The rise and fall of an early 20 something with wonder in his eyes and greed in his veins!
This story takes place several years back, around 2006 to be exact...
I was a couple years into my college career when I decided I needed to figure out a way to make some extra income. I didn't have time to work any traditional jobs because I was playing 2 sports in college at the time. However, every now and then I had a few hours here and there where I wasn't studying or practicing for sports.
The money I had saved up previously was running low and I knew I needed to find something that would bring in some income, or at least stop the drain on my savings account. This was right about the time I was going to turn 21 and naturally I had been getting interested in Casinos as they were now available to me for the first time, well at least legally. :)
It wasn't so much the gambling that interested me, it was the potential to make some extra money that really motivated me. After hearing it was the only beatable game in the Casino, I was instantly enthralled with "Blackjack". I started to read up all I could on learning the basic strategy of the game. Once that was mastered I started spending my time getting into the more lucrative (or so I'd heard) card counting aspect.
I spent every spare moment I had practicing and learning all I could. After a couple weeks I could keep the running count in my head, convert to the true count, and adjust my bets accordingly all while carrying on a conversation about any of the local sports teams with a random stranger at the table. I had it down.
Luckily this was happening right about the time my basketball season was ending, so it gave me extra time on the weekends to practice my craft at the casinos. Surprisingly, my strategy started working right away. My first couple trips I went into the Casino with between $100 and $200 and would routinely leave with $250-$400 each time.
The casino didn't become a place I would go for fun, it became a place I would go to anytime I needed some extra income. The first 8 times I went, I left up more money than I came with every single time except for one, and that one I didn't actually lose, I broke even.
The problem was that this was extremely time consuming. Yes it was nice to make $100 on a Friday night, but I would often have to spend 6-12 hours in one sitting doing it and it was kind of a long drive to get there. It really was a lot of work and effort. Not to mention it killed my social life. That combined with the fact that my golf season would be starting shortly meant that I needed to figure out a better way to make some money. I had to figure out a better way to make some money without having to spend so much time... I needed some passive income.
Enter the stock market...
Right about that time my friend had been telling me about some extra money he was making investing in penny stocks. I thought to myself, this is perfect. I can invest the money and let it earn for me. I won't need to spend 12 hour nights sitting in a smokey casino, I can go out with my friends and let my penny stocks take off and make me rich. So, I told him to send me everything he knew about them and I would get busy doing some research. I love to research things before I just jump in and this wasn't going to be any different.
After spending much of the weekend going over papers and websites I found a stock that had been heavily promoted. It was a small mining stock that was currently trading for $2 a share. It had been as high as $4 and the promotional letters were saying it could be the next $80 stock if their exploratory wells showed some big reserves. So, I decided I would jump in with most of my paltry savings, roughly $2k at the time.
That would prove to be a bad idea, however, as just about every single day it would go down $.10 or so. In just a few weeks the stock was sitting under $1 and I was feeling pretty down about it. I shoulda stuck with the casinos I thought to myself. However, I was determined not to sell at this point because I was "too far down to sell", terrible investing rational by the way.
Sure enough, that $1 level would be a distant memory as well as the days and weeks went by. Pretty soon the stock was sitting below $.20 and most of my investment was now gone. Ok, I thought to myself this was a learning experience. I really need to figure out how these penny stocks work and figure out when and when not to buy them. So, I sold what little I had left and began my search for the next one.
After doing plenty of more research I decided that message boards were often a good place to find hot stocks. I spent the next several days scouring the yahoo.finance message boards. I made some new friends along the way and they pointed me to a couple stocks they felt were likely to be promoted in the future. That was the secret I learned, the fundamentals didn't mean much in penny stock land, it was all about the promotions.
So, I took the $1200 I had left in my savings account and I spread it out over 2 stocks. One was a cleaning company that sold soap infused sponges and the other was a medical supply company that had some hot new gadgets in the works. Luckily for me one of these hot new gadgets had to do with the swine flu vaccine. Which was very big news at the time.
About 2 weeks after I had bought the stock they came out with an announcement where a big pharmaceutical company was going to be buying their swine flu vaccine delivery device. The stock went absolutely bananas.
It was trading for under a penny at the time and shot to over $.20 a share within 2 days. That doesn't sound like much, but my little $800 investment was now worth close to $30k. I couldn't believe it! I hit the sell button as fast as I could and just like that, my bank account now showed $30k.
Now that is what I am talking about I said to myself! This is the kind of stuff I had been looking for! With $30k to my name I am ready for the real fun to begin...
The rest will be continued tomorrow in Part II...
Live well my friends!
Image Sources:
http://www.huffingtonpost.com/karen-firestone/why-the-market-keeps-goin_b_4466037.html
http://www.ukcasinochecker.com/2014/11/card-counting/
http://www.bilderstock.eu/
