Investing into Stocks - Hello Suckers!

Picks 05/17 – 05/21

Recently I was busy or out of town so I wasn’t able to update my blog as often as I would wish to. The most recent news is that I liquidated all my positions in my trading account (quite in time to avoid larger loses) and currently I am sitting in cash. Mostly I will be saving, studying and thinking about my strategy. Recently I made a lot of mistakes (again), so I put my trading on hold. I will wait for the market and see when and what to trade. I might buy back Visa when it confirms its strength, Medifast or start building a core of the portfolio. I definitely want to do something about my trading. Maybe I will give it up completely and move all the funds to my ROTH IRA account and focus on dividend investing rather than aggressive trading in which I am unsuccessful so far. Or I might start the same approach of saving money into mutual funds (index funds) and resume trading when my portfolio gets in a better shape.

Trading Account:

New [tag]stock picks[/tag] this week:

Stocks bought or added to portfolio this week:
none

Stocks dropped from portfolio this week:
MED

Stocks watched this week:

none

Existing & new [tag]holdings[/tag]:

Symbol

Qty

Last

Gain($)

Gain(%)

Stop

ATR

Risk to
stop (%)

Contribution this week: $0

Current [tag]capital exposure[/tag]: 0%

New positions available to open: 0

Starting [tag]account value[/tag] = $1,963.60

Account value = $1,600.08 (without margin)

Buying power = $0

[tag]Portfolio Gain/loss[/tag] this week = -18.51%

[tag]Portfolio[/tag] Gain/Loss for MAY 2010 = -33.54%

Portfolio Gain/loss for 2010 = -45.43%

[tag]Annual Return[/tag] (CAGR): -37.56%

Lending Club:

Debt notes

Available cash:	$13.05
In Funding Notes:	$0.00
Outstanding Principal:	$390.75
Accrued Interest:	$2.06
Account Total:	$405.86	Net Annualized Return:	12.26%
Contributions this week:	$0.00
Weighted Average Rate:	11.56%
Expected Monthly Payments:	$13.11
Payments to Date:	$13.21
Principal Payments:	$9.25
Interest Payments:	$3.96
Late Fees Received:	$0.00

ROTH IRA Account:

New [tag]stock picks[/tag] this week:
05/20/2010 Bought 7.764 SICNX @ $6.44

Existing & new [tag]holdings[/tag]:

NTF Mutual Funds

Symbol	Qty	Last	Gain($)	Gain(%)	Div. Y(%)	Port. (%)
AIGYX	83.472	13.15	97.66	9.77	7.13	29
ATIPX	106.395	8.92	8.87	0.94	7.04	25
GABUX	39.936	6.01	-9.98	-3.99	3.99	6
HISIX	26.918	6.35	-29.07	-14.54	4.56	5
SICNX	54.495	6.51	-44.69	-9.93	4.97	11
SWDSX	53.286	11.42	4.35	0.72	4.00	16
SWLSX	29.814	9.49	14.01	5.21	1.63	8

Individual ETFs

Symbol	Qty	Last	Gain($)	Gain(%)	Div. Y(%)	Portfolio (%)
AOD	219.0	7.12	-444.57	-22.19	20.63	83
IGD	29.0	10.65	-47.85	-13.41	14.49	17

Individual stocks

Symbol

Qty

Last

Gain($)

Gain(%)

Div.
Y(%)

Portfolio
(%)

Account target and current allocation

Individual stocks	0	42%	0%
NTF Mutual funds	3,754.41	38%	66%
ETFs	1,868.13	20%	33%

