Obviously I don't understand what is going on in the market right now. I have sold off my positions in dividend yielding companies because the dividends they would pay out simply does not keep pace with the amount of money I was losing daily from the drop in stock prices.
I've already lost about 50% of what I had in total in the market after a 25% drop in prices. I now have first hand experience in understanding what it is like to lose a good chunk of cash in the market as a result of leveraging. Relying on my gut and decent book prices of a stock wasn't sufficient to prevent myself from losing big time, as it seems that macro economic factors in the market is brining everything down.
I sold my positions today because I am believe that the market will continue to deteriorate and will admit that I made a huge mistake on trying to catch a local bounce that never did happen. For the time being, I will scale back and get out of my positions in the market over the course of the next while. I am expecting bad 3rd quarter reports and probably worse winter sales.
I will be spending the coming week/month doing research on understanding what went wrong and developing a better prediction of the future.
Wednesday, October 29, 2008
Saturday, October 25, 2008
Friday, October 24, 2008
Will probably get slaughtered in the market
I am very amazed with the prices dropping as they are right now. To the point that they don't make sense. I originally thought I had found a bottom in the market a while back, but it seems that I was wrong as the markets are starting to panic about the 3rd quarter results, thus pushing the stock market lower.
30 minutes till the markets open today. Asia is down 10% as of today and it looks like things are going to be particularly nasty today. The stocks I hold right now are probably going to open 20% down and me being leveraged, I am going to get hit pretty badly, with numbers as they are right now, I am likely going to lose about 1/2 of what I have in the market today.
This is truly a humbling experience as I am going to have my ass handed to me. Well, I guess this is a lesson better learned now than later.
30 minutes till the markets open today. Asia is down 10% as of today and it looks like things are going to be particularly nasty today. The stocks I hold right now are probably going to open 20% down and me being leveraged, I am going to get hit pretty badly, with numbers as they are right now, I am likely going to lose about 1/2 of what I have in the market today.
This is truly a humbling experience as I am going to have my ass handed to me. Well, I guess this is a lesson better learned now than later.
Wednesday, October 15, 2008
Market Outlook
Disclaimer: This is obviously a personal opinion here so I highly suggest that readers here take this with a grain of salt.
I have been thinking about my plans to trade over the coming year and this post is to help me to keep track of my frame of mind over the coming months. That is, in the case that I screw up pretty badly, I'll know exactly what I was thinking.
With the stock market in confusion, I believe that the market will be over responsive to any sort of news in the coming future and I am expecting high volatility. The market will likely rebound over the next month in a similar fashion seen in the January crash after the Bear Stearn debacle. With government intervention from the US and around the world, I believe that the markets will temporally stabilize over the coming months.
However, I still believe that the fundamentals of the economy will still be weak.
My plans are to now to get myself into some positions in the market over the next few days. The market has rallied rather sharply over the course of the last 2 days and I believe that there will be a small dip coming up as people cash out to take out some profits.
I will mention that I did something rather bad yesterday and got into the market a little early (call it an emotional trade) and got hit by a small dip in prices towards the end of the trading session yesterday. I see that strong nerves are required to prevent reactionary trades and thus am requiring myself to formulate a strategy that I will stick to and evaluate as events develop over the coming year. But enough of this tangent...
After the rebound, I expect that winter sales will be poor due to the poor financial condition of the general public and will be expecting that companies to post sub-par quarterly results for the first quarter of 2009. With this said, I believe that the stock market will stagnate or slide downward towards the beginning of next year.
Officialy, the US is not in a recession yet as defined by having 2 consecutive quarters with negative GDP growth. However, I believe that the current Bush administration has been cooking the numbers so that they will not have to announce that the US is in recession and take the blame for their poor economic policies. The word on the street, however, is that the US is in recession as a result of rising commodity prices.
Monte carlo simulations on the November US election results indicate a 97.8% chance of a Democratic win for the election based on data posted at the intrade website. Assuming a Democratic party win in the US the stock market may start to rise with confidence in the Democratic nominee, Barak Obama, but that will not occur to next year.
Looking at the data posted at the US Bureau of Economic Analysis, the data there indicates that the US GDP grew by 2.8% in the second quarter of 2008 and personal income grew by 0.5%. The data here indicates to me that the average American is going further into debt because the GDP generally represents how much people are spending... and they are spending more than their earnings are increasing. I should note that the GDP represents spending by businesses and individuals but I am running on the assumption that the increased spending between businesses and individuals is approximately the same.
