So it's been a while since we've posted anything on here, but not a whole lot has changed since April. What I will touch on is some of the problems we've encountered and the strategies we've employed to counteract them.
When we first started Lake State Capital Management at the beginning of 2011, everyone was super pumped up about meeting every couple weeks, analyzing stocks, and voting to make plays that could give us a quick hit for a gain. We ran with that mindset for the first few months of 2011, but we quickly realized that once summer started that it was hard to keep the pace we were running at up throughout our existence. We would buy into securities that would gain a lot or lose a lot within the first few weeks of owning the stock so we decided to set safety nets on stocks that decided to drop fast. We set an 8% loss rule to sell automatically if a stock fell 8% off its high point of our ownership. This was a great strategy when we were meeting every few weeks to put our cash back into other investments, but when summer hit, things changed.
During the summer months, it was hard to get everyone to meet even once a month so what happened was that when we had investments that hit the 8% rule after just a week or 2 of our ownership, we were sitting on cash until we met next without the money working for us which in our opinion was not a good play on our part. We tried a few times to push different plays on stocks through on group emails, but we hadn't agreed in LSCM meetings on a procedure to do this and it became a hot topic as we headed into our meeting in early September. We had a group of people in the group who had the ability to monitor stocks on a daily basis and react to changing market conditions as they happened. On the other side of that though, we had a group of people who's jobs didn't allow for as much exposure to the changing market landscape. It became evident to everyone that we needed a procedure to move quickly on plays that we thought were no brainers and this is what we came up with in our September meeting.
What we decided to do was to change our groups strategy from one of voting on stocks that people brought up at meetings only, holding them until the next meeting and reevaluating to more of a split portfolio. The largest portion of our portfolio is devoted to a buy and hold strategy, buying blue chip stocks that have had a solid history, strong brand, and a bright future. Doing this will provide us the ability to be more hands off on the portfolio as it should be expected that these stocks increase as time moves on. This will encompass 75% of our portfolio and will be the staple and backbone of LSCM. It will be reevaluated every meeting as to what we want to do and how we think the market could affect our portfolio. The remaining 25% of our portfolio will be devoted to "quick plays". We decided that in order to continue to learn new types of investments we needed to continue to expand our knowledge into the different types of securities that we can invest in. This group is made up of 5 people (Ben Turnwall, Pete Anderson, Jay Rainey, Kyle Lee, and Peter Rolando) who have the ability to react quickly to changing market conditions and make quick hit and run plays from day to day. What this also enables us to do is to buy up stocks who we believe is very undervalued, even though they could be considered a perfect buy and hold opportunity, and then put it up for a group wide vote to move into our Long Term Portfolio. Thus far this group has done a good job communicating with each other and have made some good plays since the new strategy took effect. Our long term, buy and hold portfolio should be structured at our next meeting on Thursday, October 13th.
It has been a great first year where we've made some good plays, but just as many boneheaded moves which we gained our largest return on....the knowledge to not make the same mistake twice which at this point will carry us farther than even the largest returns in this first year.
Wednesday, October 12, 2011
Thursday, April 7, 2011
Going Forward
We met last night (4/6/11) in the Mancave on a mission to hammer out an on going strategy for how we make the most of what we have.
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:
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.
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.
Monday, March 7, 2011
Profile Preview :: Michael Ervin, The Treasurer of Treasurer's Assistant
Over the years, Merv has held such coveted positions like Cub Foods Maintenance Boy, Minnesota Valley Country Club Lawn Boy, and Northwest Airlines Bag Boy. Consideration has been set in motion to change his title to Treasurer Assistant Boy. A financial intern position was held at UBS and a Legislative Aide position at the Minnesota House of Representatives is also under his work belt. Currently he resides as an internal auditor at United Health Group where sitting at a desk with limited motion plagues both himself and the rest of us.