Contribution this week: $50

Starting [tag]account value[/tag] = $6,020.72

Account value = $5,708.65

Dividends received in May 2010 = $8.64

Dividends received in 2010 = $115.36

Portfolio dividends yield 2010 = 2.02%

Portfolio dividends yield lifetime = 3.49%

Dividends received lifetime = $199.48

[tag]Portfolio Gain/loss[/tag] this week = -5.18%

[tag]Portfolio[/tag] Gain/Loss for MAY 2010 = -10.71%

Portfolio Gain/loss for 2010 = -7.04%

[tag]Annual Return[/tag] (CAGR): -5.53%

[tag]Portfolio Return[/tag] since inception: -17.56%

The stock market continues falling down and it is very painful seeing my holdings losing. Should I hold or sell? I always used to liquidate losing holdings as soon as they reached my stop loss, but with my ROTH IRA and dividend investing the approach is totally different. I am a bit nervous. However, I am trying to hold, because in the long run, these loses will most likely recover as it happened at the beginning of 2009 when the market started its impressive recovery and erased almost all loses from previous years. United States economic data points to strong growth and the only what drags down the market is global worries. It always was that when the US sneezed, in Europe they got cold, these days it seems our Wall Street boys are so scared that whenever Europe hiccups Wall Street gets sick.

Taking look at manufacturing, personal income & spending, or housing, you can see some interesting data out there. But global worries are now a lot stronger driver of the entire market. The drops of price creates great buying opportunities, and my plan would be to start buying a mutual fund which follows S&P 500. It seems like a great chance to catch weak market and when all this mess will be over, ride it up.

At the end of this week I am leaving for my 3 weeks vacation, so there will be no updates on this blog or very little if I get a chance to access a computer.

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Posted by MartZee May 18, 2010
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money Visa V Durbin Congress Durbin's interchange fees checks MasterCard

Visa under panic but creates great opportunity

When I opened the computer on Friday and saw the drop in price, my first thought was “what happened again?” and that “I might have jumped in too early” when I bought Visa (V) the previous day. But then I stopped panicking and started thinking again. What caused the major defeat of Visa along with Master Card (MA) and other financials? It’s our comrades in Senate whose philosophy is to help you even if you do not want any help and protect you against yourself. Maybe next time, whenever any of us refuse governmental help, the comrades may start using force and arresting us for not accepting such a generous (even unwanted) help.

Well, I sold Visa today to protect my money. I wasn’t willing to hold on losing trade. Maybe it was wrong approach because the stock may start growing again. Maybe.

Right now It seems like it will be driven further south, mostly by totally uninformed investors. Wall Street seems have no clue how Visa is making money and this is why investors start panicking whenever any news about credit cards come out. Earlier, about two years ago, I wrote about an analyst who recommended selling Visa, because it was exposed to credit card delinquencies. What a nonsense!

Today Visa is once again driven down by a crowd who is clueless how this company makes money.

You may already know that whenever you use your Visa credit or debit card your merchant pays 1% to 3% fee, called interchange fee. Most likely the merchant passes the fee onto a consumer, but large retailers may not. However that is not the point. A general public THINKS that this is the fee which goes to Visa (or Master Card). But that’s incorrect. Visa doesn’t receive a penny from this fee.

Who gets the fee then if it’s not Visa? I have read several conclusions these days stating that the cap approved by Congress may affect Visa revenue. Well, if Visa is not a receiver of the money, it won’t affect them at all!
I can see the confusion here. I read on CNN Money the following:

“Industry kingpins Visa and MasterCard collected interchange fees of at least $35 billion in 2007, according to government estimates.”

Everybody automatically assumes, Visa and Mastercard got so fat on this. Maybe this is why Dick Durbin got so jealous and decided to act and push the bill to protect his incompetent voters. In former Eastern post-communist countries you may find many such Durbins.

So what’s the deal with Visa and interchange fees? Visa collects those fees, but reimburses them back to the card issuing banks. Visa doesn’t keep a penny. When you take a look at annual report on Visa’s web, you will clearly read:

“Although we administer the collection and remittance of interchange reimbursement fees through the settlement process, we generally do not receive any portion of the interchange reimbursement fees.”

It seems, that investors didn’t do their homework when investing into Visa. All the mess around this stock is a pure overreaction and there was no need for such a sell off.

