One of the first stocks I researched happened to be the company that originally owned the store I work in. Since they had sold my company off I decided not to buy, but since the owners of my franchise happened to also own another store that was involved in the company, I set up some news alerts just to keep abreast of how they were doing.
The other day my inbox started buzzing. The trading volume on this stock was insane! I loaded a live chart of the action and watched the price of the stock climb higher as new 52-week highs were reached. This stock that originally traded for around $13 in March at their 52-week low was now selling for over $20 a share and going higher!
By the time it was done the company in question had been bought out by another company at over $32 a share. If I had purchased 100 shares of this company at its 52-week low, I would have netted a $1,900 profit.
But I missed the boat.
So what have I learned so far with these two experiences? I’ve learned to always wait to make sure that a stock has bottomed in price before investing. I’ve learned that, while cutting dividends to pay down debt or grow a company may be a good thing that investors don’t agree and the price drops drastically as a result.
I have learned the value of patience and research.
I’ve also learned that I am on the right track. I can invest in dividend-producing companies at their 52-week lows (after checking into why the stock dropped to make sure it is a good investment), hold onto the stock until it reaches a new 52-week high then sell at a profit, receiving dividends while I wait.
I’ve also learned that there is an odd chance that I might get very lucky and make a mint like the one I lost out on. I’m not going to count on that, however. Stumbling upon a coup like that is kinda like winning the lottery, in my opinion.
I’m finally starting to form a game plan. The proof will be in the pudding, however. It will take about a year before I learn if this method will work or not.
I can wait.
First off, I want to thank everyone who has commented or messaged me with suggestions. You are awesome, and you’ve given me a lot to think about.
Second, I’ve been burning the midnight oil as I try to work out a way where I, the Shoestring Girl herself, can build up some sort of passive income stream that will support me in the future so that I won’t have to worry about working should I become unable to.
I’ve temporarily ruled out real estate, though it is something I would like to explore once I get my income in a higher range. As it is, with Katie planning to move out at some point in the future, the expense of acquiring a vehicle to attend any real estate purchases is a bit more than I feel my current finances can handle. The insurance alone (since I haven’t had any for several years) would destroy my budget.
My research has revealed that the stock market has a very low entry point; you can start an account with no minimum deposit; a variety of stocks trading there go for a pittance. Did you know that Ford Motor company is currently trading for around $12 a share? I was floored at some of the prices listed. I thought you had to be rich to even enter that arena.
Thanks to Carla for recommending that I read about Derek Foster! I’ve got two of his books due to arrive any day now. In the meantime I’ve acquired several books on the stock market to read while I’m waiting. Here is a list of the titles:
- Investing for Dummies
- The Intelligent Investor
- Get Rich Carefully
This is going to be interesting. I know nothing about the stock market except for the fact that my dad invested in it when I was a teen and lost a small fortune. Since he invested with Merrill Lynch I decided to sign up for an account with Merrill Edge, their online brokerage. They have no minimum deposit to start, they have a ton of information available to help beginners, and they charge a flat rate of $6.95 a trade. I found cheaper brokerages out there but sentimentality won out.
Let’s see if this old bird can figure this out.