How I turned $1,500 into $15,000 -- WHEN EVERYONE FLED, I DOVE IN!! -- Making Money in a Crisis

It was early in 2007, and the economic times were still booming. Money was just flowing everywhere. People were buying homes, and within a month had $100,000 in home equity. There were people buying new cars, boats, taking trips around the world and buying luxurious items. Then, just like that, it was all over. The economy not only crashed, but it Burned by 2008 leaving many in financial ruin.

Lets Rewind the Tape

Rewinding back to around the year 2000 and my first experiences in stock market trading, there was also a 'BOOM and a BUST'. This was known as the DOT-COM Bubble, where many new Internet start-ups were showing promise but ultimately came crashing down due to higher than normal valuations and expectations for some of these companies.

During this time, I had recently transitioned from a Full Time Custom Harley Davidson Motorcycle Builder and Technician into a Full Time computer student at a Computer Trade School. I immediately immersed myself in everything that had to to with computers, the internet and technology in general. I quickly realized that the Internet was "Booming" at the time, and I envisioned a future where more technology would be playing a bigger role in our future lives.

It was during this time, that my father had asked about the stock market and investing in stocks. He had some savings, and he had some extra money besides his savings that he was willing to invest. I was really excited because I had done my "due diligence" on investing in stocks, had found a reasonable trading site called Bidwell.com (eventually bought out by Ameritrade) and firmly believed in the technology behind the Net companies. My father funded the account with $2000 U.S. Dollars. I bought Yahoo stock and another company called Applied Materials ( a semi-conductor manufacturer). By the end of the week, the account value had grown by $1000 Dollars, and of course my father was ecstatic. Then, just as quickly as it went up, it went down and kept going down. The Bubble had burst and now those $2,000 that were at one point $3,000 were now worth just about Zero. I considered holding onto the crumbs, and even tried to explain to my father what had happened, and that this was the time to buy more rather than to flee and sell. I had explained to him the risks prior to investing, including the possibility of losing all the money, but of course he did not remember that part and to this day, sadly, he has not forgiven me for that loss nor has he ever invested in the stock market again. He has Gold, Silver and other commodities, but "hates" stocks.

Fast Forward

Fast Forward back to the year 2007, with the stock market lessons of the past seared into my very being, I nonetheless continued to be very interested in the stock market and in Investing. At the time, most of my money was tied up in a property as an investor. I begged the other partner to sell the property. I explained that I had done much studying of the market, and of housing prices and the correlation to average income/wages but was ignored. I used the Case-Shiller Index to support my argument to no avail. When an adjacent house had sold for about 5x Times what we had paid for our investment property, I knew it was time to sell but again was ignored. And then of course the Housing market crashed and now you could not sell the property even if you wanted to.

But prior to that crash, I had been studying a stock for a few years that I found to be an amazing company. It was Sirius Satellite Radio , and it was making great progress. It had just merged with its rival, XM Satellite Radio, solidifying it leadership role in the Satellite Radio Market. Also, many of the leading automobile manufacturers were starting to include Sirius Satellite Radios with their vehicles, thus leading many new car buyers to become subscribers of this new Satellite Radio Technology. Times were booming for Sirius Satellite radio as far a subscribers go. The stock was nowhere near its peak of $60 (Feb. 2000) which bottomed to 0.60 cents during the Dot-Com Bubble, but had bounced slightly up to about $7 Dollars and settled around $3 Dollars. Subscribers on the other hand, kept joining month after month, gladly paying the monthly subscription fee for COMMERCIAL FREE vehicle entertainment and/or to listen to Shock Jock Howard Stern.

I saw my "Window of Opportunity" the day that Sirius Satellite Radio Stock bottomed at about 0.05 cents per stock towards the end of 2008. The company's stock price had managed to weather the Housing Market Implosion, but the price finally came crashing down because of the Housing Market aftermath. Sirius was generating something around $100 Million a month from subscriptions and steadily gaining subscribers due to increasing deals with car manufacturers. What made the stock price crash was not company fundamentals, but rather the company's inability to secure financing to restructure an up coming Bond payment. If the Bond payment could not be re-negotiated, Sirius Radio would have to declare bankruptcy. Since most if not all banks were now in crisis mode, there we no lenders available or willing for Sirius Radio, and the shares tanked with this looming bankruptcy.

