Hello Suckers …

New stock picks this week:

LJ International, Inc. (JADE)

Existing & new holdings:

New positions available to open: 0     

Starting account value = $1,864.19

Account value = $1,853.54 (without margin)

Buying power = $539.17

Portfolio Gain/loss this week = -0.57%

Portfolio Gain/Loss for OCTOBER 2009 = 4.17%

Portfolio Gain/loss for 2009 = -23.08%

Annual Return (CAGR): -29.41%

The market has been a bit bumpy last week. Stocks were rallying as well as falling down as a rock at the same time. One day stocks shot up on the news of earnings better than expected and a few days later an analyst wrote that these earnings were not such good and sent stocks to 40 minutes sell off. I am surprised how the market is overreacting on such news and opinions of some so called analysts. A young kid without experiences writes his/her analysis and the stocks go to hell. Or are the doomsday predictors, who are predicting the fall since the market started rallying in March, so scared that at any moment when a company missed expectation by a couple of cents or some analysts started saying sell, sell, sell, they started panicking and selling just to start buying back the very next day?

I remember once an analyst (if she is analyst at all, maybe a columnist) Morgan Housel wrote about Visa to be a hot candidate for dumping the stock, because its growth is not sustainable. I wrote about it in my post “Is Visa Affected by delinquency?”. I couldn’t find any reason, why Visa wouldn’t be capable to sustain it’s growth. All I could see that even during bad market we experienced Visa reported positive earnings and during Q2 & Q3 2008 it was even an earnings surprise! How come that at the time when consumers were dumping credit cards, stopped buying, Visa exceeded analysts expectations? This year’s growth is at 28% rate! I understand that if the company doesn’t make money, it should be avoided, but shouldn’t we be looking at what the company does instead of what some so called experts say or think? Visa closed at 69.27 at that day when the column has been posted. Last week closing was at $74.12, 7% higher since the doomsday prediction. If you hold through the correction which followed or bought later back, you would be enjoying great return so far. I did and enjoyed 11% gain within 4 months.

I was told by one guy at a MarketWatch discussion board: “Do not seek a logic in the market”. He was right, but still all this surprises me that even experienced traders (as I would expect them to be) are panicking without serious reasons. That makes the market volatile. I do not remember such volatility. Usually stocks corrected within 10% or less, but today this threshold is easily reached or even higher.

Let’s see what following weeks bring us, if the market corrects or will continue higher. This is all we should watch and listen to, not to analysts or columnist publishing their opinions.

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