burned by internet stocks

So when I was in my 20s, working in New Hampshire, I worked my butt off and eventually got on staff at the statewide paper there. This was the first time I was making any money — it was a pretty good salary for someone my age, living in a low cost-of-living state.

One of the things I did with the increased salary was to … buy Internet stocks. AOL, AMZN, YHOO, EBAY, TWX, CNET, ET, CMGI … Well, at least it was the blue-chip Internet stocks. I bought stocks on margin and saw them double in value within days. I had three Internet brokerage accounts and was addicted to CNBC.

In roughly a year my initial investment of about $5,000 (or was it $10,000?) hit a high of about $25,000. I couldn’t wait for all of it to double again! I remember dancing around my kitchen in excitement …

Of course, as you all know, it didn’t quite work that way. I think I broke about even or made a slight gain on my largest position, AOL. But the rest of it — not so much.

I had bought 10 shares of CMGI stock for about $1,000 … when I sold them they was worth about $5. I actually owed my broker money after the sale, since the commission was $8 or $12.

I still have 20 shares of CNET, worth $181.60, or $1,100.89 less than what I paid for it nearly a decade ago …

Yeah. Not so smart.

But I also made another move that has paid off. This is the one you should take my advice on. More on that tomorrow.

1 comment to burned by internet stocks

  • themofo

    I can’t believe I’m going to start doling out stock-picking advice, but…

    1) Pick stocks with a rock-bottom P/E ration (like, under 12) and fat dividends. Almost by definition, if the ‘E’ is large, that means the ‘P’ is underpriced and the stock will rise. Usually these stocks are energy companies, they’re always mature companies, and the price goes up.

    2) Take advice from the guys at Fortune. They do know their stuff.

    3) Listen to simple advice. When I was engaged, and at the same time one of my best friends was engaged, my ex told me to buy Weight Watchers. Why, I asked? ‘Um, because every woman you currently know is trying to lose weight for these damn weddings.’ Bought it the next day at 33. Yesterday it was at 55.

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