The next report on the economy will be on Oct 31 and it will be interesting to see the GDP growth number. If the numbers are negative this quarter, it could send the stock market down somewhat, though I am willing to bet that the numbers will be doctored to be positive. Over the past year, the GDP has been positive despite the sub-prime crisis. But it could be possible for the GDP to turn negative this quarter.
How will I play this?
I will play the current market by buying into a few positions now and holding them till after October and then selling those positions off as I do not have confidence in the current world/US economic situation. I believe that poor economic results will be posted over the winter season and probably to atleast the beginning of next year.
When the market rebounds over the next month or so, I am expecting the price of gold which is a hedge against bad economic conditions to fall as confidence in the market grows. When gold (and possibly silver prices) look attractive, I will move into take a small or medium position in the metals and keep approximately 50% of my portfolio in cash and move the money out of USD. The USD rallied recently against the CAD recently and it would be nice to take advantage of this. I believe that the USD may drop in value over the coming 6 months due to continued deficit spending and the weak economy.
I may decide on keeping small or medium positions in companies with good dividend yields while waiting for the economy to recover. During this time, I will be on the look out for good bargains in the market. I may hold some good dividend paying companies after the bounce as these companies will be paying out their dividends fairly soon in the 3rd quarter of this year.
Edit:
This was posted before the market opened on Oct 15th... the bad play I made yesterday, by jumping into taking some positions too early materialized as the market dropped today... silly me for not taking my own advice. I bought into some more positions and will be waiting (hoping?) for the market to bounce somewhat over the next few weeks.
I have been thinking about my plans to trade over the coming year and this post is to help me to keep track of my frame of mind over the coming months. That is, in the case that I screw up pretty badly, I'll know exactly what I was thinking.
With the stock market in confusion, I believe that the market will be over responsive to any sort of news in the coming future and I am expecting high volatility. The market will likely rebound over the next month in a similar fashion seen in the January crash after the Bear Stearn debacle. With government intervention from the US and around the world, I believe that the markets will temporally stabilize over the coming months.
However, I still believe that the fundamentals of the economy will still be weak.
My plans are to now to get myself into some positions in the market over the next few days. The market has rallied rather sharply over the course of the last 2 days and I believe that there will be a small dip coming up as people cash out to take out some profits.
I will mention that I did something rather bad yesterday and got into the market a little early (call it an emotional trade) and got hit by a small dip in prices towards the end of the trading session yesterday. I see that strong nerves are required to prevent reactionary trades and thus am requiring myself to formulate a strategy that I will stick to and evaluate as events develop over the coming year. But enough of this tangent...
After the rebound, I expect that winter sales will be poor due to the poor financial condition of the general public and will be expecting that companies to post sub-par quarterly results for the first quarter of 2009. With this said, I believe that the stock market will stagnate or slide downward towards the beginning of next year.
Officialy, the US is not in a recession yet as defined by having 2 consecutive quarters with negative GDP growth. However, I believe that the current Bush administration has been cooking the numbers so that they will not have to announce that the US is in recession and take the blame for their poor economic policies. The word on the street, however, is that the US is in recession as a result of rising commodity prices.
Monte carlo simulations on the November US election results indicate a 97.8% chance of a Democratic win for the election based on data posted at the intrade website. Assuming a Democratic party win in the US the stock market may start to rise with confidence in the Democratic nominee, Barak Obama, but that will not occur to next year.
Looking at the data posted at the US Bureau of Economic Analysis, the data there indicates that the US GDP grew by 2.8% in the second quarter of 2008 and personal income grew by 0.5%. The data here indicates to me that the average American is going further into debt because the GDP generally represents how much people are spending... and they are spending more than their earnings are increasing. I should note that the GDP represents spending by businesses and individuals but I am running on the assumption that the increased spending between businesses and individuals is approximately the same.
The next report on the economy will be on Oct 31 and it will be interesting to see the GDP growth number. If the numbers are negative this quarter, it could send the stock market down somewhat, though I am willing to bet that the numbers will be doctored to be positive. Over the past year, the GDP has been positive despite the sub-prime crisis. But it could be possible for the GDP to turn negative this quarter.
How will I play this?
I will play the current market by buying into a few positions now and holding them till after October and then selling those positions off as I do not have confidence in the current world/US economic situation. I believe that poor economic results will be posted over the winter season and probably to atleast the beginning of next year.
