Today's Market
by Dr Invest
One of the more joyful moments is when the market turns in your favor. Still, you can't trust your emotions, even though you have them. The market alone is the sole determinate of market price and trend. The market is not rational; when you think it should go up, it goes down and when you think it should go down, it goes up.
There are, though, certain seasonal trends that improve your chances to take a profit. The market is presently EXPLOSIVE, volatile. I would not enter the market at this time and believe that we have two more weeks of a postive market trend, which is not enough time to carefully invest in the market. STAY OUT OF THE MARKET!
MY RECENT TRADING HISTORY
On November 9th, I purchased DLTR (dollar tree), FDO (family dollar), and CATM (cardtronics). All three started with a bang and returns of 2%, 3%, and 6% and within days had each sunk below 5% in the negative by Thanksgiving weekend. I had placed a 6% stop-sell and was convinced that all three would end up selling, leaving me with a 6% loss.
If you have been following this blog, you will see that I operate by a set of carefully crafted rules. For example: (1.) only buy stock with a proven uptrend; (2.) buy selected stock when in a temporary dip; (3.) determine how much you are willing to loose before making a purchase; (4.) Learn the behavior of a stock during its one day period and purchase when the stock is typically lowest during its day trading period; (5.) place a STOP-SELL on the stock when you buy it, set for the amount you are willing to loose in the trade (what you are betting on is your judgment); (6.) be patient and wait, even if the stock is going down. (7.) when your stock rises 1 time above the percentage of your STOP-SELL, move the STOP-SELL to half the percentage above the purchase price. (you set the stop-sell at 6% below purchase price, when the closing price rises to 6% above the original purchase price set your new STOP-SELL at 3% above the original purchase price of the stock. As the stock continues to rise, move the STOP-SELL behind the closing price by 3%. [you can also use a TRAILING-STOP which follows the closing price automatically]). (8.) Ideally, you want to stay in the market as long as the stock will continue its upward trend. A more volatile stock may mean setting a higher percentage. It the stock moves up or down 3% at each market turn (up or down), you may need to set the percentage at 12% because you are taking a greater risk for purchasing a stock that grows more quickly or may fall more quickly. (9.) The most important rule is: DON'T LOSE MONEY!
PRESENT RETURNS ON STOCK INVESTMENT
You will remember that in my last blog, I wrote that I wanted to sell FDO as soon as possible. It was always tepid, even though climbing some 7% in the past week, when it hit a particular price, it would fall back down. (this is called resistance) Some analyst believe that FDO is OVERBOUGHT. That means too many people own it and it is over-valued. This can be a learning lesson for me and you, in that, if a stock doesn't show MOMENTUM, get out of it! By the end of the day FDO closed with only a .31% gain. By following my intution and selling at the high during the day, my portfolio gained 1.72% . The 1.72% gain is after brokerage fees, so I am happy that I didn't have a loss in my portfolio and have exceeded the amount I would have made from a Certificate of Deposit. (Excepting that it only took a month to gain the 1.72%)
AMAZING INVESTING FIGURES
Harry Markowitz is a Nobel Economics Prize winner and considered the "FATHER OF MODERN PORTFOLO THEORY". As I understand it, his portfolio is divided into half, with 50% going into VTI (Vanguard Total Stock ETF) and 50% going into BND (which is the Vanguard Total Bond ETF). For a man who is so intelligent but has such a simple portfolio, one has to ask: "What does he know that I don't?"
In the past few blogs, I have explained why this market is different than any other. The last 12 years, the DOW has remained flat, growing only .83% annually and when offset by CPI (inflation) the DOW has declined. When considering that Financial Advisors have their clients into investments that DO NOT BEAT THE DOW INDEX and fall below the DOW index some 10%, 20%, even 30% it is no wonder that almost everyone's portfolio is beaten up.
USE CARE BEFORE PURCHASING AN ETF IN THE MARKOWITZ PORTFOLIO
Care should be used when entering the Markowitz Portfolio. Make sure that the current price of the ETF is ABOVE THE 200 DAY MOVING AVERAGE or don't buy it. If the ETF moves below the 200 day moving average, sell it! Re-purchase the ETF when it rises above the 200 day moving average.
I am presently invested in BND, but I have a stop-sell on the ETF just in case it start falling. Treat ETFs just like stocks. Don't buy a BOND CERTIFICATE. There are concerns that there is a BOND BUBBLE, so be cautious here. In this volatile season of the market, always protect yourself with a STOP-SELL. You will not regret it later.
(Note: the above article is soley for entertainment purposes and not to be used in anyway as financial advice.)
by Dr Invest
One of the more joyful moments is when the market turns in your favor. Still, you can't trust your emotions, even though you have them. The market alone is the sole determinate of market price and trend. The market is not rational; when you think it should go up, it goes down and when you think it should go down, it goes up. There are, though, certain seasonal trends that improve your chances to take a profit. The market is presently EXPLOSIVE, volatile. I would not enter the market at this time and believe that we have two more weeks of a postive market trend, which is not enough time to carefully invest in the market. STAY OUT OF THE MARKET!
