Initial Stock Purchases

Like I said in the last post, I had followed the stock market since back in 2005, technology being what I followed the most.  Which stocks I followed varied depending on what was going on with them and what my interests were:  Dell was of interest back when I was shopping for their computers, Google has been a hot stock for years, Apple was one I tracked after the iPhone came out.  But one that I had of great interest since it debuted was SiriusXM (SIRI).

I got an XM Radio for my first vehicle back when I turned 16 and thought it was the coolest thing.  XM and Sirius both underwent several changes all the way up until the merger of the two, and the stock continued to suffer even after amid the financial crisis.  My interest in SIRI grew again recently when I learned that new car sales had increased as of late.  This means that with new cars that have satellite radio factory installed, car buyers get a free trial of the service to try it out.  From what I understand, this also includes some used cars that have it as well.  After that trial period is over, they can choose to continue the service and become paying subscribers.  Basically I'm banking on them getting hooked onto the commercial-free, coast-to-coast service so much that they're willing to pay for it.

I'll be honest, when I got serious about buying stocks last year, I didn't really think I would buy this stock.  I wasn't sure I'd find a good entry point to jump in.  By that, I mean where the stock became good value to purchase, but that's exactly what happened.

After I got my TradeKing account up and funded, I had been keeping track of prices of those stocks I was interested in buying.  For each one, I had an idea of at what point I wanted to buy them at, hoping that would be near the bottom.  For example, my price for FB (Facebook) was $25.00, CZR (Caesar's Palace) was $13.00, and DAL (Delta Airlines) was around $12.  And for SiriusXM, it was $3.00.

On my way to work on April 15, I noticed the price of SIRI had fallen to $3.03, so I got on my TradeKing app and set a limit order to buy 100 shares of the stock at $3.01.  I wasn't too sure if it would fall to that.  If it didn't, I wasn't going to be upset, but if it did, I felt I got a good amount of value in my purchase considering just a few days earlier, it had traded at $3.17.  Sure enough, within a few minutes, my portfolio updated to show that I owned 100 shares of SIRI and that the price had gone up to $3.03.  I had already made two dollars! (Minus the $4.95 cost of making a trade, of course.)

I arrived at buying $300 worth from the amount of money I had set aside for investing.  I presumed I could buy three different stocks for around $300 each, and that would be cost effective as the $4.95 per trade would equate to less than 2% of the total purchase.  Sure, when I sell the stock, I'll have to pay that again, but I plan on making far more than that amount first.

So before I confirmed to buy this stock, I had made a goal I wanted to achieve.  This is something I plan on doing for each and every stock purchase I make.  For SIRI in particular, my goal is to sell it at $3.50, netting myself somewhere around $40 after fees.  Then, I would use that money to move onto my next purchase.  I'm still holding onto that goal, as SIRI has been inching upward ever since a few days I bought it.  The stock did drop down below where I bought it, falling down to $2.97 at one point.  As much as I strive for perfection, I know not to expect that with any regularity.  Besides, buying any stock just four pennies from the bottom isn't doing too awfully bad.

Now that I had purchased my first stock, I obviously wasn't going to stop there, so I continued to research stocks I was interested in, along with new ones.  I keep a constant list on the Stocks app of my iPhone that I want to keep tabs on, and can tell you their average price at just about any given time.  I'll also use that, as well as the TradeKing app and my laptop, to follow trends of stock prices and trends, such as how high their peaks are and how low the drops go.  It's obviously not an exact science, but you can get a good idea of how a stock behaves and where good buy and sell points by looking at their one month, three month, and six month charts.

Two days later, I was keeping tabs on those stocks on my list, and noticed one that I was very serious about, RDN (Radian Group), had fallen throughout the morning.  It was one that, like I said, I was just waiting to find a good entry point.  When the stock was around $10.27, I set a limit to buy 30 shares at $10.20 each.  It didn't immediately fall to that point, but sometime after I set that, the purchase went through.

I was excited because this is one stock that I look to hold onto for quite sometime, at least a year if not three to five.  Radian Group is a mortgate insurance company that took a hit shortly after the financial meltdown.  Obviously when mortgages weren't being dealt like they had been, as well as so many falling victim to foreclosure, this was a dark time for anything related to housing.  But recently, the housing market has made a comeback and most things having to do with housing have seen quite the uptick in revenue, including homebuilders, suppliers, banks, and, in this case, mortgage insurance companies.  So just as SIRI was my play on the increase in auto sales, RDN works just the same with the boost in housing in this country.

The stock did fall further later that day, and even further the next morning, but after that it's been all uphill.  Again, I wasn't able to buy the stock at the very bottom, but I was within just over 3%, and now the stock is up over 15% from where I bought it, so I am already pleased with it, and plan on seeing this through for a while.

I don't have an exact price with this particular buy, as that was not my intention with it.  I would like to hold onto it for over a year, see where housing is at at that point, and try to figure how high it will go and when.  I keep reading and hearing that RDN could reach $20 within just a couple of years.  Obviously that depends mostly on if housing can keep its momentum going over the course of that time, thus why I'm leaving my options open.  I will say this though:  if it were to reach $20, or if I think it will get there, what I'd like to do is sell half of my shares and keep the other half.  The thinking here is that since the price will have doubled, selling half will earn me my original investment back, meanwhile I still own those 15 shares-worth of the company.  Nobody ever got hurt taking a profit, right?

So those are the two stock I've purchased up to this point.  As of this writing, SIRI as inched its way up to $3.12 from the $3.01 where I made my purchase, an increase of over 3.5%.  Meanwhile, RDN has managed to reach $11.78, $1.58 more per share than where I bought it.  Again, obviously those $4.95 per trade fees do dig into my profits, but as I increase my net worth and start buying larger portions at one time, the percentage of what I spend on said fees will go down.