In 2007, I began to invest in the stock market. I was an older woman with not much income. But I had had a small nest egg. I did not need this money for basics. And I began to think about investing in stocks so as to have a brighter future. This was 2007. The stock market was hot and booming. It was going higher and higher. Persons were making a killing and there seemed to be no end in sight.
In the 1960’s, I had worked for a stock broker in a brokerage house and I felt that I had a good understanding of the market. I also kept up with the news of the day and I began to watch the financial stations such as CNBC.
I did not yet have a computer but planned to get one soon. So first, I needed to find a stock broker who had a brick and mortar office. I met with a financial counselor at my credit union who tried to steer me into a high priced mutual find that I was not interested in. I went to Charles Schwab and Scottrade. And I went to Edward Jones.
After visiting and meeting with all these persons, I decided to go with Scotttrade. Why? First, they were the friendliest and spent the most time talking with me. Remember, this is when the stock market was very hot and getting hotter and going higher with each and every day. And I was and still am a small timer. I did not have a lot of money to invest. Some companies were not interested in someone like me.
Charles Schwab was very busy when I went in and I felt that they were a little short with me. However they gave me a good book written by Charles Schwab, himself, on investing in the stock market. This was mine to keep and I would find it very helpful.
After meeting with me, the investment counselor at my credit union had felt that Scottrade might be the best place for me. He recommended Scottrade which was one of the brokerage houses that I had already been considering. And that sort of cinched the deal for me.
Scottrade is a very community based company. They have small offices conveniently located throughout the United States. They make it very easy to just walk in. And they make it very easy to open an account. They are warm and accomodating to the small and first time investor, which I was.
I established an online account with Scottrade. My trades are just $7 a trade. That means that if you buy or sell 3 shares of a stock or 300 shares of a stock, your total trade is still just $7.00. Scottrade is able to offer this low fee per trades because they do not have a research department. You can get research through third parties when you have an online account with Scottrade but Scottrade itself does not do its own research, And they offer no advice. They will not advise you or the buying or selling of any stocks, bonds or mutual funds. It is all up to you.
This is different with other online brokers such as Charles Schwab, Ameritrade or Etrade. They do have research departments of their own and they do offer advice. But they charge more per trade — several dollars more per trade. And these commissions can add up.
Well, I have invested a small amount of savings in the stock market. I have made a little money but I have lost more. In fact, I have not really made any money because I have not sold any of my stocks. But I have lost money because in two situations, it was taken out of my hands. One stock went bankrupt and one mutual fund closed down.
Most of the money that I originally invested was when the stockmarket was hot and booming. No sooner did I begin investing then everything began to go down. But that happens. One day it is down, the next day up. But the stock market continued a downward spiral until it plunged. I was in no position to sell. It was better to hold on. No one knew what was going to happen in the country. It looked like the country might go belly up. I decided just to hold on to my stocks in the hopes that they might come back.
Some of my stocks have come back. There are a few that are doing well and if I sold today, would make a small profit. Others are still below what I initially paid for them but are improving and close to what I paid for them. I am holding on.
Here is one of my success stories. I bought Whole Foods when it was at an all time low. This was the day that the stock market plunged 500 points and was at its lowest since the great depression. Whole Foods has a good history. it had been selling at about $40 but was now down to $22. I took a deep breath and bought a small amount. I offered up a prayer and thought “what have I done now?”.
Whole Foods is now at about $60 – 70 a share. I am holding on because it is a great company with a good history and I believe that the stock is going to go higher. Now, I am kicking myself because I could have bought more. I had more money that I could have used but I was afraid to. Darn!
And here is one of my big failures. Because of my success with Whole Foods. I purchased some GM at just over $3 believing that GM would never go bankrupt. Well, guess what. GM did go bankrupt. I received legal documents from the Scottrade home office regarding GM’s bankruptcy. I ignored them. I did not have the time to read them. I did not understand how important they were. If I had taken the time to read them and fill them out, I would have received some money back from the bankruptcy. In the end, I got nothing. I lost all my money although it was not very much. Now maybe if I had gone with a broker who offered advice, I might have gotten a call from my broker telling me that I needed to fcomplete the documents.
I could have called the Scottrade local office and asked about the documents or even the home office but never found the time. I was busy and I was discouraged. So here is one of my painful lessons in learning.
And here is another painful lesson in learning. AARP Financial began a mutual fund about 2006. It was a new mutual fund. it looked good. it looked solid. And it was very accommodating for the small investor. They made it so easy to invest. You could invest small amounts of money through the mail. There was no commission until you sold. AARP Financial began this mutual fund company just before the stock market began to fall. And they did a good job of putting it together. Over a period of a year, I invested about $1,000. In 2010, AARP Financial decided to close the mutual fund for reasons that were never really plain and clear. The investor had no choice. I did get most of my money back but l still lost a little over $100.00.
Stocks that are doing very well one day can go way down another day. Stocks do go bankrupt, even those that are household names. Mutual Funds can shut down and you get whatever the market price is that day for the mutual fund.
My most important advice is do not invest any money unless you can afford to lose it. If you can not take the lows with the highs, don’t do it.
I feel very comfortable recommending Scottrade if you are an independent investor who is able and willing to do all your own research. And don’t need any advice from your stockbroker. Otherwise, you might want to look into one of the other online brokerage houses.
CNBC and Fox Business Network are two stations that offer financial advice which includes recommending specific stocks, bonds and mutual funds. I often watch Jim Cramer’s “Mad Money” on CNBC. He does recommend stocks but he has had his hits and misses. I have taken his advice and I have had some hits and some misses. Very recently, I have had a miss taking Jim’s advice. He was pushing a technology stock, which I prefer not to name — a small company. Jim was not alone. I did my research and other analysts were saying “buy, buy, buy”. I bought this stock at an all time high of just over $11.00. The next day, it began to go down and is now about $6.00. And all those who were saying “buy” before I bought the stock have all been saying “sell, sell, sell”. Well, I can’t afford to sell because I can not afford such a loss. I have to hold on hoping that this company will work out its difficulties and that one day the stock will come back to what I paid for it.
At the end of Mad Money, there is a disclaimer advising that you should always do your own research before investing because “no one cares more about your money than you”. That is so true.
I still have money available to invest. I am keeping my eye on the stock market and on certain individual stocks. I plan to buy more but don’t know when. I keep thinking about it but am having trouble with the actual purchase. I can’t quite bring myself to do it. Maybe soon!