Purpose of This Site:
To share my research and experience with my kids, who are 3 and 1. I’ve always thought it would be cool to know what my parents were thinking about when they were younger. Even if it was just tidbits of info about one area that they were passionate about. I hope that by sharing my passion with my kids they will one day feel a deeper connection with me, even if it’s 30 years down the road.
I grew up in New Jersey, was a slightly above average student. I went to Lehigh University on a swimming scholarship and majored in accounting mainly because I hated engineering (what I went to Lehigh for) and needed to find a field that was stable enough to get a job in and was also a good foundation for business, which is what I was passionate about.
After school I worked in the corporate world doing hedge fund taxes for about 10 years. I ran two small web startups on the side:
First was NetCaterers, a web portal I launched in 1999 that connected people with caterers throughout the US
Second was/is SexyFurnishings, a retailer of modern furniture.
How I got interested in the market
My dad is a bit of a math geek…he majored in math (although I’m not sure what exactly he focused on or if he legitimately finished his major (it was the late ’60’s / early 70’s and I’m pretty sure he was a major hippie), studied for the actuarial exam, loves to play Sudoku and other brain teasers. Every week in the early to mid 1990s while I was in high school he would get these CDs mailed to him that had the charts of the trading of every stock in the market for the prior week (this was pre-internet). My parents were divorced so my brother and I would go to my dad’s house every other week and on one of those visits he introduced me to the CD’s. I don’t really remember the specifics of what we looked at or if we really dived that much into the details of the charts, but I do remember one thing that has always stuck with me: the observation of volume spikes on charts corresponding with major turns in the direction of a stock.
This sparked my interest in the market. I started getting a copy of the Wall Street Journal once a week and highlighting stocks that had large disparities between their 52 week highs and lows and were trading near their 52 week low – for reasons I’m not quite sure of, other than I reasoned that stocks that moved a lot and were closer to their lows had a higher probability of rising significantly (I didn’t do any backtesting of this which would have been the smart thing to do). I would then wait for the CD of the prior week’s charts to come in the mail so I could look at those stocks that I highlighted to see if there was a big volume spike. I didn’t have any money to invest during high school so mainly I was just observing things.
I went to college during the late 90’s bull market but didn’t have any personal money then either. What little money i did have was spent mainly on beer. I was fortunate enough to have my grandfather give me a little bit of money to do whatever I wanted with but this was money I never touched. My dad and I invested it in some random mutual fund that I don’t think did much. I convinced my dad to put some of the money into individual stocks and the first stock I bought was Applebee’s (APPB), which I think went down like 20% the day after I bought it. I held onto it for a while and made a profit in it, luckily. I really had no clue why I bought it or what I was doing, though.
I don’t really remember what we did with the money after that until around 1999 when I told my dad to put it in some stock called Ariba Networks (ARBA). The stock was in the midst of the massive late 90’s internet bubble and it went up like 400% within 6 months. Not really having any understanding of valuations or anything like that, I kept holding on, thinking I owned the next great stock. Naturally within another 3 months, the stock came all the way back down to where I bought it at. I continued to hold on and it rose maybe 75% or so and I sold it all. I used the money to help start up NetCaterers.
Ariba ultimately went down about 95% from there. Even though I didn’t sell at the top, I was lucky. But I had no idea what the hell I was doing. So I decided to really focus on learning about fundamentals, about charts, about how the market worked, what moved stocks, what trends worked. I became completely obsessed about the market.
I read all of the popular investment books: Intelligent Investor, One Up on Wall Street (my favorite investing book of all time and one I still reference from time to time), tons of books about Warren Buffett. Every free second I had I was consuming information. It became a habit of mine to do a massive printing blitz every day at work right before I left. I would wait until everyone left work and then print off dozens of investing articles as well as annual reports from the SEC’s website for companies that I was interested in. I would read everything while I was on the train ride home from work and also when I got home from work. This really expanded my knowledge of the markets.
My First Real Taste of Success
My first success came in the early 2000’s. I had about $4,000 in 2003 and was able to turn that into about $40,000 within 2 years, mainly focusing on stocks within sectors that had significant near term catalysts behind them, that had solid balance sheets, and were inherently cheap (either relative to other companies or relative to their assets).
I used that money to help fund a move from Boston to San Diego and lived off of it while I was trying to start up SexyFurnishings. I wasn’t able to get the business off the ground enough to support me and I ran out of my savings just as the market turned south in 2007. By the bottom in March 2009 I only had about $8,000 saved up after having lived off of my savings for a year or so and having lost money on SexyFurnishings.
By then I had a full time job working remotely for the same company that I worked for in Boston, doing hedge fund tax work. I began building up my savings again right as the market bottomed in 2009. Over the next 6 years I focused on the same strategy I had success with before in the mid 2000’s: stocks within sectors that had significant near term catalysts behind them, that had solid balance sheets, and were inherently cheap.
The result was far more than I ever imagined: from March 2009 until May 2015 I have averaged about 170% annual returns with no leverage or options (i.e., about a 470x return). It still boggles my mind how the hell this happened. But I firmly believe that the decade or so I spent teaching myself as much as I possibly could about investing provided the foundation for success. You might not see the results immediately but if you stick with your passion long enough it will pay off big in the end.