The journey started - Bought NTGR stocks

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I bought 32 Netgear (NASDAQ:NTGR) stocks on 10/22/2007 for $30.2 each. Ameritrade charged my $10 for the transaction. So, I would consider the cost of each stock to be $30.51.

I want to keep track of the following information for every new stock that I buy:

1) Why am I buying this stock (Research that I did, factors that convinced me to buy that stock, why didn't I buy the stocks of a different company in the same market/domain?)

- Earnings per share (EPS) was 1.18
- The company's 52 week's high was about $41 and 52 week's low was about $21
- The stock reached around $26 in July 07 due to poor Q2 results.
- The company gave a good Q3 outlook
- The company is venturing into Storage area solutions, coming up with innovative products like Skype phone, digital entertainer HD (for homes). The company was named in Deloitte Technology fast 50 program.
- TheStreet.com has given a buy rating with a target price of $41.
- The company's performance is good since it went IPO.

2) When will I sell the stock?

I am planning to sell the stocks when the value reaches $40 or above.

I'll think about selling this stock if it continues to go down and goes below $20.

3) What am I going to do with the money that I get out of this stock?

I am going to donate 20% of the profit and save the remaining amount. I'll probably buy an iPhone (when I save a lot or when Jobs announces another price cut :))

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I joined the world of volatility

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In late 2006, I was fanatic about trading stocks in the market. Thanks to my financing fundamentals from the MBA degree. I got very motivated and opened a free trading account with Ameritrade in early 2007. At that time, I had more interest & less money to invest. So, I had to fetter my thoughts. However, I decided to continuously monitor and keep track of the economy and the market.

I personally felt that I've gained more skills & knowledge by keeping track of the market than by reading books. Though I cannot claim to be dexterous at trading stocks, I now have a decent understanding of the dynamics of the market.

In October 2007, I read Robert Kiyosaki's "Rich Dad Poor Dad" - a great eye opener. This book exhilarated my passion to invest in stocks. I decided to start trading stocks to improve my financial ingenuity.

I was looking at companies from different industries, reading analysts reports, reading press releases, analyzing the quarterly reports etc., I first thought of investing in eBay - thinking that eBay would announce good Q3 results & due to the holiday season they'll do well in Q4 also. The results from eBay was a bummer. They've to write-off some money to meet the obligations of the Skype deal. The stock didn't do well. I felt fortunate that I didn't invest in eBay :)

After a couple of days, I transferred $1K from my bank account and bought 32 Netgear (NTGR) stocks on 10/22/2007.

I have created this blog to keep track of the things that I learn during the process of developing my financial intelligence. Hopefully, this blog will be useful for others also (Too early to say this with just one posting!). I am hoping to update this during every trade that I make.

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Sharpen the Saw

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When we were small, we were told "Study hard upto your 12th standard. Once you get into your college, you can start to relax". We completed 12th. But then, folks said "Study well for another 3 or 4 years. Once you complete your college and go to work, you can start to relax". But, here you are. You completed your studies and got into a job. Now, your manager gives you a bundle of project/product documentation to read. You are also asked to attend a set of training sessions. You have to continue to read about new technologies/tools for every new product/project that you start to work on. In IT industry, the need to continuously update your knowledge doesn't end. What happens to a wood cutter who continues to chop trees without sharpening the saw. Either the saw will break or the wood cutter will get tired soon. He'll soon reach a point where he cannot cut any more trees. The same thing will happen to you if you are not constantly updating your knowledge/skills. Technology evolves rapidly ... like a supersonic jet that vanishes in the blink of an eye. You need to keep pace with it. Otherwise, you'll get outdated.

You can also continue to update your knowledge by taking part-time courses. Many companies provide distant education programs by affiliating with colleges and universities. That is one good way of replenishing your skills.

Use every opportunity you get to learn something new. Don't ever forget to "Sharpen the saw".

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Time, Cost, and Quality - Pick any two

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Building a product and nurturing a plant have lots of similarities. You need to invest sufficient time and resources (i.e., money) to get quality in the output. Time is indeed money. When you spend a lot of time on the project, the cost of the project goes off the roof. Though you might have built a high quality product, the product won't be appealing enough - because it will be COSTLY. On the contrary, if you rush to deliver something in a short time, compromising on the quality, the product still won't be appealing enough - because it is BUGGY. So, you need to strike a balance between these 3 factors - Time, Cost and Quality. Most of the times, you may have no choice but to select 2 of the three. You would have to compromise on Time or Cost or Quality. Based on my experience, companies often try to compromise on Quality as it is not very visible when the customer begins to evaluate a product/solution. However, it doesn't take you very long. Customer will soon figure out that the product is BUGGY and it will come back to haunt you. Successful companies have learned to strike a balance between these 3 factors. So, if you want to be successful, you should be too.

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