3/5/21 - I’ve lost nearly 12% of my portfolio

 

OMG!  The markets have been mega tanking since February.  I’ve lost nearly 12% of my portfolio.  It’s scary.  But that’s the risk we take when we invest, right?  The silver lining – buy the dip (BTD).

I made some exciting investments this week, including new learnings about the market, as well as investment in 3 new stocks.  First, my learnings.  Learnings can come through organic learning, as well learning from mistakes.  I did both this week.  :D

Organic Learning – SPAC– Special Acquisition companies

Before joining my tech company, I interviewed with a cutting edge start-up company specializing in sustainable packaging intended to replace plastic bottles, among other things.  The start-up was partnered with companies like Nestle and PepsiCo.  Through my connections and feed on LinkedIn, I learned that Origin was going public not through an IPO, rather through a SPAC partnership.  SPACs have been quite popular this last year, as a greater number of young companies are joining the stock market.  A SPAC a “special-purpose acquisition company”, and is sometimes referred to as a “blank check” company.  You can read more about SPACs here. 

Needless to say, I was excited to see Origin had matured enough to enter the market, and I wanted it!  One of the great advantages of SPACs for investors is that you can typically get a lower buy price on a new-to-market company.  Most SPACs enter the market at $10, and since the stock ticker is initially listed under the SPAC’s name and not the company of interest’s name, there can be less publicity and attention to quickly drive the price up.  This is one of the “unfair” aspects of an IPO (specifically), is that some investors have the opportunity to start buying the stock before it’s public, and then by the time the stock goes to the public market, the price is already out-paced for some investors.

In summary, I now own 130 unit shares of AACQ (will be ORGN when the merger is completed).  130 represents a special number to me from my experience with Origin.  I’m looking forward to supporting their success for years to come!

Learning from mistakes – All Stocks are not equal – do your RESEARCH

Okay, so I realized I made a misinformed investment.  ☹  Remember when I bought RLLCF a couple of weeks ago?  Well…I started to do more (haha, more?) research on this stock, because I wanted to understand the difference between 3 stocks that represented Rolls Royce.  I learned that RR is the main company stock, traded on the UK market.  The other two tickers, RLLCF and RYCEY, represent non-common stock types.  Specifically, RLLCF which I had purchased, is stock that is awarded to shareholders as a dividend.  So, I bought stock that shareholders receive for the purpose of selling, or reinvesting somewhere else!  (Face-palm) 

Admittedly, my research before purchasing was minimal, if not non-existent.  I saw this stock with high activity on one of the leaderboards and was drawn to its very cheap price.  Penny stocks can be an exciting, earlier investor opportunity, but there’s also a reason penny stocks are penny stocks.  Do your research!

There’s also something to be said about purchasing stocks of companies you know (and love!).  I don’t know much about Rolls Royce, other than it’s a fancy car.  I made an uninformed decision based on a relatively small amount of data and experience.

This week I sold my [“dividend”] shares of RLLCF so that I could reinvest in a real opportunity.

Experimentation – BUZZ

I know, I know.  I just preached to do your research and not to make uninformed decisions.  Buy what you know.  But sometimes it’s fun, and profitable, to jump on the bandwagon and ride the wave.  (Yes, very bad analogy.)  This month, a new term has arisen – “meme” stocks.  These are stocks that recently gained significant momentum and gains following social media hype and chatter.  Even I rode the GameStop (GME) rocket, though I owned the stock previous to the chatter. 

There have been several stocks targeted and boosted through social media forums.  Some of the other “meme” stocks included GME, BB, NOK, SNDL, AMC, and a few others.  The power of this organized retail stock trading has garnished so much attention that today a new stock ETF entered the market – BUZZ. 

Link to article - “The new ETF (ticker: BUZZ) tracks the 75 stocks that are getting the most social media hype and packages them into an exchange-traded fund.”  “BUZZ gathers its data through the Buzz NextGen AI U.S. Sentiment Leaders Index, which tracks stocks with a $5 billion minimum market capitalization that have seen consistent and diverse mentions on social media over the past year. The index uses an algorithm that determines whether those comments are positive, negative or neutral, then ranks each stock based on the degree of positive sentiment and breadth of discussion, according to the fund description.  Anywhere from 250 to 250 stocks will meet the initial criteria, but only the top 75 that have the highest social media sentiment enter the index.”

After witnessing the power of GME as a “meme” powered stock, I was excited to BUZZ and jump on this experimental rocket from its inception this morning.  I purchased 20 shares at a cost basis of $20, for a total investment of $1000.  As they say – To the Moon!! 

UPDATE 3/6 – my experiment is going to require adjustment.  I set a Limit order to buy BUZZ at $20, but the price never dropped to that level.  Thus, my order was canceled at the end of the day.  As of this weekend, I do not yet own BUZZ.