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Archive for May, 2011

Posted by Martin May 31, 2011

Market in Rally Attempt today

So the crazy market rallied today. How serious this attempt is?

Considering that economic data released today morning were weak and the only fuel for the growth was (as Yahoo.com reported it):

  • Stocks Jump on Hopes for New Greek Aid Package, Still Down for Month
  • Greece moves on austerity, opposition wants more

and similar…

So is this the only reason for today’s crazy run? If so I do not expect this rally to last for long. I think this Friday more economic data should come out, so the market may provide mediocre results until then.

For me there is no change in the strategy. I am still sitting tight and waiting. Right now I wish to buy a SPY LEAPS options but to do so I need to save some money. I still hold all my dividend paying stocks, but got rid of all investments which do not fit my “dividend paying stocks” strategy.


I need to save a few hundred dollars more to be able to buy my first options contract. I want to save more money than needed. It is because I am using leveraging of my portfolio buying stocks on margin to be 200% invested. When doing this I want to have some money left after my purchase as a safety cushion so I do not get caught in margin calls when the market falls.

So we will see what happens in coming days. If you are a small investor and saving money to invest, this is still a good time to sit back, save and wait for the right time. It is coming.

Posted by Martin May 26, 2011

ATU sold

I decided to sell Actuant (ATU) shares. Not that I wouldn’t believe in this stock anymore as I wrote in my previous posts, but I have a different interest right now and I need to release money. I still believe this stock is good and it will grow more. Maybe right now it is a great time to buy more shares rather than selling, but as I mentioned I want to buy some options right now and to do that I would need more cash. Thus I decided to sell this stock.




Posted by Martin May 23, 2011

Buy Shares of Industrials Like Caterpillar

Investors should buy shares of industrial companies, which have improving operating performance, “reasonable” valuations and “strong” cash flows, according to Oppenheimer & Co.

Brian Belski, Oppenheimer’s New York-based chief investment strategist, recommended 22 industrial companies, including Caterpillar Inc. (CAT), Union Pacific Corp. (UNP) and FedEx Corp. (FDX) He considered companies in the Standard & Poor’s 1500 Index that have a forward price-to-earnings ratio lower than 15, and S&P stock rating of B+ or better, estimated 2011 and 2012 earnings- per-share growth greater than 10 percent, and increasing forward free-cash-flow yield.

“Investors are becoming increasingly nervous regarding the sustainability of global and domestic economic growth,” Belski said in a note today. “We recommend that investors focus on higher-quality areas with consistent to improving operating performance, reasonable valuations and strong cash-flow generation. In our view, industrials provide investors with all these attributes.”

A gauge of industrial shares in the S&P 500 has risen 7.2 percent this year, compared with a 6 percent gain in the broader benchmark index. The industrial companies have a price-to- earnings ratio of 17, while the S&P 500 is trading at a multiple of 15.1.


The following list contains the 22 industrial companies Belski
recommends. Ticker symbols are in parentheses:

Actuant Corp. (ATU US)
Applied Industrial Technologies Inc. (AIT US)
Brady Corp. (BRC US)
Carlisle Cos. (CSL US)
Caterpillar Inc. (CAT US)
CSX Corp. (CSX US)
Cummins Inc. (CMI US)
Curtiss-Wright Corp. (CW US)
Dover Corp. (DOV US)
Emerson Electric Co. (EMR US)
Eaton Corp. (ETN US)
FedEx Corp. (FDX US)
Honeywell International Inc. (HON US)
Hubbell Inc. (HUB.B US)
Illinois Tool Works Inc. (ITW US)
Lennox International Inc. (LII US)
Norfolk Southern Corp. (NSC US)
Parker Hannifin Corp. (PH US)
Regal-Beloit Corp. (RBC US)
Rockwell Collins Inc. (COL US)
Snap-On Inc. (SNA US)
Union Pacific Corp. (UNP US)

Read the rest of the story.

Posted by Martin May 23, 2011

US stocks plunge on European debt worries

With little economic news coming out of the United States, Wall Street is panicking about Europe. The Dow Jones industrial average fell 173 points, or 1.4 percent, to 12,338 in midday trading. Stocks also fell broadly in Europe and Asia.

So the Wall Street is panicking. Great, let them panic even more. This will push prices down and I will be able to buy cheaper. Save money and be ready to invest. Now let the Mr. Market screaming, panicking and falling as low as he can. When he finally realizes what a chicken he was it will be the right time to purchase.

Posted by Martin May 17, 2011

Can you help improve this blog?

I wish to provide my visitors a look at my process of investing, how I started and how I did it. I wish that the new investors can see how I developed my strategy and thinking about investing and trading. I am determined to succeed. I also remember myself looking for information and education how to be successful in investing and trading. It wasn’t easy. And I wish this blog would be able to provide some insight and make it easier for new investors to follow my steps and identify their own strategy.

