margin 50%. So if your portfolio is worth 5K, they will loan up to another 5K.  If the stock drops in value, the account holder will receive notification to add cash and restore the position, or sell some off.  I was in this situation in 1998-ish and it was very, very unpleasant.  I was in the hole 22K.

Tomorrow, individual investors with margin positions will be under pressure to sell tomorrow or add cash to their position due to pending margin calls.  

That’s at least one negative factor that will impact the market.  Another is the sell off in China is probably not over and will reverberate through the U.S. markets tomorrow.  

By Friday, institutions and bargain hunters should be buying and the talking heads will announce the sell off was overdone.

Portfolio:

AHM/30 Long term hold
HAL/100 3+ month hold
HTGC/100 Long term hold
LVLT/450 6+ month hold
SAI/100 Long term hold

CASH $543

Total $10,470 (Still up 4.7% for the year).  I was up 8% and some change yesterday.

Jim

Originally Posted By FALARAK: What a day.

Buying opportunities on Thursday. (maybe late Wed!)

Today is going to be volatile.

Futures are up.  Looks like a better open than I thougt yesterday, but I suspect it will sell off for most of the day.  I still think Friday or Monday before the market settles down.

Jim

data for the 4 fund portfolio, YTD period ending 28 feb 2007:



ETA:
folks, through my own carelessness, i overwrote the 28feb2007 gainloss jpeg when i created the 03apr2007 gainloss jpeg.  so, there is now one less jpeg in this post...  
losdos.dyndns.org:8080/public/stocks/arfcom-4funds-28feb2007-gainloss.jpg


summary: the 4 fund portfolio is up 2.63% YTD inclusive of all trading costs.

ps:
the FFNOX reference portfolio is at $ 10,057.61, or about 0.58% YTD.

ar-jedi

Update 12 Mar 2007:

Sold 30 shares of AHM @24.02 at a $305 loss, after the dividend is factored in.

I see this sector in turmoil into the foreseeable future.  

While 30 shares is not a lot, I don’t want to wake up sometime in the next month and see this down another 30%.  I actually considered selling at $30, and had this been a larger position, I probably would have.  Anyway, it’s making me nervous.  

AHM is not a sub prime lender, but it is somewhat levered to the sub prime market.  When they go down, AHM goes along for the ride.  I still like the company, but I believe it’s going to be very ugly in the sector for a very long time.

Additionally, I think the whole market is going to tank sometime this year, so I may just keep this in cash or go with a utility, which grows slow, but I could convert it to cash and buy something else after a big downturn, but before stocks begin to run back up..

I’m considering PPL or DUK as a replacement and will probably add 50 more shares to LVLT to make it an even 500 shares.  During last weeks correction, DUK and PPL hardly moved.  My parents own PPL since the 1960's and I'm well acquainted with it.

HAL/100 3+ month hold
HTGC/100 Long term hold
LVLT/450 6+ month hold
SAI/100 Long term hold

CASH $1253

Total $10,450

Jim

Update 14 Mar 2007:

Bought 45 shares of [email protected] for a 45-60 day trade, will reevaluate at that time.

MINI/45 1-2 month trade
HAL/100 3+ month hold
HTGC/100 Long term hold
LVLT/450 6+ month hold
SAI/100 Long term hold

CASH $24

Total $10,293 – includes $9.99 trade fee.

Jim

Update 23 Mar 2007:

Fri Mar 23 03:12:42 2007 Cash Dividend Paid.
HALLIBURTON CO (HAL) has paid a cash dividend.
Amount: $7.50

Tue Mar 20 03:03:59 2007 Cash Dividend Paid
HERCULES TECHNOLOGY GROWTH (HTGC) has paid a cash dividend.
Amount: $30.00

- The dividend was used to purchase additional HTGC stock through the Dividend Reinvestment Program (DRIP) with no additional brokerage fee. 2.24 shares of HTGC were purchased @$13.389

Holdings:
MINI/45 shares 1-2 month trade
HAL/100 shares 3+ month hold
HTGC/102.24 shares long term hold
LVLT/450 shares 6+ month hold
SAI/100 shares long term hold

CASH $32.05

Total $10,374.77

HAL took a dive this week as they came in under earnings estimate.  Ordinarily, that might be a good reason to unload a stock, but HAL is sitting on 6 Billion in cash and is undervalued in comparison to its peers.  I plan on hanging on to it until about $42 a share and then re-evaluate.

