It got worse . . .Week In Review 3-7-2008
Ouch. My gains from last year are quickly evaporating. I don't like it.
I lost 3.67% this week. It could have been worse--the Zweig RS 5 lost 5.75%. Yikes.
Zweig RS 5 was the worst performing screen this week. WATG performed terribly losing 16.59%. WSCI (which I didn't buy, of course) was the only stock that made money--3.78%.
The best performing screen was To the Moon which only lost .60%. Of course, I owned nothing on that screen.
ZZ #1 is still holding out as the screen to beat this year.
I'll be honest and admit that I feel a bit beaten up. I genuinely felt that we had reached a bottom a couple of weeks ago. I'm not sure what to think now. I know if I decide to pull all of my money out, that's when everybody should buy because the market will surely rocket up.
I plan to stick to my guns next week. Maybe what I do doesn't work in markets like these. I've never been through anything like this. But I think the best lesson I can learn is to trade a struggling market so I have a better plan when I face it again.
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4 comments:
Hi StockPunk
Markets are close to MLK day lows and will likely break them and head lower as *recent* economic numbers are turning out to be negative. YTD Nasdaq is down about 17%. So a lot of people have lost money not just you.
My advice is this: I would say hang in BUT do that only if u have a *good trading strategy and picks*. If your are *convinced* that your strategy is right then you should continue. Else you will *likely* lose more as I believe (and I may be totally wrong) the mkt will head lower as bears are getting more economic & financial news fodder. The two things you should honestly think about are 1)strategy and 2)picks. If you have both bad then you will do bad. Think about it. Also you were doing exceptionally well over the past 2 years and have several years of trading experience yet why are you losing? Introspect honestly but don't give up easily.
Develop a comfortable trading strategy and trade within that. Then you will have *long term* success. Ask yourself why u traded WATG? Does WATG fall in your comfort zone? If it does and yet u lose then that is fine. Think. Think. Learn from your losses. And one more advice stop paying so much for DVDs etc. I had taken so many trial memberships of newsletter (as part of my learning curve) and found 99% of them to be junk. The only good ones I came across were: PrudentSpeculator and FindProfit. As they told you exactly why they were buying shares, what catalysts etc to expect and most importantly they had a value bent. BTW, I haven't subscribed to them in the past 2 years. I am comfortable with my strategy. ;-)
I am a value investor and I play long and still I am doing fine in the last few months and am up about 15% YTD. Here are some rules from my strategy for my trading comfort zone.
1)Play in small lots 300 to 600 shares & buy more than 1000 on further dips if you are convinced in the value of the stock.
2)Avoid biotech stocks.
3)Develop a list of *many* value stocks and buy a *little* of them on dips and sell on pops. These stocks will be range bound in this mkt. So u can exploit their trading range well.
4)Clear even your value stocks before earnings unless the company has already preannounced then u can have a small lot to play the earnings bounce.
5)Avoid stocks with debt.
6)Be honest and read and learn. That's why/how I am constantly looking for good blogs and came across yours ;-)
7)Don't rush into a stock. If I haven't traded a stock before then I ask myself a)how much profit am I looking for in this new stock b)and can I make the same money in my oft traded watchlist. Is it worth the risk?
8)And many more
Honest homework for you: Can you write down yours?
Mind psychological play: How many times have been agonized by your stocks? Stocks should not control your mind. They should not irritate you. That's another reason you need a strategy. A nice strategy means even if you fail every now and then you won't berate yourself. And yes you will fail on some/many occasions despite your strategy (because you don't know what pain the other holders of your stock are going through and so are selling at even ridiculous prices). A good strategy/plan means you will buy more instead of berating yourself silly on your losses. A good strategy should act like a mental moat. Should let you sleep well.
Another basic advice: Do you know how to value a stock? If you don't then you will end up in more trouble in this market especially as I believe it is heading lower.
Sorry for asking such a basic question. But many people even after years of trading don't know this. And in fact this is the most basic element for successfully trading stocks.
Here is one strategy for you to try. Look for stocks that have popped in a day and then a)check why they popped b)is the valuation worth it.
If they are value stocks and have popped on good earnings then u put them on your watchlist. Let the stock retrace over the next few days. If it does then start nibbling in small lots. I do this and buy in 300 share lots. With InteractiveBrokers it costs me only 1.5$ in fees to buy 300 shares.
Conclusion: Develop a strategy. Go with picks you like (me I go with value)
Apologies: I sincerely apologize for giving so much advice. Hey atleast you didn't have to pay for it ;-). Seriously speaking, I hope it helps you and other readers of your blog.
Steven
P.S: Good luck. Enough of my lecture. Now for something different here is a small clip of Craig. Such a modest guy.
http://finance.yahoo.com/tech-ticker/article/5322/Craig-Newmark's-Moral-Compass;_ylt=Ao3NwgnFcnZck3OroRf4lahk7ot4?tickers=
Regarding the strategy I discussed, look at SAPE for example. The valuation is decent, it has no debt and a good sized cash. About 8 days ago it reported earnings and it beat by 7 cents. A lot of people expected(and so shorted) it to miss as it is in the software services sector which is expected to slowdown in the current econ conditions. So the day after earnings the stock went from 6.3 to 7.8 to close at 7.4. Some analysts were positive on the earnings and have target price of 11. Others remain skeptical that the company will be able to deliver such numbers.
Now 2 things happened since it reported earnings 1)the mkt crashed last week and 2)INFY got downgraded. INFY is a competitor. Net result the stock retraced to 6.7 yesterday despite blowout earnings.
So now I can think of entry. Technically if you look at the charts, the stock has good support near 6.5. So I can start thinking of buying near 6.6. Also Fidelity took a huge stake and bought a lot of shares recently near 6.5.
So here we have a stock with a)decent valuation b)good support near 6.5 c)executing well despite econ conditions. That is the bull part of the story.
The bear part is company will likely miss in this environment. But stock has decent valuation here.
So let the big institutional bulls and bears battle. I'll buy it near 6.6 in 300 share lots hoping to make 150$ profit. (You do this in many stocks and the 150/200$ gains add up quite nicely, trust me) And buy much more on further weakness. I listened to their CC and it was very good. Only red flag was "Jan was soft because of econ conditions but then Feb was very good". So the bears have decent fodder too. So I won't overload but buy a few. Will keep trading this for 2 months till next earnings (beware of preannouncement though). Buy on dips (and there will be many in this mkt) and sell on pops (like silly Ambac bailout or Fed cut rate news).
Have confidence in your stocks.Know them well. Know their balance sheet well. Listen to every CC. Presentation. These are wonderful modern times. You can listen to them free on the internet! Trade them nicely and even then if you lose. That is ok.
Stick to basics. Stick to trading fundamentals.
Good luck. And hope to see u recover your gains in the months ahead.
Steven
Scott,
Have you considered/looked at any short screens. On the surface at least, these would seem to offer some protection/diversification when the market sours.
I've been looking at things like the Negative_FCF screen at Keelix.com - It's "up" 22% YTD based upon a weekly screen and short of the top 3 stocks
Like value investing, really good screens like Zweig never stop working over the long term. The last three months have sucked, but that's simply not enough time to give up on your screens. If Zweig underperformed for 3-5 years, I'd reconsider. A solid trading plan should never be abandoned because of a few months of poor performance.
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