Occasionally, Flute Squad guitarist Ryan Graham will hound me for band money in the pursuit of some hare-brained scheme. This is one of those instances, and this post was written by him.

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We’ve already touched on how we manage our band account with ING Direct.  This is a very convenient way to keep track of our money, but the paltry 1% interest we earn on it (through no fault of ING – it’s actually a better rate than most savings accounts) doesn’t exactly make our money work for us.

Sure, most bands use their band account to buy merchandise and pay for CD pressings, which in turn makes them more money and in turn can be seen as an investment.  However, wouldn’t it be nice if you didn’t have to do as much work to make your band some cash?  Like, if piles and piles of money just appeared out of nowhere with minimal time and effort on your part?  THAT’S THE STOCK MARKET, BABY!!!

“Wait, wait, wait!” you’re saying.  “Haven’t a bunch of people recently lost their entire savings in the stock market?”  To which we reply, “YEAH, STUPID PEOPLE!”

You’re telling me that you don’t have enough balls to gamble away your entire band account in the hope of MASSIVE PROFIT?!  Well then have fun living in your little shack with your mom, cry-baby!

THE FLUTE SQUAD IS WILLING TO RISK IT ALL, SUCKERS!!!*

Okay, so we actually received a notification from ING saying that if we opened up a stock trading account through them they’d give us 50 no-fee trades and $50 in cash after the first trade.  So we figured, shit, as long as we don’t lose more than $50, who cares what happens?  Let’s blow some cash on the stock market!

So without further adieu, here’s the diary of our wild 5 day experiment in day-trading:

Day 1 – 10.26.09

Start of Sharebuilder’s 50 no-fee trades.  Fees are usually $10 per trade, meaning it takes $20 to get in and out of a stock.  But with no fees, you can cut margins closer and sell at smaller rises/falls without worrying about making up that $20.  Day-trading is awesome!!!**

Bought 10 shares of NFLX (Netflix) @ 55.90

Bought 7 shares of AMZN (Amazon) @ 123.07

AMZN went up a bunch, more than $2.50 at one point.  NFLX went up at first but then started dropping.  Will have to sell tomorrow if it keeps tanking.

Whole market down today.  Expect both stocks to go up tomorrow if market does better.

Final tally:

NFLX 55.17 =  -.73/shr   = -$7.3

AMZN 124.65 = +1.58/shr = +$11.06

Total for today = +$3.76

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Day 2 – 10.27.09

Everything is down today as of 12:45PM.  Consumer Confidence Index fell unexpectedly.  Not the best time to be invested in retail stocks.

Amazon has dropped over 3% and Netflix is down more almost 1%.  Overall we’re now down about $30.  There’s a good chance that both of these stocks have peaked and are now on a downturn.  I’ll be selling both if we go below a $50 loss, which probably won’t happen today.

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Day 3 – 10.28.09

Amazon was down $5/share at one point yesterday, and I was pretty close to taking the loss and calling it quits, but decided to stick it out.  Luckily it went back up a bit, but we still ended up down about $24 when the markets closed.

Not much to do today except continue to stick with it and hope the stocks rise.

Update: Sold Amazon @ 124.98 for a $13.37 gain.  Still deciding whether to take a loss on Netflix.

End of Day Update: Good timing on the Amazon sell; it didn’t go much above that and then dropped.  Netflix continued to drop, and is down about $2.30/share right now from where I bought it.  So altogether we’re still down about $10.

All of the markets went down again today and have been since Day 1, and apparently this is the worst they’ve been since July.  So not really a good time to try to make any money off of stocks.  So even though we’re down, it could be much worse.  Hopefully Netflix will go up enough tomorrow to at least bring us back to even.

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Day 4 – 10.29.09

Futures were up before the markets opened due to a lot of good financial data that came out this morning, so I decided to buy 25 shares of SSO @ 34.01/share.  SSO is an ETF that doubles the gains or losses of the S&P 500.  It’s a fairly risky stock, because if the entire market tanks you lose twice as much.  We’ll see what happens.

Update 12:28PM:  Sold SSO for $34.53, for a profit of $.52/share, so $13 total.  It gave me some message about “free riding” when I tried to sell, which is basically buying and selling shares when previous trades haven’t settled yet.  Hopefully the Feds don’t come after Nikc, since the account is in his name. 

In all seriousness, they might freeze us from buying any stocks for 90 days, but that’s fine because we have to be all out tomorrow, which is when the fee-free trading ends.  We’re working with such a small amount of money that spending $10 per trade would pretty much negate any quick profit-taking.  For example, our overall fees for these trades would have been $60.  Even over at tradeking.com, where trades are $5/each, that’s still $30, which would have wiped out the profits we made.  Of course, if you’re dealing in $10K transactions, $10 for a trade fee isn’t a big deal because you can make much more on each transaction.  But for small trades the fees can sink you quickly.

Netflix is back up around the $55 mark.  If it goes up to $55.90 today I’ll sell.  If not, I’ll wait until tomorrow and see what happens.  It’s definitely a gamble, but at this point we have over $26 in earnings, so I can afford to gamble a little.