When the market rebounds over the next month or so, I am expecting the price of gold which is a hedge against bad economic conditions to fall as confidence in the market grows. When gold (and possibly silver prices) look attractive, I will move into take a small or medium position in the metals and keep approximately 50% of my portfolio in cash and move the money out of USD. The USD rallied recently against the CAD recently and it would be nice to take advantage of this. I believe that the USD may drop in value over the coming 6 months due to continued deficit spending and the weak economy.
I may decide on keeping small or medium positions in companies with good dividend yields while waiting for the economy to recover. During this time, I will be on the look out for good bargains in the market. I may hold some good dividend paying companies after the bounce as these companies will be paying out their dividends fairly soon in the 3rd quarter of this year.
Edit:
This was posted before the market opened on Oct 15th... the bad play I made yesterday, by jumping into taking some positions too early materialized as the market dropped today... silly me for not taking my own advice. I bought into some more positions and will be waiting (hoping?) for the market to bounce somewhat over the next few weeks.
Stock market watch: Local Bottom hit, on Rebound
In terms of the market, I believe that we have hit the bottom on Oct 10th. Looking at some of the stocks right now, some of them are trading below or at their book value, meaning that further decline in prices represent excellent buying opportunities, especially for companies that have positive net cash flow for the past 5 years.
The market rallied today and yesterday and I expect a small drop tomorrow or the day after with some profit taking going on. I believe that over the course of the next month that we will likely see a 30%~40% increase in stock value as the market rebounds.
For the past few days, I have been skimming small profits on volatility in prices over a period of a few days (and no! I am not doing intra-day trading).
I will now be changing my strategy to pick up some stocks that I think are undervalued starting tomorrow and hold them for the next month and then pull out of the market after gunning for a 30%~35% appreciation in capital value. During the whole financial meltdown, I have not gone on margin (I abhor loans!) however in this case, I believe that I am willing to go on margin for about 50%~75% of my equity (ie. a debt:equity of 0.5:1 ~ 0.75:1) for a short period of time.
Fortunate for me, amount of capital I have at stake, though a moderate sum, will not put me into financial danger in the worse case scenario. This next month will be interesting.
The reason I write this is to prevent myself from getting caught up in the day to day movements in stock prices (as watching the numbers is quite addictive!) and focus on a medium/short term plan.
I will post more later on.
Wish me luck.
The market rallied today and yesterday and I expect a small drop tomorrow or the day after with some profit taking going on. I believe that over the course of the next month that we will likely see a 30%~40% increase in stock value as the market rebounds.
For the past few days, I have been skimming small profits on volatility in prices over a period of a few days (and no! I am not doing intra-day trading).
I will now be changing my strategy to pick up some stocks that I think are undervalued starting tomorrow and hold them for the next month and then pull out of the market after gunning for a 30%~35% appreciation in capital value. During the whole financial meltdown, I have not gone on margin (I abhor loans!) however in this case, I believe that I am willing to go on margin for about 50%~75% of my equity (ie. a debt:equity of 0.5:1 ~ 0.75:1) for a short period of time.
Fortunate for me, amount of capital I have at stake, though a moderate sum, will not put me into financial danger in the worse case scenario. This next month will be interesting.
The reason I write this is to prevent myself from getting caught up in the day to day movements in stock prices (as watching the numbers is quite addictive!) and focus on a medium/short term plan.
I will post more later on.
Wish me luck.
Monday, October 13, 2008
North American TV programming is obnoxious
I have just returned to Japan after staying in Canada for a week to attend a good friend's wedding and doing some relaxing at home. While at home, I had plenty of spare time that I decided to watch some TV to see what kind of programs there are since I haven't seen much North American programming in a long time. What I did manage to see was rather disappointing.
The first thing about North American TV programming, after living in Japan without a TV for 4 years, was that the characters on most programs were obnoxious, petty and incredibly loud mouthed. I also think that compared to last the last time I was home, I also found that people in general tended to be far more loud mouthed. But first, I should illustrate this with a few examples.
Reality TV
I think Reality TV is probably one of the worst culprits when it comes to obnoxiousness, and this is a result of the design of TV program itself-- the program is based around the drama and conflict between characters, if there was none, there'd really be no content.