OK, so how is Visa making money? They charge processing fees and service fees based on transaction volumes and these are fully paid by issuing banks. Of course, banks will pass those fees down to their clients (in this chain the retailers), and they pass it on you, but the cap most likely won’t affect Visa at all, because banks will most likely reduce their own fees charged on top of the Visa’s ones.

I could find (unfortunately too late) that Visa anticipated something like this and on their web site they published the following:

If we cannot successfully defend our ability to set default interchange rates to maximize system volume, our payments system may become unattractive to issuers and/or acquirers. This could reduce the number of financial institutions willing to participate in our open-loop multi-party payments system, lower overall transaction volumes and/or make closed-loop payments systems or other forms of payment more attractive. Issuers could also begin to charge higher fees to consumers, thereby making our card programs less desirable and reducing our transaction volumes and profitability. Acquirers could elect to charge higher merchant discount rates to merchants, regardless of the level of Visa interchange, leading merchants not to accept cards for payment or to steer Visa cardholders to alternate payment systems. In addition, issuers or acquirers could attempt to decrease the expense of their card programs by seeking incentives from us or a reduction in the fees that we charge.

So will this hurt Visa or Master Card? Potentially this may have some impact on these companies. As Visa states, it may happen by “steering consumers to alternative payment methods”. But, what are those methods besides cash or writing checks? Will you be using checks or cash rather than your debit or credit card? I personally do not carry checks or cash at all and use my debit card. It will be banks who will most likely absorb this loss rather than Visa, but they won’t quit using Visa or Master Card network.

Even though Durbin’s amendment passage is really unfortunate, and stupid socialistic way of governmental interference with free market and part of the game and its risk, I was also forced to sell the stock and wait until the Wall Street realizes that they overreacted this too much and the stock starts recovering. Originally I believed the recovery would come today (Monday 17th), but it didn’t happen and the stock displayed another strong selling pressure. The stock corrected ca 23% so far, some say it will go even lower all the way down to $40 – $60 range. Let’s see what will happen in a few upcoming weeks.

Nevertheless, Visa is creating a great buying opportunity. It’s internal fair value is at $100 per share so the stock still has great potential for recovery and growth. This huge drop will allow buying the stock very cheap.

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Posted by MartZee May 17, 2010
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Visa sold today

I gave up on Visa and even though my original stop loss was lower then today’s sell I decided not to wait for further loses and sold. I am going to wait for the market reversal and buy Visa back when it shows some strength and will to grow. Right now it looks like the stock will fall more.

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Posted by MartZee May 16, 2010
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Picks 05/10 – 05/14

Trading Account:

New [tag]stock picks[/tag] this week:

Stocks bought or added to portfolio this week:
Bought 18 V @ 86.71
Bought 45 MED @ 34.13

Stocks dropped from portfolio this week:
none

Stocks watched this week:

none

Existing & new [tag]holdings[/tag]:

Symbol	Qty	Last	Gain($)	Gain(%)	Stop	ATR	Risk to stop (%)
[tag]MED[/tag]	45	35.76	72.90	4.75	25.48	2.5700	-25.36
[tag]V[/tag]	18	77.26	-170.24	-10.91	72.00	4.2500	-16.97

Contribution this week: $100

Current [tag]capital exposure[/tag]: -28.38%

New positions available to open: 0

Starting [tag]account value[/tag] = $2,080.90

Account value = $1,963.60 (without margin)

Buying power = $0

[tag]Portfolio Gain/loss[/tag] this week = -5.64%

[tag]Portfolio[/tag] Gain/Loss for MAY 2010 = -18.44%

Portfolio Gain/loss for 2010 = -33.35%

[tag]Annual Return[/tag] (CAGR): -30.35%

Lending Club:

