How I Almost Doubled Stock Market Investments in 1 year

At the end of 2011 I sold CoolVibe.com to help cover expenses and also to free up more time for Linux consulting work. With the modest funds left over and since other than a single credit card we had and still have no dept/loans, I decided with my wife that I wanted us to invest in stocks/companies rather than the common alternative of placing funds in a high yield savings account. It was really not enough money for just “saving” and I looked at it as an opportunity. I wanted to turn a small amount into something more substantial over a 4 – 5 year period. Well in just over one year we’ve almost doubled our money! Here’s how…

I opened a trading account with ShareBuilder (approx $10 per trade). Then I spent over 3 months watching the markets, planning and discussing investment opportunities with my wife before investing a dime. My plan was to invest around 50% in low risk/low yield stocks and the rest in a mix of medium to high yield/risk stocks that I knew well. With more risk involved it was important that I chose wisely so I did a lot of homework to come up with “my picks” as it were. In the end, I made it a MUST that I give myself at least 3 solid reasons for each high-risk stock, as to why I was confident about going against the general market’s advice on these troubled companies.

List of the stocks I purchased over a year ago…

First 50% of funds were split between these 3 Low Risk Stocks:

As you can tell based on the the current share prices of these stocks they did really well as a group. These are solid companies that all offer dividends, two of which (MCD & BMY) offer high-yield dividends above 4%.

The next 50% of our funds I split between these 4 medium to high risk stocks:

As you can see Sprint & AOL more than doubled in value! The general sentiment for S, BAC and AOL was to SELL or HOLD and certainly not buy. I have many many reasons why I chose those 4. Plus, I’m extremely familiar with Sprint, AOL and Cisco. As for Bank of America, I invested there for slightly different reasons than the other 3. With my work and experience in wireless & telecommunications it made me least worried about my reasoning behind investing in Sprint and more confident that stock would pay off.

Here’s a good read: http://www.fool.com/investing/general/2013/01/03/2012-the-year-few-got-right.aspx

One major factor that made me jump into the stock market was all the negativity about Obama and his recovery plan. I believed things are changing for the better and so I put money on it. Because of the mass media’s focus on negativity it left so many investment opportunities open longer than usual.

Of note, the Dow Jones industrial average and Standard & Poor’s 500-stock index closed out just last week at a five-year high! So although we should always approach the US & world stock markets with much caution, read the numbers, figures and facts because there’s a lot of false negativity out there!

Also read: http://www.treasury.gov/resource-center/data-chart-center/Documents/20120502_EconomicGrowth.pdf

Here’s a quick example of the negative tone from US news & media vs the UK media:

http://www.weeklystandard.com/blogs/average-gdp-growth-less-half-what-obama-predicted_657832.html

verses this UK based article:

http://www.guardian.co.uk/world/2012/oct/26/boost-obama-us-economic-growth

…both published on the same day about the same report!

Happy 2013 investing!