Merv was one of the few to bring some real life investing experience which took place during his stint as a bag boy. Upon receiving 120 shares of Delta Airline stock (during the merge) priced at $11, frustration, bewilderment and a bad lunch brought along his sell out at $9. Investment in Microsoft was his next move (at $24 a share) and again after much frustration, bewilderment and a bad breakfast burrito the shares were sold at a loss at $22 a share. Here's to learning from our mistakes!
Besides making new friends and maintaining old ones, Merv wanted to join an investment club to keep his mind focused on investing as well as leveraging other people's ideas, opinions, and strategies and then turning them into profitable investments. As his friendships and the club continue to grow, five years down Merv hopes for solid returns on investments and continually obtaining vast knowledge on making good investments. Ten years down he hopes for the capital earned to be turned around and invested into a business and a dream of his (and he hopes of the club as well); outdoor batting cages.
Bethel Professor Chuck Hannema has been an influence on Merv's investing strategies as well as David Browns, "All About Stock Market Strategies," and his Grandpa. His Grandpa's investments lie outside of the stock market which he believes to be "driven too much by emotion and intangibles" and not having enough real value. Instead, he owns a car wash, strip malls and has partial stake in a Texan Jack-In-The-Box. Owning tangible assets or land and then offering a product or service are investment strategies shared by both Merv and his Grandpa.
Merv likes to fill his free time with biking, softball, golf and hockey. One of his personal accomplishments is visiting 24 of the 30 MLB team stadiums and has plans to visit both San Fran and Oakland this year. Other parts of his free time are spent listening to country music, reading Shane Claiborne books, and eating at the outrageously delicious food graced by the gods known as Chipotle. Also, Inception tops the chart of his movies selection.
If Merv's interests and investing strategies were to be aligned and say, he were to find himself owning a baseball field, he would call it LSCM Field (which I must admit is a superb name) and would feature Carl Crawford, Hanley Ramierez, Ryan Braun, and Albert Pujols topping the batting order.
Looks like we'll have to keep you around for a while Merv. Chances your Grandpa is an angel investor?
Cheers
Monday, February 28, 2011
Meeting 2/23 Recap
Greetings,
We had a great meeting Wednesday night and Geoff was most accommodating. We started off collecting February's dues and then started presenting what our current stocks have been doing and what we thought we should do with them. Matt, Bast, Jay, Bob, Gieff and Pete all presented their stocks. Bob recommended we could hold for now or sell our VWO which has dropped ~6%; I recommended purchasing more of the Q's; Gieff recommended holding onto PYZ and Pete suggesting holding IJR for now, but we could also sell for more investment options.
After going over some current events,it all boiled down to Rolo's suggestion of buying oil. Next on the agenda was new investment options; the following stocks were discussed: PXE (Merv), CBI (Tim), ODC (Rolo), and SATC (Ben). Voting then took place on all current and future stocks with the following outcomes:
Hold -> DOW, IYF, QQQQ, IJR
Sell -> VWO (10 shares)
Buy -> ODC (16 shares), CBI (8 shares), and BP (12 shares)
Pass -> PXE and SATC
After voting Merv's stock game was discussed and many of you have seen the email with that already. The proposed idea was $10 a person with the game starting this Monday the 28th. Please reply to that specific email for questions/suggestions/issues you may have.
The Prez would also like to remind us to please only use checks for our monthly payments so proper paper trails can be in check. Look for an agenda from the Prez later and we will be meeting Wednesday, March 9th unless otherwise noted.
Great meeting and we'll see everyone next month!
Cheers
We had a great meeting Wednesday night and Geoff was most accommodating. We started off collecting February's dues and then started presenting what our current stocks have been doing and what we thought we should do with them. Matt, Bast, Jay, Bob, Gieff and Pete all presented their stocks. Bob recommended we could hold for now or sell our VWO which has dropped ~6%; I recommended purchasing more of the Q's; Gieff recommended holding onto PYZ and Pete suggesting holding IJR for now, but we could also sell for more investment options.