Jim

data for the 4 fund portfolio, YTD period ending 03 april 2007:  (sorry it's a few days late!)






summary: the 4 fund portfolio is up 4.94% YTD inclusive of all trading costs.

ps:
the FFNOX reference portfolio is at $ 10,281.18, or about 2.81% YTD.

ar-jedi

an update...

two of the funds in my 4 fund portfolio posted distributions in the last few weeks.  initially i thought that this was going to be a large pain in the you-know-what to manually track.

nevertheless, the folks at Morningstar have cleverly sorted this out and automated the entire process.  all i needed to do was convert the online portfolio tracker from the "standard" type to a "transaction" type.  now, all dividend and capital gain transactions are posted, recorded, and calculated automatically by pressing one button (noted at the location of the pointer below).  

that said, here are the updated 4 fund portfolio holdings as of 10 april 2007:  



and here is an example of how Morningstar tracks the distributions:



as shown above, due to the reinvested distributions the 4 fund portfolio now has fractionally more shares of Fidelity Balanced Fund (FBALX) and iShares S&P MidCap 400 Value Index (IJJ).  

summary: the 4 fund portfolio is up about 6.09% YTD inclusive of all trading costs.

the FFNOX reference portfolio is at $ 10,359.10, or about 3.59% YTD.


ETA:
if anyone is interested in what the complete Morningstar Instant Xray report for the current 4 fund portfolio looks like, here it is:
losdos.dyndns.org:8080/public/stocks/arfcom-4funds-10apr2007-instantxray.jpg

ar-jedi

ps:
note that having a tracking porfolio at Morningstar is free and does not require a Morningstar subscription of any type.
see
portfolio.morningstar.com/NewPort/Reg/AllView.aspx

Update 16 Apr 2007:

Sold 102 HTGC Executed @ $13.7101

Reason: Laggard.  If LVLT doesn’t move in the next two months it’s probably getting the same treatment.  I’ve also adjusted my thinking on dividends. 5% or less is okay, as growth isn’t sacrificed for payout.  Over 5% bears watching and a huge dividend probably means that stock or sector is in trouble, such as the sub prime mortgage lenders.

That said, I’m interested in NLY, Annaly Capital Management, which is poised to benefit from the sub prime downturn.  I’m also interested in DUK or PPL, nanotech, some biotech or keeping it in cash for awhile.

Holdings:
MINI/45 shares 1-2 month trade
HAL/100 shares 3+ month hold
LVLT/450 shares 6+ month hold
SAI/100 shares long term hold

CASH $1,420.50

Total $10,627.75  after all fees


Jim

How much time /resources do you put into touching or doning research for your portfolio?  

I've followed this for the last couple of months, and it friggin' Greek to me.  And I guess I'm missing the whole point of the exercise, which I thought was to create financial wealth.  

There were 65 working days in the first quarter.  Your portfolio earned about $9.65 each one of those days.  If you bought a magazine about investing, your days take could be reduced to about four bucks.  If you spent 15 minutes that same day looking at your account online, you've paid yourself $4 for that time and anything above and beyond that is pro bono on your behalf.  

A 10K portfolio is not an engine of wealth creation, it is a hobby.  On our smaller economies of scale, there are more effective ways for an individual to increase their "workday" income by $9.65.    

Sure, I still invest.  It's just not a hobby for me though.  It's all just numbers on paper and is every bit as much a gamble as the Mega Millions IMO.  

Not a slam...I'd truly like to be enlightened.  Outside of buying IBM or Microsoft type lottery ticket stuff, why are people so damned confident that a Great-er Depression cannot / will not happen "in their investment lifetime" ?  

For me...If I want more money, I give myself a raise....I go get a new customer.   I'm all about immediate gratification and real holdings.  

Thanks for any advice.    

Originally Posted By SevenMaryThree: How much time /resources do you put into touching or doning research for your portfolio?

well, i'm the one with the hypothetical "4-fund" mutual fund portfolio described above, and i probably spend 3-4 hours a month on investment research.  

Originally Posted By SevenMaryThree: I've followed this for the last couple of months, and it friggin' Greek to me.  And I guess I'm missing the whole point of the exercise, which I thought was to create financial wealth.

let's run some calculations -- start investing when you are 20, end when you 50...

