My Trading History
| My first stock
purchase was on January 11, 1990. I coughed up $590 to buy 100 shares of an unknown
computer company named Dell Computer Corporation at 5 1/2 (unadjusted for stock splits).
I sold the stock a few months later at 9 1/8, pocketing a net profit of
$278.33. I was so amazed at how easy it was to make money that I immediately pumped
more of my hard-earned funds into the stock market and began trading more
frequently. Things were going well and I began to feel invincible. Then, Iraq
invaded Kuwait, the US fell into a recession, stock prices plummeted, and I took a
beating. I ended the year with a loss of $13,448.
I spent the next two years spinning my wheels. I tried just about every investment strategy known to man, but got nowhere. In 1991, I placed 66 trades (1 trade = 1 buy and 1 sell) and had a net profit of $13,240. In 1992, I placed 239 trades and lost $2,014. In December 1992, my account value had fallen below $7,000. I was on the verge of losing it all, but I was determined to make back the losses.
In early 1993, I started to experiment with stock price charts. At the time, charting programs were cumbersome and expensive, so I drew them by hand. Flipping through my old copies of Investor's Business Daily, it took me four hours to create one 2-year stock chart. After studying the charts, my success rate improved and my account value rose.
In September 1993, I got fed up with drawing charts, so I decided to get a charting program. Looking back, I can honestly say that it was the best investment I have ever made. Now, I could flip through hundreds of charts in a matter of minutes. Profits started rolling in. I ended the year with a net gain of $93,760 (after commissions, but before taxes) on 282 trades.
Higher interest rates put a damper on stock prices in 1994. The S&P 500 lost 1.54% that year, but I managed to gain $29,727 on 158 trades.
Beginning in 1995, stock prices took off and so did my account value. In 1995, I placed 433 trades and netted $277,513. My holding period fell to an average of 19 days from 45 days in 1991. 1995 was great, but 1996 was simply incredible. My trading activity and account value went through the roof. I placed 1,048 trades and netted $1,673,374!
1997 was a difficult year. Stocks fell in April when I thought they would rise, and they rose in May when I thought they would fall. My account value was cut in half and my dream of retiring early faded away. I thought about calling it quits at that point, but later decided to take my chances. It was a good thing I did.
Noticing weakness among the oil drilling and service stocks in November 1997, I shorted them with everything I had. The gamble paid off big time. I ended the year with a net gain of $858,529 on 1,345 trades.
So, how much did I have at the end of 1997? After paying off Uncle Sam each year, I ended up with $1.5 million. In December 1997, I took out $1.3 million from my stock account and placed it in a US Treasury Bond yielding 6.18%. My dream of retiring early was fulfilled.
Now, I spend my time playing with the money I left in my stock account. My new goal is to see if I can turn that portion into $1 million after taxes by 2005.
© 1998 VTO Capital Management. All rights reserved.