After going over some current events,it all boiled down to Rolo's suggestion of buying oil. Next on the agenda was new investment options; the following stocks were discussed: PXE (Merv), CBI (Tim), ODC (Rolo), and SATC (Ben). Voting then took place on all current and future stocks with the following outcomes:
Hold -> DOW, IYF, QQQQ, IJR
Sell -> VWO (10 shares)
Buy -> ODC (16 shares), CBI (8 shares), and BP (12 shares)
Pass -> PXE and SATC
After voting Merv's stock game was discussed and many of you have seen the email with that already. The proposed idea was $10 a person with the game starting this Monday the 28th. Please reply to that specific email for questions/suggestions/issues you may have.
The Prez would also like to remind us to please only use checks for our monthly payments so proper paper trails can be in check. Look for an agenda from the Prez later and we will be meeting Wednesday, March 9th unless otherwise noted.
Great meeting and we'll see everyone next month!
Cheers
Friday, February 18, 2011
1.5 Months In
We've been trading live now for almost 1.5 months and have learned a lot as well as seen most our securities rise a few percentage points in this short time.
When we initially bought our ETFs we assumed they would continue to rise as the market continues to be bullish. We purchased them with the intention of slowly developing a diversified stock portfolio and we are continuing to research stocks as well as ETF's as we accumulate monthly dues and sell off the securities. We bought 2 emerging market ETFs and saw those drop the day after we bought them. ECH which was our Chilean fund fell 12.12% before we voted at our last meeting to sell it and cut our losses. There was much debate about and we figured we had to set in place some rules as to how much we would let any security fall before we sold it. This is what we came up with.
Sale of Falling Security
When any security we purchase falls 8% from it's high price it reaches, at any point of our hold on it, we will sell it immediately to cut our losses. If it continues to fall we have saved ourselves that much money and can then either wait to repurchase on it's upswing, or put that money in another investment. Here are some examples of what that means.
We buy 'ABC' at $100 and it falls 8% right away, we sell it.
We buy 'ABC' at $100 and it goes up to $105 then falls 8%, we sell it.
We also talked about how we will decide to sell a security on a gain and we figured that every meeting we would review where each investment is at and vote on whether to accumulate more, hold, or sell off. We hope that if we did all research on any security we purchase it will continue to rise and we should at least be able to make 8% per investment, but in the cases where we reach that 8% mark and think it will continue to rise, we have the option of holding it.
Deciding to cut losses at 8% will protect us from letting it drop farther than 8 which will allow us to put our money into other forms of investments.
Here is our current unrealized gains on our securities:
We have made a good start but will have around $1000 in cash that is still left to invest and should make decisions next Wednesday on what to do with that.
Check back later for more updates!
When we initially bought our ETFs we assumed they would continue to rise as the market continues to be bullish. We purchased them with the intention of slowly developing a diversified stock portfolio and we are continuing to research stocks as well as ETF's as we accumulate monthly dues and sell off the securities. We bought 2 emerging market ETFs and saw those drop the day after we bought them. ECH which was our Chilean fund fell 12.12% before we voted at our last meeting to sell it and cut our losses. There was much debate about and we figured we had to set in place some rules as to how much we would let any security fall before we sold it. This is what we came up with.
Sale of Falling Security
When any security we purchase falls 8% from it's high price it reaches, at any point of our hold on it, we will sell it immediately to cut our losses. If it continues to fall we have saved ourselves that much money and can then either wait to repurchase on it's upswing, or put that money in another investment. Here are some examples of what that means.
We buy 'ABC' at $100 and it falls 8% right away, we sell it.
We buy 'ABC' at $100 and it goes up to $105 then falls 8%, we sell it.
We also talked about how we will decide to sell a security on a gain and we figured that every meeting we would review where each investment is at and vote on whether to accumulate more, hold, or sell off. We hope that if we did all research on any security we purchase it will continue to rise and we should at least be able to make 8% per investment, but in the cases where we reach that 8% mark and think it will continue to rise, we have the option of holding it.
Deciding to cut losses at 8% will protect us from letting it drop farther than 8 which will allow us to put our money into other forms of investments.
