Sunday, January 25, 2009

Money Where Your Mouth Is

I've been known to talk about the fact that fund managers are a rip off and we're basically getting screwed when we deposit money in things like 401k's and IRA's. It's the best available option for working class folks like ourselves, but an option making rich people richer and not very good in terms of value for the consumer.

I usually follow up this boastful talk with the fact that when I play the market with hard rules, but fictional money, I tend to outperform my most aggressive 401k by 10-20%. In my convoluted mind, this proves that we're over paying for a service that does not provide much value and isn't that hard.

The very good counter argument is that I'm using fictional monies and if it was real money I would make different decisions and would probably not out perform guys who were trained to do these types of things.

Marsalis has taken the argument one step further and said it must be an amount of money I'm not comfortable taking risks with.


So now we'll settle the score. It's a new year and an excellent time to try this out, especially given the fact that my 401k looks like shit anyways.


Given the fact that I was immediately losing 10%-25% of money every time I made a 401k deposit, I have reduced my contributions and set some money aside for savings. I've been doing this for a while and I know it goes against typical financial advice and the "dollar cost averaging" theory, but it's Friday and I don't give a @#!%$

I'm going to take $4,000 (I assure you Marsalis, that I'm not cavalier about that much money and Corinne is especially concerned about it's well being) and begin placing trades through an online broker.


The sort of fun part for y'all is that I will list out every time I make a trade, how much was made/loss and where I stand. Because I am not a day trader, each of my trades will likely span weeks, not hours, etc.

My prediction is that I should be up %25 by the end of the year, not including taxes, but including trade fees. Really, my goal will be to outperform my ING account which is currently making about 2.5% annually. I'm %100 sure I can beat that.


I, of course, highly recommend that you don't take any of my trades as financial advice or insight. I also won't be trading any financial stocks since I sort of work in the industry and don't want anything to look inappropriate.

I will try and remember to label each post as "stock" so you can view the history over time and provide summaries occasionally. At the end of the year, I'll also show what would have happened if I had just stayed with the stocks I bought as opposed to trading them.

Let the grand experiment begin.