My close journey to riches in high-tech stocks and options
Posted by Frugal on September 23rd, 2006
1991: Advised my dad to buy INTC (Intel). My dad bought Macy’s department store instead, which went into Chapter 11 bankrupcy later. From about $1 to $69 in year 2000, that’s about 69X return.
1995: I was done with my personal home page. Certainly saw the big potential of internet. Being too early in the wave, I also dismissed the internet bubble too early in 1998 when I first had a little money. I never bought into the internet hypes. Throughout the internet/high-tech boom years, I was mostly in the school, and /or without any money. The only thing that I could do is watch from the sideline.
1996: CSCO (Cisco). Slept only 1 hour the night before interview, and didn’t do well for the interview. I bought CSCO, and put a GTC order right after purchase. The GTC order got executed without me knowing it. Too busy in the school at that time. From $6 to $77 in 2000, that’s almost 13X return.
1997: QCOM (Qualcomm). Did the stupid thing again of not sleeping enough before the interview. Can’t believe I screwed up in the interview again. (I wanted to buy QCOM in 1998 and kept waiting for it to fall a little bit, until an announcement of China adopting CDMA standard, which drove up the stock by 10% in one day on 10/13/1998. I gave up buying QCOM from that point, which rose from 2.52 to 87.10 on 1/3/2000, a 34.52X from that point). Now it’s at $38.
1998: Tried BRCM (Broadcom). Too hot to even get an interview, and too scared to buy at a triple price on the IPO day. From $9 to $275 in year 2000, that’s almost 31X return.
1999: Got a great offer from MRVL (Marvell) at the pre-IPO stage. Because of lack of public information about the company, I decided against leaving the comfort zone of working in a big company, despite that I saw a promising and a strong company at Marvell. Now MRVL is at $19, which I could have got at less than $1 pre-IPO. At least 20X return.
2000: MyTwoMillionsAt28 dot com (at company XYZ).
2002: Almost landed a job at NVDA (Nvidia). It would be a great opportunity to get the stock options priced at super-low price at $4, and now it’s at $30. Almost 8X return.
2004: AMD (Advanced Micro Devices) could not give me a competitive offer to me due to my highly in-the-money stock options. It was at about $11. AMD stock price almost quadrupled after that, and now it’s at $26.
I’m sure that most people working in the high-tech industry came very close to strike riches if not already. From 1990 to 2000, it had been terrific years for high-tech. If you were able to catch (and cash out) the ride, you would have done great. Sometimes, being at the right place at the right time is all it matters. In a bull market, you usually don’t need to be smart or selective about your choice to come close to riches. But more importantly I recognized that it was not because I was smarter, but because I was at the right place at the right time. Recognizing the macro-economic trend and riding on the prevailing secular bull market is usually more important than individual stock/real estate selection (which you can usually employ sector ETF/mutual fund without selecting individual stocks).
P.S. I certainly missed the real estate boom totally. The real estate was already beyond the previous peak on the inflation adjusted in 2000/2001, and I was afraid to buy into the peak. It turned out that it is the most gigantic boom/bubble in the human history in terms of dollar.
And hindsight is always 20/20, 
.
More related posts:
Digg it Del.icio.us Reddit Furl BlinkList Newsvine Yahoo MyWeb
September 23rd, 2006 at 10:53 am
Man, I can relate to this post. I graduated university in ‘94 and rode the tech boom until today. Unfortunately, I haven’t really been lucky enough to be at the right place at the right time. I have done ok, but I haven’t struck it rich like some have. On another note, I did do pretty well in the real estate boom: 4 properties in 11 years and have moved from a $67k condo to a $500k townhome. I’m happy with that.
September 23rd, 2006 at 11:40 am
“The real estate was already beyond the previous peak on the inflation adjusted in 2000/2001, and I was afraid to buy into the peak. It turned out that it is the most gigantic boom/bubble in the human history in terms of dollar.”
OK, Frugal, here it is, the pattern keeps repeating over and over again. Your observation is perfect, it was fear that held you back. The numbers told the truth, as it did in 1990, onlt to blast to new highs. THE LESSON: IT’S NOT ABOUT THE REAL PRICE OF REAL ESTATE.
The media, as well as so many who want housing to crash are confused. I have said over teh past 5 years that rising prices is no reason for declines ahead. It’s not the NASDAQ.
When I bought my SFR in San Francisco (1990)it was at the very peak of the market (May) and the recession hit 2 months later and went full blown on August 2nd when Iraq invaded Kuwait and oil hit the unheard of price of $40 per barrell. I paid $325,000 of a 3 BR house with a panoramic view of the pacific ocean. My landlady and own mother thought I over paid. The value probably declined over the next two years by about 10%. I DIDN’T CARE! I WASN’T SELLING. Today it’s probably worth $1 million and I still don’t care!
I put down 20% and have have never refinanced the original loan, now in it’s 17th year. (ARM) I always put down 20% and I never take money out.
September 23rd, 2006 at 12:53 pm
Please delete in favor of: http://millionairenowbook.blogspot.com/2006/09/how-heck-can-i-even-think-about-making.html (but, those are the topics)
September 26th, 2006 at 6:03 am
Fin_Indie,
Turn $67K to $500K is great for you. Wish the same was true for me.
September 26th, 2006 at 6:14 am
Larry,
Thanks for your link. Lots of stuffs for reading.
I don’t know much about 1990 real estate peak, and I think it really varies with individual circumstances. In 2000/2001, my household salary is close to $50K, while the SFR is about $550K. Affordability is really a serious issue for me. Even today, my household income at about $100K, with SFR at about $800K, it is still very tough for me to make such purchase. What was your ratio of price to income?
I think you cannot refute the fact that affordability is a serious issue. It’s only apparently easier because of the exotic mortgages.
September 26th, 2006 at 2:46 pm
True novice here. Why is an ARM preferred to a 30 year fixed mortgage? Question coming from a person wanting to buy a single family residence in a year or two.
September 26th, 2006 at 10:44 pm
Novice, I will move your comment and my reply after a week to
Payment Shocks from Option ARM and Interest-only ARM.
My personal opinion is that interest rates won’t be around this low rate in another 20 years (I could be wrong though). I think a better deal is to lock into a 30 or 15 year fixed mortgage. If you ever go with ARM, I think MTA should be the best index, especially when interest rates are going up because MTA is behind the curve. However, Fed will be lowering interest rate early next year. You will need to see how it unfolds to decide the best index.
Locking into a fixed rate is the similar to locking your inflation rate. Inflation rate has been low in recent decade due to globalization and immigration, and I don’t think it will be low going forward. When inflation rate goes up, bond yield goes up, and then all mortgage rates go up. At the current rates, I will definitely not go with ARM.