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Sunday, March 12, 2006

Stock Tips are Like Assholes...

The following was paid for by John Brodigan for a Better America

I've been playing the market as of late. This is the first time in a few years that I have a steady job and am making a few sheckles, plus in order for me to fully embrace conservatism I really should have a stock portfolio.

It's also something I've wanted to do for a while. One of my regrets was that I didn't invest in my old company when it was at $.12 a share. I could have gotten 1,000 for $120. If they went bankrupt, BFD? It's only $120, and I would be more concerned trying to find a new job (which I wound up being anyway). If it hit, I could make some decent money. But I got scared since my few of the market is people jumping off of buildings when they lose. The company, when it was taken off the market, was at $9.76 a share. Do the math.

So for the past few months I've been garnishing some of my weekly wages, putting them in an investment account, and set forth to make my fortune. My first fiscal quarter is almost over, and I am happy to announce that I'm up 4.4%! Go me. A few of my friends have been asking me about it, so I thought I'd share a little of what I did and learned thus far.

FORWARD LEANING STATEMENTS
I'm not an expert. I don't even play one on TV. And as a matter of full disclosure, my holdings are Marvel Entertainment (MVL), Lion's Gate Films (LGF), World Wrestling Entertainment (WWE), Nokia (NOK), Hasbro (HAS), and Activision (ATVI). Apparently when you write about stocks you're supposed to disclose your holdings, so I thought I'd do it all at once.

MONEY
I take 10% of my monthly salary and invest it. It's just like putting the money in a savings account, only with a risk. Plus on an average, stocks yield 11% in interest, so it's a good risk. I chose Schwab.com to open my account. I saw a bunch of commercials for different sites, but Schwab was the easiest for me to figure out plus the others usually had an minimum account balance you needed to keep.

I also take another 10% and opened an ING Direct account, just because having a cash account makes sense too. Things might be a little tight this year, but after living paycheck to paycheck since...well, since I ever started working in the first place, another year won't kill me to make sure I never have to do that again.

READ AND WATCH TV
There are two websites I go to. One is Finance@yahoo.com, and the other is TheStreet.com. Both are free, and both have invaluable advice. The Street (owned by CNBC's Jim Cramer) sends me a newsletter everyday that collects the different articles on the site. The finance page at yahoo lets you create your own watch list, and collects relevant articles from all over cyberspace.

Bookwise, I started with "Make More Money Now" by John Bradshaw Layfield. Yes, THAT John Bradshaw Layfield. My thinking was that it'd be a good read for someone like me, without having do gram one of the "Dummies" or "Complete Idiot's" books. I've just started reading Cramer's "Sane Investing in an Insane World."

Then you have television. CNBC is great, particularly Jim Cramer's "Mad Money." He's insane, and he makes investing seem fun. You also have the Saturday morning finance shows on Fox News. Yes, we all know Fox News is evil and totally biased towards conservatives. I mean, when all other networks have the President's approval rating at 33%, Fox has it at 39%! Totally scandalous! But seriously folks, I'm not endorsing drilling in Alaska or cutting Justice David Souter's brakes. These (the analysts on Fox) are simply people who have been very successful making a lot of money in the stock market, and they bring up interesting points. One of them is even Wayne Rogers from M*A*S*H. How can you not trust Trapper John McIntyre?

You'll be surprised what some of the research might uncover. I was avoiding WWE, mainly because as a wrestling fan, the product bores the hell out of me and I don't see it reaching another high peak like it did a few years ago. Yet, it was always a highly rated stock and I couldn't find out why. Once I read how hot digital media is going to be in the future (they have their own channel), and reminding myself how well their international business does, I decided to go for it. My stock is up 11% since investing.

TWO THINGS I'VE LEARNED
1. Oil prices go up, stock prices go down. I don't know why.

2. When a company announces it's earning before trading starts, that's generally good news. When they announce them and the end of the day, that's generally bad news.

KNOW WHAT YOU'RE INVESTING IN
My mom keeps telling me about how she and my dad invested when they were told it was a good time to do so, and lost all the money they invested. Here's the thing. She doesn't even remember what they invested in. That's the wrong way to do it, plus there's no excuse these days when you have a wealth of information and research at your fingertips.

I chose Marvel because I know Marvel. They were the fastest growing New York Company in 2005. They just signed a licensing deal with Hasbro, and starting in 2007 will license their characters for new action figure, video games, and anything else Hasbro wants to do with them. They've got three movies coming out in '07 (Ghost Rider, Spider Man 2, and Fantastic Four 2) plus a little movie coming out in May called X-Men. This was a no brainer for me, and my stock is up 14%.

Conversely, I had invested in a company called JDS Uniphase (JDSU). I know nothing aboot fiber optics, but Cramer highly suggested it and I got in when it was $3.07 a share. Their most recent earnings weren't as high as expected, I had read a number of experts start to sour on tech. I didn't know what that meant and realized that I know nothing about fiber optics, so I got scared and got out when shares dipped to $2.94.

They closed Friday at $3.70. Do the math there.

That's been my journey thus far. I started with a $150 and it's basically just been a lot of reading and a lot of checking Yahoo Finance ever five minutes to make sure that the market hasn't crashed. It hasn't so far. :-)

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