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Just a meaningless prediction

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February 22, 2011 – Comments (20)

This is not a correction, because everybody I heard on TV and CAPS keeps saying "alright wait for this correction to be over in a week or two, then buy more".  So, people are still longer term bullish, and everybody is expecting a correction (so it can't happen).

I bought some spy calls, hopefully they work out.  Again, I don't have much money, so I don't have much to lose, just trying to learn with little money before I earn big money.  

I have been right on all of the dips so far, I am bound to be wrong soon.  Maybe this is the time, but I doubt it.  SPY bounced off 20 MA like last time.

Should be interesting!

 

 

20 Comments – Post Your Own

#1) On February 22, 2011 at 8:56 PM, BlackSwanCapital (58.31) wrote:

What size (in terms of $$) portfolio are you trading with right now, if you don't mind me asking?

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#2) On February 22, 2011 at 9:03 PM, ChrisGraley (29.74) wrote:

Valyooo, The options market is tough for someone that doesn't have a lot of money.

How long out are these calls and can your afford to lose everything a few times before you hit a winner? 

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#3) On February 22, 2011 at 9:26 PM, Valyooo (99.39) wrote:

My portfolio is just under $6000.

I turned 3k into 11k in 2009.  Lost a lot last year, but I am still up more than the SPY since I started...but barely.

I manage my friends money, and do a very good job for him.  Since he has more than me, and i dont want to risk others money, I buy larger chunks of investments and dont trade as much.

I however have lost like 10% of my port this year, because I am trying new things.  Doesnt matter too much to me, because 1) It is a leanring experience 2) I am actually decent at this as shown by my friends portfolio 3) I want to try to figure out the next cool trading strategy

I am hoping to get a finance job when I graduate in 3 months so I am going all out trying things out now.  Losing money does not scare/bother me. 

Chris, you are right, it is tough, but when I invest other peoples money (which I do) or when I have more money one day, I will stay away from them.  Sometimes, I have ideas which work often but they only scalp 0.5% profits.  0.5% of a little bit of money barely covers my commissions.

These calls expire this week, and if I lose on them I will start buying long term calls and adding to dips.  I can afford to lose everything a few times before hitting a winner...plus I am persistent.

My STOCKS have been golden so far, I just need to hone my options skills...or you know, stop using them alltogether.

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#4) On February 22, 2011 at 10:21 PM, TheFoolishEdge (23.22) wrote:

Hey Valyoo,

Did you think of looking at Exxon (xom) calls with a few months to expire?

Exxon may post very strong earnings in their next couple of reports.  Just a thought.

How's the contest going so far?

 

 

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#5) On February 22, 2011 at 11:22 PM, ChrisGraley (29.74) wrote:

As long as you don't mind losing it all, it's ok to experiment, but I would suggest giving yourself a longer time frame to prove your ideas right or wrong. That may also be the reason that you are scalping picks at 0.5% profits.

Also, it's a very good idea to paper trade when you are trying new things. You can notice trends about your ideas that way without losing a bunch of money.

One thing about paper trading though, take it more seriously when you lose money than when you win.

Too many people see the big wins and forget about the big losses when they paper trade. 

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#6) On February 22, 2011 at 11:38 PM, Valyooo (99.39) wrote:

Chris,

I do have a core set of stuff for the long temr (vnq, cni, ijr, pm, gpl, aem, brf, mhs)

The rest of the stuff is my trades.  If I only hold the trade intraday or one night, I use margin.

I have paper traded...but you know its just not the same.

If I had 100,000 to invest, I can usually spot a 0.3% scalp per day...I wouldnt mind adding $300 a day to my income.Obviously it wouldnt be 100% of the time though.

The other thing is, even if I find a good longer term trade, if I only have $600 per stock, I am not really that happy with 20% in a year.  I am using the next couple of months to experiment (while using real money for my friends and family, who I do better for).  My school costs 22k a year.  I am learning more by messing with 6k than I am with that 88k for my 4 year schooling.  Thats the way I see it.

Trust me, I know long term I have to switch my strategy.  But if I can learn ONE thing about trading thats VERY consistent, and my own, it can greatly help me in the future.

Plus, learning to stomach thousand dollar intraday losses (and gains) is something good to learn when young, IMO

As for XOM, IMO it is too big to really move.  Also, I feel that oil is a crowded trade...what I mean by this is it is the most closely watched commodity, and XOM is one of the most closely watched companies...so many people to compete with, it is usually priced pretty fairly.  You may be right though.

I dropped out of the contest....I would rather spend my time equities trading and reading about economics/finance than trying to figure out how to trade commodities futures, which is something I am not interested in, and theres a lot of luck involved (its a 2 week trading period, and you have to make atleast 5 trades a day....I can make real life trades instead)

At the last known after hours trade, SPY is up 0.24%...lets hope it holds till tomorrow.

