Playing a bit on the stock market was one of the things I’ve been wanting to do since I was a kid but I never did it because I was too afraid that the stock would tank and never recover to the level I bought it at.
Two years ago for instance I was planning to buy Google shares, I’m not exactly sure but I think they were trading around $375 or in the low $400s back then. I followed the stock closely for a couple of days but backed away from the idea of buying it as the GOOG shares dropped quite a bit that week and didn’t really recover.
Looking back at this event it’s clear that I made a big mistake. By the end of 2006 GOOG jumped above $500 and last year they even reached a peak of $714. If I invested $5000 in Google when they were trading around $350 and waited one year or a year and a half I could made anywhere from $2500 to $5000 profit.
Yesterday I decided to take a gamble on the stock market by buying some Intel shares. With the sub-prime crisis in the U.S. lots of stock and indexes worldwide lost lots of value. In some cases this was probably justified but there are also companies who dropped a lot without any good reason at all.
Intel reported big increases in revenue and profits last week but was punished by investors because their outlook for the second quarter was a bit less well than analysts were expecting. As a result of this and because of the fear of a recession Intel’s stock dropped from about $22-23 to a low of $18. I’m fairly confident that Intel will perform pretty well this year and in the near future so I decided to take a gamble and bought some INTC stock at $18.32.
I wasn’t really expecting the stock would recover quickly but much to my surprise the INTC shares jumped about 2.5% shortly after the stock market opened. It’s now trading around $19 per share so fortunately I haven’t lost any money yet
I’m planning to sell it when it reaches about $23 – that’s 25% profit plus dividends (if any). If the crisis gets really ugly I might have to wait a while for it but I believe that it’s a safe bet shares from a firm like Intel will eventually recover.
Just like Intel’s stock I’ve been following AMD closely but I’m not really interested in investing any money into this firm as they are currently failing to keep up with Intel and NVIDIA and are losing massive amounts of money. A couple of years ago when AMD was kicking Intel’s butt lots of fanboys were screaming to buy AMD stock when they traded around $35-40 but I hope they didn’t put their money were their mouth was as AMD’s shares steeply declined since early 2006.
Not that you can’t make money on stock of firms like AMD. For instance, just before they announced their financial results last week their stock dropped to almost $5.5 but after that it gradually jumped to around $7. If you had the guts to pour some money into AMD you could’ve made almost 25% profits in less than a week.
Update: We’re now a day later and the tech stock is doing better than expected. INTC went up +7% yesterday and is now remaining flat around $20.3 – that’s about $2 profit per share for me. Within a couple of hours Microsoft will announce their financial results, lets hope this doesn’t disrupt the upward trend of Intel’s stock.