First time stock owner, new investment experience
Up until mid October 2020, I had never bought even one share of a stock in my life. I am a mutual fund type of guy.
However, a couple of months ago I decided to do a little experiment. I decided to buy one share of Halliburton stock (HAL). This was my very first stock purchase.
I had been watching this stock for a little while. At the time I started watching this stock, the stock was sitting at the bottom of the ocean. It was trading around ten to eleven dollars range.
Not too long after I started watching this stock it moved up to twelve dollars a share. Shortly after that it moved up to thirteen dollars per share.
I watched it for a little while longer as this stock kept trading between eleven dollars and change to thirteen dollars and change.
At the beginning of 2020, this energy sector stock had a high of $23 and it briefly touched $25. Back in 2017, it had a high of $58.
Since I felt that this stock could easily reach twenty to thirty dollars per share, I decided I would buy just one share, feeling that I had very little to lose if the stock went south on me. It would also be a new learning experience for me.
Buying my first share of a stock, no commission
I paid thirteen dollars and change for one share of Halliburton (HAL) stock. I use Fidelity to do my trading so I don’t pay a commission when buying or selling shares of stock. When you pay a commission to buy and sell a stock it subtracts from any profit you may make by owning the stock.
Buying a second stock
A little less than one week later, I bought one share of NIO stock (NIO). I paid twenty seven dollars and change for one share of NIO.
I kept watching Halliburton trade and about two weeks later I decided to take a chance and buy one additional share of Halliburton stock. In that three week period of time the price moved up from thirteen dollars to fourteen. I paid fourteen dollars and change for the second share of HAL stock.
My average cost for two shares of Halliburton stock was $13.70 per share. It is now the middle of December 2020 and the price for one share of Halliburton stock is nineteen dollars and change.
Not long after that the stock ran up to seventeen dollars. I don’t remember, but this stock may have even ran up to eighteen or nineteen dollars.
Shortly after that, the stock began dropping, dropping and dropping. I decided to take my small profit and run. I sold the two shares of Halliburton stock at sixteen dollars and change.
In roughly forty days, I made a twenty one percent profit on the stock.
During the time that I started buying Halliburton stock I also also buying additional shares of Chinese electric vehicle maker NIO (NIO) stock. This time I bought two shares of NIO stock for thirty seven dollars and change.
Normally, I would not suggest investing in a stock such as NIO because it is not a profitable at this time. NIO is only six years old. However, the EV market is extremely hot right now, just look at the price of Tesla stock.
But, because NIO is so popular, it was voted queen of the EV prom. I will give you one guess who the king of the electric vehicle prom was. Yep, you guessed it, it is Tesla.
It just so happened to turn out that there was a party being held at NIO and everyone was jumping into the pool and buying NIO stock. This includes big institutions such as pension funds.
The price for NIO stock had jumped ten dollars a share since I bought my first share of NIO on October, 28, 2020 until I bought two additional shares of NIO on November 3, 2020.
Over about forty five days the stock was going up like a rocket. As I was watching this stock shoot up in price, I began experiencing the fear of missing out. I kept buying additional shares of NIO one share at a time.
I ended up buying ten shares of NIO stock between twenty seven dollars and change up to fifty one dollars and change within a couple of weeks from the time I bought my first share of NIO stock.
My average cost to buy ten shares of NIO stock was forty two dollars and change.
It was not very long after I had bought ten shares of NIO that the stock began dropping. NIO stock price continued dropping. I almost got out when the stock dropped down to around thirty nine dollars a share, but I didn’t.
Shortly after that, NIO went back up in price and was trading in the low forties. I believe that NIO went back up to around forty four or maybe even forty five dollars a share.
A very short time after that, NIO started dropping again. It kept dropping and dropping. I made the decision to sell all ten shares of NIO stock at forty six dollars and change. I did ok with this stock. I made just under ten percent on my investment in just a little over one month.
Had I decided to sell shares of both stocks at the time when they had been higher than what I decided to sell them for, I would have made about twenty six percent in about five to six weeks.
But, I bought both of these stocks with the intention of holding onto them for the long term rather than short term. Had I intended to invest for the short term, I would have taken my money and ran when I was up around 25% for these two stocks.
After owning these two individual stocks I decided I prefer to own no-load mutual funds so I went back to just investing in funds.
This turned out to be a real wonder and educational experience for me. Most of all, it was also profitable. I learned about placing market orders as well as limit orders.
Investment risk tolerance also comes into play once you own shares of stock. I saw first hand how fast a stock can move both up and down in value.
For anyone considering owning individual stocks, I would highly recommend doing something similar to what I did if you have never bought a stock before. Buy something low in price rather than buying a stock in the $100 to $500 range.
I had very little to lose when I owned just one or two shares of Halliburton. Stick to owning only one or two stocks rather than owning five, ten or twenty different company stocks.
All of this stock buying and selling occurred with both stocks between Oct. 23 and Dec 2, 2020.
I have owned, and currently own four no-load Fidelity mutual funds.
The reason I like owning mutual funds is because they give you two things that you don’t get when you own one or a small number of individual stocks.
2. professional management
Another benefit to owning mutual funds is that Fidelity has a number of mutual funds that have no-load, so all of the money I invest goes to work for me, and there is no minimum investment requirement when I want to invest in a fund.
In other words, I can invest $10 in a single fund or even several funds. I could split that money up and invest it in two, or more funds.
Buying individual stocks for dividends
If you are seeking additional income, to boost your retirement income, you may already own, or you may be considering owning individual stocks that pay a good dividend every quarter such as AT&T, McDonald’s and Coca Cola, just to name a few.
However, rather than buying shares of stock in numerous corporations in order to receive dividend income, you can own no-load funds.
There are funds out there that own shares of stock in those and other well established corporations that have a good track record of paying dividends.
You also get greater diversification owning a fund with a large number of stocks in the fund portfolio over owning a handful of these stocks.
Learn more about investing in no-load mutual funds. Check out some Fidelity mutual funds, most of which I invest in here. The information covers how you can allocate your investments in all age groups.
This is not a recommendation to buy or sell any of the stocks mentioned above.
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