Update 4:05PM:  Up about $20 total after today’s rise.  Netflix went to $55.31, so I’m waiting until tomorrow to sell.  Account hasn’t been frozen yet!

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Day 5 – 10.30.09

Markets dropping steadily again today.  Netflix down about $1, but I’m waiting until around 12:30PM to sell, which is when it seems to peak again each day, judging by past charts.  We’re definitely going to be taking a loss on this one.

Sold Netflix for $54.49, which was a $1.41/per share ($14.10 total) loss.  As I said at the beginning of the week, I knew it was possible this had hit its short-term peak, and as a result it was a risk getting in.  However, as a long-term investment I think Netflix is probably a great bet, since they’re a cool company with some pretty progressive ideas.

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SUMMARY

Altogether we made $12.27 for the week, basically a 1% gain.  To compare, the S&P 500 was down 4.7% for the week, so in this case we actually did beat the market by a very sizeable margin (almost 6%).

But here’s the kicker: The only reason we did this whole thing is because we knew we’d get a $50 bonus.  So we actually made $62.27!  HAHAHA, TAKE THAT STOCK MARKET!!!

In all seriousness, even though we came out ahead, it was very stressful and actually took a lot of time, sitting there watching stocks rise and fall all day.  So while the stock market might very well be a viable way to make some quick cash from your band account, we can’t in good conscience recommend it.***  Your time and money is probably better spent dreaming up and executing great marketing and merchandising ideas or (gasp!) MAKING SOME FUCKING MUSIC!!!

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*We don’t recommend day-trading unless you have about $2500 to start and a huge nerd like Ryan Graham in your band to monitor and stress out about all the minor rises and falls of the market on an hourly basis

**We don’t recommend day-trading your band’s money at all, actually.

***So stick to your part-time job flipping burgers at Starbucks or whatever. SIKE! Be somebody and fucking day-trade already!

Back in 2006 The Dirty Marmaduke Flute Squad got a gig headlining at the Talking Head Club in Baltimore. We had been playing all over town for over a year and this venue seemed like a big deal.

We somehow managed to pack the place. Actually there’s a pretty amusing story about the bathrooms not working that night. But for this post, we’ll skip ahead to the part where the promoter of the show walks up to me and hands me 5 sweaty twenty-dollar bills. It seemed like a godsend, because we never had gotten paid to play before, we hardly even considered asking.

I proudly walked up to the stage where the rest of the band was tearing down the gear and handed every one a twenty-dollar bill and kept one for myself. It seemed to divide easy enough, and it surely paid for the beer we drank that night.

I was an idiot.

Now I’m going to tell you some advice that I hope is so painfully obvious that you throw up both hands and spit coffee all over your keyboard:

DON’T SPLIT UP THE MONEY! PUT ALL OF THE MONEY IN AN ONLINE SAVINGS ACCOUNT FOR YOUR BAND!

Before you click away in disgust, recognize that this isn’t some commercial. Nobody in the Flute Squad works for the banks. This is real world advice that worked for us. The sooner we started saving money, the sooner we became a band with products and goals.

And before you tell me: “Oh yeah, my band saves money, Murray saves it all in a shoebox in his room,” let me tell you this. I’ve heard of the shoebox savings plan. I heard a really terrible story of a band that did just that, only to have a crackhead roommate steal their entire fund. Heartbreaking stuff. Don’t be a knucklehead, save your money with a financial institution.

Let me answer a few questions from the audience:

1. Why? We each individually worked for the money!

Listen, if you are interested in doing this band thing for the long haul you are going to need some scratch to do alot of things that real bands do. CDs, stickers, shirts, equipment, bar tabs of band members who bail, gas money, tour buses, et cetera, all need to be paid for at some point .

I think we can all agree that your plan to buy a Red Bull and Vodka for that hot chick at the bar is better suited for your own money rather than the band’s money.

2. Who gets to be in charge? Everyone in my band is terrible with money!

I hate to break it to you, but you’re the one reading this blog, which immediately makes you the smartest member of your band. You should probably get over your fear of money, read I Will Teach You To Be Rich, and start dominating your band’s earnings.

3. I hate you. I didn’t get involved in this to deal with money!

That’s not really a question, but okay. Maybe you actually started the band so you wouldn’t have to deal with problems like this. But it’s inevitable that at some point in your life you are going to have to demonstrate some sort of fiscal responsibility. At least you can see the results of your savings when your band gets back its first CD, all shiny and shrink-wrapped with a 12-page fold-out lyric sheet.

4. What do I do? You are 100% right, but I’m confused!

We knew you’d come around. Here’s what to do:

Go to ING Direct and follow the instructions to start an Orange Savings Account. You will need to go to your local bank and open a physical checking account to start the online account.

While there are other options, we personally use and can vouch for ING Direct. We’ve stayed with them for years because they have (nearly) the best interest rates, and are constantly upgrading their security and options. We also use an Electric Orange Account for when the band is playing out a lot. This is an online checking account that gives you a debit card that you can use like a credit card.

Coming soon: How the Flute Squad beat the odds by timing the stock market!