MY RECENT TRADING HISTORY
On November 9th, I purchased DLTR (dollar tree), FDO (family dollar), and CATM (cardtronics). All three started with a bang and returns of 2%, 3%, and 6% and within days had each sunk below 5% in the negative by Thanksgiving weekend. I had placed a 6% stop-sell and was convinced that all three would end up selling, leaving me with a 6% loss.
If you have been following this blog, you will see that I operate by a set of carefully crafted rules. For example: (1.) only buy stock with a proven uptrend; (2.) buy selected stock when in a temporary dip; (3.) determine how much you are willing to loose before making a purchase; (4.) Learn the behavior of a stock during its one day period and purchase when the stock is typically lowest during its day trading period; (5.) place a STOP-SELL on the stock when you buy it, set for the amount you are willing to loose in the trade (what you are betting on is your judgment); (6.) be patient and wait, even if the stock is going down. (7.) when your stock rises 1 time above the percentage of your STOP-SELL, move the STOP-SELL to half the percentage above the purchase price. (you set the stop-sell at 6% below purchase price, when the closing price rises to 6% above the original purchase price set your new STOP-SELL at 3% above the original purchase price of the stock. As the stock continues to rise, move the STOP-SELL behind the closing price by 3%. [you can also use a TRAILING-STOP which follows the closing price automatically]). (8.) Ideally, you want to stay in the market as long as the stock will continue its upward trend. A more volatile stock may mean setting a higher percentage. It the stock moves up or down 3% at each market turn (up or down), you may need to set the percentage at 12% because you are taking a greater risk for purchasing a stock that grows more quickly or may fall more quickly. (9.) The most important rule is: DON'T LOSE MONEY!
PRESENT RETURNS ON STOCK INVESTMENT
BUY FRIDAY
TODAY
FDO (Family Dollar) $58.8193 gain .68% gain 1.72% SOLD
DLTR (Dollar Tree) $79.20 gain .53% gain 5.23%
CATM (Cardtronics ATMs) $24.81 gain 9.42% gain 10.11%
FDO (Family Dollar) $58.8193 gain .68% gain 1.72% SOLD
DLTR (Dollar Tree) $79.20 gain .53% gain 5.23%
CATM (Cardtronics ATMs) $24.81 gain 9.42% gain 10.11%
You will remember that in my last blog, I wrote that I wanted to sell FDO as soon as possible. It was always tepid, even though climbing some 7% in the past week, when it hit a particular price, it would fall back down. (this is called resistance) Some analyst believe that FDO is OVERBOUGHT. That means too many people own it and it is over-valued. This can be a learning lesson for me and you, in that, if a stock doesn't show MOMENTUM, get out of it! By the end of the day FDO closed with only a .31% gain. By following my intution and selling at the high during the day, my portfolio gained 1.72% . The 1.72% gain is after brokerage fees, so I am happy that I didn't have a loss in my portfolio and have exceeded the amount I would have made from a Certificate of Deposit. (Excepting that it only took a month to gain the 1.72%)
AMAZING INVESTING FIGURES
Harry Markowitz is a Nobel Economics Prize winner and considered the "FATHER OF MODERN PORTFOLO THEORY". As I understand it, his portfolio is divided into half, with 50% going into VTI (Vanguard Total Stock ETF) and 50% going into BND (which is the Vanguard Total Bond ETF). For a man who is so intelligent but has such a simple portfolio, one has to ask: "What does he know that I don't?"
In the past few blogs, I have explained why this market is different than any other. The last 12 years, the DOW has remained flat, growing only .83% annually and when offset by CPI (inflation) the DOW has declined. When considering that Financial Advisors have their clients into investments that DO NOT BEAT THE DOW INDEX and fall below the DOW index some 10%, 20%, even 30% it is no wonder that almost everyone's portfolio is beaten up.
USE CARE BEFORE PURCHASING AN ETF IN THE MARKOWITZ PORTFOLIO
Care should be used when entering the Markowitz Portfolio. Make sure that the current price of the ETF is ABOVE THE 200 DAY MOVING AVERAGE or don't buy it. If the ETF moves below the 200 day moving average, sell it! Re-purchase the ETF when it rises above the 200 day moving average.
I am presently invested in BND, but I have a stop-sell on the ETF just in case it start falling. Treat ETFs just like stocks. Don't buy a BOND CERTIFICATE. There are concerns that there is a BOND BUBBLE, so be cautious here. In this volatile season of the market, always protect yourself with a STOP-SELL. You will not regret it later.
(Note: the above article is soley for entertainment purposes and not to be used in anyway as financial advice.)
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