“You know, I’m semi-retired right now,” said the cab driver. “I was able to do that through investing in the stock market.”
“Really?” I asked. “How so?” I decided not to bring up the fact that he was driving a cab.
“I have a degree in Chemistry. I used to work for a dot-com. When the dot-com bombed, I was left with some money. I used that money to begin learning the stock market.”
The car sped down the 101 and darted between slower cars. “I started small,” he continued. “First, I invested only a little. I read a lot of websites and magazines and books. I studied a lot. Everyday. My wife would come home and complain about all the financial reports I had throughout the house. I told her, ‘But this is how I’m making us so much money!'”
I laughed. “So you built up a portfolio through reading all this stuff. Let me guess, you’re a value investor?”
He smiled into the rear-view mirror. “No, not really. I invest in one stock a year.”
“One stock a year? So… you don’t diversify your holdings?”
He shook his head with a grin. “Nope. I spend six months researching and researching. Then, after six months, I select a single stock I want to invest in for that year, then I put all my money into it.”
“Interesting. Sounds risky for the average investor, but since you’re an educated investor…”
“Exactly,” he added. “For six months, I study everything about a particular company. I study the executives, their backgrounds, how many shares they hold. If the CEO holds many shares of that company, that’s a good sign. If he’s selling most of his shares, that’s a bad sign.”
“True true,” I laughed.
“I study the product, the market, it’s competitors, everything. Even if the stock has a sudden spike while I’m researching, I don’t buy it. I only buy it after I’ve completed my research and am very certain that it’s a good buy.”
“You must be a very patient man.”
“Yes, I am very patient. You have to be if you want to be a good investor. I’ve been doing this for thirty years now. I started doing this at a young age. In the twenty years since I started the one-stock-per-year model, I’ve only lost money once.”
He nodded with a broad smile. “Just once. I started with penny stocks, since they were very cheap. Even now, I’ll purchase low-priced stocks. Right now, I’m holding about 50,000 shares of a $1 stock. So when it moves up to $2 and $3, well…” he beamed.
“Wow.” I shook my head. “That’s awesome.”
“When I started, I didn’t have this much money, of course. In the beginning, I lost a lot of money. Just like everyone else in the dot-bomb. But every time I lost money, I’d study my decision making analysis to understand why I made this mistake. I’d study the stock more, the company more. I analyzed why the stock lost money. And I used those learnings to improve my investment decisions going forward.”
“And now you’re semi-retired,” I stated.
“Yes. Now I am semi-retired.” We pulled up to my destination. He stopped the car, then turned around. “I tell you, investing is a very important skill. You should learn it. Start small and study your mistakes in the beginning. Do a lot of research and be very patient. Do that, and you’ll be able to retire too.”
I thanked him and got out of the cab. I waved as the cab drove off. Only in Silicon Valley can you met a semi-retired cab driver who makes his money with $1 stocks.