I told everyone I knew about this golden opportunity, even my father. I explained to them everything I knew about the company, its stock, the current state of the economy and how a Big Investor (John Malone) was considering a majority stake in Sirius Radio. I explained to them that I was going to invest the last dollar I had on Sirius Satellite radio, which wasn't much but all I had at the moment. I explained to those that would listen, that at a nickel (0.05 cents), the stock had little room left to go down to Zero, but had all the room to go up in price. No one listened.

I took my last $700 Dollars that I had in a savings account for my daughter and invested in Sirius Satellite Radio at about 0.16 cents a share for a total of about 4150 shares. John Malone, owner of Directv and other major corporations, did come to Sirius Radio's rescue, sort of. John Malone ended up with about 40% in Sirius Radio for a measly $500 Million Dollars (today those 40% are worth about $8 Billion). This cash infusion kept Sirius Radio afloat, allowing it to meet its debt obligations and foregoing bankruptcy. Now I was really excited because I considered John Malone to be one of the greatest Investors of all time and still do, and he was investing in a company that I had a stake in. I didn't believe, instead I knew I had made the right move and this allowed me to make my next moves.

The Right Moves

About 6 months after my initial purchase of Sirius Satellite Radio shares, I added another $350 to my TDameritrade account, and purchase another 1040 shares at about .34 cents per share. Then 25 days later I sold 2000 shares for 0.43 cents/share, only to buy 2,220 shares at 0.38 cents the very next day. I wish I could remember my exact state of mind during these times, but I was definitely watching the stock daily if not hourly. I was keeping up with all the company news and pertinent information such as car manufacturers sales reports, dealership inventory and even calling Sirius Satellite Radio customer service to "fake" my subscription cancellation to see what would ensue or try to gather information on subscriptions from the phone operators. All the information and news continued pointing to Sirius Radio being extremely undervalued by the market. So I watched for peaks and valleys in the price and volume of Sirius in order to attempt to "time the market," along with many other indicators such as Moving Averages and Bollinger Bands

Two months later I sold 3000 shares at 0.69 cents and 2 days later re-bought 3100 shares at 0.66 cents per share. Near the end of 2009, I made two more cash deposits into my TDameritrade account for a total of $500. I then proceed to make two separate purchases of 575 shares at about 0.60 cents followed by the purchase of another 225 shares at about 0.63 cents each. I ended 2009 with about 6300 shares of Sirius Satellite Radio.

5 months into 2010, I sold 3380 shares at about $1.13, and about 16 days later re-purchased 3860 Sirius Radio shares at about 0.98 cents each. Then in October of 2010 I sold 3500 shares at $1.38 and regrettably had to withdraw the money during a family emergency. That year I cashed out a little over $4800 with 3290 shares remaining. Then finally during another financial crisis, I again regrettably sold the remaining of my shares now totaling 3,630 for about $2.80 each in November of 2012. My daughter's mom had some properties, but she never really got back on her feet after the 2008 crash, and she was losing one, so with the proceeds from the Sirius Radio Stock sale I was able to save that property. In the end, it was money that I was saving for my daughter that had made the initial Sirius Radio Stock purchase, and now that same money would be saving a property that my daughter will one day inherit.

The Point

Like a Boy Scout, Be Prepared!
First off, this is not investment advice and is for informational purposes only. Also, it is not to brag or show off. It is simply a story of how one can still do well during economic hardships. Lately, there has been a lot of news in regards to the World Economic climate, and most of it is bad. It seems that many wealthy investors are preparing for some sort of economic fallout, possibly similar to what happened in 2008, except this time it seems there are many more believers in this "Dooms Day" scenario than in 2008. Gold has just dropped in price, Oil wants to go back up, Home prices are flat lining and not many new jobs have been created, so I hope that this story inspires those who have not thought about preparing for another Economic fallout to do so soon, and to those who already have, then you are in a similar position that I was back in 2008, ready to pounce on "golden opportunities."
"By failing to prepare, you are preparing to fail."
Benjamin Franklin
10/08/16
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