Sabot L'ours (sabotlours) wrote,
Sabot L'ours
sabotlours

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Playing the Market

About 10 years ago I decided to jump into the stock market game. Everyone was making tons of money and so I thought I would try my luck. As you all know I am a big fan of railroads, so I bought shares in BNSF and Union Pacific. There was a merger frenzy in the early 90's and I thought there would be a major consolidation of the nation's biggest lines. In terms of moving vast quantities of bulk materials like coal, wheat, corn, and plastics, there is nothing more efficient than trains. I think I bought the shares right after the Union Pacific meltdown when it tried to swallow Southern Pacific like a bad vore scenario. It took some time, but UP finally swallowed and the system recovered.

When you first invest in the market, you are constantly checking up on the price to see how it's doing. After awhile, however, you just let it ride and let things take care of themselves. My railroads just sort of chugged along. They paid me a small dividend, and so I still made money on them even if it was a small amount. A little while back I decided to check up on the stocks and had noted that they had shot through the roof! I had worked out a little spreadsheet that told me what a stock should be priced in order to have a certain level of return. In other words, if I wanted a $10 stock to make a 10% return every year, it should be worth $11 after the first year, $12.10 the next year, $13.31 the next, etc. etc. The railroads had finally exceeded the 10% curve, and so it was time to take some chips off the table. I didn't leave the "casino," however. I simply took some money from the craps table and went to play blackjack. Of course Uncle Sam will want his cut. And the success of the railroads will help offset the losses I incurred when I bought into the high tech market just as the dot-com bubble was bursting.
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