Investing in the Stock Market - Year 2
A year of learning (and making mistakes)
The beginning of the year is always chaotic for me. We frantically collect all the tax receipts and other documents for the upcoming tax return. We budget to ensure there are enough funds for our life insurance policies. By the time spring comes around, I haven't paid any attention to the stocks in my Roth account. Ford had plummeted from $15 to just over $10, GE had recovered most of its value, Kimberly-Clark had a moderate gain, and Pepsi was see-sawing all over the place. Estee Lauder continued to be star at a 60% gain.
I felt a little braver and thought about the next stock I would purchase. I read the newspaper, listened to my friends, and watched advertisements on TV. I felt that the trend with an aging population is vanity: companies that provide products that help us look and feel better and younger. I already had a cosmetics company, so I decided to purchase a pharmaceutical stock, Allergan, the maker of Botox and breast implants.
I looked up the stock ticker in my Yahoo Finance fantasy stock portfolio, and it had a very nice steady trend upward for the past 10 years and it's P/E ratio was moderate at 22. I went to the Fidelity website (my Roth account is at Fidelity), looked up Allergan, and purchased. The following day, I took a look at my account and had a rude shock. I had not purchased Allergan, but the Alamo Group, a company that makes tractors! Alamo's stock ticker is "ALG" and Allergan's is "AGN". I quickly set up the sell order and for the next 3 months, I watched this stock fall. I was so angry at myself for making such a silly mistake but in hindsight, I'm glad I did so that I could avoid it in the future. By the 4th month since purchasing Alamo, I decided to eat my losses and set a price that was only slightly higher than it's current value and it sold. Yeah!
I was very sore about purchasing the wrong stock and didn't buy Allergan until the following year when it was $86 instead of $74. Sigh.
Before the year was out, I purchased three more stocks, Royal Bank of Canada, Coca-Cola and VF Corp. My husband had TD Bank stock which was doing well, so I decided to purchase another Canadian bank that was not as popular but whose chart had a historical upward trend. I was watching Coca-Cola for a few months and decided it was a good buy. I came upon VF Corp quite accidentally. I was shopping at the Galleria Mall in Edina and bought some yoga outfits from a store called "Lucy". I was impressed with the price and quality of the clothes, so I looked up the name and learned that the company belonged to a large corporation, VF Corp. that owns such brands as Timberland, Vans, and Lee Jeans.
UP NEXT: Year 3