2007 will go down in the annals of Rob Becker history as the year I started investing in the stock market. Hopefully, twenty years from now, I’ll be able to look back at this year as the beginning of my journey towards early retirement and that elusive something know simply as the good life. But in the hear and now, I’m just getting my feet wet in this sacred rite of capitalism. I’m very much learning as I go, continuing to devour books on the subject and just absorbing the feeling — the ebbs and flows — of the market. I have so much more to learn, but in the short term I’m pretty pleased with job I’ve done this year. But the market is a game of numbers, so here are the numbers from year number one:

S&P500 Stock Market Index Performance for 2007: 3.7%
Rob’s Stock Portfolio Performance for 2007: 23.5%

What follows is rundown of my first year in stocks — my successes and mistakes and the thinking behind them. Enjoy!

The Hits

Garmin [GRMN]
The first stock I bought was Garmin, the leading U.S. maker of G.P.S. navigation devices. I was turned on to the stock after I received a Garmin for Christmas. I absolutely love the product, which is a great first step for finding a great investment. In fact, much like my cell phone, I think of my G.P.S. as a how did I ever live without it product. I looked into the company and discovered that Garmin was making a nice profit while sitting on a big pile of cash with little debt. In short, the company had great fundamentals and was a leader in a growing market — a great investing opportunity! But instead of jumping at the stock I sat around and didn’t buy a share until May.

One thing I’ve learned about stocks this year is that timing is crucial. In the case of Garmin I got lucky. I bought into Garmin on May 9 for about $56. The stock stayed at that price (which is where it had been for all of 2007 to that point) for about six days and then started a quick and steady assent that had it trading at just over $120 by the end of September. Wow!

Since Garmin hit its high, investor jitters over consolidation in the G.P.S. industry as well as general malaise in the stock market have weighed heavily on the stock. I’ve used this as an opportunity to buy more shares, though in retrospect, my zeal for Garmin caused me to overpay. Garmin also tested my intestinal fortitude when it quickly dropped from the $120s down to $82. But I got through it and so did the stock, rebounding back above $100.

This holiday season G.P.S. devices are a hot item, which bodes well for the future of Garmin and especially fourth quarter earnings. I continue to believe that G.P.S. navigation will find a bigger and bigger market as more people become familiar with this wonderful technology. I’m especially excited about the prospects of G.P.S. devices enabled with real-time traffic information. Though increased competition from other manufacturers, as well as a quickly evolving market for this technology could change things fast (can you say G.P.S. enabled iPhone?). But right now I see car navigation devices continuing to be a big seller through 2008 and I believe Garmin will continue to lead the charge.

Bought: $55.73, $100.06, $104.19, $108.37
Average Share Price Paid: $89.01
Current Share Price: 97.00
2007 Return: 8.98%

Navteq [NVT]
Bullish on personal navigation after my purchase of Garmin, I purchased a company called Navteq. Navteq is a software mapping company that generates map data and sells it to the likes of Garmin, Google (for the Google Maps application) and many other companies with the need for map data. This was another company with strong fundamentals that was doing business in a growing market. Even better, Navteq has only one significant competitor. The business of mapping the world is a costly and difficult thing to do, and with Navteq so far ahead of the game, I didn’t foresee more competition on the horizon. I figured even when Garmin was facing fierce competition from big electronics companies, pre-installed in-dash nav systems, and G.P.S. enabled cell phones, Navteq would be raking in the dough by selling map data to everyone.

Apparently I wasn’t alone in my thinking. I bought the stock in June for about $42 and watched it march to $78 in four months. Then, at the beginning of October, the cell phone manufacturer Nokia surprised everyone by announcing a deal to buy Navteq at the $78/share price — a deal worth over eight billion dollars. I sold my shares on the news for a nice profit.

