johnnyfdk
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Guess who bought $10k of Facebook Stock?

As soon as I had reached the goal of $30k in the bank with the gold watch challenge I realized that having all that money just sitting in my checking account wasn't the best strategy.  The first course of action could have been transferring all of the money into a savings account, but at less than 1% interest it wasn't even worth the time.

Then I thought, okay I'll open a CD.  When I saved up all of my birthday money as a kid, I opened a certificate of deposit and got 4.25%, that seems fair.  Then I checked the current CD rates in this economy and realized the interest rates are 1.05%.  So what did I do?

I used my network and emailed the richest guy I know, JP.  We met through a friend six years ago in San Francisco when he was driving a Honda Accord and had a 2-bedroom condo.  I assumed he made a decent living as he always had clean, fitted clothes and was always generous with friends. Little did I know that was just one of his many condos around the world and that he had a fleet of company cars parked at various airports to use whenever he was in town.

I'm assuming living low key would also come in hand when it came to meeting new friends or dating new women for the first time, as it would weed out the takers. I guess I passed the test as a month later he showed me his real home down in Los Angeles.  I drove his Ferrari and spent the weekend in his 7 bedroom mansion in the hills.

He's one of the smartest guys I know so I figured, why not just ask JP what he invests in? Here's the actual email I sent him. 






Taking His Advice?



If you ask me what I did next, it was nothing.  I got scared.  I emailed him straight back basically saying that I wish he had given me a magic pill, an easy, risk free, sure thing.  Luckily, the next morning I snapped out of it, and manned up. 

I realized that this guy who is worth more than anyone I know, who doesn't even have time to reply to emails the company he owns sends him, took the time to give me solid advice and I had just wasted his time.  The clarity came when I was holding my breath underwater in the cool water plunge pool I had started going to every morning in Saigon. It was in that minute of clarity that I realized that I don't want to be a taker and ask for great advice with no intention of taking it.

So I went home, set up a buy and  that evening, my trade went through.






Why I invested:


I'm not a stock expert but after watching the The Wolf of Wall Street, I realized that many professionals aren't either. I chose to invest in Facebook shares because of three reasons:

1. The advice from JP and the fact that his own money is in FB shares.

2. I constantly use Facebook daily both as an end user and as a business owner buying ads.

3. Facebook ads used to be known not to convert and were a waste of money, but now with retargeting ads, a lot of businesses will start spending money on FB ads again, which means revenue for FB.


I started with $10k in this account, now lets see it grow! =)


My Exit Plan:



 You always need an exit plan.

Bears make money bulls make money pigs get slaughtered.

I set an automatic Stop Loss which will automatically sell all of my shares if FB somehow drops below $55 a share.  This means the most amount of money I can possibly lose is $2,000 and I'll still have $8k left, which is a risk I'm willing to take.

I've also set alerts for the stock for when it reaches $90 a share.  When it does I will sell half of my shares, pocket it and let the rest rise and see what happens.  





Should you buy FB stock and invest?


I have no idea.  I did, but that doesn't mean it'll actually work.  I just wanted to share the advice I got from my JP as not everyone is fortunate enough to have access to millionaire friends.  He was right about Amazon stock in the past.  He told me to get in when shares were $270 a share which was awesome as it is wayyy higher than that now.  

Too bad I only had enough money to buy 4 shares at that time!  He had gotten in when AMZN was under a hundred so he jokes that he can buy whatever he wants from Amazon.com for the rest of his life and it'll all be technically free as those stocks had made him so much in the past.  




Best of luck to everyone in your own investments and businesses.  A year ago I didn't think it would be possible for me to save up $10k ever so everything now is a bonus.  I'll try to keep everyone updated in whatever new businesses I get into as I would love everyone around me to share in the success.  I am a big believe in the abundance mentality and that allowing your friends to get rich around you also helps you, instead of thinking it'll somehow hold you back or make you feel not as important.  

Let 2014 be the year that our investments and bank accounts balances rise and our businesses grow. If you haven't started your own business yet, get on it! And best of luck to everyone.

Update: I've stopped the stop-loss. =)


Because of the advice I've gotten from Jakub in the comments, and from my friend Ed who I know well in person I've canceled the stop-loss order and have instead set a price alert which informs me automatically if the price tanks below $55 a share or rises above $90.  

Here is what Ed wrote:





Update:


Here's what I did when FB dropped and I was scared as crap:  http://www.johnnyfd.com/2014/04/just-bought-more-facebook-stock.html

Here's how it all ended:  


Update 2017: 


I learned so many lessons about investing since writing this, that I somehow ended up starting a podcast where we get to ask experts and CEOs newbie investing advice, check out Invest Like a Boss.



Warm Regards,

Johnny

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  1. Sell me this pen! Saw the film last night, it was crazy and inspiring even with all the bad stuff!

    ReplyDelete
  2. In JP's email which company is he referring to when he mentions 'PM'? Cheers, Brad.

    ReplyDelete
    Replies
    1. Also wondering the same. He didn't mention anything about Twitter?

      Delete
  3. What website you use to buy stock?

    ReplyDelete
    Replies
    1. Charles Schwab (it's on the screenshot)

      Delete
  4. Stop loss doesn't work the way you probably think it does "the most amount of money I can possibly lose is $2,000”. Stop loss automatically puts your stocks for sale if the price goes under it. BUT there must be buyers for this price to lose only $2000. Usually though, if the price goes down, there are no buyers or buyers for ridiculously low prices = higher loss for you.

    Personally I'm not a fan of stop loss. Why? Google "Flash Crash". Also, sometimes when there is a single bad news about a company, the stocks may go down sharply for brief period of time, and then it will recover quickly when everything is explained.

    To answer question above, PM is a code for Philip Morris on NYSE.

    I bought IBuy Group Ltd about 6 weeks ago, got 32% so far. Just wish I had more free cash at the time :(

    ReplyDelete
    Replies
    1. What's up guys! It's awesome to see people interacting in the comments section and giving value to each other.

      Dexter C. - I had a sales job (good guys and best buy) when I was young and the skills I got from that, planting seeds, asking for the sale, taking three no's, has helped me tremendously over the years in business. AWESOME movie, I would watch it all over again in a heartbeat.

      MJ/Anon - Jakub answered the question, PM is Philip Morris. But I don't invest in companies I don't believe in for moral reasons. So no PM or Monanto for me, even if they do make money.

      Anon - Charles Schwab - MJ thanks for answering that. I only use them because I happen to have an account with them for no ATM fees internationally. But they are good, and around $8 a trade transaction which seems fair.

      Jakub - Thanks for all of the valuable insight. I'll look into the flash crash, that would suck for sure. I'm hoping with Facebook having such high trade volume and being bought and sold literally very second of the day it won't be as big of a deal but that is definitely something to consider.

      Good luck with your investments, sounds like you know what you are talking about.





      Delete

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