You’ve got to love the stock market. Back when gas was $40 a gallon and the Second Great Depression wasn’t in full swing, I became the proud owner of a handful of shares of solar stock. That stock went up 30 percent in less than three months. I sold my earnings and kept the rest. Now that stock is down 75 percent, but it recently went back up 25 percent in one day.
After my easy 30 percent gain (occurring the first time I ever made a stock trade on my own), I was a bit fooled as to how easy it is to make money in the stock market. I thought that solar was the only way to go. The cost of oil was rising by hundreds of dollars a barrel per day and the natural consequence seemed to be that interest in alternative energy would skyrocket.
However, my second solar buy proved to be in a company that didn’t have it together as well as the first company I bought into. The second stock I bought dropped instantly and I don’t think it has gone above my purchase price while I’ve owned it.
My most recent buy is pretty interesting as well. A particular stock that used to sell for $80 a share. This stock that used to sell for $80 a share plummeted to below $4 per share seemingly overnight.
Since this stock happens to be in the commercial sector, the government isn’t going to bail them out. Apparently, the government thinks we need money to spend on shoes but not corporations to buy and sell shoes. Needless to say, this corporation has chosen to lay off numerous employees in mid-level management to keep from going under.
Coincidently, and quite unfortunately, my aunt-to-be happens to be one of the ones laid off. She used to buy and sell men’s underwear for the corporation. Now, the guy who’s in charge of buying and selling ties will do her job as well. I’m not making this up.
Anyway, I bought this stock after it got above $4 a share again, hoping to get rich quick off my hundred shares. The stock dropped the day after I bought it. I’ve been sitting on it for a couple months and it appears to like costing $4 a share.
I’m not too worried because I’m in it for the long haul; I’m holding out for $80 a share again. By then, my $500 will have turned into $8,000 and I’ll be able to retire and move into a nice cardboard box somewhere.
As it turns out, over the past few weeks this stock has jumped some 30 percent. If I sell now, I’ll make an easy $150. Before you laugh, remember that’s still a 30 percent gain in a matter of a couple months. It won’t pay my mortgage, but it’s better than the 0.9 percent interest I’m making off my checking account and it just might pay for one month’s worth of interest on my mortgage.
If it weren’t for the lousy commission, I’d be buying and selling stocks like hotcakes (since when do hotcakes sell so fast to allow their use in this metaphor anyway? What are hotcakes after all? Are hotcakes the same thing as pancakes?).
I guess that commission fees keep people from going crazy with the stock market, from essentially gambling away their life savings and causing the market to artificially rise and fall. While I don’t think that’s why brokers charge such outrageous amounts of money to let a computer do their work for them, I guess it’s a good side effect.
So there you have it. Commission fees on stock trading are a surprisingly good thing.
Oddly enough, it’s probably a very good thing that I have basically zero expendable income because, if I did, I would lose it (and possibly my job) by posing as a day-trader.
Matt Brumit is a junior Humanities major. He can be reached for comment at [email protected].
