About

Scroll to the bottom for my current stock holdings.

Introduction + Why you should invest + How to get started investing

Hello! My name is Eric Tu, I’m 23 years old and have started investing in the stock market January of 2017. This blog will cover the stocks I am currently invested in, as well as my rationale coupled with the research behind my decisions. Please view all blog posts with discretion: all content, whether it be advice, research, conclusions, etc, may be incorrect or drawn from biased sources and offer no guarantee of future stock price. Following advice from this blog will comes at your own risk.

I started investing in January of 2017, after getting out of college and only really having experience with a virtual stock market experiment when I was a student in elementary school. I knew the general rule behind investing is that the market, on average goes up; thus, to capitalize on it, you must invest early, and invest periodically (at fixed intervales), regardless of the market environment. Compound interest is a wonderful thing. The average s&p 500 return per year (a typical benchmark index, which can be thought of a stock of the largest 500 U.S. company combined) is about 10%. That means, if you invest $10,000 today in an index fund, and reinvest the profits you earn, in 40 years you would have half a million dollars. The mistake most people make is after a sudden drop in the stock market, they take all their money out, thus their “average” return on the market consists of a huge drop, and misses out on any potential future huge gains.

Most everyone has a 401K which typically allocates a certain amount of money from your paycheck towards retirement in an index fund. Index funds are a way of investing in the market as a whole, they will balance the stocks in the index fund to match a larger market environment, maybe all the tech stocks, all the large companies, all the mid-size companies, etc. Data shows index funds on average earn more than the majority of active portfolios, ones where “experts” choose specific stocks instead of an overall market, so many see it as a win-win situation where you do not need to monitor your stocks and you will on average earn more money than even stock experts. Thus, one can choose to invest savings outside of the 401k in index funds to good results. However, the trend it tending towards everyone passively investing (investing in index funds), and how economy usually works is once the majority figure out the best strategy, it is no longer the best strategy. Thus, now may be a good time to have some “fun money” used to research and invest in certain stocks to gain an understanding of all the changes happening in the marketplace and use that knowledge to profit off of disciplined research and analysis.

To get started investing, one needs to choose a broker. A broker is simply a company that can officialize stock market sales, i.e. the store where you buy stocks. Most brokers charge a transaction fee of $4.95 per trade order, so it would make more sense to buy a larger order of stocks, say $1000 rather than $100, as if you lose $5 the latter would mean an immediate 5% loss. I currently use Fidelity as my broker, but I know Robinhood is a trading app (only available on the phone) that does NOT charge a transaction fee, though they may lack some other advanced resources like option trading (a way to trade stocks short-term at higher risk-reward) and help filing tax returns, though I am not familiar with the app. Also some side notes, any profits made from selling stocks count as regular income, even if you reinvest the money back into buying more stock. If you hold on to your stock for at least 1 year before selling, the sales will be taxed at a lower percent than if you sold within a year (this would be taxed at your regular income rate).

Anyways, the first thing I basically saw when I started researching in what to invest in January was the “Trump bump,” where most stocks, but banks especially, rallied with the election of a Republican president and businessman, as many were expecting slashes in corporate taxes leading to better earnings for companies. Interestingly to note, pharmaceuticals performed worse, due to concerns stemming from the desire to repeal and replace the Affordable Care Act, as well as comments from the president regarding high drug prices, accusing pharmas of price gouging for their own profit. Anyways, I was upset I missed the boat on the bank rally, but I attributed the bump in banks as also due to the expectations for interest levels to start increasing again. So I tried to think of other sectors that may also benefit from an increase in interest levels, and arrived at insurance companies, who need to invest the money they receive from clients safely. So that was where my first investment went into.

After that, my philosophy has generally been to do read other analysts opinions on stocks to get a general gauge on the current perception of the stock, and then make my own evaluation on whether a company will outperform or underperform expectations. One great way of getting immediate feedback from the market on whether your analysis is supported by the market or not is during quarterly earnings for a company. During this day, there is typically a larger move in stock price as these dates represent the revealing of recent company performance. Along with earnings reports are presentations to investors, which are located on an investors page of every company, and are a great resource to use for research.

Lastly, one needs to realize that there are different methods of trading. There is one based on market trends and valuations, also called fundamental trading. These investors believe that good prospects in stocks will translate into good stock prices. The next group trades off of the stock charts of companies, and are called technical traders. These groups play off positive or negative momentum, and have labeled patterns in stock charts as generally positive or negative, though there hasnt been great research which supports their opinion. I am not a fan of technical trading, but since there are algorithms that trade automatically according to these trends, the safest investment would be one with solid fundamental and technical metrics.

Lastly is the type of company you are investing in. Some companies are stable but give out cash to their shareholders in dividends. Examples are Telecom and oil conglomerates. Others are growing stocks but provide almost no dividends, instead choosing to invest their profits in investments for their own company, giving returns to shareholders through stock price increase. Furthermore, there are diversified companies which have less risk and less reward with project successes and failures, due to the diversity balancing out the impact of each sector, and the opposite are focused stocks which may be easier to analyze, but would be hugely dependant on a few factors that can significantly impact their market. My ideal stock would be one showing solid fundamental and technical metrics, which is just starting to diversify, and each field it is diversifying into has a strong growth story (or environment) which can sustain and fuel its growth.

So that’s how I got started in investing! Definitely invest in stocks you are interested in and can understand, try to understand the industry as a whole (whether it is a sustainable trend or not) then compare the stock against competitiors in the same space. Remember, to make money in the stock market, you buy undervalued stocks, not necessarily good or bad stocks. For that reason, it is important not to only understand the potential of a stock, but whether the general stock market is overpricing or underpricing a stock.

Current Positions: (07/27/17)

Total Gain/Loss Lifetime (01/12/17-09/21/17): + 19%

Equity:          Total Gain/Loss          Dates of Holding

AABA            + 31.44%                       06/02/17-Present

AAOI             – 16.84%                       05/11/17-Present

AMAT            + 33.94%                       02/15/2017-Present

AMD              + 14.32%                       06/12/2017-Present

BABA             + 51.54%                       05/28/2017-Present

GILD               + 7.77%                          07/25/17-Present

HCLP              – 17.62%                       06/21/2017-Present

NTDOY           + 34.5%                        03/07/2017-Present

 

SND                 + 7.44%                        07/19/2017-Present

TSLA (short)  -18.37%                          07/17/2017-Present

Exited Positions:

Total Realized Gain/Loss (07/26/17): + 12.7%

Equity:                         Total Gain/Loss

AAPL                            Gain

AMGN                          Gain

AMZN                           Loss

BX                                 Gain

CHL                              Loss

CMG                             Gain

DIS                                Gain

FN                                 Loss

FNF                               Gain

FL                                  Gain

GILD                             Loss

GIMO                            Loss

GM                                Loss

GOOG                           Don’t remember

GSK                               Gain

HXL                               Loss

INTC                              Gain

JBLU                              Gain

MGA                              Loss

MNK                              Loss

MU                                 Gain

NVDA                             Gain

OAK                                Gain

OCUL                              Loss

OLED                              Gain

PRU                                 Gain

PTR                                  Loss

PYPL                               Gain

SBUX                               Gain

SYY                                  Loss

VIRT                                Loss

VLO                                 Loss

WB                                  Loss