Also, my problem is my execution, not my ideas.  For instance, I bought a bunch of QQQQ calls because I know that 1) Jan 31 of odd years is up 90.4% of the time 2) FIrst of the month the market has been up like every month for 2 years.  So I bought them Jan 28 mid day (instead of waiting till 3:59, I am an idiot).  Then, bam, Egypt slapped me in the face.  I aveeraged down so much that the calls became 30% of my portfolio.  Over the weekend I realized I am not experienced enough to be making those kind of trades, so I sold at the market open when the market was flat.  Lost about $500 on that.  If I had held it until the end of Feb 1st like I planned, I would have made $500 instead of losing $500....a $1000 swing.  SO right idea, sloppy execution.

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#7) On February 23, 2011 at 1:20 AM, HarryCaraysGhost (99.67) wrote:

Hey Value,

I don't do options, or margin. Just don't wan't to be forced to sell if things don't go my way at that particular time.

Lately I've been dealing with penny stocks. Seem less risky then buying into an ever climbing market (today not, withstanding). Oh and Silver, I love Silver.

I know the Fool frowns on this sort of thing, but I've made money so that's all that counts when it comes to stocks (granted it's a fiat currency which does'nt mean much. but that's for another blog.

I get that your trying to learn as much as possible now. My view on margin is that you can easily lose everything. The Crash was just one giant margin call.

 

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#8) On February 23, 2011 at 1:46 AM, Valyooo (99.39) wrote:

I love silver too.

I only use margin calls for 24 hours or less, because if I am "forced" to sell, it wont matter, because I was going to sell anyway.

I can't do penny stocks...I wish I could.  It is just something I am unable to do.  I am more of a momentum investor...I know, makes no sense..that would make me more of a "Trader".  But I do 3 things mostly

1) Make trades that I have witnessed work at least 65% of the time, that make sense

2) Invest in core positions I believe are excellent well established companies or etf's (IJR, SPY, VNQ, BRF, PM, KO, PG type of things)

3) Buy best of breed stocks in sectors tha I like

Mostly 3.  For instance, I just bought CNI 2 weeks ago because oil is moving up and the world economy is expanding.  CNI is, IMO, the best rail company, and I like canada more than america for stability, and they are growing like crazy.  So I bought them.  That is my version of DD. 

I can't really do the DD on penny stocks, for multiple reasons.  I am not lazy at all, thats not it.  Its just that I don't have the highest convictions about any of my investments (besides PM and index funds) so for me it is easier to get into a stock and then let big money push it higher.  Also, companies I cant see or that I dont read about all of the time, to me, I can't tell if they are the real deal or not.  Plus, I don't like sitting around forever, waiting for the market to catch on to the stock...I liek to make money, and then move on.  GPL being the exception to this.

I hope you make a crapload of money on penny stocks, you deserve it.  What exactly do you do to analyze them?

I guess everybody has their things they are good at.  For me, it is easy to identify which sector has been unfairly beaten up, pick out the strongest of the batch, and sell it when it becomes overbought.  I bought STD at $9.83 when Europe was "going to implode".  A few weeks later good news came out, and I sold it at a 30% gain.  That is the type of stuff I am good at.  The reasoning went like this: 1) Trading at under P/B of 1  2) Dividend of 5%  3) Acquiring other companies, so they must be healthy  4) it is a well known bank.

If it was some company I hadnt heard of in the news all the time, I wouldnt be confident that the compant was not going to go bankrupt.  Since I know from word of mouth that STD is the best bank in latin america and spain, I didnt have to do much DD to be confident in my pick.

Which is kinda why I regret buying DSCO.  I have had it on my watchlist for 2 years now.  I have watched it move.  It hit 17 cents (before the split) when they were getting delisted.  I knew they would get relisted, and I knew surfaxin had another shot.  I had 60% gains and didnt take them, now I am down 30%.  I have been buying all of the big dips.  Why is this a bad idea?  Because I don't know much about healthcare.  I have read that surfaxin is good, I understand the general price action...but what the hell do I know about the chances of the company failing?  Plus, its not big enough that I can get a crapload of opinions on it.

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#9) On February 23, 2011 at 1:46 AM, Valyooo (99.39) wrote:

P.S. I really wish there was a spicy pickle near me!

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#10) On February 23, 2011 at 2:25 AM, Valyooo (99.39) wrote:

Also, I do own 1 penny stock- BDGR

$250 worth at .0001/share.  If their balance sheet is real, and they keep doing stock buy back, this stock is a 5 bagger.

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#11) On February 23, 2011 at 2:31 AM, awallejr (79.37) wrote:

1) Trading at under P/B of 1  2) Dividend of 5%  3) Acquiring other companies, so they must be healthy  4) it is a well known bank

Here you try to do some fundamental analysis with success, so why putz around with trading?  Very few are good at it.  You have to look at the computer screen every second.  You have to time it.  And you need luck.

Option trading has value.  Selling puts or writing calls or playing collars all can help a portfolio.  Straight out buying calls or puts is simply a gamble imo.  You are hoping to guess right.