Debt notes

Available cash:	$8.21
In Funding Notes:	$25.00
Outstanding Principal:	$369.28
Accrued Interest:	$2.46
Account Total:	$404.96	Net Annualized Return:	12.85%
Contributions this week:	$0.00
Weighted Average Rate:	11.56%
Expected Monthly Payments:	$12.34
Payments to Date:	$8.31
Principal Payments:	$5.72
Interest Payments:	$2.59
Late Fees Received:	$0.00

ROTH IRA Account:

New [tag]stock picks[/tag] this week:
05/10/2010 Bought 39.936 GABUX @ $6.26

Existing & new [tag]holdings[/tag]:

NTF Mutual Funds

Symbol	Qty	Last	Gain($)	Gain(%)	Div. Y(%)	Port. (%)
AIGYX	83.472	13.82	153.59	15.36	7.13	30
ATIPX	106.395	9.03	20.57	2.19	7.04	25
GABUX	39.936	6.27	0.40	0.16	3.99	7
HISIX	26.918	6.57	-23.15	-11.57	4.56	5
SICNX	54.495	6.76	-31.61	-7.90	4.97	10
SWDSX	53.286	11.86	27.80	4.60	4.00	16
SWLSX	29.814	9.87	25.34	9.42	1.63	8

Individual ETFs

Symbol	Qty	Last	Gain($)	Gain(%)	Div. Y(%)	Portfolio (%)
AOD	219.0	7.83	-289.08	-14.43	17.98	84
IGD	29.0	11.63	-19.43	-5.45	12.67	16

Individual stocks

Symbol

Qty

Last

Gain($)

Gain(%)

Div.
Y(%)

Portfolio
(%)

Account target and current allocation

Individual stocks	0	42%	0%
NTF Mutual funds	3,836.20	38%	64%
ETFs	2,052.04	20%	34%

Contribution this week: $0

Starting [tag]account value[/tag] = $5,939.31

Account value = $5,970.72

Dividends received in May 2010 = $5.01

Dividends received in 2010 = $111.73

Portfolio dividends yield 2010 = 1.87%

Portfolio dividends yield lifetime = 3.28%

Dividends received lifetime = $195.85

[tag]Portfolio Gain/loss[/tag] this week = 0.53%

[tag]Portfolio[/tag] Gain/Loss for MAY 2010 = -5.87%

Portfolio Gain/loss for 2010 = -1.97%

[tag]Annual Return[/tag] (CAGR): -4.10%

[tag]Portfolio Return[/tag] since inception: -13.15%

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Posted by MartZee May 13, 2010
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Visa (V) added to portfolio

Today I bought back Visa (V), which I consider a great stock with a great growth potential.

13:40:39 Bought 18 V @ 86.718

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Posted by MartZee May 11, 2010
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MED Medifast strong buy

Medifast (MED) added to portfolio

This time I weighted my decision to buy this stock and since the stock is one of the leaders which survived the drop and even rose in price, recently it received “strong buy” recommendation I decided to add shares of this stock into my portfolio.

14:07:44 Bought 45 MED @ 34.1399

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Posted by MartZee May 10, 2010
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Should we chase this rally attempt?

When looking what the stocks, mainly those I was ready to buy back did this morning I said to myself “I should have hold them and I shouldn’t have stop loss applied. Today these stocks opened mostly with gaps and I could have made money.” Yeah. This is what I have tried last Friday and cost me money. There will be many other opportunities and chasing stocks just to make up previous loses is really a bad idea.

And the market can still turn down at the end of the day.

What is behind today’s rally? Just another hype based on Europe trillion dollar rescue plan. C’mon, is this anything solid? Stocks are rallying just because in Europe they will spend trillion of dollars to rescue Greece (which in my opinion will do the same job as throwing money out of the window) and other countries in troubles. Most likely they will have to print new Euros to do so.

The Wall Street is crazy.

I would agree jumping in if the rally would be based on the news of 290,000 new added jobs last month, but that doesn’t seem to be the fuel of this madness.

