Wednesday, January 23, 2008

Hell on Earth

As you can see I haven't posted anything in a long time... okay a very long time. In this time away have had the privilege of watching my stock portfolio go from bad to worse. I have not calculated the total percent loss in a while, but I believe the total damage is close to 50%. At this point I would like to express my concerns that no one- I mean no one- should be following my stock picks and I am terribly sorry if any unlucky soul has been.

After a person loses this much money in the stock market (or anywhere for that matter) they start to reflect on what they're doing and what they can do to turn this problem around. I have/tried/am done/doing this and have talked to my dad about what I can do to stop this massive outflow of money. Now my dad is far from an investment guru, but he has been around a while and knows his share about financial markets. He mentioned something called "high beta" stocks. This term refers to stocks that are highly volatile. In a highly volatile stock market, these stocks will go down close to double (or even more) what the average stock index will. These high beta stocks are easy to find because they are usually the ones that have gone up more that 100% in the last year. I found out the hard way, that owning these types of stocks in a scared market, you will quickly lose a lot of money.

My previous portfolio included:
Apple (appl)
Baidu (bidu)
First Solar (fslr)
Mosaic (mos)
Zix Corp. (zixi)

My current portfolio is:
Apple
First Solar
Mosaic
Short: Wynn Resorts (wynn)

I choose to keep the positions that I did because I believe that they are safer and will most likely rebound. However, I believed that about all my stocks and look where I am today.

On my next post I will give more information on my current portfolio and also give some ideas that I have for other stocks.

Sunday, November 4, 2007

First Two Weeks

I have been invested in the stock market for 11 trading days now.
And I don't know where to start...

My first Sell: ANW @ 79.74 (-11%)
ANW took a nose dive on October 25th on the news that of when their earnings are going to be released. Being the beginner investor that I am, I freaked out and instantly wanted to sell. However, I held onto it for another two days. It went up...then back down. I sold it. Guess what! It goings back up again!

What I learned:
1) Calm the F#@K down
If your stock starts dropping, make sure it is for a legitimate reason and that the direction will continue. I lost a lot of money because I got emotional and didn't calm down and think about what was going on. The stock was a high growth stock, which means lots of volatility. In retrospect, I should have bought more.
2) Buy on Dips
I bought most of my stocks when they were right at their 52-week high. It is always a good idea to buy stocks making their 52-week highs because they are obviously growing. However, stocks usually pull back a couple of percentage every few days. These would be the best times to buy the stocks because you don't lose the initial 1-3%. This is not a big problem, but every percentage point helps.

Cramer's Recommendation: VIP + EXM
VIP: Cramer recently said to sell VIP. He did not say that he didn't like the stock he just said Russia is very risky and he believes it is too risky of a stock. I decided not to sell it, but i did put a limit order that would sell at a 7% gain.
EXM: The dry bulk shipping industry released that profit margins would go down. That day EXM went down 20% (I learned my lesson and didn't sell). Cramer had the CEO of a competitor on show and he said that the short to medium-term outlook looks positive, but he sill wasn't very positive. Cramer said he still likes the stocks, so I'm going to hang on to it and see what happens.

-Global Sources'(GSOL) stock has been acting weird lately so I placed a limit order of 10% on it.

If my stocks sell at their limits, here is my watch list.
Watch List:
GOOG (Google)
BIDU (Baidu.com)

What I have learned in investing so far.
Personal Investing Rules:
1) Sell offs DO NOT automatically equal bad stocks, but they usually DO equal buying opportunities.
2) Buying on dips = 1-3%

My current progress and holdings.
My Portfolio:
AAPL +9.13%
EXM -9.62%
GSOL +6.87% (10% Limit)
VIP +2.87% (7% Limit)
Overall: -1%

Sunday, October 21, 2007

Research

I have a couple of friends that are interested in investing and the main question I always hear is: Where do you find high quality stocks to research and invest in? I'm not going to pretend to be a professional investor with unlimited resources. Professionals have team of analyists researching every stock imaginable. Lets be honest no one reading this has these kind of resources. I use 4 main sources; Books, Magazines, Internet, and TV.

I use the books to learn what type of stocks would be good to invest in. Some authors that come to mind are:
- Jim Cramer - Worked at Goldman Sachs and owned Hedge Fund
- Peter Lynch - Said to be best mutual fund manager of all time. 17% annualized for 20 years.

