Stock Market Gambling with MGM

I have decided to start looking to invest some of the money that I have made as an affiliate marketer in the stock market. I have always been cautious to do so because I don’t know much about the stock market and I have always felt that if you don’t know why something will go up or down then you have no business investing in it.

I still can’t say I know enough to put all of my money in the market but since the stock market as a whole is down, I figure it can’t hurt to put some money in and see where it takes me. I have been trying to pick companies that historically trade at a much higher price but are down because of the fear of the US economy crumbling and generally are still a sound business.

It is still a gamble since the market can go down further but a quote that I like is “scared money never made money” so that is where I stand and here have been my investments so far.

I decided to buy MGM knowing that casinos make money and historically they trade at around $20 dollars. In 2007 they were up to about $100 dollars per share but that is when Vegas was booming and I wouldn’t expect that to happen anytime soon. Their stock has recently dropped like a rock because of the City Center their 76 acre property on the strip with a price tag of $11 billion dollars, the largest privately financed development in US history. They haven’t finished it and their are concerns that they may  go bankrupt (they still can).

This is the last 5 years for MGM Mirage <- Link to MGM Stock Ticker on Google Finance.

I bought MGM grand on 2/5/2009 for $6.50…This is about the time when all the financial analysts were saying do not buy them and were changing their rating to F. I figured if everyone was selling it was a good time to buy as they are eventually going to bottom out….well that didn’t happen. The graph below shows the stock on the day that I bought it up to today. As you can see the stock kept dropping right after I bought it and at one point was as low as $1.89….I decided to hold on to these shares and just hope that the stock would bounce back (I still have them).

Not to be discouraged, I still felt like MGM had a lot of upside and was going to go up. So like a smart investor gambler I bought a lot more shares at $3.20 and $3.25 on 4/02/09. This time it actually worked out and went up for the next couple days and I decided to sell mid-day on 4/06/09 at $6.15. It worked out and I was able to clear $2.95-$2.90 on each share. The stock ended up closing at $5.50 on 4/06/09, so selling at that time was a good decision.

MGM’s stock kept dropping after 4/6/09 so I felt like I would buy back in. I ended up buying back in at $5.19 on 4/9/09 and still have the stock and will see where it takes me. Currently it is looking pretty good but who knows where this roller coaster they call MGM  stock will go from here.