Starting amount: $10,000 Years to invest: 30 Additional contributions: $4,000 per year Hypothetical annual rate of return: 8.00% compounded annually Total amount invested: $130,000 Ending investment balance: $590,010

whoa -- what's this?  
we contributed only $130K total but ended up with over a half million dollars!

i don't know about you, but having an "extra" half million dollars when i'm 50 would be a pretty good thing, no matter how much i have saved up elsewhere.  

what if, on the other hand, we saved like mad in our twenties -- contributing $10K each year -- then at 30, stopped investing altogether.  yeah, you had to live like a pauper during that time.  you can now enjoy that extra cash in your 30's while you turn your back on your investment fund.  let's see how it turns out...

Starting amount: $10,000 Years to invest: 9 Additional contributions: $10,000 per year Hypothetical annual rate of return: 8.00% compounded annually Total amount invested: $100,000 Ending investment balance: $154,856

so at 30 you have $155K.   let's figure out where we are at 50...

Starting amount: $154,856 Years to invest: 20 Additional contributions: $0 per year Hypothetical annual rate of return: 8.00% compounded annually Total amount invested: $154,856 Ending investment balance: $721,777

wow -- nearly three quarters of a million dollars and we didn't contribute a nickel after age 30!

plan to work to 60, and let that money sit for 10 more years?  let's rerun the above but with 30 years instead of 20...

Starting amount: $154,856 Years to invest: 30 Additional contributions: $0 per year Hypothetical annual rate of return: 8.00% compounded annually Total amount invested: $154,856 Ending investment balance: $1,558,263

holy crap -- a million and half bucks and again, nothing added after age 30!

Originally Posted By SevenMaryThree: A 10K portfolio is not an engine of wealth creation, it is a hobby.

a 10K portfolio is not a hobby.  it is the starting point for a much bigger investment pool down the road.  as you can see from the calculations above, trivial investments early in your career turn into immense amounts due to compounding.  

Originally Posted By SevenMaryThree: On our smaller economies of scale, there are more effective ways for an individual to increase their "workday" income by $9.65.

perhaps.  but that is a very short-sighted calculation.  let's take $10K and leave it alone for 30 years.  

Starting amount: $10,000 Years to invest: 30 Additional contributions: $0 per month Hypothetical annual rate of return: 8.00% compounded annually Total amount invested: $10,000 Ending investment balance: $100,627

we ended up with 10X the money.  now then, let's pick a year along the way, say the 20th year:

20 / $0 / $3,453 / $46,610

the above is from
americanfundsretirement.retire.americanfunds.com/tools/calculators/investing.htm
with the aformentioned numbers plugged in.

it is a line that shows in year 20, we added $0, and the earnings were $3,453 for the year, leading to a total of $46,610.  

Originally Posted By SevenMaryThree: Sure, I still invest.  It's just not a hobby for me though.  It's all just numbers on paper and is every bit as much a gamble as the Mega Millions IMO.

do not equate long term diversified investing with the lottery.  your "return" on playing the lottery is terrible -- you lose about 60 cents for every $1.00 you invest.  that sucks.   investing is not "gambling", to paraphrase you.  you can believe that if you want, but long term investing is not gambling.

Originally Posted By SevenMaryThree: Not a slam...I'd truly like to be enlightened.  Outside of buying IBM or Microsoft type lottery ticket stuff, why are people so damned confident that a Great-er Depression cannot / will not happen "in their investment lifetime"?

it could happen.  this is why you do not keep all of your eggs in one basket -- you diversify your investments across different securities, across different currencies, and across different countries.  

Originally Posted By SevenMaryThree: For me...If I want more money, I give myself a raise....I go get a new customer.

someday down the road, you may be unwilling, unable, or otherwise not inclined to "go get a new customer".  you may want to relax, travel, fish, visit the kids/grandkids, go to the range and shoot crap with Old_Painless, or whatever.  at that point, like many others, you will get your income to pay for food and shelter from a combination of your savings and government assistance.  i implore you not to depend on the latter.

Originally Posted By SevenMaryThree: I'm all about immediate gratification and real holdings.

you may not be a good candidate for retirement then.

ar-jedi

ar jedi - Thank you for the thought out response.  

Update 20 Apr 2007:

Bought some biotech for a momentum play.  I suspect NSTK is going to run like Dendrion (DNDN) recently has.  If it hits the 20’s, I’m out.  It closed at 13.98 today on heavy volume with no news.