Bought: $42.20
Sold: $76.97
Return: 82%

The Misses

Garmin [GRMN]
I’ve read time and time again not to fall in love with any one stock, but I did it anyhow. How could I not fall in love with my first stock after watching it double in value over four months? Yeah, I figured Garmin could go nowhere but up, and so I bought more shares at high prices. Of course, Garmin hit a bump in the road and I’ve lost value on all of those shares. The lesson here is patience and perspective. Had I stepped back and realized that Garmin was possibly over-valued, instead of getting caught up in the excitement, I could have held out for a better price or put my money in other stocks. Either way, I’d be doing much better thanks to my prudence. I’m still have confidence that Garmin’s growing profits will continue to push the stock price up in the long-term, but confidence in future growth isn’t nearly as good as realized growth.

Bought: $55.73, $100.06, $104.19, $108.37
Average Share Price Paid: $89.01
Current Share Price: 97.00
2007 Return: 8.98%

So Close Yet So Far

J. Crew [JCG]
J. Crew is my favorite clothing store, so I’ve been following its story starting with its IPO last summer. It’s a retailer with great name recognition, a plan to add more retail outlets (and room to expand, unlike many other retailers) and a new CEO (the same guy who ushered the GAP through their boom years in now heading J. Crew). It’s also saddled with big-time debt. Wall Street embraced the stock at first, but nervous investors ran away from it after a disappointing quarter. I saw the stock selling for a bargain, and also saw that the company was systematically paying down its debt. I bought in at $36, but a few days later I saw Garmin selling for (what I thought at the time was) a bargain. Faced with the choice of owning a company I loved (Garmin) at a discount, or a company I liked (J. Crew) at a discount, I opted for Garmin. I sold my shares of J. Crew for no gain and bought more Garmin. A month and a half later J. Crew hit a high of $50. That’s a gain of almost 40% I missed out on, while my Garmin shares were only up 10%, and have since declined below the price I paid. Ouch.

Gateway
My very first computer was a Gateway 2000, so I have a warm spot in my heart for this computer maker. This was a company that was poorly managed and got hit HARD in the dot-com bubble burst. At its peak it sold for $80, but had since fallen all they way down to $1.50. That’s a long way down, and so it was no surprise that Wall Street had lost interest in Gateway. But I saw a company that was pulling itself back up from the doldrums, getting itself back in the black, and still was the #3 seller of PCs in the U.S. I saw an opportunity here, and so I thought long and hard about buying some of the stock over a cup of coffee one Saturday morning. The following Monday I checked in on the stock, only to discover that the Taiwanese computer maker Acer had just announced its intentions to buy the company at a 50% premium over its current valuation. Acer saw value in Gateway’s U.S. market share, just as I had. For me, it was a good idea that was just a little too late.

Looking Ahead

The second half of 2007 was a tumultuous time for the stock market, with housing woes and credit fears produced roller-coaster-like swings. This bares the question: Have we emerged from the worst of it, or is there a recession looming in 2008? It’s a question that I can’t even begin to answer, so looking towards 2008, I’m merrily ignoring the whole mess. This will either be a prescient move on my part, or a fantastic learning experience. As I view it, either way I come out a winner.

What I do know is that many stocks have been hit hard, which smells like a holiday discount to me. The last month of the year I’ve been picking out companies that I like, which Wall Street has run away from for the moment. Recent purchases have included Silicon Motion [SIMO] at $17.41 and DSW [DSW] at $17.62. I’m also keeping a close watch on Synaptics [SYNA] and Best Buy [BBY].

So far in my stock trading lifetime, I’ve yet to own more than three stocks at any one time, so I’ll look to diversify my portfolio in 2008, ideally expanding my holdings to something in the range of five to eight companies.

But mostly I want to continue the learning process that has started in such earnest this year. My somewhat meager investments aren’t going to put me on easy street tomorrow or the next day, but the lessons I’m learning now, through both my successes and the inevitable failures, will hopefully be worth much more to me in the future than any realized cash gains could be valued at now. Yeah capitalism!