However, let’s see what the market will do today and next few days. Maybe the rally attempt will sustain and I can start buying back. This time with clear mind.

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Posted by MartZee May 09, 2010
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Market stocks market review investing Visa ROTH IRA loss equity stock trading buy Visa make money in stocks V momentum stocks ATIPX margin gains mutual funds savings NTF NTF Mutual funds IGD AIGYX HISIX SICNX SWLSX Bonds dividend high dividend yield REIT how to invest investing into individual stocks aggressive stock trading 401k plan contribution 401k contributions IRA contributions dividend stocks AOD Northern Global Fixed Income Alpine Dynamic Dividend trading account investing account Lending Club debt note NOIFX PHYRX PIMCO Aquila Three Peaks High Income I ETF no transaction fund GABUX Gabelli Utilities AAA PIMCO High Yield R

Picks 05/03 – 05/07

Trading Account:

New [tag]stock picks[/tag] this week:

Stocks bought or added to portfolio this week:
Bought 20 V @ 84.04
Bought 50 MED @ 32.53

Stocks dropped from portfolio this week:
Visa (V)
Medifast (MED)

Stocks watched this week:

none

Existing & new [tag]holdings[/tag]:

Symbol

Qty

Last

Gain($)

Gain(%)

Stop

ATR

Risk to
stop (%)

Contribution this week: $200

Current [tag]capital exposure[/tag]: 6.00%

New positions available to open: 3

Starting [tag]account value[/tag] = $2,107.57

Account value = $1,980.90 (without margin)

Buying power = $1,980.90

[tag]Portfolio Gain/loss[/tag] this week = -14.16%

[tag]Portfolio[/tag] Gain/Loss for MAY 2010 = -14.16%

Portfolio Gain/loss for 2010 = -30.05%

[tag]Annual Return[/tag] (CAGR): -29.20%

Shame on me for what I did last Friday when I jumped in breaking all my trading rules. I do not know why I did it. I just woke up in the morning and felt “this is it, the price couldn’t go any lower…” Unfortunately, it could and it did. And I lost money once again. I am still angry with myself for doing such a stupid thing. I realized that it was all wrong just after I hit “buy” button and then I was asking myself: “What have you done?” Well, I paid once again for this lesson and it ws quite costly one. Being greedy and trading emotionally doesn’t work. After all the years of creating a strategy of picking the proper stocks, defining the entry point, trailing the stop loss I do such a stupid move!! Incredible. Now it will take a really hard work to fix this mess and make that money back. Maybe it was just another reminder how important it is to stick to your rules.

Lending Club:

Debt notes

Available cash:	$6.61
In Funding Notes:	$100.00
Outstanding Principal:	$295.45
Accrued Interest:	$2.15
Account Total:	$404.21	Net Annualized Return:	13.29%
Contributions this week:	$100.00
Weighted Average Rate:	11.56%
Expected Monthly Payments:	$9.86
Payments to Date:	$6.69
Principal Payments:	$4.55
Interest Payments:	$2.14
Late Fees Received:	$0.00

ROTH IRA Account:

New [tag]stock picks[/tag] this week:
05/06/2010 Bought 4.241 SWDSX @ $11.79

Existing & new [tag]holdings[/tag]:

NTF Mutual Funds

Symbol	Qty	Last	Gain($)	Gain(%)	Div. Y(%)	Port. (%)
AIGYX	83.472	13.26	106.84	10.68	7.13	32
ATIPX	106.395	9.00	17.38	1.85	7.04	27
HISIX	26.918	6.50	-25.03	-12.52	4.97	5
SICNX	54.495	6.61	-39.78	-9.95	4.97	10
SWDSX	53.286	11.61	14.48	2.40	4.00	18
SWLSX	29.814	9.63	18.19	6.76	1.63	8

Individual ETFs

Symbol	Qty	Last	Gain($)	Gain(%)	Div. Y(%)	Portfolio (%)
AOD	219.0	8.13	-223.38	-11.15	17.39	85
IGD	29.0	11.07	-35.67	-10.00	13.65	15

