Blackjack Day: Why I Don't Gamble

    I didn't really understand what was going on when I got to class Wednesday. Mr. Kapptie handed me a stack of poker chips, and Noah started asking me if I was allowed to gamble. I sat down (next to Brooke luckily; she seemed to know what was going on) and was totally ok with not getting many instructions. Figuring out what to do is sometimes the most enjoyable part of these activity days. When Mr. Kapptie aid Blackjack I knew twenty-one was my goal, but didn't have any strategy for getting there or know the details of the game. Mr. Kapptie told us twelve could play at a time, so I started small and put one chip in. I didn't really understand how close I should get to twenty-one, so I made eighteen or nineteen my stopping point (oops...). I bet low all three games I played. Then, in my final game, I bet all my chips except one. And I busted. I'm definitely glad I don't gamble because I don't like how stressful it gets. The comparisons Mr. Kapptie made the next day between the stock market and blackjack were interesting. I like what he said about being consistent because if I'd have been consistent I wouldn't have lost as much money.

Moral of the Story: Gambling=No Money 

Stocks

    I bought Hershey's stock as a trade. Mr. Kapptie talked about it and got me interested. What I found is that Hershey's doesn't just go up at Halloween. It's stock prices curve around the end of the year going up in October and down in December. I bought stock on Friday the 25th of October. I will sell the Monday after Thanksgiving. The catalysts for this stock are Halloween, Thanksgiving, and Black Friday. Based on spikes around this time in previous years, my goal is to make five dollars per stock. I have bought ten so far, so I will make fifty dollars. With commission I will end up only making about ten dollars, so I am hoping the price will go down in the beginning of my trade, and I can buy more stock.
     I bought Arlington Asset Investment stock as an investment. It has a quarterly dividend of $0.875, which adds to a total yearly dividend of 14.10%. In this stocks history there have been spikes and drops, but in general they have been going up until mid 2011 when, in general, they evened out. In January 2013, though  stocks went up and and have evened out a little there. If I were able to keep this stock for more of a long term investment my goal would be $31. Because this investment is limited due to class length, my goal for this stock is for it to get to $26.50.

https://www.google.com/finance?q=NYSE:HSY
http://finance.yahoo.com/q/bc?s=AI+Interactive
http://www.arlingtonasset.com/index.php?s=126

Trades and Investments

    A trade is a buy in a certain stock for six months or less. Its commitment level is comparable to a high school relationship which isn’t likely to last longer than six months. Often a trade is bought before an ‘event’ or catalyst is going to happen. A catalyst is anything that increases the price of a stock. After the catalyst occurs, a trade is to be sold, no matter what the market is doing. In trades dividends are not huge moneymakers.

    An investment is a buy in a certain stock for more than six months. Its commitment level is comparable to a marriage. A dividend is when a corporation pays money back to its shareholders. This is a good thing to look for in an investment.

    15% is the magic number. When a stock that has been bought as a trade (and is pre-catalyst) or an investment decreases in value about 15%, there are two options: buy more of that stock or wait. Because the stock bought was originally a good price, now that it is “on sale”, it is an even better price. The average point at which the buyer is making money decreases if more stock is bought at a better price.

    A short sell is where the trader borrows a stock from a broker. The trader then owes the broker, not money but a stock. The trader sells the stock. Then if the borrowed stock decreases in value, the trader can buy stock to return to the broker. The difference in the original stock and the one returned to the broker is kept by the trader. With a short sell, the price of the stock can also increase and the trader still owes the broker a stock but must buy the stock to be returned at a higher price. A trader should never short sell stocks that they own.

 

 

Candy Stock Day

    Last Thursday as we entered the classroom, my senses were assaulted. It was mostly dark in the classroom with a few lights illuminating the white board. A variety of candy and colored slips of paper covered the floor. Bells, voices bartering, and general noise played with a projection on the wall. It quickly became apparent that we wanted whatever was on the floor. I knelt down and started gathering as much as possible. The tootsie pops were very plentiful. I think they got passed by because they were so plentiful and small. I figured I might as well take them, though, so I grabbed everything within reach, including money. When my hands were full, I shoved the candy in the extremely large pockets of my old lady housecoat. Those pockets were probably my biggest benefit because I could grab without pausing. Once everything was off the ground, we were told that the market would open in one minute, and I organized my spot on the table. On the board were the candy names and prices. Mr. Kapptie announced the market opening and Quin and some other people came up to me and started asking to buy. My pride kind of got to me here. I sold without thinking because I felt cool that people were coming to me to buy. I could tell that I had been able to get more candy than most of the people around me. I sold to everyone who asked, for about a minute before Mr. Kapptie walked by the board, changing the prices of all the candy stocks. All the prices went up, and I realized that I had sold cheap. Quin, after I had realized this, pointed out how dumb it was… I thought a lot more about my sales from then on. I learned to buy when what I wanted was low and sell when things were higher. Announcements happened every two minutes, so everyone would stop and listen over the noise of the projections. The prices of the candy stocks went up and down much more often than announcements came. This happened very subtly which kind of threw me off, but was interesting. At one point Chalin approached me and offered $120 for each of my Heath bars, which was about a $30 profit on each (or something huge like that). I just knew he knew something I didn’t, so I said no and resolved not to sell those for anything. An announcement came that sent the market up, and Chalin came back, telling me that what he thought was going to happen didn’t, and he was willing to sell me all of his Heath bars (about ten) for a little less than their value right then. I bought. Right before the market closed, an announcement came about Heath bars. Their value shot up. Mr. Kapptie wrote a higher price crossed it out, wrote a higher one, crossed it out, about four times total. Each time he did this, I could hear Chalin, who was standing near me saying, “I’m losing $5 for each of those I sold… $10, $20.” That was exhilarating. Each time he said that, I’d gained that much. Mr. Kapptie announced the closing of the market, flipped on the lights, and wrote the final stock prices. Tootsie Pops, which no one had really thought about, were worth a lot, and I had 29 of them. I made more than $2,000 on them alone. We learned that when a company (Nerds) splits their stock, 3:1, the price may look like $30, but it’s actually $90. We calculated our value (with no calculators). I ended up with $6,541, which was the highest value in the class. And got a one hundred dollar bill for it (not real, of course). But that felt good.

Notice how this is all one big giant paragraph with lots of long, run-on sentences? That’s how Thursday’s class period was. No breaks. No pauses. We got thrown in the middle of everything with little introduction, did the entire thing from start to finish, and then figured out what was going on. Isn’t it nice to have no structure sometimes?