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I think I was successful so far, although I lost a great amount of money at the very beginning. However, it helped me to realize how I want to be investing and into what stocks or investment vehicles (options for example). And shaped my strategy. Many experienced investors already knows, but newbies (like myself) need some practical help. I know myself desperately looking for step-by-step help. Despite the losses I was able to fully recover my ROTH IRA account (within a year) and make it profitable. I could save and increase the value of the account to $10,000. Now I am focusing on my “Trading” account. Which still need a lot of work to recover my previous huge losses. But I am progressing satisfactory, increasing the value and boosting savings as well as investing to get the most from stocks. I am also looking for additional income and trying to maximize portfolio income which can be reinvested.

But I would like to ask you for your help, my readers. What do you want this web should provide you with so you can find what you are looking for?

I decided to change this blog’s image (theme) and it would be a great opportunity to incorporate your comments. You can comment underneath this post or send me an email.

Your input would be greatly appreciated. Thank you!

Posted by Martin May 16, 2011

What to do when market is falling?

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There are many ways what you can do when market is falling. You could probably find advice on selling your positions and go sideways, buying more stocks, do nothing etc. Well it is all about strategy.

I remember myself when I was trying to figure out which way to go. Originally I used a strategy of selling stocks which hit my stop loss. Unfortunately during markets like today I was stopped out quite quickly. I ended up collecting losses. One after second.

I was thinking what I can do to prevent it. What strategy would be the best? Which would work for me?

Well, it is all about strategy.

With a small account like mine I couldn’t afford swing trading or timing the market. Although I still believe in this strategy as good one and I still believe that it is possible to time the market. But timing the market will increase trading frequency and also you may pick up more wrong stocks or wrong timing. With a small account you cannot afford it. That was my lesson.

So I must hold stocks longer. I must pick and buy stocks, which won’t be that volatile and which will hold value better than small caps. Besides some other reasons, this one was the one why I chose dividend paying stocks.

But what to do when the stock market is falling and almost all your holdings go south? First don’t be panicking. Mr. Market is once again having bad mood and overreacting. Based on the strategy he is actually creating a great opportunity for buying.

For me it is an opportunity. As I mentioned in my previous post I try to teach myself to stay calm, when the market is growing and get ready when it is falling. Watch your investments and save money. You may reinvest dividends or invest new savings into slowly growing stocks during long term strong bull trend, but during volatile market like today I am just saving and sitting tight. Now when the market is in correction I am preparing to act. I was waiting for Kinder Morgan stock as I said in my previous post, but I have bought CTL instead. CTL showed better results to me, better dividend yield, growth and other numbers I look at. Now, after I purchased CTL I am again waiting for KMP.

When I first mentioned KMP it was trading at $75.84. Today, a few days later KMP closed at $72.09. Given the size of the company, industry it operates, services it provides and dividends it pays this stock doesn’t look as a bad investment to me. Buying it cheaper is a great opportunity.

When the market or the stock shows strength again I will buy and add this stock to my portfolio. If the market continues growing, I will be saving money again for another buy opportunity.

How do you invest or what you typically do when the market is growing or falling?

Posted by Martin May 16, 2011

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Posted by Martin May 13, 2011

How to make extra money?

In my few posts I wrote that I was looking for new opportunities to make some extra cash which I will have available for investing. Almost every week I search the Internet to find those opportunities.

It is not easy, because the net is full of scam today. Many times I come across a web which claims that you can make thousands of dollars a day. Yeah. If it was that easy, everybody would be a millionaire already.

So the first rule is, if it looks to be too good to be true, it probably is a scam. So I am not interested.

The second rule is that if any of the promoters promises you to reveal a secret way how to make dollars IF you pay only $xxx fee, sorry, I am not interested either. I am looking for making some cash, not pay cash to somebody.

There are some ways how you can make cash.

  • You can start your own business (I am currently so busy at my job, that this option is not for me – yet).
  • You can take part time job (I already did it, but had to quit. I could sleep only 4 hours a day between two jobs, so not for me).
  • Affiliate programs (this can be a great source of additional income, but I wasn’t successful so far. I will be trying, however).
  • Investing (I think, after circa five years of learning I finally got the idea how to invest successfully).
  • Stock, options & penny stocks trading (Here I still need improvement and learning, so not doing it yet).
  • Alternative sources (see below).

I do not know how to call alternative sources using different name. I came up with some which makes me money.

Lending Club

I wrote about this site many times. I am currently making 12.27% (annual rate). Everybody can do it and with a little effort the account can be self-working. And that is exactly what I wanted. I am a lazy person, so something what can work for me is good for me. Everyday I just glance thru the account to see how it is doing and move forward. It is growing and making me money. I have a plan that as soon as the account reaches a certain level, I start pulling some cash out and reinvest in my other “Trading” account.

If you want to give it a try, click on this link or banner.

If you open an account and invest, Lending Club gives you $25 dollars welcome cash. And that is all you need to start. If you invest more, you will be eligible for more money from Lending Club.

