|
PureBytes Links
Trading Reference Links
|
Front page story in Sunday's SF Examiner. Stock neophyte
jumps in to buy the dip...
JW
-----------------------
http://www.sfgate.com/cgi-bin/article.cgi?file=/examiner/hot
news/stories/09/firstperson.dtl
First-time stock trader: e-agony and the ecstasy
By Marianne Costantinou
OF THE EXAMINER STAFF Sunday, April 9, 2000
------------------------------------------------------------
--------------------
I'm one of Them now.
You know whom I mean. If you live in the Bay Area, there's
no escaping them, those smug twerps who have cashed in on
the crazy stock market, made a killing, and are running
around town driving up housing prices so much that no normal
person can even afford to rent a monthly garage space, much
less buy a house.
I didn't want to be a twerp but I wanted the luxury of smug.
Everyone, I felt, was getting rich except me and my family.
I wanted a piece of that high-tech, dot-com easy money.
This week, Nasdaq plunged and I decided to take the dive,
too. I became an online stock trader.
And if I can be a little smug, I didn't do so badly for
somebody who didn't have a clue what she was doing.
My timing, for once, was perfect. After a three-day
scavenger hunt looking for tech stocks at bottomed-out
prices, I made a 13.45 percent profit by the close of the
market Friday, even after the $29.95 commission I paid for
each of my 20 transactions.
And I would have made even more if I hadn't run out of money
before discovering a few other nuggets just screaming to be
bought. Alas, others heard the cries, snatching them from my
outstretched greedy fingers literally pennies from my
low-ball bids. As luck would have it, five of my wannabe
tech stocks — Infospace, Vignette, Brocade, Exodus,
Redback — far surpassed the achievements of my modest but
stalwart keepsakes, popping up from $50 to $100 before my
sorrowful eyes.
Which all leads me to three lessons I learned from my
self-taught crash course:
(a) You gotta have money to make money.
(b) The three screaming meemies — Woulda, Coulda, Shoulda —
will drive you crazy.
(c) You gotta get some sleep.
I don't know why they call the crazies I joined "day
traders." I haven't pulled so many all-nighters since
college. Who can sleep? If you're a newbie like me without
some stockbroker or guru to help you, you have to spend some
time researching and deciding which stocks to pick and what
prices to pay.
So many choices, so little money.
I was surprised at how ill-prepared I was to jump in. I had
been eyeing the stock market for months, hoarding newspaper
and magazine articles talking about trends and hot stocks,
seething at all these 1,000 percent run-ups on stock prices.
I was obsessed with what happened to eBay, the online
auction site that I, as a compulsive shopaholic collector of
all things ridiculous, knew only too well. That could have
been me tripling my family's nest egg, I'd whine bitterly as
eBay stock soared from $80-something, when I first started
paying attention to it.
Boy, if we only had some money, I'd complain to my husband,
Marty. Trouble was, creditors and expenses already had dibs
on our salaries. The family nest egg was the Mickey Mouse
bank on our bureau that we used for spare change. It's
gotten so hard to just keep the checkbook balanced that our
12-year-old son Mark got his own savings account and won't
tell us his password because we kept hitting him up.
I've obsessed about buying a house. We moved here three
years ago from Philadelphia, where folks have a hard time
giving away mansions for $125K. We were galled by the
housing prices here, especially for tiny termite-infested
bungalows. If only we had bought then. Those $300K houses in
Berkeley and Oakland that we might have been able to afford
with low mortgage interest are like $400K-$600K now.
My parents, Greek immigrants who still walk a mile to the
supermarket that honors double coupons, could stand my
self-pity no more. I had nagged my dad for a year to get rid
of his respectable but snail-paced Citigroup stock that he
had owned for eons and to pop aboard the Nasdaq roller
coaster. Instead, he did what I should feel utterly ashamed
to admit: He sent us some money — nearly the only savings my
folks had left after decades working as a waiter and as a
seamstress — so we could put a down payment on a house.
Being a modern-day daughter, I snatched it. I even made him
FedEx it to me.
I got the check last Saturday. Alas, what was a fortune to
my parents and to us and to anyone living anywhere else in
the country was barely enough for a 3 percent down payment
for a house here.
So, my husband and I decided that if we're going to compete
with housing prices driven up by dot-com funny money, we
better go after it, too.
As luck would have it, the stock market was already
spiraling down, down, down last Tuesday morning when I saw
that my dad's certified check had cleared my bank. My
husband, having learned early on that I was a control freak
dictator, just let me handle it.
