Posted by Martin November 07, 2008
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Investor’s checklist I.


This is a post from Hello Suckers

Are you [tag]new to investing[/tag]? Were you thinking you would [tag]start investing[/tag] some [tag]money[/tag] in the [tag]stock market[/tag] to make some [tag]additional income[/tag], but you have no idea how to start? Don’t worry, we all were beginners once, so do I. This article shall give you an “implementation & operational” manual on [tag]how to start investing[/tag]. I would guess you want to start from the beginning so let me start from scratch.

1. Start saving money

For investing in the stock market you would need some [tag]initial capital[/tag] to start. Ideally you want to start with at least 10,000 dollars account, however you can start with 5,000 or even 2,000 account will work. If you do not have such sum, I would recommend opening a savings account and transferring some amount of money until you save your initial capital. Do not open your investing account and save on it, since this account will earn no or very small interest and investing is not only about [tag]buying and selling stocks[/tag], saving money is part of the entire game.

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Posted by Martin November 07, 2008
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Picks 11/03 – 11/07


No new picks.

There is nothing to buy out there.

Existing holdings:

Symbol Qty Last Gain($) Gain(%)
AFAM 10 51.47 100.24 24.19

Contribution this week: $0

Starting account value = $1,920.05

Account value = $1,953.16 (without margin)

Buying power = $1,438.46

Portfolio Gain/loss this week = 1.72%

Portfolio Gain/Loss for NOVEMBER 2008 = 1.72%

Portfolio Gain/loss since inception = -12.79%

Annual Return (CAGR): -12.79%


Are you interested in Reverse Scale Strategy and see how it works when implemented to even a small account?

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TastyWorks

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Posted by Martin November 05, 2008
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AFAM filed positive 3Q results today, 63% better than expected

AFAM filed positive 3Q results today, 63% better than expected

AFAM, the provider of home nursing care services filled its Q3 earnings today 63% up over the expectations and it rallied back to $49.51 a share from its yesteday sell off. Sales rised up 84% which is quite a good result in todays economy. Volume is raising as well and even though the stock’s rally is slowing down it still may be the new winner making another 100% run. Let’s see what would happen in couple more days.

AFAM


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Posted by Martin November 05, 2008
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Is Dow heading to 4000 points?

Is Dow heading to 4000 points?

Today I have read Jon Markman’s commentary on a crisis. In his paragraph “A Credit crater too big to fill?” he writes that Dow Jones can easily sink down to 4000 points level, because of the weak economy which can not be fixed by election itself. Wow. Is he serious? He provides calculations why he thinks he is right.

If he is right, we are heading to a huge and deep drop. Also when looking at the market, it is still hard to say, which direction it will go, see chart:

Dow Jones

It may continue growing along its support line, or it can end recent rally again. Today, the market responded to bad news of economy negatively, the only good news could be the low volume. So let’s see what would happen next couple days or week.

Tip: Save your money, do not invest into any new positions, build a watch list and wait for the market to tell when it is the best time to start buying stocks. This beginning rally still may fail.


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Posted by Martin November 04, 2008
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King is dead! God save the King!


Pre-election rally which has started last Tuesday brought impressive gains today:

Dow
+305.45 +3.28% 9,625.28
Nasdaq
+53.79 +3.12% 1,780.12
S&P
+39.45 +4.08% 1,005.75

However some leading stocks declined today (AFAM is among those stocks) and this makes this rally a bit weak. Will it survive or is it just another attempt to fail?

Tomorrow we may expect weak open and weak trading, however this post-election period will be crucial. The economy is still showing bad data and bad news. Will the market respond to the bad news or are we really consolidating?

Tip: Save your money, do not invest into any new positions, build a watch list and wait for the market to tell when it is the best time to start buying stocks. This beginning rally still may fail.


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Posted by Martin November 02, 2008
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Are we at the bottom?


It seems like the market is bottoming. Even an unexperienced investor can feel that there is a resistance line and the market is not willing to go down any more. It can be misleading however. Take a look at the chart showing  recent moves in the stock market.

Dow Jones

The first red resistance line was what I considered a bottom line in July 2008. Since then the market was growing as well. Then it failed in rally, when in September it tested this line twice and at the end of the month it failed and dropped down like a rock. This all can happen again.

However the market doesn’t respond to bad news about weak economy, losing consumer confidence, bad retail and factory results, decreasing GDP, and unemployment negatively with another drops. It tends to grow as the chart shows. Last three days the market was growing and if the trend remains we may get into new rally.

I consider this development as a “Rally Attempt” and I am changing the market status into a Rally Attempt status.

What does it mean for RSS investors? I still strongly recommend NOT buying any new positions. Even if the screener shows new stocks, I add them to a watch list as potential stock to buy and if the screener shows those stocks again when the market will be ready I will buy. Until then I am sitting tight, saving money and wait.


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Posted by Martin October 31, 2008
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Picks 10/27 – 10/31


No new picks.