Hits4Pay

This program requires a little effort. It is a program where you get paid for reading emails. It doesn’t pay big money, but better small than nothing. You have two options how you can make some cash:

  1. Reading emails and make circa 0.05 cents per email (so you won’t get rich quickly – did I disappoint you?)
  2. Recruiting new members – referrals. (I do not have much experience with this, but I give it a try.)

When I started my account some time ago I received $10 welcome bonus. Nice to start. Then you need to do some work. If you wish to give it a try, click on this link or banner below.

Among many other websites, Hits4Pay looks the most reasonable to me. If you wish to give it a try, click on the banner above. You get $10 sign-up bonus which is good to start with. They pay every time you reach $25 dollars on your account.

YouData.com

I came across this web site recently. When you sign up, you need to fill up a questionnaire based on which you start receiving ads. They call it “MeFile”. I must admit that I liked those ads so far. They definitely were in a range of my interest. They also pay nice rate per ad and they pay to your Paypal account. There is no minimum, so you will be receiving even small cash.

You Data

All other websites I visited were either scam or worthless. However, I do not say that there are no other, better programs. I might not have visited them yet. So if you know about any other, which provides reasonable payout, let me know. I will definitely give ’em try.

Posted by Martin May 06, 2011

Actuant (ATU) a stock with blow-out earnings potential

Actuant (ATU) a stock with blow-out earnings potential

Actuant Corporation is recently going zigzag in short term and side way in somewhat middle term (December 2010 until today). Many times I was thinking to get rid of that stock since it no longer shows momentum to me, no growth, so why lock my money in it.

Actuant Corporation

But then I try to remind myself – be patient. Once you picked the stock because it showed a great potential for growth and making you money… Another reminder was Netflix to me. Once I bought the stock when it was selling at $55 a share. A few months later I sold the stock, because it went nowhere or it even went down and hit my stop loss. Today Netflix sells for $229.60.

I am trying not to repeat the same mistake. I believe Actuant has a potential for further growth, just it needs time. Once I read, buy a stock and give it time to grow.

So what I am doing? Watching the stock carefully. I am trying to find news and what other bloggers and investors say about the stock and see how it reacts, but most importantly I try to stay calm, sitting and waiting. Maybe Actuant is another Netflix and at the end of 2012 I will be selling three times more than today. Who knows.

So browsing the Internet I found an article about Actuant:

Actuant is a global manufacturer of a broad range of industrial products and systems with operations mostly in the EU and North America. In fiscal year 2010, ending on August 31, the Company made net sales of $1.16 billion with a 10% increase in profits.

Return on equity was a lackluster 3.3% at the end of quarter 1 2011, or the three months ending November 30, 2010. It was 3.23% at the end of FY 2010, and 1.99% at the end of FY 2009.

Actuant is an awfully cyclical company, but we think the upswing is about to go into full-force. Large debt-loads, still at $500M, have made the company lean and efficient, translating into high return-on-invested-capital. There is significant leverage at the company, which can create outsized returns when its end-markets are performing well. We think shares are a buy given the likely growth in its energy segment. Many Actuant actuation and hydraulic products are used upstream to build the machines used by land-based and deep-water exploration and production companies. High fuel prices bode well for more production.
We find coverage to be light on ATU, leaving the potential for positive earnings blow-outs throughout 2011 and 2012.

Read the rest of the story.

Posted by Martin May 02, 2011

Sell in May and run away… well, I am not so sure

Sell in May and run away... well, I am not so sure

I have read this little rhythm somewhere and I liked it. Some professionals from Wall Street and analysts say that May is typically a weak month when stocks fall. If I recall it correctly, last year it was actually April when stocks headed south. But I may be wrong.Crash

Sometimes it is confusing listening to advice like this. We are bombarded by information like this every time and newbies can be quite confused. Once, I remember, I wanted to make a list of weak and strong months and coordinate my buying accordingly. Glad I didn’t have enough time to do so.

As I have changed my investing strategy I see this weak month as an opportunity. If it shows up as they say and stocks will head down I will be actually happy about it. Even though I will see a lot of my holdings in red numbers (which is psychologically very hard for me) I am repeating to myself, that this would be a great opportunity to buy. Even if the stocks head down, it won’t last forever and I can be buying cheaper than today.

So what I am doing during the period when stocks are growing? Waiting and saving. I save money to have enough to buy when the stocks fall so I can buy more. And when stocks start growing again I will sit, wait and save money. If I have saved more than a few dollars I am willing to invest into my mutual fund HSTIX, which I can be buying without commissions and it pays dividends. This fund serves me as a money storage. As soon as I see a buying opportunity I sell a portion of my holdings in the fund and use released money to buy.

Right now I am waiting for Kinder Morgan as my next buy. It yields 5.8%, its 5-year average dividend growth is 7.13% and it was increasing the dividend in 14 consecutive years. I want the price drop down, so I can buy cheaper.