The Secrets of My Success

I've been doing the online brokerage thing for a few months, and things are going suspiciously well. Thanks to Zecco and their comission free trades, I'm up 14.35% over 123 days (.336 years) on one account and 11.10% over 98 days (.268 years) on another. I've been "managing" (I use the term loosely) both accounts similarly, and both those numbers both extrapolate to 41-43% annual returns.

In a year marked with hedge fund and real estate misery, why are things going so well for me? I'm not asking this in the rhetorical-arrogant way, more the suspicious-waiting-for-the-other-shoe-to-drop way.

My basic assumptions going in. Theyre both gambling related. Stick to what you know.

1. Stocks are like roulette, but since things tend to go up, the odds are slightly in your favor instead of slightly against you.


2. The dice do have a memory, i.e. what happened before is indicative of what will happen in the future.

With these assumptions in mind, I present the Big Ern Rules for Make Benefit Glorious Nation of Boat Filled Retirement:

1. Take the Money and Run - A) As soon as you see a 1-1.5% gain, slide in a stop or trailing stop order to protect your gains. B) As soon as your high flyer starts to level off, sell that mother. A 1 or 2% gain over a few days is awesome, especially with no fees.


2. Buy Good Companies on Bad Days - This goes against my bandwagoning instincts, but seeing headlines like "CostCo Stock Drops 4% Due to Heat" should get you fired up. The sun will come up. Probably tomorrow.


3. Don't Take Stock Picks from Anyone You Know - If the pick goes up, you become dependent, if it goes down you get bitter. Man is not an island, but the man who owns (or will own) an island doesn't need a hot pick from his cousin's neighbor's nephew.


4. Don't Do Any Research - Research is for the weak. Find a stock rating tool you like, and use it. What the hell is a P/E ratio anyways?


5. Losses are for Losers - Never give up until a stock shows a gain. This is the one that worries me. Thus far even when things have dropped precipitously after I bought them (Level Three, Raytheon, Exelixis, Scholastic, even Apple once), I've held on and they eventually (a month or so) come back up to show a small profit. (Note - I'm still waiting on Exelixis and Scholastic.) As soon as you see that small profit, see Rule 1.

Here are (some of) the possible flaws in my genius:

1. Eventually one of the stocks I refuse to unload will clean me out. If I started this 8 years ago, I'd still be holding the Enron I bought at $90.


2. The last few months are an anomalous period and the guidelines I'm using will fail me over the long run.

I'd love to hear other reasons why I'll eventually end up living in a van down by the river.

Apple is up 2% today. Off I go...