챕터 62장, 1/3 정도 완성한 글인데,
한번 읽어봐라…
62
Investing Wrong Way
Secret to endure stock market depression is the dividend.
Do crazy things as long as you get dividends and interests.
-Brad Kong
If you are not familiar with stock market investment, you can read Chapter 17 and 26 first. I wrote a little bit more about the basic concept there. You may know more than me, but this book is a sort of essay, not an investment guide. I am trying to write all my articles even for readers who have not much investment knowledge.
There is a movie theater company called AMC. They have stocks and the ticker is “AMC” as well and it does not come with a dividend. In March, 20202, suddenly AMC stock went up to $29 from $14 within two weeks. The people in the Korean web community explained that short squeeze or gamma squeeze will burst. I honestly do not know what these mean. Part of the reason is I intentionally have kept myself away from option, reverse or inverse stocks investment.
But, suddenly a strangely “bright” idea hit me as soon as I saw the AMC stocks. “The $89,000 amount of my bank CDs will mature soon. Can I put all these in AMC stocks? Can that make my money double? They said the trading volume of AMC stock has been 10 times bigger than average today.”
According to my experience, when there is a lot of trading volume in a stock, usually my chance to make quick profit gets higher: I can buy those stocks and sell them quickly for short term profit. Higher volume of trading (for example, 100 million shares a day for one stock) means there are a lot of people buying and selling stocks of one specific company. Price moves really fast every second. It fluctuates crazily only because the stock is extremely popular. If you catch the low enough price, it will go up soon for no apparent reason. As I said, it is just popular, so it goes up. Somebody wants to take advantage, so he sells and it goes down. This happens all day at extremely high speed.
When I googled “ stocks with the highest volume”, an Yahoo result came out: “The most active stocks today”. When I clicked it, the page showed 25 stocks with the highest volume on that day. And, I remember AMC was highly ranked in the list in March, 2022. And, I noticed something strange.
There were other stocks listed as well and some of them were dividend stocks: Ford (F), Energy Transfer (ET), At&t (T), Annaly (NLY), etc. And, some suggested a crazily high percentage of dividends though it is high volume stocks; ET has 9% and NLY has 11% of dividends. These are like 5 times bigger than bank interests. And, this was the conclusion I made on that day: “Why don’t I bet on other dividend stocks instead of AMC? Even if my prediction goes wrong, I can still get dividends. If I buy those at a low enough price, I will not lose money. These are stocks with very high volume, which usually give me more chances to make quick profits.” You know what? My guess was correct.
First of all, the AMC stock price went back to $14 in May, 2022. When I saw it in March, 2022, it was $29 from $14 and I expected it would go up much higher from $29; that is what those squeezes are about. But, that did not happen. And, I told you that AMC stock does not have a dividend, so I could have been in loss for nothing by now.
Instead, I bought a lot of AT&T (T) and Annaly (NLY) stocks which come with 5% and 11% dividends in April, 2022. So far, the prices are similar in May, 2022, but I am getting high dividends at least. Still, these are stocks with the highest volume, so I believe I can make money someday. At least, I will not lose money. As I explained in Chapter 17, this is how I recovered money from hopeless PBI investment: Wait for the right moment while I am getting a dividend, at least. It sounds easy, but some people never get it, lose a lot and commint suicide.
Remember this: “Do crazy things at least with getting dividends and interest.” After spending 11 years in the stock market, I learned that I cannot, actually no one can predict stock price: “Not at all!” It would be beneficial if you can learn this lesson as quickly as possible and stick to it.
Another thing I would like to talk about is real estate investment in America.