Here is our current unrealized gains on our securities:
We have made a good start but will have around $1000 in cash that is still left to invest and should make decisions next Wednesday on what to do with that.
Check back later for more updates!
Monday, February 7, 2011
Profile Preview :: Kyle Lee, The Treasurer of Treasurer's
Next on the list is Kyle, one of Bethel's football sensations and our beloved Treasurer. Graduating from Bethel in 2009 with his Bachelor's in Business (emphasis Marketing and Finance), he has quickly arose within the group to his position with the help of his Leadership Minor. His normal life is filled with work where he thoroughly enjoys every waking minute of being at the Department of Veteran's Affairs in the Loan Guarantee Division with his more than perfect boss' (eat that snippy goggle-searching overheads!). Before that he was a long time employer of Best "The Ocho" Buy, the original megastore. Outside of work his time is spent playing guitar, hanging out with friends and is always down for any type of a pickup game. His appreciation for creativity is being newly displayed in his growing passion for photography.
Like a number of us fellow LSCM member's, Kyle had a fairly limited knowledge of investing. He's managed some of his own stocks (through his parents) well enough to have them reset in money market funds and has gained what knowledge he could from it. The idea of an investment club offered the perfect, low-risk opportunity gain further understanding and to learn about investing. As the markets are in the midst of a big up swing, it made the most sense to him to get money in now and as often as possible. Even if we don't find that next Apple stock, the overall growth of the club will allow for Kyle and the rest of the members to reap the benefits. Major growth should be imminent as the growth of the fund and knowledge of the market surges through each and every LSCM member. While he's talked in depth with financial planners, learned as much as possible a number of analyst opinions, Kyle doesn't have any significant influence on his fresh palette of an investment style. If i were to force Kyle to choose an influence (I didn't) it'd be the Bethel Professor, Chuck Hannema, aka the eighth wonder of the world.
Five years to the future Kyle hopes that member dividends will be paid out while in the middle of significant growth. With proper management, the club will be able to kick back "play money" for its members as an additional stream of assets available. Further down the road, a full set of assets for LSCM members would be available to develop business deals as well as real estate acquisition. "It can function as a means to an end... aka the lifestyle we all dream of." Here's hoping! With the initial LSCM funds serving as the catalyst to a larger means of financial growth and stability via the diversifying of the investment portfolio beyond the traditional market, Kyle personally hopes and dreams for consistent growth with enough monthly inflow to diversify outside of the stock market into unnamed business ventures. Perhaps one of them could be a theme park Kyle?
Before getting into that, when asked what was the best about being the Treasurer he responded "secretly having to do nothing." While this is somewhat of an overstatement, this does make some sense since we are using a finely put together, beyond excellent investment tool such as Ameritrade (helloooo endorsements!). With the brute calculation taken care of, all that's left is to interpret and communicate the results which only presents difficulty when certain members are present ;)
Kyle's favorites include eating prime rib, shrimp, and special k bars, listening to Keith Urban, and the book that changed his life is Everyone Poops. Favorite movies include Inception, Memento, Shawshank Redemption, Road to Perdition, and the mini-series Band of Brothers. If Kyle were to invest in a theme park it would be titled, "Hains World." Those of you that were around for the Heritage 211 days will be familiar with this reference (and those of you that are not can visit here for a rambunctious look into a group of college students in their senior year). Most popular ride at Hains World? The Rogne. 'Nuff said.
Cheers!
Wednesday, January 12, 2011
IYF Completes the Portfolio
We purchased IYF (iShares Dow Jones US Financial Sector Index Fund) at the end of last week to complete our ETF Portfolio. We purchased 8 shares at $57.96/share. Currently the share has jumped 1.93% this week and is helping to offset the loss we are currently taking on the Chilean ETF.
Overall since we have started purchasing stocks, our portfolio is up just a tick mostly driven by today's strong opening. Look back soon for more updates.
Overall since we have started purchasing stocks, our portfolio is up just a tick mostly driven by today's strong opening. Look back soon for more updates.
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