I think everyone should vote. At the very least, we'd know who would be responsible of putting an idiot to the office. We should all take the risk and the responsibilities of our actions. I just wish I didn't lose my voter's registration card and have to wait in line for a couple hours.
Friday, October 17, 2008
It is very frustrating to be right, yet not be able to benefit from it. In history, several people have shorted the market and won big. A lot more has shorted the market and lost, including Laurence Tisch. It's not that they're wrong about the market being pricy. It's just that nobody expected the crutch to be in place for so long. I certainly didn't expect for the interest rate to go below 4%. I was wrong.
In case of market bottom, though. I was right. October 10 was the bottom. I bought some shares Friday afternoon, right at the very bottom. I would have sold those Monday afternoon for a quick profit, but I can't because the account wasn't settled and the balance was negative. I tried to do electronic transfer, but it wasn't set up right. I needed to mail a paper signature. That took time. It wasn't positive until yesterday, and I couldn't do anything about it.
Now the opportunity is lost, since the price is closing to the crash level. Can't sell now. I'll just have to hang tough.
We're definitely in deep recession. It probably started when President George Bush was saying "The economy is slowing down, but we're not in recession." Well, we are now! This will probably last 2-3 years if not more.
Even Warren Buffet's Berkshire Hathaway is declining. The party is definitely over. Time to sit this one out and get some bonds, instead.
Well, I did manage to liquidate some Microsoft stocks. It really wasn't in my profile, so I sold it for a quick profit. Hey, maybe I can do this full time! Of course not. This only works because the stock market crashed big time on Friday. How do you make money in a declining market, anyway?
Tuesday, October 14, 2008
Saw this on USA Today. Stock brokers are happy due to the biggest bounce on stock market.
"What are they celebrating for?" I wondered, "The stock market is still under 10,000!"
Either these stock brokers are easily impressionable lot, or there's something missing. Hmmm, maybe I should read the article.
I bought some stocks last week. It was late Friday and everybody was hurting. Me, too. I've neglected to set my stop loss limits, and the stocks took a free fall to the ground. Seeing your portfolio lost 40% of its value is definitely not fun!
Still, I am one of those people who sees positive things in life. "Well, if this is the absolute worst bottom I've seen, then anywhere I go would be UP!" Yep, bought some more stocks. That was Friday, October 10.
I bought GM stocks when it was trading around 5 dollars. I figured, it pays $1 dividend. That's 20%! That's how credit card companies makes money, you know? It was a standard rate when the price hovers around $20-$40. $5 is an absolute bargain! I'd have spent $50,000 had I have the money. I have it set to DRiP, Dividend Reinvestment Program. How can I lose? If the price went up, I make money. If the price went down, I get more of these super shares! Well, there are ways. They can cut dividend, as most cash strapped companies most likely do, which would cause the price to drop for the now useless shares. Alternatively, they may merge shares, which would indicate big trouble at the company. Huge insider selling and share merging are two indicators I should exit the position and cut my losses.
All these talks about GM declaring bankruptcy, I don't believe it. GM is too big for that. They'd sooner sell off assets than declare bankruptcy. Their attempt to acquire Chrysler got disrupted by market crash. I think they'll be fine. Good management I've seen so far.
I also bought some Microsoft stocks. This was based on a tip that they recently split their stocks and increased their dividend. So I bought some. Then I do research and found out that they did it last year. That's not recent! I didn't make out too bad. Anywhere I go is up. However, that'll be the last time I act on hot tips without checking.
Lots of learning this last week. Trend lines, APR, and ROI. This has been an intense, chaotic week. It is just the way I like it!
Thursday, October 9, 2008
I got myself a Nintendo DS learning program from Ubisoft for learning Mandarin Chinese. Seems okay, but I guess I'll need a native speaker to listen to what I have to say, since I can't tell whether or not I'm saying things correctly. I'm also going to get Learning Japanese once it comes out. It's good mostly for building your vocabulary, which I'm keen on doing.
Funny thing. Nintendo is supposed to be a game company, but I'm using Nintendo DS as portable classroom for learning on the go. Konami also has a game out called "Let's Yoga", based on Wii Fit module. I'm going to get that one also. Now, if they have one for Tai Chi, I'd be real interested in that, especially if they have different versions (Chen, Yang, Wu, International) and weapons (stick, sabre, sword, spear). Hint, Konami! Please make one for me!
It has been an expensive lesson so far, but at least I'm learning. Specifically, I'm learning about Dollar Cost Averaging. It appears that one stock was overpriced. Now that I know better, I wouldn't have bought it at that level. I was rather upset that I had to learn this the hard way. Oh, well. At least I'm learning. Had this been a professionally managed portfolio, I'm sure he'll be giving a lot of excuses, and not learn anything. This is why I managed my own portfolio.
I'm learning resistance levels, and give my pattern-recognition brain section a good healthy workout. The last resistance level was at $8.50-$9.00. I set the limit at $8.50, but after analyzing it on the weekend, I decided to up it to $9.00. I should've waited until Tuesday to do it. I knew this. I ignored it because I don't have time to do it. I could've saved 25 cents per share. That will be the last time I followed my emotion, instead of logical thinking. Lesson learned.