He went to work.
I turned on the computer at home.
It was about 8:30 a.m. Pacific time, early for me, but 11:30
a.m. in New York, where the major stock exchanges are. I had
forgotten about that in my big scheming. But not to panic. I
was psyched. I was going to make a killing.
I had decided long ago that I would do all the trading
online, to take advantage of those cheap commissions. I had
chosen ETrade as the gateway to our fortune. I loved those
goofball colors of lime green and violet blue in ETrade's
logo, its sassy billboard signs, and the fact that some
honcho in the company looked like he had a Greek surname.
Anyway, I'm there. I'm at the computer. I go to the ETrade
home page. I click on the link to start a new account. And,
ugh, first thing I learn is that I am limited to a $2,000
initial deposit. That wasn't the minimum. It was the limit.
Ugh No. 2: After filling out the application and getting my
"Congratulations" note, I was told that some snafu
transferring money from my bank prevented me from trading
that day. I'd be getting an application in the mail that I
could send back in the mail with my signature and check.
The MAIL, I screamed at their customer service reps. You're
kidding, right? The stock market is going blooey, you're an
online brokerage, and you're telling me I've got to wait for
the mail?
Greek expletive. Greek expletive. Greek expletive.
Meanwhile, stock prices are plummeting. My dad is calling me
frantically.
"Marianna, Marianna, Cisco is at 64!!!" he said, breathless.
I had CNN on in the background. I knew. I knew.
I drove to San Francisco in a rage. It was noon. The stock
market was closing in an hour and I was feeling desperate.
After a few more attempts with ETrade "customer service" —
"Please let me wire you the money, let me drive it down to
your Menlo Park office" — I called Charles Schwab.
I had nixed the idea of doing business with Schwab long ago.
First, they charged more in commission for Nasdaq stocks,
$29.95 vs. $19.95. And the offices there seemed too
polished. It was a wingtip place, and I'm strictly
Birkenstock.
But this was no time to be choosy. I called Schwab. A rep
took my application over the phone. Five minutes later, I
was walking over to its headquarters on Montgomery Street. I
signed the application and handed over a personal check. And
that was that. I was ready to make some money.
Of course, the market had closed.
Having missed out on the Cisco bargain, I decided to do some
research and go after the more aggressive, riskier stocks in
tech and telecommunications, the industries that had gone
gangbusters last year. My husband and I really wanted to
make a lot of money and we wanted to make it fast. Our hope
was to double our cash so we could buy a house within a
year.
We also decided that, given that we were clueless, we'd
rather have a lot of different stocks in small quantities,
say 10 to 100 shares of each, rather than let all our
fantasies ride on one or two stocks. Besides, I later
realized, I felt like I was a part of the new economy by
owning a cornucopia of these Internet and tech stocks. It
wasn't Them anymore. It was Us.
OK. What to buy? Ebay was too expensive. I pulled out my
news clips to get some names of stocks to research. I also
had a list of hot stocks from my husband's friend, George,
who is an avid market watcher. And I even found out about
one stock, Veritas, by checking out Mayor Willie Brown's
published portfolio.
I narrowed my choices by cross-referencing. Which stocks
kept getting mentioned in those stories about stockbrokers'
favorites? Which stocks were considered leaders in their
niche?
After narrowing my choices to about 50 companies, I checked
out Schwab's amazing charts and analysts' reports. I then
made my own list, noting several key points for each stock:
the 52-week high and low, its median price range in recent
months, and the daily price range over the last few days.
I wanted to control the price I paid, rather than exposing
myself to whatever price happened to be floating on the
stock market floor when my order to buy went through. I was
placing "limit" bids, meaning that was my top price.
Deciding on that magic price was the hard part. Depending on
how much I lusted after the stock, I tried to get it for
several notches below the median price I had noted on my
list and within the price range of recent days' trading.
I then crossed my fingers.
Sometimes, I was too stingy, and saw the stock race away
from me. But most of the time, my strategy worked. By the
end of the week, I'd made a nifty profit.
If I can do it, you can, too.
Don't be intimidated. Yeah, it's all the money you have in
the world and you don't know a thing. But, you know enough
to steal, don't you?
Read the paper, find out what stock names keep getting
mentioned by all those analyst gurus. If people are talking
about 'em, they must either be buying them or dumping them.
Find out which. And even though they tell you that past
performance is no guarantee, you got any better ideas?
Oh no, I'm giving advice. I see I'm gonna be one of those
twerps.
-------
©2000 San Francisco Examiner
|