I saw a program called I want to work for Diddy while I was back; it was basically was a rip off of Donald Trumps "Apprentice," where the contestants were competing to be the main assistant to Puff Daddy, a rapper. Like the Apprentice, the show was about focusing on the conflict between the contestants, for example how they would argue against each other about who didn't do their job, who did their job the best and etc. But the things they would argue about were so incredibly petty, things such as who was working properly at some event, about how they didn't agree about the kind of food they would order and so on.
The whole show was like taking an ordinary uneventful grocery shopping event and turning it into a drama over 2 people arguing apples vs oranges and then having some kind meltdown occur because they couldn't agree. It's as ludicrous as that.
I could even talk about another show called Say yes to the Dress, which is a bridal TV reality show where brides bring their family and friends to help them out to pick a wedding dress. The portion of the episode I watched had a picky and somewhat demanding bride trying to choose a dress with the husband and and their respective families. The whole show would basically be a semi-drama about the bride trying to pick a dress that would appease herself and the family. The show would go on about where some people didn't like how bride's but stuck out in one dress or the bride not liking the amount of cleavage showing in another dress or whatever, but the thing that bothered me the most about this show was how they some how they turned the act of simply choosing a wedding dress into some drama.
Our society has become more obnoxious
As a result of the abundance of TV programs like these increasing over the years, I personally feel that our society is becoming more and more obnoxious and judgemental from the conversations I've overheard while being back home.
I'd be hearing conversations like how some person might not like Indian food and then make sweeping disapproval about "how could they like such spicy and pungent spices" or how something arbitrary sounding is better than some other arbitrary thing. A mode of thought like this breeds contention and conflict instead of acceptance and understanding.
Often I find myself with having a hard time relating to such people because I simply do not have an interest in participating in an intense, inconsequential discussion. Actually, when involved in such discussions, I usually have very little to say.
When is comes to an argument about the superiority of oranges versus apples, I would much rather say that I like apples and don't really mind at all which fruit you like best, because I would much rather be doing something enjoyable/important instead.
The first thing about North American TV programming, after living in Japan without a TV for 4 years, was that the characters on most programs were obnoxious, petty and incredibly loud mouthed. I also think that compared to last the last time I was home, I also found that people in general tended to be far more loud mouthed. But first, I should illustrate this with a few examples.
Reality TV
I think Reality TV is probably one of the worst culprits when it comes to obnoxiousness, and this is a result of the design of TV program itself-- the program is based around the drama and conflict between characters, if there was none, there'd really be no content.
I saw a program called I want to work for Diddy while I was back; it was basically was a rip off of Donald Trumps "Apprentice," where the contestants were competing to be the main assistant to Puff Daddy, a rapper. Like the Apprentice, the show was about focusing on the conflict between the contestants, for example how they would argue against each other about who didn't do their job, who did their job the best and etc. But the things they would argue about were so incredibly petty, things such as who was working properly at some event, about how they didn't agree about the kind of food they would order and so on.
The whole show was like taking an ordinary uneventful grocery shopping event and turning it into a drama over 2 people arguing apples vs oranges and then having some kind meltdown occur because they couldn't agree. It's as ludicrous as that.
I could even talk about another show called Say yes to the Dress, which is a bridal TV reality show where brides bring their family and friends to help them out to pick a wedding dress. The portion of the episode I watched had a picky and somewhat demanding bride trying to choose a dress with the husband and and their respective families. The whole show would basically be a semi-drama about the bride trying to pick a dress that would appease herself and the family. The show would go on about where some people didn't like how bride's but stuck out in one dress or the bride not liking the amount of cleavage showing in another dress or whatever, but the thing that bothered me the most about this show was how they some how they turned the act of simply choosing a wedding dress into some drama.
Our society has become more obnoxious
As a result of the abundance of TV programs like these increasing over the years, I personally feel that our society is becoming more and more obnoxious and judgemental from the conversations I've overheard while being back home.
I'd be hearing conversations like how some person might not like Indian food and then make sweeping disapproval about "how could they like such spicy and pungent spices" or how something arbitrary sounding is better than some other arbitrary thing. A mode of thought like this breeds contention and conflict instead of acceptance and understanding.
Often I find myself with having a hard time relating to such people because I simply do not have an interest in participating in an intense, inconsequential discussion. Actually, when involved in such discussions, I usually have very little to say.
When is comes to an argument about the superiority of oranges versus apples, I would much rather say that I like apples and don't really mind at all which fruit you like best, because I would much rather be doing something enjoyable/important instead.
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