The Investment Project
Submitted by royh on Sun, 01/06/2008 - 23:06.
Yes. As is apparent in other postings, I'm in the process of trying to raise a bit of capital for future projects. Now, simple savings, which is how I indicated I was going to do this, is not going to cut it.
To that effect, I've worked on identifying undervalued stocks. I waited out the Dec. 31st end of the year before opening up my first investment account with TD Ameritrade, and now I'm the proud owner of some seriously undervalued stocks.
Now, the question remains - am I gambling or am I investing, and what is the difference. The best article I found on the subject of differentiating between the two mindsets made a very simple assertion. If you can't afford to the lose the money you've staked on an outcome, then you are gambling. Now, technically I can't afford to lose the money... It is money after all, and losing money hurts anybody with half a brain. In fact, that's why hangovers hurt so much. The size of the hangover increases proportionately with the amount of money one has spent acquiring said hangover.
So, back on topic. Investing.
I am not going to name any stocks here, because I have a nagging feeling that blogging about stocks is far different than blogging about tomatoes. I can make fun of Burpees' Porterhouse beefsteak variety's impotence in hot weather without incurring the wrath of a huge government regulatory body operating under one of those nifty three letter government acronyms.
But I will tell you this much, I'm confident enough in myself to pick a basket of undervalued stocks, splitting up the money I've set aside for this endeavor between a number of stocks that I believe will recover at some point in the following quarter of this year. I'm so confident, I've even arranged to have a New Year's resolution that will help me save money without completely removing me from the social bloodletting polite society refers to as "the bar scene."
As I save money, I'll be sneaking a few hundred dollars here and there into my investment account for the additional purpose of buying up small numbers of undervalued stocks. I remember all the long term picks I made 10 years ago. Most of them have matured to the point where if I'd invested real money, heck I'd be retired. I even have a few relatives who've told me that they wish they'd listened to me, but when I decide on a new pick, they do the exact same rigamarole of hemming and hawing... No, no relatives in Samoa - I'm talking about my other relatives who actually ask me for investment ideas and then don't take my advice, but who later will mention that they wish they'd followed my advice. I'll take that as a sign that they believe my opinions have credibility and give them new advice. Then they do the same thing all over again, and this has repeated ad nauseam for a decade. It isn't their fault. It is mine. If I'd invested my own money and made money, maybe they'd have more to base my credibility on than just the fact that I believe I'm right.
Okay, so this project better work out, because I really want to be able to retire young and say, "I told you so." That, plus I'd like to do so many other things. Maybe that's one of my problems. There's so much that interests me. I want to build a nuclear power plant in American Samoa one day. But I need $150 million and U.S. Government approval before I can even dream of it. Pebble Bed Modular Reactors... So darned cool. I wouldn't mind building my own cell phone company too, just for kicks. A movie studio to produce movies of books that I love. Tons of computer graphics to make up for lack of sets, and computer generated actors that we'd own and market.
One day. One step at a time. I may not technically live in the family basement, but one must go down a lot of stairs to get down to my room. Of course, the pool deck is right outside my door, so technically - it isn't the basement, but it is pretty darned close.
The Ides of March Do Approach...
And if my name were Ceasar, I'd beware of Brutus on the morrow.
In all seriousness, the market took a pretty darned big hit today. No surprise. The last few weeks of bad news have eaten away at my gains, but that's okay. I haven't sold, so I'm good. I plan to continue adding to my positions.
The theory is that if I loved the stocks I'm holding at their recent peaks, I should love them even more now that they're once again extreme bargains.
For those of you like me, young and without a dire need to keep all my cash liquid, there's no better time to start investing than a market like the one we got right now. Depressed values for stocks that will trade 30% higher once the economy recovers from the current panic are good bargains. Pick companies that are likely to survive the panic and add to your positions in those companies throughout the downturn. The result will probably be an early retirement in your future, or if you pick poorly, the worst that can happen is that you continue working. This strategy is good for those of us who don't need too much asset protection and who don't trade on margin. For those of you looking at going into debt to finance your investments, please by wary and consult your parents before trading on margin.
Word to the wise, don't borrow money from loan sharks to invest in the stock market. Pointy Petey and Gonzo will never believe that you blew all the money away on bad stock picks, and I doubt they'll accept the depressed stocks in exchange for cash. You know, I'm just saying that if you might need the cash soon, this is a bad time to throw money at the stock market.
For myself, I expect that things will be looking pretty good in a month... or two... or three. Heck, who's counting?
Friday 11, 2008 - Update
I suppose I should update for last week.
Last week was a good week. I'm confident that my current positions don't need adjusting, and I refrained from making any trades last week beyond buying more into one position that has consistently increased in value week after week.
Other than that, last week ended well and I look forward to a stronger showing this week.
End of another week...
Today is Friday, February 1, 2008. It is the end of another week and the start of a new month.
-------------------------------------
On Wednesday morning, I woke up right after market opening and I sold a few positions, opened a few new positions, and went back to sleep. I woke up again to evaluate the result of my trades, and decided that the results were sub-optimal. Oh, I was still up. My overall position gained another 6% or so over the previous days trades, but it was sad because it should have been twice that (12%) if not for bad decisions made in the wee hours of the night.
