Dan on May 21st, 2006
Other than 2 finals I have this coming week, school is now out for the summer. That means I can concentrate on trading, investing, and speculating. May options expired on Friday and I took full advantage of it. I sold covered options on Wednesday and Thursday and managed to make over 11% return on my entire account after broker fees by the close of the markets on Friday! I can still count the number of trades I’ve done on one hand so overall I’ve been doing very well. I’ve only had one small losing transaction. Overall my account is up 16.25% after fees. Did I mention I’ve only been trading for 1 month? I still have one more open position. Assuming the market doesn’t go up more than ~7% in the next month (very unlikely) my total gains will be almost 19%.
One thing I haven’t been doing well enough is watching risk. In the future I have to watch my exposure much more carefully. I’m in the process of evaluating my overall risk and repositioning to protect myself from fraud. Some of the investment pools I’m in are extremely risky and are not transparent. I am slowly moving my money out of these funds and placing them into managed and autotraded accounts. I just signed up with an options autotrading service I’ve been watching for quite some time now. They’ve been operating for about a year and a half and have had no losing trades. Their overall return is in excess of 100%. I’m going to use this service to increase my knowledge of options trading and hopefully continue with their winning streak. I’m also planning on opening a second brokerage account with TradeStation so that I will finally get some good stock market charting software. Also, between the two brokerages I will be able to open more trades without having the $25,000 minimum to qualify as a daytrader. I wouldn’t be surprised if I get a warning from optionsXpress due to how many trades I’ve done this week 
Eventually I’ll have the daytrading minimum but until then I’ll have to deal with 3 trades a week per account.
I’ve been trying to find a PHP/mySQL project to do to keep my skill level up. As they say, use it or lose it. I’ve decided that I’m going to develop an investment tracking script. It will track my investments as if I were running a pool (mutual or hedge fund) with outstanding shares. I will update the database daily with my positions and it will automatically track the value and change over time. Of course, the fund will be totally ficticious but it will be a good learning experience. Who knows, maybe I can develop it to the point where I can sell it. Features will include charting, statistics, share owner tracking, individual account tracking for different brokerages and investments, and more.
Dan on May 6th, 2006
I’ve been doing some thinking and some math. I’ve figured out that I can have $1 million in 5 years if I start with $25,000 and earn an average return of 6.35% per month (76.2% per year), compounded monthly. I believe this is achieveable since I’m already earning more than that. If I reach that goal I’ll be a millionare before I turn 30.
My investments are rapidly approaching $25,000 so I’ve almost met that goal. The problem is that I’ve been living off of my investments. If I continue withdrawing enough to pay the bills I won’t be saving enough to reach that goal. This leaves me with a few options.
Option one is that I can find enough stuff to sell to raise my investments to more than $25,000. That means I would need to earn less per month, leaving me with (hopefully) enough money to live off of. I do have a lot of extra stuff I can sell, including my ‘89 Mustang that’s been in the garage for 2 years.
Option two is to find a job *shutter* that earns me enough money to live on. I could even find one that earns me enough extra to grow my investments faster. I hate working for other people so this is my least favorite choice.
The third option is to find a way to get a greater return on my money. That would leave more money above and beyond the required 6.35% per month. While this would be a very nice option I don’t think it’s going to happen. It may be possible once my account grows larger. A few extra percent a month isn’t much with $25,000. With $100,000 it’s enough to live on.
So right now it looks like I need to raise some extra money. I haven’t figured out how much yet but it’s quite a bit. I’m willing to do whatever it takes to become a millionare before I’m 30.
Dan on March 6th, 2006
I haven’t posted any trading updates in a while so here it goes. I’ve been trading a simple volatility strategy on a forex demo account with great success. The account is up close to 10% in about a week! The way the system works is that it takes small gains from low level randomized movement. Most losses are quite a bit larger (stoploss is 5-10x the take profit), but since wins are so frequent they offset losses and then some.
