Going into business-partnership?

rob333January 20, 2011

I've been known to dabble in the stock market when I had money. I did learn loads and I can still play "on paper"; I'm really getting it right. For instance, I knew, from past charting experience that Nvidia would go up (or down) massively in late December. Actually, I could see the momentum was up. The volume was up. The stochastics were up... it was going to go up. I would've bought a call that was worth $500. It could've sold for $8,700 within 2 weeks. For instance. NVDA is the stock I buy and sell options on. I know it well.

At any rate, I am considering getting back into this. I want to retire doing this; I can do it. My mom has been watching all these years and she knows I know how to play both the up, and the down markets. She wants to invest with me.

What kind of contract would you draw up? I'm trying to see it from all angles. As a "client" or a "partner"? Or??? We do know we want it in writing. We know that she gets back no less than half of what she invests (at this point she's offering 20% of the investment). Have you done anything similar to this? Any words of wisdom?

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don_socal

Wish I could help but have never done stocks. The most I know about partnerships is they need to be well thought out and properly documented. Also need to be with some one you can trust implicitly, sounds as though you have that handled.

    Bookmark   January 21, 2011 at 10:03AM
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rob333

That's why I think I'll dip my toe in and let her be my first (only!) client instead. Thanks for the kind words Don. Stocks are fun, they're a cross between legalized gambling, lots of knowledge of American and global economics, mathematics, and, believe it or not, emotions. Emotions play the largeset part of it all. If you "know people", you can estimate what a stock will do, as stocks act in very people-like ways.

    Bookmark   January 21, 2011 at 10:29AM
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shilty(6)

Just from my own very conservative perspective...

Both of you need to make an investment in the partnership - and that's no more than the amount either of you or both of you could afford to lose - cause there will be some losses.

So your first business paper would be the partnership agreement stipulating your total investment, what the two of you agree on - like no one gets upsot when and if - or inevitably, there are some losses, and how long she can
be your only partner - if you get so good at it should others 'buy' in with an equal amount to your investment or
a percentage of their take?

Lots of questions to sit down and discuss with a partner... hard to do cause most parents will hand you their investment and tell you they trust you - but there may come a time when third parties/other family, lawyers, partners need to know what your agreement was and what their liability is for them.

All the best -

Cream always rises to the top.

    Bookmark   January 21, 2011 at 2:35PM
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rob333

Yes, I'm one of those who would never sell a car to a friend, or "date a coworker" kind of person. I'd rather just avoid conflics that are inevitable. We have addressed the amount and what will happen if the business doesn't pan out or even dies out. The money I'd put into it would be strictly from a windfall, so it's "extra" money. If there is such a thing. I think I'm getting set on it being my sole ownership, it just gets rid of that unknown factor of inevitabilty with the decision making easier.

So far, y'all are saying what I was thinking. It's not my first time investing in the market; last time I made money. It's just been spent or lost through other means (divorce is an ugly thing). I'm ready to do it again, and sock it away this time in order to sustain myself without driving to an office or reporting to anybody. Last time, was practice, this time is for real.

:)

    Bookmark   January 21, 2011 at 2:46PM
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mawheel

Rob, I knew you had boundless energy, lots of common sense, and moral stability; now, using your own "smarts" to invest in the stock market will have people thinking of you as "Wonder Woman"! You go, Girl!! :>)

    Bookmark   January 21, 2011 at 5:46PM
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west_gardener

rob33, you know your mom. Is she ready for a business relationship with you as her daughter?

    Bookmark   January 21, 2011 at 7:27PM
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rob333

She is west. She's hasn't always been this way, but she went through it all with me this past two years. She even loaned me money when I was in a bind when someone decided not to pay court ordered amounts for several months, and was repaid very quickly. She knows I can handle money well and has even asked for my help doing her own personal budgets. She has been round the block with me and knows me so well, she's become my biggest fan. It seems she admires my tenacity now that she can see the positive side of stubborness (which is no fun when you're the parent!), through the realities I want, materialize. Good question and I guess I hadn't considered because it's a moot issue.

:)

    Bookmark   January 24, 2011 at 8:53AM
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