A few months ago I wrote an article about how oversold stocks have become so I started a swing trade with two of my favorite companies, Suncor and Silver Wheaton. Well if you follow me on the Twitter you may have seen my tweet earlier today when I sold both my holdings and made a 34% gain. Mission complete. This swing trade was a success.
When I first purchased these stocks I received a lot of positive feedback from readers…
“That’s awesome that you’re confident enough in your investing to take out a loan from the bank. ” ~Jeremy
“Awesome !!! Your $1000 is a coming :D” ~Amanda
“Very solid buys!” ~PC
Wow, with that kind of support how can this swing trade possibly go wrong? (^_~) Okay, details below.
Wed, Jun 6th, 2012. (my original post here)
Initial Investment: $3,000, from savings.
Leveraged up to $5,810 by borrowing the extra $2810 from TD bank on a line of credit at 5.25% interest rate.
Bought: 100 shares of (SU.TO) at $29.02 = $2,902
Bought: 100 shares of (SLW.TO) at $29.08 = $2,908
Total money spent buying stocks: $5810
Today, Thurs, Sept 13, 2012.
Sold: 100 shares of (SU.TO) at $32.93 = $3293
Sold: 100 shares of (SLW.TO) at $36.23= $3623
Total money earned from selling stocks: $6916
Interest on borrowed money: -$39.20
Commission: 4 trades x $9.99 = -$39.96
Net profit after expenses: $1026.84 (before taxes)
So after paying back the loan on my line of credit, and all associated costs I’m left with about $4027. Considering that I started with $3000 of my own money, a 34% return on investment isn’t too shabby. I could’ve made more money if I sold later in the day but when I started this swing trade I stated very clear that my goal was to make $1000. I’ve reached it and I’m happy with my results. I can’t lose money by making a profit after all. I was too greedy in my previous swing trade (round 3) and held on too long >_< Not making that mistake again this time lol.
This strategy of buying high quality, industry leading, large capitalization stocks when markets are depressed, and then selling them when they go back up has worked for me 3 out of 3 times so far, maybe it’s beginner’s luck? Using leverage has also helped because for every 1 percent increase in the share price, my investment returns almost 2 percent :0) My other strategy of timing the volatility index on the other hand, is failing miserably haha. But now I’m a better investor because I know what works for me, and what doesn’t.
Disclaimer: I’m not a professional anything. Trading stocks is very risky and I could’ve easily lost all my money had I been unlucky or something.