I have my account funded at OptionsXpress. I wanted to trade GOOG options on Thursday due to an investor news conference. However, I had class and wasn’t able to do so. Had I been at a computer and done the trade I estimate I would have made 30-35%! Also, on Friday I forecasted that the market (as represented by QQQQ) would gap in one direction or the other and then go in the opposite direction. I didn’t have enough confidence in my prediction to trade it but I turned out to be correct. The return would have been quite high. It could have been a lucky guess so we’ll see how my future forecasts go.
Dan on February 5th, 2006
I’ve been rolling an idea for a website around in my head for over a week now. I started putting it on paper (well, a Word doc actually) tonight. Assuming I can work it the way I want I think it has HUGE earnings potential with very little maintenance.
The concept is a combination between pixel advertising (see Million Dollar Homepage), browser based gaming (see Google Directory of browser games), “get paid to” sites (paid to click, paid to surf, paid to read, etc), and autosurfing (search Google). I can’t reveil the details yet since it is still only in the concept phase. Needless to say it has great potential and, as far as I know, is 100% original. One major hurdle I face is making sure the way the site operates complies with federal and state laws. I’m not sure if my current idea will be considered a contest. If so it may be much harder to get up than I currently hope.
I’ll keep everyone updated!
Dan on January 18th, 2006
Assets and liabilities are probably the most misunderstood, yet most commonly used terms used to evaluate what you own. When you truly evaluate both you may be surprised how much money you unnecessarily waste. Money that could be going into investments is tossed away into our consumer culture.
First, let’s look at the common defination of asset and liability. Assets are considered anything of value that you own and liabilities are the opposite, debt or obligations that cost you money. Many people have the mindset that assets are good things and liabilities are bad. While by defination this is true, once you step back and look at both you’re realize it’s not black and white. You can have bad assets and good liabilities.
For example, anything that depreciates is a bad asset. Exampes include vehicles and consumer goods. Vehicles are frequently your worst asset. I don’t even consider them an asset, I consider them a liability. Everything about them costs money. They depreciate very quickly and you have to pay for maintenance, insurance, and fuel. Very very very few vehicles increase in or even hold their value. If you’re in a financial situation where you’re just making ends meet the first thing you should do is get rid of a newer vehicle. Stick with ones in the $1,000-3,000 range. Low end vehicles tend to hold their value much better. If you run into a high cost maintenance item, such as a transmission rebuild, you can scrap the car and get another. In the mean time you can invest all the money you would have spent on monthly payments. In no time you’ll be earning a large enough return to make those monthly car payments!
I can go on and on about bad assets. Most everything people own is a bad asset. The top level good assets are ones that generate cashflow, such as investment real estate. The next level down would be your personal residence, assuming you own it, and other assets purchased as investments. Below that everything becomes a bad asset.
Liabilities work the same way. A mortgage on a rental property is a great liability! It helps you leverage your money to generate a much higher return than you could have obtained by purchasing the property outright. Any liability used to leverage an investment can be considered a good liability. HOWEVER, be warned that over leveraging is a very bad position to be in. This could be real estate with an interest only mortgage (VERY dangerous), borrowing money to use for speculative investments (equities, commodaties, etc), or using a margin investment account without properly understanding and addressing the risks. Other debt and liabilities are bad, such as credit card debt or a vehicle loan.
To sum up, if you reduce your bad assets and liabilities and put that money into good assets and liabilities you will rapidly find yourself increasing your networth. Once you find yourself in a comfortable situation you can continue enjoying those bad assets - without the liabilities since you’ll have the money up front.
So what do you do? First, STOP SPENDING! You don’t need all the junk that the media pushes on you. If something isn’t required for you to live a normal life (such as dishes) don’t buy it if you don’t have the extra cash to pay for it. Invest first, spend later. Next, get rid of the junk you already own and never use. You can put that money to good use instead of having it depreciate away in the corner. My favorite resource for getting rid of stuff: Ebay. Prices are low and fees are high but the market is liquid. You can sell almost anything on Ebay.
Once you get that money invest it! Don’t spend it. Put it straight into a money market, mutual fund, stock, bond, option, property, whatever! Put it in a place where it can grow untouched, somewhere that you won’t be tempted to spend it on the newest fad item.
