Graduate With a Profit : Make Money While in School

So the market isn’t doing too good right now, or the economy in general for that reason, yes we all know that. But as entrepreneurs - we are used to taking some risk and doing things that most people would do. We often think the opposite of the “norm” and get asked a lot “You invested your money in WHAT?!” and then we just laugh at people when we get a nice ROI. That is my thoughts with the current stock market situation - a lot of funds are lowing a significant amount of value right now, so when is a good time to buy? When the prices go down and it becomes a better investment for you! Enter my thoughts….

Vanguard Capital Value Fund

http://finance.google.com/finance?client=ob&q=MUTF:VCVLX

This fund has dropped over 45% since July ’07 (at its peak). Normally people would freak out at this, because yes, this is VERY BAD. But however, when you look at the whole picture, that means that the price that it is right now, is about the same price it was in May 2003. But notice that from April 2003 to July 07 it GAINED 106%!!! What does this mean? This means that I can buy a ton of shares now at rock bottom prices, hold onto it and wait for it to start gaining momentum again, and then it’ll easily start compounding.

To put this in perspective, if you were to invest $10,000 in the beginning of 2003, and follow the value of your investment up until the peak in July 2007, you would have almost DOUBLED your money.

Catch my drift now? So instead of buying it at the high prices in 2007 and losing a TON of money, why not be a smart investor, and play the market by taking advantage of the low prices now, and then ride the waves later. Granted, this is by no means a guarantee of fund performance, but chances are, whenever this recession ends, that you would have made a good decision. Even if the market continues to fall, you would have gotten an investment that was much better than if you were to have invested recently.

To illustrate how there is a certain amount of risk associated with stocks, remember that if you were to invest $10,000 in this stock a year ago, it would be worth $6,696.85 now - a net LOSS of $3,303.15 which is a large chunk of change that will take time to re cooperate.

Similar thing for the Vanguard Windsor Fund
http://finance.google.com/finance?client=ob&q=MUTF:VWNDX

Too bad I cant say the same for US Airways:
http://finance.google.com/finance?gl=us&hl=en&q=NYSE%3ALCC&client=fss
Lost over 92% in ONE YEAR! Now $2 and was $63 Not a good investment. The only airline that I would invest in is Southwest, as they are the only major airline (according to the nightly evening news) that is actually turning a profit right now - gotta love Fuel Hedging, right?

Anyway, food for thought - good luck! I’d love to hear any comments (Good and bad) about my thoughts. If I do (probably will) take this investment, I am going to publish monthly results of my earnings/losses as they happen. Stay tuned.