I also read a couple magazines. These keep you up to date on the newest tech and business stories and you can usually find a couple good stocks to invest in and some good economic commentary. I subscribe to:
- Business Week
- Popular Science
- Wired
- Money

CNBC is the best business/investing channel on TV. My favorite show is Mad Money with Jim Cramer @ 6pm Eastern. Their whole line up is based on investing and many of their shows are hosted or interview professionals, so just watching in will give you a lot of ideas. Also, watch the ticker at the bottom of the screen. If you see a stock that keeps showing up day after day and the price is going up, then thats a good sign that institutions are buying the stock and will usually be a good investment.

The last and most important resource is the internet. There are so many investment websites that I can't list them all. The ones i use are:

--TheStreet.com- This is owned by Jim Cramer. This guys amazing ok. Just do what he says and you'll make a lot of money. They have Mad Money recaps and blogs by Jim Cramer and many other investors. They also have ratings of stocks, which would be a easy way to check if your investments are sound.

--StockPickr.com- Subsidiary of TheStreet.com. This site is an "stock idea" website. It gives you access to what all the major mutual funds, hedge funds, and stock gurus are doing. So if you can't beat them- Join them.

--Caps.Fool.com- This is a stock community. The idea is that everyone rates stocks if they believe they will outperform or under perform the market. The old saying goes "two heads are better than one," well in this case there are thousands.

There are also many screeners, or programs that search for stocks based on your entered criteria. I haven't had any luck with these, but in theory they should work very well.

Well here are where i get most of my ideas. I'll probably have separate posts on all of these sources later on so i can give you more information on how to effectively use them. Remember, always make sure to do your own research before you buy a stock.

Saturday, October 20, 2007

The First Trades

My funds settled into my account 10th of October. However, the zecco trading platform wasn't working so i had to contact the customer support team. They actually fixed the problem in about 4 hours which was surprising considering the forums i read. I think the trick was to be polite and give a lot of information.

I made my first trades on Thursday the 18th. I tried my best to pick the best 5 stocks on my watch lists. I decided to split the 2k into 5 equal parts and invest $400 into each stock. Due to the uneven prices though i ended up with $100 extra dollars which is good for a little security.
I bought:

AAPL 3@172.13
ANW 9@44.65
EXM 5@75.24
GSOL 12@30.87
VIP 13@30.62


If anyone was watching that day the market was pretty mixed, but my picks went up about $80. Then on Friday it was a whole different story. All three major indices (NASDAQ 100, S&P 500, and DOW 30) went down about 2.5%. NONE of my stocks were immune to the fall and i lost $100.

So after 2 days i'm down about 1%. Whatever. Stay in the Game.

Monday, October 1, 2007

The Proposition

Soooo.... Absolutely no one is going to read this blog, probably for a long time. And when they do they are going to look at the title, laugh to them selves, and go to a different investing blog. STOP! If you are still reading this blog then I kindly ask you to finish reading the first post and then make your decision about where to go. You might not like investing at all, but his will at least be interesting (or get you interested). If you are currently an investor then this will provide some inspiration, and maybe some stock tips, on how to make more money.

I got the idea to test my investing talent from the sites such as marketmillionaires.com and topguntrading.net. The market millionaires site suggested turning $500 into $1 million in just one year. Doing some simple math that comes out to getting 200,000% (i think....) on your investments. The site calculated it to be 73 trades of 10%. This is a day trading site so in theory there are numerous 10% trading opportunities per day. However sustaining this type of progress with progressively more money is near impossible and in the end they gave up after a month and the winner had a 250% gain on his money. That is amazing for one month, but very short from his goal. Top Gun Trading suggested turning $250 into $250,000 in a five year period, or a 100,000% gain. Once again that is 73 trades of 10%. This will be slightly easier because of the fact they have less capital and they are less pressured to make less successful trades. This just started in the last week or so, so there is no way to tell where it will go.

And now for my challenge....drum roll....
My plan is to turn $2,000 into $1 Billion, in 40 years. There are no rules. I can invest in stocks, mutual funds, hedge funds, real-estate, companies, forex, options. ANYTHING. The basic math will include making 40% a year compounded for 40 years. This math does not include taxes, commission, lawsuits (you never know its a long time), or any other additional costs for that matter. I figured this out by 2000*1.40^40=1400075393. I will have an extra $400 million in there so hopefully that will take care of some taxes and other expenses.

I'm putting $2,000 in my account sometime this week. I do not know when it will settle, but i will track my trades on this blog.

GO!