Individual stocks

Symbol

Qty

Last

Gain($)

Gain(%)

Div.
Y(%)

Portfolio
(%)

Account target and current allocation

Individual stocks	0	42%	0%
NTF Mutual funds	3,505.33	38%	59%
ETFs	2,101.50	20%	35%

Contribution this week: $50

Starting [tag]account value[/tag] = $6,293.15

Account value = $5,939.31

Dividends received in May 2010 = $5.01

Dividends received in 2010 = $111.73

Portfolio dividends yield 2010 = 1.78%

Portfolio dividends yield lifetime = 3.30%

Dividends received lifetime = $195.85

[tag]Portfolio Gain/loss[/tag] this week = -6.37%

[tag]Portfolio[/tag] Gain/Loss for MAY 2010 = -6.37%

Portfolio Gain/loss for 2010 = -2.49%

[tag]Annual Return[/tag] (CAGR): -4.27%

[tag]Portfolio Return[/tag] since inception: -13.61%

I had to make some changes in my target allocation holdings. I decided to replace Alpine Dynamic Dividend (ADVDX) with Gabelli Utilities AAA (GABUX) since it will be cheaper for me to buy this fund than Alpine. The minimum investment for this fund is only $250 and it buys utilities which pay dividends. It also have better performance than ADVDX.

Another change I was forced to do is replacing Aquila Three Peaks High Income I (ATIPX) with PIMCO High Yield R (PHYRX) since ATIPX is no longer available through my broker. I am going to keep the fund, but will no longer be able to invest in this fund. PIMCO fund is similar to Aquila one, it has no initial investmet, so I can invest as little as $1 to it with no transaction fees and its ranking is similar (as per Morningstar). Unfortunately its turnover ratio is way too worse and its expense ratio as well, but I couldn’t find better replacement for ATIPX. If I do not find a way how to continue investing into ATIPX in my Roth IRA account I will continue investing in PHYRX. I use those funds as a savings vehicle anyway and as soon as I save enough I will sell and buy dividend stocks or ETFs anyway.

The last replacement I did this week was replacing Northern Global Fixed Income (NOIFX) with an index fund Homestead Stock Index (HSTIX). It is an index fund mirroring S&P 500 index and I also increased its target allocation to 18% of the entire portfolio. I haven’t invested in NOIFX or HSTIX yet, but when I start allocating my free money, it no longer will be NOIFX.

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Posted by MartZee May 07, 2010
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Grrr I am so upset

I am so upset with myself now. All the rules and strategies I was working on for so long trying to protect my money and today morning I threw it all away.

Visa has been already sold on stop loss with a loss. I am such an idiot!!! Well I am expecting MED to follow soon. I am planning on buying these stocks, but this was too early and greedy vision of buying cheap blurred my mind.

OK, MED has been sold right now and I gave up some $200 dollars this morning. @##$%^@

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Posted by MartZee May 07, 2010
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Visa, Medifast added to portfolio

This morning I added an initial positions of Visa and Medifast to my portfolio with very tight stop loss.

05/07/2010 09:40:16 Bought 20 V @ 84.0394
05/07/2010 09:46:15 Bought 50 MED @ 32.5399

However now I am admitting that these trades were a complete violence of my rules, so I am expecting to pay my “penalty” for it. Let’s see.

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Picks 05/17 – 05/21

Trading Account:

Lending Club:

ROTH IRA Account:

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Visa under panic but creates great opportunity

Visa sold today

Picks 05/10 – 05/14

Trading Account:

Lending Club:

ROTH IRA Account:

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Visa (V) added to portfolio

Medifast (MED) added to portfolio

Should we chase this rally attempt?

Picks 05/03 – 05/07

Trading Account:

Lending Club:

ROTH IRA Account:

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Grrr I am so upset

Visa, Medifast added to portfolio

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