Sick of my job. What do you suggest?

[steveny]

I came up with my figures by calculating a 120% return per year, reinvested for 20 years. It just seemed from your earlier post that is was very easy to make large returns every month with little or no risk.

I have also made and lost a lot of money in the market and I am sure that you and I want everyone reading this post to be careful with their money before jumping in head first.

120% would be nice but that's has not happened for a few years. I also mentioned the market as a way for someone like Netviper to have an option other than his job. I had a job that I liked but knew would not last forever. I bought nothing with my paycheck, drove around in old junk pickups and stuffed every cent I could in savings for seven years. When the job ended as I knew it would I then started trading the market. I do reinvest some of the proceeds but some of them pay my bills and I am not stuck in a job I might not like. I would love to see an area on NSX Prime to post about the market and finance.
At the current levels of the market I would suggest this to new comers....stay away or you will see your money consolidate at lower levels.

 

[NetViper]

Why dont we start a stock thread of what people are buying etc... and what they think will happen and we could all do it as a group together... make some $$$.

The ferrari guys did this for a while on ferrarichat...

 

[O-Ace]

Why dont we start a stock thread of what people are buying etc... and what they think will happen and we could all do it as a group together... make some $$$.

The ferrari guys did this for a while on ferrarichat...

I'd participate; although I'm mostly trading the S&Ps right now. But I could do some option plays on the side

 

[steveny]

Let's assume that it is much harder to find good stocks than it is to find bad ones. If this is the case, then wouldn't that imply that it is much easier to make money by short selling stocks than it is to go long?

What am I missing? Do you have to pay margin interest when shorting stocks?

Shorting is very risky and has an unlimited loss potential. Buying puts would be a better way to limit your loss BUT there is the chance of losing the entire principle investment with puts.

 

[O-Ace]

Let's assume that it is much harder to find good stocks than it is to find bad ones. If this is the case, then wouldn't that imply that it is much easier to make money by short selling stocks than it is to go long?

What am I missing? Do you have to pay margin interest when shorting stocks?

I don't think a blanket statement like that can work in the market. It really depends on what the overall market is doing. For example, I lost some cash shorting in the middle of 2003 since the market as a whole was moving up. Just try to go with the flow. Look at what the indices are doing (Nasdaq, Dow); find the sector that's moving in the same direction; find the strong stocks that are moving in the same direction (weak for shorting) ...and then just go with the flow.

Btw, brokers actually pay you credit interest when you short a stock.

-Awais

 

[steveny]

I'd participate; although I'm mostly trading the S&Ps right now. But I could do some option plays on the side

I'd participate too. Ace And I trade different parts of the market. So far today I am up 420 bucks. Not a lot of money but more than most day jobs pay for 2 hours of "work".

 

[O-Ace]

Average of $400/day = $100K/year Not bad for 2 hrs of "work"

 

[steveny]

Average of $400/day = $100K/year Not bad for 2 hrs of "work"

True but as you and I know not every trade is a winner. The way I look at it is 400 buck pays my internet bill for almost a year.

 

[DocL]

Isn't the stock market a form of legalized gambling? If you lke taking big risks, then it may be well suited for you, but if don't want too lose it's not for you. I made a considerable amount of money in the mid '90's, but I also lost a considerable amount afterwards. I didn't lose too much after the decline and market crash a few years ago, but that was because I pulled out most of my initial investment at the time. I did however, lose a tremendous amount of profit on paper, and since I did a lot of trading within my IRA, I also took a bit hit in my retirement account.

The thing to remember is that if you cannot afford to lose money, don't make day trading you sole source of income. And don't take all of your savings and hope to make it big without losing some of it to begin with. I have a few friends that lost everything because they thought they were smart and were doing some of the things discussed here. I'd hate to see someone go into trading based on the advice recieved on the internet because you might as well flush it down the toilet otherwise.

 

[O-Ace]

I'd hate to see someone go into trading based on the advice recieved on the internet becasue you might as well flush it down the toilet otherwise.

Don't flush it down the toilet...just wire it over to my account

 

[steveny]

Isn't the stock market a form of legalized gambling? If you lke taking big risks, then it may be well suited for you, but if don't want too lose it's not for you. I made a considerable amount of money in the mid '90's, but I also lost a considerable amount afterwards. I didn't lose too much after the decline and market crash a few years ago, but that was because I pulled out most of my initial investment at the time. I did however, lose a tremendous amount of profit on paper, and since I did a lot of trading within my IRA, I also took a bit hit in my retirement account.

The thing to remember is that if you cannot afford to lose money, don't make day trading you sole source of income. And don't take all of your savings and hope to make it big without losing some of it to begin with. I have a few friends that lost everything because they thought they were smart and were doing some of the things discussed here. I'd hate to see someone go into trading based on the advice recieved on the internet becasue you might as well flush it down the toilet otherwise.

Absolutely true. This is why I do not invest my life savings or be greedy about it. If I were to invest more I would be able to make a great deal more...or lose a great deal more. I use an amount of money that I could live without if it were to disappear tomorrow. I am not looking to hit a home run. All I want to do is make enough to pay my bills so I do not have to work a job that may make me feel the same way Netviper feels about his. I think greed plays a big roll when investors lose large sums in the market. Discipline is the only way to limit losses and gains. It sounds like you have discipline as you too like me took money off the table before the last huge downturn. Much like you I wish I had moved my IRA to cash like i did with my trading accounts.

 

[Spider]

I don't think a blanket statement like that can work in the market. It really depends on what the overall market is doing. For example, I lost some cash shorting in the middle of 2003 since the market as a whole was moving up. Just try to go with the flow. Look at what the indices are doing (Nasdaq, Dow); find the sector that's moving in the same direction; find the strong stocks that are moving in the same direction (weak for shorting) ...and then just go with the flow.

Btw, brokers actually pay you credit interest when you short a stock.

-Awais

I agree with your assessment. I was just thinking out loud how we're all taught from the begining to buy low and sell high, but in order to do that, we must research a stock (study its balance sheet, revenue, earnings, debts, etc...) But then I start to realize: finding a gem is much more difficult than finding a mediocre or unattractive one. So, why not play it the other way around?

 

[Lud]

I was just thinking out loud how we're all taught from the begining to buy low and sell high, but in order to do that, we must research a stock (study its balance sheet, revenue, earnings, debts, etc...) But then I start to realize: finding a gem is much more difficult than finding a mediocre or unattractive one. So, why not play it the other way around?

Don't kid yourself... It requires at least as much rigorous analysis to sell high and buy low with a reasonable amount of managed risk as to buy low and sell high. And the risk potential when shorting is huge. Plus you can get squeezed, and then you're really screwed, PARTICULARLY if the stock is heavily shorted and folks are being forced to cover their position, thus causing the price to further skyrocket. I really do not think any serious amount of shorting stocks is for the average casual individual investor, and certainly not for someone trying to find an easy, casual way to make a buck in the market.

If you want to really do well in the market over the long haul you have to put time in to educate yourself and, just as importantly, be willing to put in time on a regular basis to keep up with everything. There is no real shortcut.

Of course that' s just my opinion!

 

[steveny]

Don't kid yourself... It requires at least as much rigorous analysis to sell high and buy low with a reasonable amount of managed risk as to buy low and sell high. And the risk potential when shorting is huge. Plus you can get squeezed, and then you're really screwed, PARTICULARLY if the stock is heavily shorted and folks are being forced to cover their position, thus causing the price to further skyrocket. I really do not think any serious amount of shorting stocks is for the average casual individual investor, and certainly not for someone trying to find an easy, casual way to make a buck in the market.

Great words of wisdom. