Help! I Forgot to Plan My Retirement
I didn’t really think about what I wanted to do until it was too late. I don’t mean to say that I didn’t have dreams because we all do, sometimes life butts in whether we want it to or not and we have to move in directions vastly different than we would like. When I was in high school my forward looking plan was to attend the Air Force Academy and become a jet fighter pilot. I had the grades, I had someone who would sponsor me, not naming any names here, but what I didn’t have was 20/20 vision. When asking your country to borrow the keys to a multi-million dollar, faster than sound jet fighter loaded with live ammunition, it’s the simple things like being able to read the gauges that they obsess about.
It’s my fault that that particular criteria slipped through the cracks until my junior year in high school but then I didn’t follow through with a plan B, at least a credible one. I went into the military as an aviation mechanic, then I found out that you can work on multi-million dollar planes with just a GED in your 201 file but when you get out you are treated like you know next to nothing and have to take all of the classes that you have already taken, and at incredible expense, to get a piece of paper that entitles you to reestablish your career in the civilian sector while paying down huge student loans at next to minimum wages.
Working in construction, retail, commission sales, various mechanical trades for 40 years and I had exactly zero savings to show for it. Then it dawned on me, I will be too old to work pretty soon, what would my wife and I do? We had never really talked about this, and it was coming up faster and faster as the days went by. I began saving, or more correctly, not spending, and to my credit that became an easy habit to stick to. At the same time our house was paid off, another big chunk of worry gone there. But still no plan.
One day I got a statement from my bank and noticed that one thing was missing, interest. It was like the bank was expecting simple gratitude from me for being allowed to let them use my money. That was going to stop. I had been toying with the idea of making money online, most recently in block-chain trading, but thankfully the exchanges that dealt in the commodity I was interested in made it insanely hard for me to open an account. That went to the back burner and sat there until recently. From all of the following I had done in the news and all of the articles and interviews that I listened to crypto was off of the table, I opened an online stock trading account with a couple of thousand dollars that my bank wasn’t paying interest on and began to look for some likely investments.
There are a few things that became clear right off the bat, number one of which was that I had no idea whatsoever what I was doing. So I started with what I did know, the way that you make money in the stock market is to buy low and sell high. Using this one piece of information I began to look for good advice, and found this out: No ‘credible’ broker/advisor/analyst will ever suggest that someone buy a stock that is not at it’s 52-wk high price, aka=no where to go but down. This is because these people get paid on commission and they have to eat. I found a website that happened to maintain a list of stocks that were very close to their 52-wk low, aka=no where to go but up, this seemed to make more sense.
There are quite good reasons why an issue is really down in the market, lawsuits, settlements with unhappy customers/workers, etc., poor sales, pump and dump schemes, the list is endless. Then there are some businesses that for whatever reason just don’t get the foot traffic that others do and are priced to sell as it were. You have to dig deep, find out why, did they miss a dividend payment, quarterly report not as robust as some talking head thought it should be, whatever, and start making a list of likely candidates. What does Buffet and Munger do when they are looking at an acquisition? What do they look for on the balance sheet. What is the Graham number of the business(this is one of the things that you can do to quickly separate the thoroughbreds from the carriage horses.) You look at earnings and free cashflow, and a little old acronym called EBITDA(Earnings Before Interest Taxes Depreciation and Amortization) to sort through them and when you think your head could not possible hurt any worse you just pick one and go for it.
First you pick a number. I knew how much I was going to eventually put in this account and I used that to derive a percentage that I was comfortable risking as I went forward. I started with $500 and bought a company called Greengro Enterprises. My thinking here was, they had been in the market for several years, they weren’t likely to be scammers. They were associated with a very respected name, Scotts Miracle Gro. They made a product that had multiple applications in both established and future markets, turn-key vertical greenhouses, if/when legalization hits the US like it has in Canada, these guys could go places. The price was right, $0.0333 per share, bet little, lose little. And they had the best company motto I had ever heard of, “Because high is better than wide.” No sooner than I had typed a few numbers into a trade order, 15,000 shares of GRNH were mine. I was ecstatic, and then I logged off and got some sleep. I was going to need it.
Next Installment:
The 90/90/90 Rule
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