Wednesday, March 14, 2012

Why Dumb People Shouldn't Play the Stock Market

In 6th and 7th grades, we did stock market units in math class. I think it was supposed to teach us about probability and real life and other things I didn't really care about. In 6th grade, I followed a stock called GEO and it bottomed out. I could have chosen things like McDonalds or Disney or my friend's father's company, which was going to split during our unit (I don't think it's considered insider trading if you're using Monopoly money). No, I had to be different. I found something for like $3 a share and watched it get down to a $1.12. I lost my proverbial imaginary shirt on that one.

(In 7th grade, learning the lessons of the year prior, I stuck to Merck. It was more expensive and didn't do so hot then, either. We also had to do a fake tax return and write a story of our future life to go along with it. In mine, I had three kids, married a pilot, and lived at the beach. I was in accelerated math, and we got to write stories. What did you do in YOUR math class?)

Last year, I opened an INGdirect savings account. It suggested I open a ShareBuilder account, too. Apparently, I'd get like free magic beans or something for doing so. I opened the account and bought one vanity share of a company I like.

A week later, feeling cocky and smart and awesome, I decided that this was going to be how I made my millions. I looked for my money maker. I found a stock selling for $.08 a share, a medical supply company. I bought 100 shares, bringing my total to $8. (Actually, because of some fees and small print and my own impulsivity, I think it cost me like $23 to buy those 100 shares. But let's not dwell on that.)

The reason I chose this stock, besides it being $.08 a share and once trading at $567 a share in 2006, was the English major in me. There were lots of repeating vowels in the name of the company, and it's stock symbol is a palindrome. Word fun!  Ooh...and then my phone contract was up, so I got an Android phone and could put the Google Finance app on my main screen. I felt so smart on so many levels.

And then, 6th grade happened all over again.

Apparently, the $.08 a share I bought at was the 52 week high. It then started to hover around 6.5 cents a share. It once dipped to about 4 cents. But that's what you want in a Cinderella story, right?

In the fall, I happened to check it one day and saw it was at $.64 a share. I was so excited! I was calculating how much I made and dreaming of how much better it was going to get. If we would have had a dog track up here, I would have gone. I was feeling lucky!

Was this my stock or my IQ that went down so dramatically?


Before I put the down payment on the yacht, I read the fine print. My stock had done a reverse split. I had to Google what that meant. So, my 100 shares of palindrome fun had been reduced to 6.67 shares. They upped the value of each share, but cut the number of shares by that amount. Or something like that. (Remember, we wrote stories in my math class, so really, I don't understand how the math works.) I learned later that they did this to stay on the stock exchange. (Apparently, you have to be over a dollar or something to be listed on the stock exchange...and if you're under, you have a year or so to get your shit together.) And the even worse news was that the reverse split put it at $1.50 a share, and was already down to $.64 when I checked it.

Then, for a few months, I watched it bounce up and down. Last month, it went up 30% in one day. Unfortunately, that brought it to $.45 a share.

(In the meantime, I bought 3 more shares of my real stock. Someday, I'm going to retire on those four shares.)

Yesterday, I looked at my $8 investment and saw acronyms I had to Google. (I'd like to take this opportunity to tell you that if you have to Google terms in the Stock Market, then you shouldn't be playing. Okay, actually, my friend from high school who handles stuff like this for a living would like you to know that.)

As far as I can understand, my stock is so bad and has had so many warning from the SEC (again, more Googling...) that yesterday, the company made the announcement that in the next two weeks, it was leaving the market and going OTC (over the counter...hey, I knew that one...but had to google what Tylenol and Ny-Quil had to do with the Stock Market). I'm still not quite sure what it means, but I know it's probably not good. I had to call my yacht guy and tell him that the brass fixtures were a no-go.

My friend from high school, who certainly is re-thinking his friendship with me at this point, told me I should sell what's left.

Yeah, I don't know how to do that.

However, I will say that my $8 ($31 with fees) has given me entertainment for the last year and lasted way longer than what it would have in the slot machines at the nearest casino. (Though, the last two times I played slots, I won a total of $400. Maybe I should just stick with the one-arm bandits.)

I'm currently in the market for another English-based stock. Maybe a nice preposition or onomatopoeia this time. Palindromes are nothing but trouble.

2 comments:

  1. Dog track, really? :-( Go to the casino! More humane! Just sayin’…

    'I heart Whippets & Greyhounds' – Christin

    P.S. Other than that comment I heart your blog too! :-)

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