Existing holdings:

Symbol Qty Last Gain($) Gain(%)
AFAM 10 48.16 67.14 16.20

Contribution this week: $0

Starting account value = $1,852.81

Account value = $1,920.05 (without margin)

Buying power = $1,438.45

Portfolio Gain/loss this week = 3.63%

Portfolio Gain/Loss for OCTOBER 2008 = -7.91%

Portfolio Gain/loss since inception = -14.27%

Annual Return (CAGR): -14.27%




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Posted by Martin October 31, 2008
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AFAM added


AFAM hit my decision point for pyramiding today (10/31/2008). Per the investing plan I added more shares to the existing holdings:

10/31/2008  15:41:33 Bought 3 AFAM @ 47.69

Total shares owned: 10
I have also moved my stop loss higher @38.15




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Posted by Martin October 30, 2008
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Timing the market – a fool’s play?


Some advisers and investors say timing the market is a fool’s game and every investor should avoid it, because it is impossible to do it successfully and whoever tries it he would lose his investments. These investors and advisers either misinterpret timing or do not understand it at all. Obviously, timing the market doesn’t mean buying low and selling high, fishing for the bottom when stocks seem cheap and waiting for them skyrocketing. If this is the timing, then yes, investors will lose their money.

Timing the market by waiting for stocks dipping, decreasing in price to buy them and then waiting for them to grow again is not the best approach and all advocates are right saying it. What I understand as timing the market is waiting for the right time to buy stocks and waiting for the right time to sell the stocks.

Timing the market – buying stocks

When I say that timing the market when buying stocks means for me waiting for the right time to buy stocks, I obviously do not mean waiting for the stock itself, its best price or whatsoever. I mean waiting for the right conditions to buy. Waiting for the stock and its best price may cause that the investor ends up waiting forever.

Time buying stocks – wait for the market

When I started investing again in 2006 I believed I knew everything about investing and I didn’t expected I would ever experience the market like this one. S&P is down 40% or more and there is no bright future outlook out there. This is the right time for timing the market. It is frustrating seeing investment money sitting on the account in cash, but waiting for the right time when it will be secure buying new positions again is the best approach today. There are investors in the market who are bargain hunters, long term investors and they are probably buying now. However, it is not my game and I do not play it. The market is not ready yet and I do not want to lock my money in insecure positions.
My friends are asking me whether I consider the stocks cheap enough to start buying or not. Honestly they seem darn cheep right now. Quick look at financial stocks, energy stocks, real-estate stocks, all they are cheap as they were five or more years ago. Sometimes I feel tempted to start buying. Lets take a look at Apple (AAPL). It is down from its $200 or so high to $107! Isn’t that stock cheap? Maybe. However my answer was no. I don’t recommend buying, because the stock market doesn’t show strength and nobody knows whether it would go further down and even our Apple can continue its downtrend. What if Apple stays at this price level? How can we recognize whether it will return back and make new highs or stays at this level for many coming years? The economy or market may remain at this level for many years. In 1929 it took 4 years after the crash to get the US back to prosperity. Buying stocks now would cause locking investor’s money into a stock which even cheap it still can continue in its downtrend for some long period. Who wants to have available funds in such stock? Isn’t it better to wait for the market to show the willingness rising again? After the entire market confirms its rally, it would be the right time to start buying those cheap stocks even though at that time they may become more expensive than they are today – they still may be cheap enough.
Today the market is still in correction. It probably reached its bottom, but who knows how long it stays there? Timing the market in this manner it is not fool’s play but wisdom every investor should learn.

Timing the market – selling stocks

When some investors looked at their 401k plans these days they could suffer some bitter surprise. I am one of them as well. My 401k plan is down some 24% (which is still pretty good result), but my investing portfolio is down 14% only (thanks to my own indiscipline and impatience). If I have followed the rules I am writing about I could get better results. What is my point? I do not consider long term investing – buy and hold to be a holy grail of investing. There are Nobel price authors who documented that for example S&P over long haul provided the very best results than any other approaches ever, however I do not want to invest my money and then wait 30+ years to get 20%+ profit. Thanks to the 2008 crisis some portfolios are down at the same level as they were some 10 years ago. No profit after 10 years of investing money locked in stocks in long haul? Not for me.
I believe that investors should manage a portion of their portfolio so they create a money machine which will work for them until their last moment of their life. I want such a machine! This small account shall be my “Colorado University of Investing”.

What timing the market in regards of selling means for me? When the market goes down and changes to a bear market, I sell all stocks which do not perform well or touch the stop loss. This is the best way to protect invested money.

Timing the market, when experienced investor knows what she is doing, is the best way how to protect her account against losses and achieve same or better results. So don’t be fool and time your trading.




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Posted by Martin October 25, 2008
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Picks 10/20 – 10/24


No new picks.

Existing holdings:

Symbol Qty Last Gain($) Gain(%)
AFAM 7 37.33 -10.08 -3.71

Contribution this week: $0

Starting account value = $1,847.33

Account value = $1,852.81 (without margin)

Buying power = $1,591.50

Portfolio Gain/loss this week = 0.30%

Portfolio Gain/Loss for OCTOBER 2008 = -11.13%

Portfolio Gain/loss since inception = -17.27%

Annual Return (CAGR): -17.27%




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