Daily Stock Market Equity and Options Trading Commentary

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Wednesday, March 4, 2009

My 50th Post! And My Story...

To make a long story short about today's trading I was enjoying the much needed rally so I did not trade too much. While we were up near the highs I purchased some SDS that I will most likely trade within the next few trading days. I think we should (if we did not already) hit a short term bottom soon. I am not convinced however because most of the financials did not have a strong day compared with the rest of the market. I believe in order to get this market to go higher some positive news about the banks must come out and rally the financial stocks! If we were to hear some good news about them anytime soon, I don't think anything could stop the S&P from getting back to 800.

Anyhow because this is my 50th post (I know still a rookie compared to many bloggers) I have decided to tell my story. I have received a lot of emails asking me how I can be so into the financial markets and how I know some of the info that I know (mainly about trading options) at the age of 22. So here is my story... I hope you enjoy.

My birthday is 8 days before Christmas so for my 11th birthday I was given some money and I put it into the bank (unlike most kids that age), and then for Christmas I was given some more money and also put it into the bank. Well the city I am from is Corning, NY- famous for glass etc hence the ticker GLW (Glass Works). Well it was December 1997 and the stock had just came down from its 52 week high about 40%, when my father (who passed away in October 2004 due to pancreatic cancer God bless him) suggested I "invest" my money. I only had about $500 saved up, but $500 to an 11 year old seems like a lot of money! He told me that I could turn that into a lot of money if I was patient and did my research. Of course the company has buildings everywhere in Corning so it wouldn't be too hard to do my research. So I took his advice (the best advice I have ever taken), and had enough to purchase about 15 shares (it was trading around $34 a share- the charts won't show that but it split 3 for 1). He told me that he would throw in some extra money so I could have an even 20 shares, so I said DEAL and we opened up an E-Trade account and I bought the 20 shares.

After I had purchased the shares I began to watch CNBC and Bloomberg religiously and holding conversations about the stock with many of my relatives who worked for the company. I learned so much about the stock market from talking about and researching that one stock.

Then Something happened... The country was undergoing a HUGE change... The TECH BOOM! I watched my money grow and grow everyday. I remember coming home from basketball camp one Friday in early August being shocked, I had made $500! A pretty nice pay check for a kid going into the 8th grade! Anyway my father knew trees don't grow to the sky and told me I should sell some... I felt like GLW was going to $1 million a share so I didn't want to part with it, but then he gave me another "investment" opportunity! He owned a pretty nice bar on Market Street in Corning which did extremely well during the BOOM years. He told me that I should buy a coin-operated pool table and put it in there. Well he convinced me- I sold 10 shares of GLW stock for $270 a share (I insisted on keeping the last 10 shares which I wish I would have sold as well). I had more than enough money to buy a very nice coin-op pool table. The going rate for a game of pool was $1 and there was about 500 games played a week! He let me keep all the profits as long as I put 20% in the bank to pay taxes when the time came. So I would empty the pool table every weekend and being so in love with the stock market, I would put roughly 80% into my E-Trade portfolio and the other 20% into my savings to pay taxes with.

Things went well for another 6 months, I was making about $500 a week pre-tax and playing the stock market with a portfolio worth nearly $10,000, when suddenly things took a turn for the worst. Within 2 years that same $10,000 was worth about $500! Corning was hit hard laying people off in Corning left and right, and the bar business was getting worse as well. I think I was making around $250 a week- which is still very good for a 15 year old. I was still contributing the 80% to the stock market weekly buying up more shares than I ever imagined. Well during those 2 years I must have accumulated about 5000 shares of GLW alone at an average cost of $2.15 a share, I also purchased many other stocks, including many dogs that never rebounded, such as Lucent (LU) now Alcatel-Lucent cough cough, but overall it paid off in a big way. I sold most of my GLW stock at $17-$22 a share but I would trade it back and fourth. I was also buying and selling many other securities as well. I was taught the easiest method for trading stock options at the age of 16 [which I have replicated for my readers in my simplified stock options E-Books], which turned out to be one of my best financial moves ever! Therefore, in addition to trading stocks, I was also trading stock options, which I mainly use today as a source of investing/income/speculation purposes etc... Without using stock options, I have estimated the profits I have made from the market in the last 5 years would be less than 20%, no exaggeration!

I know how bad things are right now, but WE WILL RECOVER! It seemed like it was the end of the world to me then, and I'm sure some people are thinking that now. If you don't need the money today keep a portfolio going, adding as much as possible to it! Stay diversified, keep on top of your research, and just ride out the storm! Nobody will call the bottom, just contribute the same amount to a particular security each week, or set up a similar system. I am a trader, but I have been accumulating some positions on the side to hold for the long run.

When I took advantage of the beaten market during the BUST it turned out to be the best move I've ever made. I'm not trying to brag but today I am 100% debt free, without any school loans, my car is paid in full, I don't carry any credit card debt, I don't have to worry about where next month's bills will come from, etc... And I plan on going to graduate school in the fall of 2010 and paying in full, regardless of how low of a rate I could receive.

Every great economy experiences economic stresses. When the country emerges from this recession it will be better and stronger than ever before.
The great opportunity awaits...

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Anonymous said...


Anonymous said...

Thanks for sharing. It's good to hear success stories. Blogging is a way of sharing the wealth.

Anonymous said...

Wow. Wish I could have told my boys that. I'm 43 years old and for the first time in my life got into the stock market two months ago. That's pathetic. However, now I love this game. As long as I play with money that I can afford to lose - I'm all in. Thank you for your story and thank you for explaining things to a layman as well as you do. I'm a fan.

SBL said...

Hi Marco, I found your blog on Friday and have been readying some of your older posts via RSS. I'll be buying your ebooks in a few minutes. Your story was inspirational and I have a 9 yr old son who I hope to help him learn about money much ealier that I did (I'm 42 and $50k in debt plus $70k mortgage left - but I'm learning about the market and have made $3k so far in small trades). So far my son has saved up $200+ from chores, but he seems a bit slow and disinterested in money right now. Do you have any tips on how to get him more interested in accumulating money? Maybe it's just a matter of him getting older before he gets more interested. I just want him to learn more and sooner than I did, but I don't want to push him so much that I scare him, etc. I'll keep reading yoru blog.

Option Maestro said...

SBL, sorry for the delay in the response. I was so glad to read your comment I published it from my phone, and forgot about it. First of all, thanks for the great comments! Is he into video games at all? Perhaps those tycoon games would get him interested in business etc... I've never been interested in video games, but when I was about 8 or 9 my sister and I competed against each other on a game called "lemonade stand" for computer. It may sound lame, but looking back, it certainly taught me some business basics. I think that may have motivated me to earn money, but I'll never know for sure. I don't think it could hurt to try.

He's kind of young to have him watch stock market shows and read books, but if he seems interested give it a shot. Also you may want to open him up a virtual account with a real brokerage. I have two affiliates which offer this to clients before trading for real. They are optionshouse and ptionsXpress. Let me know if you have any other questions, and I'll try to answer... Quicker than last time as well!

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