From Buy-and-Sell to Buy-and-Hold: Four Years of Trading History

It has been a little over four years since I opened my Scottrade brokerage account and started trading stocks. Back then, I was so excited about making quick money from the stock market that I kept the Scottrade trading window open from 9:30 am to 4:00 pm almost every day and didn't really do any research before jumping in. Pure speculation, to say the most. Good thing at that time was that stocks were very cheap after the dotcom burst and most stocks I bought were under $5. There were lots of them, even some very decent companies' stocks can be bought for only a few bucks. So even when I took a loss, the size of losses was at the level that I could swallow.

Last night, I logged in to my Scottrade account and collected all the trading data for the past four years. I was surprised how few trades I have made since 2005 and almost all of them were buys. And those stocks I bought in the recent two years, I still hold them. Actually, all the big profits I made from trading were from those stocks that I hold for longer than a year. Of course I didn't make much money from the quick in-and-out either.

So, here's a look of what I did in the past four years in trading stocks. 

2002

Call it crazy start. In a matter of three months, I made 24 buys, averaging 2 per week. Actually, I was quite happy if I could make 100 dollars from each transaction. From most stocks I bought during the last three months of 2002, I only hold them for only several weeks and dumped them when I realized I could make quick money from them. The only stock I still hold now is TSM though the stock price didn't really move a lot in the past four years. My biggest gains were also from two stocks, ALA and GLW, I purchased at that time. The proceeds from selling ALA and GLW helped us pay down $50,000 when we bought our house in 2004.

2003

I don't know exactly the reason, but it seems that all of the sudden, I stopped trading in 2003 and only made a handful of purchases. Actually, I lost money from most of the transactions. But those losses didn't really matter because in 2003 I made so far my best investment: bought 1200 shares of China Life Insurance (LFC) on its IPO day. Considering that LFC is now trading near $100, it's not difficult to feel how happy I could have been had I held all those shares till today. Too bad I didn't.

2004 

Here comes what bothers me the most for years: NT. I had been in-and-out of NT four times in 2002, happily collecting a few bucks from the trading. Yet, when it reached its high in the past five years, I decided to jump back in early 2004. Since then the stock had no where to go but south. And I kept adding shares when I predicted it was due to a bounce back, trying to offset the loss, but my prediction never materialized. What NT bring t me now is a loss of more $7000, or nearly 60%, of paper value. Call it my worst money move. Also in 2004, I started to invest in ETFs, PGJ and PEY offered by PowerShare, shortly after they hit the market. They are not spectacular, but solid and I still keep my positions in them.

2005

Call it an ETF year as the only stocks I added to my account were ETFs. I like ETFs because of their exposure (consists of dozens to hundreds of individual stocks, like mutual funds), the flexible pricing (like stocks), lower expense ratio (compared to mutual funds in the same category), and lower capital gains (lower turn-over ratio). The only stock I unloaded in 2005 was LFC. After seeing this stock traded in the narrow range around $25 for nearly a year, I lost patience in June 2005 and sold 700 of the 1200 I hold and used part of the proceeds to pay off some credit card debts (from 0% BT offers). Fortunately, I still have 500 shares with me.

 2006

While adding more ETFs (PHO and PSI) into my portfolio, I sold all PEY shares with Scottrade and repurchased some in my account with Firstrade after PEY shifted from quarterly dividend payout to monthly distribution because Scottrade doesn't have the dividend reinvestment option. Since then, I have been adding positions regularly. Also this year, I bought shares of BAC and PGN via ComputerShare's DRIP program and have set up automatic monthly purchase for both of them. I also applied for an account with P&G to buy their stocks directly (the application is still being processed. It could have been completed if I hadn't forgotten to sign the check the first time when I mailed out the paper work the first time). For BAC, PGN, and PG, my main interest is their dividends. With DRIP program, not only I can buy the stocks without paying commission, the dividend reinvestment is free as well.

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