Thu Apr 19 11:22:22 2007 Buy 100 NSTK Executed @ $12.6895


Holdings:
MINI/45 shares 1-2 month trade
HAL/100 shares 6+ month hold
LVLT/450 shares 6+ month hold
SAI/100 shares long term hold
NSTK/100 short term trade

CASH 144.84

Total $10,648.34 after all fees


Jim

IOTN - Cramer just mentioned this as a speculative play.  

What could be better than buying into laser-induced plasma channel (LIPC) weaponry .  

This is so evil I have to own some.  

Almost as evil as Halliburton, but without the hurricane generating technology. I could just buy some not connected to the 10K portfolio, but I want to include it.

I'm contemplating unloading SAI and buying 100 shares of IOTN and also increase my position in LVLT, which took a beating after the earnings release.  

I'm probably increasing my LVLT  holdings to 1000 shares and the most recent ass kicking will allow me to get those shares cheap.

Jim

data for the 4 fund portfolio, YTD period ending 02 may 2007:






summary: the 4 fund portfolio is up 7.31% YTD inclusive of all trading costs.

ps:
the FFNOX reference portfolio is at $ 10,545.92, or about 5.46% YTD.

ar-jedi

Update 2 May 2007:

Sold MINI @ 31.11 for a 13.1% gain after all fees.  It announces earnings tomorrow and although I expect they will be good, it will still probably tank.

It looks like SAI is positioned to start moving up after it was awarded a U.S. Defense Logistics Agency contract worth up to $6.2 billion. yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070502:MTFH52277_2007-05-02_22-01-32_N02226111&type=comktNews&rpc=44

The portfolio took a hammering after the LVLT earnings call, which was in line with guidance.

I’m planning to purchase 250 more shares of LVLT tomorrow if it doesn’t run up.

NSTK earnings call is 7 May.  If it runs up before earnings I’ll sell, otherwise I’m hanging on to it for a few months.  It's still just a speculative trade.


Holdings:

HAL/100 shares 6+ month hold
LVLT/450 shares 6+ month hold
SAI/100 shares long term hold
NSTK/100 short term trade

CASH $1,534.81

Total $10,394.81 after all fees


Jim

Update, 4 May 2007:

Bought 250 shares of LVLT @ $5.6391.  This gives me a dollar cost average of $5.8448.  

Holdings:

HAL/100 shares 6+ month hold
LVLT/700 shares 6+ month hold
SAI/100 shares long term hold
NSTK/100 short term trade

CASH $115.03

Total 10,570.03 after all fees


Jim

This is a quick note, as the market is still open.  (I took this week off from work)

I sold 100 NSTK @ 12.10

I bought 150 shares NFI @ $6.99.  I had to use a market order to get it filled as it was moving fast once the news was posted that Fremont General (FMT) (53% of float short) unloaded its commercial lending arm.

About NFI: I almost bought this back in Oct-Nov 06, but couldn't pull the trigger after a lot of homework on it.  

However, about 63% of the float is short and it appears NFIs liquidity problem is solved, so there is a lot of gas under this one and someone just lit a match.  

NFI is speculative, but all the shorts are racing to find shares to cover their short positions and I picked up some shares for entertainment purposes.  This could easily hit in the teens by Friday.

This is a quick trade and I don't expect to hold it long.

Jim

Update, 23 May 2007:

SOLD 100 shares of NSTK @ $12.10
BOUGHT 150 shares of NFI @ $6.999 for a short term trade

NFI book value is around $14 – This makes it a strong buy out candidate IF the worst is over for the sub prime mortgage industry.  

That may or may not be true at this point.  

However, the sale of Fremont’s (FMT) mortgage segment and the return of liquidity to the sub prime mortgage sector lifted the sector on an otherwise down day.  

HAL/100 shares - long
LVLT/700 shares - long
SAI/100 shares - long
NFI/150 short term trade

CASH $255.09

Total $11,051.59 after all fees


Jim

data for the 4 fund portfolio, YTD period ending 31 may 2007:






summary: the 4 fund portfolio is at  $11,099.12, or 10.77% YTD inclusive of all trading costs.

ps:
the FFNOX reference portfolio is at $10,828.01, or 8.28% YTD.

ar-jedi

Update, 6 June 2007:

SOLD 100 shares of SAI @ 19.60 into earnings.  It will probably drop tomorrow, and I’ll try to pick it up cheaper if it drops to $15-17.  I still like it, but I want to take advantage of the addition of CCIX to the Russell 2000 Index

BOUGHT 35 shares of CCIX @ $29.50

NFI is running up as I assessed it would.  I’m holding this into Friday, maybe a little longer.  It looks like a takeover target.  

