When Machines Run Our Money
Earlier today, the stock market took a crazy tumble losing nearly 1,000 points in the Dow Jones Industrial Average at one point only to rebound back to losing just under 350 points. The rumored cause of the giant dip was a typo made by a stock trader entering a “15B,” meaning billion for the number of shares he wanted to sell instead of “15M,” meaning million when selling Proctor and Gamble. Seeing a giant move like that would cause panic enough for individuals managing money to sell their other positions and mimic the movement in that particular stock that sold off.
Now, what about people who aren’t around the computer all day or aren’t able to call their brokers wanting to make a sell order when they see that much activity? Some of those people use stop loss orders which are basically an order that sits and waits to be executed when the stock reaches a certain price mitigating the losses for the individual. A big sell-off would wreak havoc with people who were just trying to cut their losses when something like this happens. The result is the market plunging almost 1,000 points. But, what happened after it nearly sank that low? It rebounded to gain close to 650 points. That investor who thought he was protecting his money and may have been satisfied at the time the trade was executed is now feeling swindled, all because of a typo.
If you ever decide to place a stop-loss order, think of the people who could be gaining from you selling on a big dip. Several stocks traded as low as a penny or less, only to close above $42.00. Wouldn’t that have been nice to buy it for a penny?
You may feel like you’re making a smart move by placing a stop-loss order to save you from losing a boat load of money, but when the market is this volatile, trusting a machine to watch over your money could prove very costly.
Amazon Gift Card Giveaway – May 2010
I am giving away a giftcard for Amazon in the month of May. The total will be for $10 of my own money that I put in there or 5% of the income that my site generates, whichever is greater. For example: if you order something from Amazon by clicking on the link on my site, it will add 5% of what I make from that sale to the total that will be given away as a gift card. Like before, you can enter twice per day. If you would like to get in on the drawing on June 1st, just follow these two steps:
1. Follow @BrianEarley on Twitter
2. Tweet this message to your followers:
I just entered an Amazon gift card giveaway! You can enter by following @BrianEarley and retweet this! http://ow.ly/V6cO #BE0510
Personal Finances – May 2010
It certainly has been a while since I updated my finances, but it feels good to see where I am financially. My new job is going to change my spending and saving habits until I can get a good grasp on how to balance everything out and find a way to make a little extra money on the side. With all the extra time afforded to me, I will have to start using ChaCha more. I’m estimating that I will be taking home around $1,500 a month with the new job as opposed to almost $2,000 at the old job. It’s a big pay cut, but not an unmanageable one. My girlfriend and I have also come to an agreement that I only have to pay for our utility expenses, which means I am directly responsible for how much I pay every month.
Unlike most people who use their tax return to buy things they weren’t able to afford before, I used mine to pay off some of my debt, beginning with my loan that I had through Prosper. It was a foolish loan that I took out with them. My plan was to get a cheap interest rate on my loan and use the money I received to invest in loans on the site that were being charged a higher interest rate. That didn’t turn out too well, because with higher interest rates came greater risk, and several of the loans I invested in defaulted and were charged off. They went through a dormant period where they were going through some filings to increase their investment choices, and I took a lot of money that was being paid to me out of their site, but after they were able to start loaning money again, I have been reinvesting in safer choices.
Tomorrow, I will be investing more money in the stock market with the last check I received from Rent a Center. I was only expecting about $400 or so from my unused vacation time, but it turned out to be more than $900! It was very tempting to use it to buy an iPad, which I have been wanting since I heard it was coming out, but I don’t really see using it to it’s full potential to justify me purchasing one. So, I figure I will take the investment route and perhaps wait until it comes down in price or I get one as a gift.
$1,605.13 Total Income
$1,500.00 Monthly Pay Checks
$5.73 Checking Account Interest
$0.51 Savings Account Interest
$16.84 Dividends ($50.52 / qtr.)
$82.05 Prosper Loans
$1,043.86 Total Expenses
$200.00 School Loans
$192.00 Car Payment
$300.00 Food & Utilities
$100.00 Gas
$72.00 Cell Phone
$50.00 Entertainment
$129.86 Insurance
$561.27 Net Monthly Cash Flow
$105.13 Passive Income
10.07% Passive Income % of Expenses
$9,678.06 Total Assets
$2,290.63 Checking Account
$509.11 Savings
$62.52 Scottrade Account
$47.23 Prosper Account
$19.96 ChaCha Account
$9.05 Paypal Account
$963.14 IRA
$1,843.52 401k
$3,995.42 in Stock
$1,104.45 Loans on Prosper
$19,471.30 Total Liabilities
$11,901.35 School Loans
$6,716.95 Car Loan
$853.00 Credit Card
-$9,793.24 Net Worth
New Old Job
About three weeks ago, my former boss gave me a call to see if I was interested in a position that had reopened with them. I was about to take my first paid vacation as an employee at Rent a Center, and gave them an enthusiastic “Yes!” without giving it a whole lot of consideration at the time of that phone call. My one and a half year raise was only a few weeks away at Rent a Center, and my monthly take home would drop significantly since I wouldn’t be getting paid as much and not working as many overtime hours at the new job. There was a lot to think about while I was on vacation in Las Vegas. I took a few extra days off after we would be getting back from our trip to decompress and get a few things done that I had been meaning to do before we left. Added to that list was a trip to see my former coworkers and fill out all the necessary paperwork to get the ball rolling on the new job since the job at the time was frustrating me.
