The problem was brought to everyones attention last meeting by Kyle and a couple other members who pointed out the fact that we need to take into account the buy/sell trade costs that we incur with Ameritrade. Currently a trade with them costs $9.99 so $20 needs to be taken into account as soon as a stock is bought.
Because we went into this looking at trying to have a diversified portfolio we spread out our $5000 between too many stocks, buying on average $500 worth of a stock. So buying $500 worth of lets say stock ABC we would have to make 4% before we break even (($20/$500)*100). What we decided last night was to raise our minimum investment of any future purchase to $1000 lowering our breakeven point to 2%.
There was good discussion about how in doing this will break up our diversified portfolio and put more of our eggs in one basket. We decided that at being young, enthusiastic investors that we can take on this additional risk as what we are currently contributing monthly is only $25. After raising our risk exposure we wanted to put in a safeguard when choosing stocks.
We spent a good ammount of time last night developing a format for reviewing stocks. Up until this point each member would review a stock and present it at club meetings. This would be the first time that anyone would have heard of the stock and would have to take the presenters word as is without having much capacity to do his own research. What we developed was a format for submitting stocks to group members for reviewal. This will be added to the bylaws:
- Each member has the option of researching a stock or security at his own will.
- The member will submit a document for proposal 48 hours prior to the next meeting via email to group members stating what they propose and why. This document is being developed currently by Peter Rolando and Kyle Lee.
- Members will have 48 hours to review the proposal, research it, and be ready with knowledge about it for a good discussion at the next meeting.
As of last night, our portfolio included 7 stocks and $866 in cash. With March dues added for an additional $250 it brings our cash total to $1116. We decided last night to sell IYF our financial ETF and also QQQ our tech ETF. Selling these will give us an additional $950 cash bringing our cash total to over $2050 to be invested at the next meeting.
We are currently in a good position, with our first quarter now history, moving forward learning more and more every week.
Our next meeting will be Wednesday, April 20th with the time and place to be determined.