Imagine my surprise that the stock market took a big dive. It went through 2 limit levels already, and I haven't done a thing! I'm going to fortify my positions for a while, and maybe I can find some good bargain to boot. Microsoft looks good. I will research the limits and STICK TO IT!
It annoys me very much that my investment time period is once per month, and this happens. When prices went up, I couldn't cash in, even though I know I should have. Then prices took a dive, and the only thing I can do is buy more, since I can't sell anything less than 30 days period. Lesson learned: Set aside short-term stocks to take advantage of quick profit.
A very important lesson learned: DON'T BE GREEDY!
Always there is a balance in something. That means lower and upper limits. People are being naive if they think if something is good, then more is better. That's not true. Even good medicine can be harmful in large quantities, while poison can be useful in small quantities. It's all about range and boundaries, instead of just the bottom line. There is such a thing called "capacity" and if it's nearly full, then watch out! It may just tumble over! I used to think that people who took profit when stock price doubled just to be safe as stupid, losing all those opportunities. Not anymore. Safety is number 1 concern. Find your limits, both upper and lower.
One more thing: If you haven't been playing with stocks, consider yourself lucky. Start on paper, so that mistakes are cheap. I suggest TRMP, Donald Trump's stock. You can download historical data on it, and go through it. Yahoo Finance has a historical data section. Download the weekly data, and follow the adjusted close prices (This ignores splits). Just load it into the spreadsheet as csv (comma separated values), sort the data by dates, and zoom the view. Then, look at the price at the bottom. Decide whether or not you'd buy and how much. Don't forget to add $20 per trade as broker fee. Then shift the cursor down one time, so the prices scrolled up one line. That's the next week. THAT is the price you use to transact your order. This way, you can't cheat by buy low/sell high based on a sure thing. Repeat until end of data, buying and selling as desired. Maybe you want to limit yourself to $500 budget every 4 weeks, just to make it real. Let's see if you can make money off that stock. If so, then congratulations! Try again with your favorite stocks. Do it with your friends, just for fun. See who has the Midas Touch!
If the stock has dividend, decide whether you want DRIP (Dividend ReInvestment Program) or just cash it out, and keep going to the next price. Meanwhile, keep track of prices of about 100 of your favorite stocks on newspaper. Then see if you can just as well trading in "real time". Now would be a good start. Anybody can make money in a bull (rising) market just by buying an index. It takes true skill to make money in a recession, and that is the mark of a true master.
The ability to calculate is a fundamental skill in chess, as it is in life. Look before you leap, they say. Sometimes life gives you choices, and you do not know what to do. It is tempting to just blunder through life and you don’t give a care in the world. A decision made quickly is better than a decision made too late. However, there are times when the situation demands a more careful perusal.
In general, the ability to think things through has given me a tremendous advantage in life. In problem solving, I can generally avoid unpleasant situations simply by thinking things through and then decide on a path that avoids all those complications. This is a skill that can be practiced. To a neophyte, it looks tremendously complicated, and most people would give up immediately. I admit that some positions baffle me, but that’s no reason not to try!
The advantage of seeing deeper not only provides you with better and cleaner solution, but also a seemingly ability to shape things to come. To become clairvoyance, so to speak. Obviously, the ability to see deep into chess position does not translate readily to real life situation. However, there skills needed to develop the skills to see deep positions in chess is the same skills needed to develop the skills to see deep consequences in planning. In other words, if you can do one, you can do the other!
Take a look at this position. Black is winning. White has to make a decision, and I decided to do a rushing attack to Black’s position. The moves are as follows:
6k1/2b2n1p/2p2pp1/1pP1p3/pP2P2P/Pq3NN1/Q4PPK/8 w - - 0 1
1. Qd2 Qxa3 2. Qd7 Bd8 3. h5 Qxb4 4. hxg6 hxg6 5. Nh4 Qxc5 6. Nxg6 Qd6?
Obviously, Qd6 is a mistake. It doesn't do anything. But let's look at the position before that, what can White do?
3b2k1/3Q1n2/2p2pN1/1pq1p3/p3P3/6N1/5PPK/8 b - - 0 6
White obviously wants to do Qe8! Now let's calculate the variations:7. Qe8+ Kg7 8. Nf5+ Kxg6 9. Qg8+ Kh5 10. g4#7. ... Kh7 8. Qxf7+ Kh6 9.Nf5+ Kh5 10. Qh7+ Kg5 11. Kh6+ Kg4 12. f3#9. ... Kg5 10. Qh7 not a check. Can Black do something?
In the short variations above, you can see that there are 2 mating possibilities: g4# and f3#. So the question becomes, is there a move that Black can do to prevent those two mating possibilities? The answer is Qxf2! f3 becomes impossible due to the pawn not being there, and g4 is impossible because the pawn is pinned. So, that would be the move I would do. As to whether or not White can actually mate the King, I honestly didn't calculate that deep.
As the game was played, though, Black failed to see this move, and loses horribly. 7. Qe8+ Kh7 8. Qxf7+ Kh6 9. Nf5+ Kg5 10. Nxd6 and White wins.