The first company I ever bought individual shares of was Swisher Hygiene (SWSH). It was shortly after watching the movie “Wolf of Wall Street”. After reading “Total Money Makeover” by Dave Ramsey or actually seeing how penny stocks played out in the movie Wolf of Wall Street you would think I would know better. I didn’t. I was the dope on the losing side.
I put $1,100 into this $0.44 stock that I knew nothing about back in May 2014. I am pretty sure my research was limited to googling “top penny stocks.” I enjoyed watching the stock daily. I envisioned quickly doubling my money! Who doesn’t want that? Then later that June the stock price was $4 and change. I thought I hit the jackpot! Then I looked into it because I thought it was too good to be true. It was. Apparently the company did a 1 for 10 reverse split which I knew nothing about. My excitement quickly faded as I read more about what this meant. Then I had to question myself for owning part of a company that no one knows about (myself included).
I later sold this stock for a small loss and did a similar thing with Groupon (GRPN) and Pandora (P). I at least knew people who used these products. I also used Pandora (still do) all the time. That was my rationale for those purchases. I still made the mistake of reading articles and buying into the hype for these stocks. This guy or girl has to know something that I don’t. They have articles published on a financial website for crying out loud! It’s on page 1 of google too when I googled the stock! I thought I was real savvy…I thought a quick google search was really doing research on a stock.
Needless to say, you can probably guess what happened. I enjoyed the initial “high” of owning a new stock and the possibilities of quickly increasing my portfolio ran wild through my mind. I eventually cashed out because my money wasn’t increasing. I was slowly bleeding money. I think this is when a lot of people get turned off from the market and never come back. Lucky for me, I am either really stupid or stubborn. Probably a little bit of both.
On October 2014 I was ready to test the waters again. I had two companies that I was looking at purchasing stocks in. Splitting my money in both never really even occurred to me back then. Even though everything I read said “diversify, diversify, diversify!” Like I said before, not the sharpest crayon in the box. The choice for me was between Buffalo Wild Wings (BWLD) and Starbucks (SBUX). I eventually decided on SBUX purchasing 100 shares at $74.50.
My logic went something like this: SBUX is cheaper so I can buy more shares. It also pays a dividend (quarterly) and BWLD does not. (I hardly knew what a dividend was or for that matter a quarter was back then.) Also, I see Starbucks everywhere and always packed!
I like to claim SBUX as my first purchase, but it just simply isn’t true. I got lucky with SBUX. Starbucks is what got me started into reading and learning about dividends. It is for that reason I am okay with the early (painful) lessons I learned from the SWSH, GRPN, and P of the world.
I am still trying to learn more about technical and fundamental analysis because it interests me. However, now that I know my own investing strategy of buying quality companies that pay dividends, I will not lose sleep over missing buying at the bottom for stocks. I am holding for life and averaging down when I can!