My Play Money at Zecco

In his book, A Random Walk Down Wall Street, author Burton Malkiel declared that

A blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by the experts.

Do you believe random walk? Or do you follow your own research? Or maybe experts recommendations?

Early this month I mentioned in my net worth update that I have been using Zecco account to do some trades recently and made a small money from the activities. Here’s what I am doing with my so-called “play account.”

When I opened my Zecco account in the summer of 2006, I was thinking of using it as a play account because of the commission-free trades it offers. For a play account, I plan only to put a small amount of money in it and play with the mo so even if I lose it all, it won’t hurt too much. If I can make any money from it, then good for me, though it won’t prove anything other than some luck.

I didn’t really start to play with the little money I have in my Zecco account until February after I published my first The Dog of the Chinese ADRs. Initially, I thought I would buy the Chinese ADR that performs the worst in the previous month and hold it for one month, then sell the stock at the end of the month and buy the next worst performer. Unfortunately, I didn’t keep up with this method, though I did trade a few Chinese ADRs in the past couple of months without doing any research (random?). I just bought the stocks when I had the money and sold them when the profit was acceptable, no really holding the stocks for a month as I originally planed.

Anyway, I made a total of 7 trades in my Zecco account in March, more than I did in the entire 2007 and made a little over $111 profits, a gain of more than 14%. Stocks I bought and sold since February include:

  • Global Sources (GSOL)
  • Xinhua Finance Media (XFML)
  • Renesola (SOL)
  • Baidu (BIDU)

And stocks I am currently holding are:

  • China South Air (ZNH)
  • WSP Holdings (WH)
  • Agria Corp. (GRO)

For me, I think I have no problem deciding when to buy a stock. The problem is when to sell. For various reasons, I am always reluctant to take profits off table when I should. For example, one of my biggest holdings China Life Insurance went to a record high of $106 a share in late October 2007. I didn’t sell any shares when the stock, like many other Chinese stocks traded in U.S., was clearly going down since. Now LFC has lost nearly half of its value, taking away a big chunk of my paper wealth. I guess I am too greedy (always expect it to go higher and higher)! With this play account, I want to sell a stock whenever I think the profit is good enough. So far the average holding time is about a week.

Money in the account were from signup bonuses I got from Zecco for referring new customers to them. I have published the Google spreadsheet that I use to track my trades and performance. The goal of this play account is to make money, small money, and I want to see how much I will have at the end of this year.

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Author Info

This post was written by Sun You can find out more about Sun and his activities on Facebook , or follow him on Twitter .

12 Responses to “My Play Money at Zecco”

  1. Turn One Pound Into One Million |  Apr 22, 2008 at 6:46 am

    I spent time, a few years ago, carefully choosing some shares and none of them did that well. I have resigned to the fact that this is very difficult and as long as you have your money invested for over 10 years, you are likely to do pretty well out of them. I now use an index tracker which is an account that has a spread of shares that follow the general trend of the stock market. I am pleased with how these have faired over the last few years and aim to continue investing in this way for the foreseeable future.

  2. Tony Leach |  Apr 22, 2008 at 1:02 pm

    Sun –

    Good to hear you’ve gotten some good returns at Zecco. But why share your trades and performance in a spreadsheet when there’s ZeccoShare available to do just that?

    Tony Leach
    (Zecco Product Manager)

  3. Super Saver |  Apr 23, 2008 at 12:47 pm

    Sun,

    I agree that selling is the hardest part of investing.

    One strategy I like to use is to sell part of my holdings, enough to recover the principal. Then I just have the “profits” invested and I can never lose money. This works best when there is no tax impact (e.g. in a Roth IRA.)

  4. linda |  Apr 24, 2008 at 11:55 pm

    Sun, is your play money in taxable account? if yes, what do you think about having to list all the gain/loss when filing tax return?
    On the other hand, Super Saver’s strategy is pretty good with Roth IRA. But it’s hard to guarantee you can preserve principal for each trade–and when you loss, you can not claim it like you do with taxable.

  5. Sun |  Apr 25, 2008 at 12:09 am

    Tony: I have wanted to use ZeccoShare, but somehow didn’t find time to try it yet. Maybe I should. I know it’s a nice platform to share investment ideas.

    Super Saver: Yes, it’s tough to sell, especially when the stock is making money. I always hope it can go even higher. Sometimes it does, but many times it doesn’t and I ended up at selling at lose :( And up to now I only sold a part of my holdings a couple of times. If I want to sell, I always sell all my shares.

    Linda: It’s my taxable account, so yes, I will have to report all the transactions at tax time, which could be a headache if I keep trading four or five stocks every month :(