The hours at Rent a Center were horrible; 9am-7:30pm M-F and 8am-6:30pm on Saturday with Sundays off and Tuesdays off for me as the sales manager. Not only were the hours bad, but dealing with all the lies and excuses from customers for why they can’t make their payment was ridiculous. People would lie straight to your face giving you one excuse and then another two minutes later that completely contradicts the last excuse. The customers have the money too. One lady was already a week past due and wanted to wait until next Friday to make her payment for “personal reasons.” When the account manager told her he couldn’t take that commitment, she hung up on him and called back a minute later to make her payment with a different person. Those customers are crazy! Needless to say, I was exhausted by the time I arrived home from work after a thirty minute commute each way, and didn’t feel like doing anything on Friday and Saturday nights when everybody else was having a good time. I had to get out!
Before the paperwork and approval even went through with the higher powers at the new job, I put in my two weeks notice with Rent a Center. It was a very gutsy move and it turned out to be a little less than two weeks. My first week of work at my new job is over, and I can finally have a life outside of work! I now sell irrigation and landscaping material to contractors who come in everyday to get their supplies for the day. My hours are 7:30am-4pm M-F and 8am-noon every other Saturday with the same commute. This is before the summer when our business really picks up, and I can get an hour or so of overtime each day. Today is the first Saturday I haven’t had to work in a year and a half, and it feels very weird knowing that I have another whole day off tomorrow as well!
I can now blog and do things I have been wanting to do since I worked at there before Rent a Center. My blog has been very neglected the past couple of months, and it’s something that I enjoy doing. One of my buddies and I had partial season tickets to White Sox games before he moved out to Las Vegas and I started working at RAC. I’ve missed out on some of the games so far, but I can at least go to a few this year. Not having the time to go to baseball games was eating at me the past year and a half, and anybody who knows me personally knows I love baseball.
Most importantly, there is now more time to spend with my family, friends, and my girlfriend, who is very excited. More date nights to the movies and quality time spent together is finally a reality. We would go on long bike rides together before RAC, and with the weather starting to get warmer we can now take more of those. It’s funny, but I think the cats are also happier. They’ve been purring and nuzzling me a lot more.
Fantasy Portfolio – February 5, 2010
The stock market has been taking big hits over the last couple of weeks, totaling 6.6% over the last month. Luckily, I took my gains in most of my stocks at the beginning of the year and haven’t seen as big of a loss as I could have. Most of the declines were caused be fears overseas and the usual unemployment factor.
It seems that the optimism of the DOW Jones Industrial Average being over 10,000 has been quelled slightly. The economy doesn’t seem like it is in good enough shape to push the DJI too much higher than its current level. When the unemployment rate declines and the economy really starts to pick up, it seems the market should sky rocket to record levels. I would love to see the market keep going up, but it just seems like there is too much optimism out there.
That’s when we get pull backs like these, when the market is way too overbought, and corrects to reflect a more realistic level. Once again we are presented with an entry point to get in if we have cash on the sidelines, which we should if we weren’t being piggish and decided to lock in our gains. Now that the market has dipped down and bounced back for a minimal gain, it gives a safe looking buy signal which I will be using to add to my positions this week.
S&P 500 at Year Start- $1,115.10
S&P 500 at End of Week – $1,066.18
S&P 500 Point Gain – ($48.92)
S&P 500 Percent Gain – (4.39%)
Portfolio at Year Start – $141,591.98
Portfolio at Week End – $133,010.71
Portfolio Total Gain – +$8,581.27
Portfolio Percent Gain – (6.06%)
| Symbol – | Shares – | Price Paid – | Last Price |
|---|---|---|---|
| AAPL | 78 | $164.61 | $195.46 |
| BP | 225 | $44.17 | $53.18 |
| CAT | 263 | $45.21 | $51.75 |
| HD | 289 | $23.90 | $27.98 |
| JPM | 77 | $33.99 | $38.30 |
| KMP | 74 | $46.92 | $59.69 |
| MCD | 50 | $54.47 | $63.37 |
| MO | 412 | $15.75 | $19.38 |
| NAT | 450 | $30.38 | $28.36 |
| PEP | 100 | $49.45 | $59.51 |
| T | 300 | $25.82 | $25.24 |
Transactions
None
Dividends Paid
None
Important Info and Disclosure: Fantasy Portfolio traded on Wall Street Survivor using principles learned from Jim Cramer’s Action Alert Plus
. I do own real shares in AT&T (T) and Nordic American Tanker (NAT). My posts about my fantasy portfolio should not be mistaken for financial advice. You should consult a financial advisor before investing in stocks.
