I had promised that I was going to start my own thread regarding stock investments and the markets. So many things have happened since last time I was here and I really do not feel like sharing my knowledge. But a promise is a promise and there have been few people that have emailed me and supported me.

This thread will deal with investing in the stock markets. I will not discuss individual stocks but discuss ETFs like SPY, DIA, IWM and QQQQ. The one good thing about trading ETFs compared to individual stocks is the the ETFs provide instant diversification among similar companies within the same sector.

I will post more as we go along, regarding entry-price, profit-target and stop-losses. I do not think that any ETF is good or bad. It is good only if I'm making money and bad if I'm losig money.

If you have not been in the market so far, please read this as an information piece only rather than my recommendations. There is risk involved and you should know how much risk to take on any position.

Any suggestations, comments and criticisms are welcome as long as it is market related. If this thread gets out of hand and we start discussing off-topics, I'll stop posting.

Have a happy new year!!!! May 2007 bring you and your family lots of joys and riches.

I think SOLF and PDO are heading for correction.....both of them look attractive for short-sellers.

 

powerranger, your performance is not too bad at all for a newbie... if u are not a trader by profession that is definately impressive returns. u easily beat the market.

I'm thinking of taking a gamble with half of my SOLF till earning tomorrow. Let's see wat happens in next half an hour or so , I do think that it will  beat the earnings by long way though.. as per my research...but afraid of these short sellers ..after what they did to JASO couple of weeks ago..

I sold ROYL @5.32 today but seems to go higher.Thanks emni for nice recommendation.What is your picks for tomorrow?

 

 

Currently I'm short S&P futures from 1440. It looks like I might have been able to sell the top on S&P. It hardly happens but somethimes you just get lucky.

Oil stocks are doing well right now but if oil corrects here these stocks will fall hard to. It is hard to say when that happens so I like to take profits and buy it on pullbacks. There are times when it won't pullback but that's okay.

I'll wait till S&P comes to 1250 or crosses 1440 to start buying.

I will let you know when I find something good.

 

singingbowl,

i have a newbie question.. how can i buy bonds... without buying a etf...
iv been trying to figure this out since last month.... i wanna buy some muni bonds.

or how else would be a better way to play a market downfall ?   im also considering shorting financials...

what do u think ? any recommendations...

ever since march 2008, i have been long oil, natural gas, gold... BUT my positions are so small that it hardly is anything worth to cashout...

now im ready to make a big move... so pls suggest. emini, singingbowl or any other guys.

Get the book, How I made 2 million dollars by Darvas. The strategy still works.

Forget about diversification, instead build a focus portfolio and watch it like a hawk.

The book that I mentioned is very good and an easy read too.

ROYL is up 40c right now. It is trading at 6.

Emni, is this book for people like me who has just a starter? 

thx, im checking out the book right now..

emini, there has to be a better way to play a bet on market falling down.. than shorting an index fund....  or am i wrong. 
wouldnt it be better to short tech since they are trading at such high pe's

Don't diversify?? How about just putting your life savings on #21 at the roulette table and having a 1/1000 odds at winning?

The likes of Buffett can afford not to diversify b/c they have vested interest and influence over the companies they invest in- you, on the other hand do not have billions to fork over. End of story.

If you are a long term investor and long on equity learn some fundamentals on asset allocation and diversificaiton- you should not have more than 3-10% of your total capital in one company. This will do you great justice during bear markets and an above avg return in the long run. As you get sophisticated with your investing you can also hedge your assets (with a small premium of course). 

If you are a wannabe trader and really want to gamble try derivatives (at the fraction of the cost), futures, f/x or commodities- unlimited upside potential gain, but limited loss (your initial investment). 

Market makers just love to widen the spread on ppl like you- totally naive!

 

emini's got a good point and so does javabeans.. i can confidently say javabeans approach suits better for most average person investing. emini's style is only for those that know what they are doing.... win big or lose big....

i personally rather take a slightly smaller approach to risk.

Latoboy,

I am not trading bonds these days. For me, it looks like Fed is done with cutting interest rate. Otherwise, you could have make money buying short-term U.S. Treasury bonds. There are pleny of high-yield Junk bonds in the market but tightening credit markets is ever increasing the risk factor. From 2007 september to march 2008 was a good time to be in bond markets as it was in gold and other commodities.

Buying Muni Bonds is a good idea for longer term as you don't have to pay taxes in their proceeds.

Shorting financials is not a good idea for now as financial stocks are not that far from their respective march lows. Try to see, how broad market is playing out. Just think, with the S&P hitting 1440, if u had shorted high flying Solar and Shipping stocks, you would have had a good return by now. So, i suggest you to read the market movemnt closely and position yrself for long and short. As Buffet says, "Do not invest in something you don't know" ; so focus yrself on few sectors and industries and ride them uphill and downhill, bothways.

I am being in and out of FSLR from long time. Last time i went in long around 265 and sold in 308, then, went short at 309 and still riding it downward.

Oil and natural gas are still good plays. Buy them in pullbacks. I will re-enter in ROYL if it pullbacks a little bit. I see it going above $10.

Read the book Emini suggested. It is a nice book. Nice book for new comers like AAAA too. Markets are more complex and competitive now than it was in 1960s but learn how to short, so that you can remain longer in the market and increase yr chances of profiting from declining market.

Currently, i am reading a new book from wiley Trading : Sell and Sell Short.  Not a great book so far......

Diversification for small investors never made sense to me. Diversification, Efficient market and Random Walk Theory are few examples they make you learn in Business Schools. Knowing them sure makes yr grades look better not a portfolio.

FPP

wat happen to this stock ..abt 300% in just a week!

JavaBeans, you sure talk as if you have the answers. Do you have any facts or data to back it up the benefits of divesification instead of what they taught you in a business school? Diversification works if you are trying to protect your capital but does not work if your main goal is capital appreciation. Where did you get the idea that diversification will provide above averge returns in the long run? I'd like to see that. If the portfolio is diversified properly and has a portfolio beta of 1, then it will perform exactly like the market--no better no worse.

If you use 3% of your portfolio on 1 stock, then you'll have 33 stocks in the portfolio and that does not provide the necessary diversification. That's what my professor told us in the portfolio management class.

You suggest people to try forex, futures and commodities and you assume that it provides limited risk and unlimited profits. That just shows your knowledge about forex, futures and commodities. You are so far away from the truth that it is not even funny. I have traded futures more than stocks and I can certainly say that you don't even know how futures work. The only think that has limited risk and unlimited profits is if you are a premium buyer but the probability of winning is so small and so infrequent that it is hard for a retail investor to make money.

I still don't undersand what you mean by, "Market makers just love to widen the spread on ppl like you- totally naive!"

To quote singing bowl, "Diversification, Efficient market and Random Walk Theory are few examples they make you learn in Business Schools. Knowing them sure makes yr grades look better not a portfolio." This is so true.

I have posted here long enough and every few months someone comes saying why we can't beat the market and we're playing a losing game. If you are one of them show us what works and we'll follow you.  Don't have a commie mentality.

 

 

 

 

gold and energy for this time. buy on dip.

anthony 15,

I hope u already got out of SOLF with a nice profit.....if u did, good for u man.

S&P is trying to hold it above 1390. Does not look good...if it breaks that support 1370 will be in eyesight.

BTW, where is everybody today? Hello Guys....??????

 

singingbowl,  i bought that dancer guys stock book... hopefully its good... i have already read couple of books such as Jim Cramers, message of the markets and learnt quite a bit in 2 months.

by the way, i shorted S&P yesterday and Nasdaq this morning....so i hope the  market keeps falling. ;)