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#12) On February 23, 2011 at 9:18 AM, Valyooo (99.39) wrote:

Awallejr,

Most of my "trades" are like that one. Not so much that I use TA (because i rarely do, because I dont know much about it).  I dont really "day trade" at all, except for intraday on companies with earnings out that day.  The reason I consider that STD trade a trade, and not a fundamental analysis investment, is because even if I read through their loan portfolio, interest coverage, roa, etc etc etc, i would still be unable to determine a "value" for it.  All I can do is tell if its oversold, and then sell when I think it is overbought.  This may last a week or a year.  very few companies do I hold for the long term (only PM, VNQ, IJR...I will never sell IJR)

My options trading isnt so much option trading.  What I mean is that, if I think the market will open up tomorrow, i buy spy options because if I am right i make $50.  if I am right and I buy the stock, I make $1. IF I had more money I would buy stock instead of calls.

 

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#13) On February 23, 2011 at 1:01 PM, Valyooo (99.39) wrote:

Looks like QQQQ is holding support

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#14) On February 23, 2011 at 1:54 PM, Pick1es (20.69) wrote:

behavioral economics is pretty interesting. 

even though I really doubt it will happen, I really want a large correction. I have too much cash on hand. 

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#15) On February 23, 2011 at 2:09 PM, davejh23 (< 20) wrote:

"This is not a correction, because everybody I heard on TV and CAPS keeps saying "alright wait for this correction to be over in a week or two, then buy more".  So, people are still longer term bullish, and everybody is expecting a correction (so it can't happen)."

If everyone thinks that this is a correction, setting up a near-term buying opportunity, one contrarian view would be that there will be no "correction"...just the 3-4% dip we've already seen.  The other contrarian view would be that it will be more than a correction...the start of a new bear market, crash, etc...  I don't expect a crash, but if everyone is saying "wait to buy the dip", it's probably unlikely that we rally hard from here...from a contrarian perpective.

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#16) On February 23, 2011 at 3:26 PM, Valyooo (99.39) wrote:

Fear and bullets, I  hope for a correction as well.

Dave, good point.  But, the fact that everybody is waiting for a dip means that they did all of their selling already.   The other people are buying the dip, and the waiters will eventually capitulate.

Anyway my prediction was wrong but i still turned a profit by averaging down.

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#17) On February 23, 2011 at 8:46 PM, HarryCaraysGhost (99.67) wrote:

What's not to love, growing industial use, weakoning dollar $50 pr/oz here we come. (or higher depending on what the dollar does).

I have two reasons for dabbling more and more in the pennys lately.

(a) Been slow at work, when nothings going on my boss and I have an agreement that I just go home. He's a good dude who burned through half a mil just to keep us employed. So I'm not going to milk him. Don't know how long the shop can stay open, but I'm not going to bail after all he's done for me.

So my capital is limited as I had to burn through my dry powder From 08- 10 to pay the bills. I did keep the companys I really like and don't want to ever sell ( Visa being the main one, bud is second)

( b) I'm a contrarion, so it was much easier to invest when everybody was completley freaking out. When I see the market make the run up like we just had I tend to stay on the sidelines, I sold a lot when the dow hit 11,000. Yeah I was early but I did'nt see a reason the market would continue rising. I'll take an almost 5000 point swing on the upside any time. Don't want to get greedy.

Now to your questions on the pennys, I look for the story of the company, since the balance sheet is invaribly going to suck. Are they growing, what's mngt like. is it a compelling product,. Basically I'm going with my gut.

Then I do a risk reward ratio in my head. I remember when I bought  Sirius the ratio was 50/50. But at .12 I thought it was worth rolling the dice.

Rock On.

Hopefully a Spicy Pickle arrives to a location near you some time soon.   

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#18) On February 25, 2011 at 10:09 AM, Valyooo (99.39) wrote:

Yeah, I am contrarian too...but I think people are still too negative, which is why I am bullish (maybe not short term though).

As for penny's, yeah I guess you can only go by the story.  My problem is, I have strange tastes.  I can love a company but that won't convince me that other people will, unless it is some new ground break company, in which case it probably won't be a penny stock.  I like companies that are talked about a lot on tv, it is easier to follow them, if you can filter the crap from the gold (most of the ones on tv are crap)

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#19) On March 01, 2011 at 8:24 PM, JakilaTheHun (99.94) wrote:

I'm on the fence about a correction.

I tend to think that sometime in the next two years, we'll either get a major commodities correction and/or a major China crash.  Not sure how much this will harm the US economy or markets in the short-term if it indeed happens.

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#20) On March 02, 2011 at 12:37 PM, Valyooo (99.39) wrote:

Jakila,

I think a commodity correction will happen next year sometime, and it wil lead to a great buying opportunity.  It will tank stocks, but the underlying companies (the ones not producing the commodities) will benefit from it.

I still don't think China is a bubble...there is just no leverage

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