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By SCOTT LONG, Times Staff Writer
Published January 12, 2008
I haven't even made my first trade, and I may have already made the biggest investing blunder.
No, not on NYSE. On IEM.
The Iowa Electronic Markets is used by University of Iowa for teaching and research, but ordinary folks like you and me are welcome to invest up to $500 to buy and sell shares in presidential candidates, just as we'd buy and sell shares in companies.
And that brings me to my blunder.
Just a week before the Iowa caucuses, shares of Hillary Clinton were going for as much as 63.3 cents out of a possible $1. But after her stumble in Iowa, shares plummeted like a lead trial balloon -- all the way to 18.1 cents. Gordon Gekko-esque, I waited for New Hampshire ... and a better price.
Gulp. Clinton won, her shares rocketed back to 55.3 cents by morning and my smugness cost me 37.2 cents in per-share profit. I thought you taught me that greed is good, Gordon.
Welcome to the world of investing, presidential-style.
With wide-open races on both sides of the aisle, there'll be plenty more profit-taking moments, though, so I invite you to follow along with me as I invest my way through the primary season. I'm calling it Bet the Vote '08. We'll chart my progress in these pages. Cheer my successes. Mock my failures. I'd like to think I'm a good case study:
I'M NO STOCK TRADER ...: Despite many years as a business editor, my market exposure is nothing more than an aggressively invested 401k and a smaller, conservative IRA. I've never sold or bought a single stock in my life. No broker. No E*Trade. Not even a DRIP.
... AND I'M NO POLITICAL ANALYST ...: Despite a degree in political journalism and a wide-eyed fascination with presidential politics since John Glenn stumbled when I was 12 in 1984, I don't hang on candidates' every claim or pundits' every prediction.
... BUT I AM A GAMBLER: A less than savory hobby to many, for sure, but the skills I've sharpened and the lessons I've learned in two decades of casino-hopping have served me well in the real world. Everything has an angle, and those who find them, and exploit them, reap the rewards.
That's why my first blunder may be a blessing. It showed me that my fellow IEM traders are impulsive. They're as quick to cut and run as they are to jump on a bandwagon. A sharp, strategic gambler (investor, if you will) has a bounty of prey to feast on here, even if he missed the first meal.
Who am I voting for? I don't know. And it doesn't matter. Even if I did, it would be foolhardy to invest with heart above head. This is pure American capitalism. Buy low. Sell high. That much I do know.
So what's my goal?
Money, for sure. But I also want to get a clearer understanding of how the stock market operates. No doubt I'll be a more informed voter when it comes time for me to touch the screen as a responsible American.
In a gambling sense, those two things make this a positive expectation bet -- even if I lose all 500 of my dollars, I'll likely get more than $500 in education.
I can earn while I learn.
Scott Long can be reached at email@example.com or (727) 893-8556.
How Iowa Electronic Markets works
- Anyone can open an account for $5 to $500. Traders use the money in their account to buy and sell contracts pegged to future events, such as who will win a party's nomination.
- When an event becomes official, traders holding contracts in the correct outcome are paid $1 for each contract, and traders holding losing contracts receive nothing.
- While trading is open, traders can buy and sell contracts, making a profit when values rise and losing money when values dip.
[Last modified January 12, 2008, 04:19:31]