So, Thursday I decided it was best to rebalance my portfolio. I took a look at the stocks in my watch list, and I closed out the losing positions, and bought into a couple other stocks based on some technicals. So far, I've been happy with the result of the house cleaning. The net worth of my portfolio so far has increased day after day for a week or two, with a few more or less agonizing dips and recoveries.
I can now say that my overall net increase for the month of January was 6.1%. Not bad, since if I'd left that money in the bank account, it would've grown a whopping "nothing" in just as much time. So, I think I'm ahead of the curve, if not as much as I'd like.
On the bright side, I didn't lose my money, which is what seems to happen to a larger number of people who attempt to "play" the stock market.
Onward, forward, and hopefully toward financial independence.
C'est Moi...
End of another Tuesday, and I'm pleased.The entire trading day, our Internet was down. Looks like the ISP had trouble with their DSL routers. The end result was that I didn't find out that my overall position was up another 6% over yesterday. Yay me...Tomorrow and Thursday look to be fairly big trading days. I plan on waking up with market opening to sell a couple positions and buy a couple positions in a couple of stocks that I think might see some good gains over the next week or so. Or maybe not. We'll see how I feel at 3 AM.
Moving Right Along
The end of another week, and the stock market ended down from the previous day. Bummer... Well, it must've been a bummer for a lot of people, but not so much for me.
I got lucky, and some additional adjustments to my positions, and I shed a couple of long shots as being not worth my while in an already volatile market, so the upside is that I ended the day "up", as opposed to "down" like the indices.
Lucky me. :-)
I haven't added to my positions in ETFC, although I've thought about it... seriously. I've even filled out the order tickets a couple of times before deleting them. I have the money, but not the will. Actually, truth is, I'd rather sell my current position at a higher price than add to that position and have no liquidity to take advantage of other opportunities that might arise. The way I see it, I can't possibly afford to buy enough extra shares of ETFC to make enough of a difference.
So, here's my plan. I'm going to swing trade, and sell some stock when it reaches a certain price that I shall not name. I will sell it, and then wait for the bad news in mid-February, to cause a pull back, and then buy the same number of shares all over again. This will give me time to explore other options, and to let my funds settle. It will also give me some time to think long and hard about how much to risk, and how often. Good thing to think about when one needs to think.
That's enough for tonight. I'm tired.
Riding the Wave
Someone recently compared the current stock market to a tennis match... UP, DOWN, UP, DOWN, UP, DOWN... DOWN, DOWN, DOWN...
I agree, it has been interesting watching the stocks I picked go up and then down, then up and then down, and this pattern has repeated itself without fail for the last two weeks. But since the picks I've made are for medium to long term "HOLD", I'm not so concerned about their volatility as someone who may be considering selling on every single drop.
I look at each drop as a buying opportunity, and I have adjusted my positions accordingly, selling some and closing an entire position in one stock in order to increase my position in another company. Thus is the way it goes. I felt that the other company (BRLC) was acting far too cagey with its financials to be kosher, and while they had been a good company before, that something is going on and it can't possibly be good if they're actually decreasing their transparency. So I closed my position in BRLC and moved that money to another company (CDL) which has problems of its own, but most of which are related to the craziness of mergers and sell-offs. But on the whole, CDL is asset rich, if not very well managed. It will eventually recover. Radio is not dead.
I bought one share of Apple... a couple of days before it took a dive. Fortunately, I plan on holding AAPL till I die, and will add shares as I go along and can afford it. The way I see it, AAPL is like buying stock in Budweiser or McDonald's... Both are permanent fixtures in our culture and Apple, Inc. is on its way to securing its own permanence likewise. It was there in the beginning of the personal computer revolution, and it will be there in the end, and it will transform over time to fill whatever niche the digital lifestyle demands of it.
My two pennies...
The wild ride of the first couple of days of trading.
Well, it wasn't that wild of a ride really. One of the stocks that I picked to take a small position in happened to dip below the margin call and cover line for institutional brokerages. The end result was a steep decline. I thought about shorting it as it skirted the edge of the cliff there, but I still haven't figured out how to short stocks, plus I have a cash account, so I may not be able to short stocks without having more money in my account. No worries. I had a stop loss and it pulled the trigger before I'd lost more than a good lunch and a few beers. The stock itself, I believe is still solid, but with all the volatility in the market due to the credit scare, I suppose I should've foreseen a hit on the smaller cap tech sector.
I plan on buying a new position in the stock later on, when the trends indicate that the stock is in recovery mode. I was so excited to be trading stock, I didn't take the time to run a technical analysis on any of the stocks. You know, Vegas Fever. First you buy, then you try to justify it.
I did by a small position in a large radio conglomerate that I'm certain will do well in the coming months. It is a solid, asset based company with radio properties all across the United States, second only to Clear Channel. Now, I'm a big fan of Clear Channel's programming, so yeah - maybe this isn't the best idea to be investing in the competition, but it looks like a bargain stock, walks like a bargain duck, and quacks like a bargain duck, so I'm going to squeeze it and see if it says "uncle". Doh. What a mouthful.
Anyhow, that's enough for now. I do like the ETrade stock right now too... But I must say that it is far riskier an investment than my other two picks. My fourth pick is a real long shot, and I may have to examine my position in it later this week and decide what I want to do.