Wachovia Securities and Deutsche Bank Securities just underwrote the securitization of 1.34 Billion of non-conforming mortgages held by NFI.  

This probably caused a reduction in short interest and stimulated unusual options activity.  It points to a buyout in the $12-15 range within the next two weeks.  

I have a limit order in to sell NFI at $15.50 should something break while I’m unable to monitor events while at work.

HAL/100 shares - long
LVLT/700 shares - long
NFI/150 short term trade – up 30% on this in a week.
CCIX/35 shares – may buy more

CASH $1,163.07

Total $11,090.02 after all fees


Jim

Update:

HAL - long
LVLT - I'm not happy with where this is, I may eject if it ever gets above $7.
CCIX - Still planning to add more, want 100 shares
NFI - I'm watching this very close.  The catalyst is sale of the company.  If that doesn't happen by next Friday, I will probably eject and add to CCIX.  

SAI - It took a dump and I sold at an almost perfect price point.  I still want to own it.  Now I can buy it cheaper.

AHR - looking to add this again.

Also interested in DUK and NYX.

A bigger correction is still coming, so I need to have some cash on the side.  Overall, I weathered this small one OK, due to NFI running up.

I finished out the week at $11,034.07

Jim

Update, 15 June 2007:

SOLD 150 shares of NFI @ 9.45 on 15 June for a 32% gain in two weeks.  
Options expiration was today. The catalyst has passed for this one.  If it retraces to $7, I would consider buying it again.

BOUGHT 35 shares of CCIX @ $29.80 on 14 June
BOUGHT 30 shares of CCIX @ 30.20 on 15 June
Bought 100 shares of LVLT @ $5.45 on 15 June

HAL – long

LVLT – trade - I’ll probably add more shares in another portfolio I have, as I don’t want to sell anything in the 10K portfolio to make it 1000 even shares.  The cheaper it goes, the more I’m buying.  It’s definitely a drag on the 10K portfolio at the moment.

CCIX – long.  It is being added to the Russell 2000 and is also a takeover play.


Total $11,042.98 after all fees.

Update, 22 June 2007:

Fri Jun 22 03:10:00 2007 Dividend paid

Paid on: 06/21/2007

HALLIBURTON CO (HAL)

Amount: $9.00

Total $11,240.98 after all fees.

HAL – long

LVLT – trade – This is finally moving and did well today on a really bad trading day.

CCIX – long.

Jim

I just bought 100 shares of ACM and 10 shares of NYX.  

I plan on buying 90 more shares of NYX if/as it moves down.  If NYX goes below $55, I may also sell HAL and add that to my NYX position as well.

Neither of these are in the 10K portfolio, but they're on sale, so I'm buying them for the long term, 2+ years.

Jim

This is not part of the 10K portfolio and I'm not recommending anyone buy it, due to risk:

I just bought 200 shares of NFI for a quick trade/speculation. A buyout is still possible. I tried catching it at $7.15, but it recovered fast after the bad news on AHM came out and NFI fell with it.

Jim

data for the 4 fund portfolio, YTD period ending 29 june 2007:






summary: the 4 fund portfolio is at  $10,949.58, or 9.28% YTD inclusive of all trading costs.

ps:
the FFNOX reference portfolio is at $ 10,698.86, or 6.99% YTD.

ar-jedi

ps:
in my initial post in this thread i mentioned that at mid-year i may decide to adjust the portfolio holdings.  i see no reason to do so, hence the portfolio stays as shown above.

miscellaneous midyear charts/data:

in the last week, distributions were declared by FBALX and IJJ.  they are recorded below.




updated holdings data for the 4 fund portfolio, YTD period ending 07 july 2007:




summary: the 4 fund portfolio is at  $11,157.25, or 11.35% YTD inclusive of all trading costs.

ps:
the FFNOX reference portfolio is at $  10,861.99, or 8.62% YTD.

ar-jedi

ETA:
ps to omar...
when you get a sec -- in your first post in this thread, could you update the link to Corporal_Chaos's original "Seeking Investment Guidance" thread to the following:
archive.ar15.com/forums/topic.html?b=1&f=133&t=514490
thanks.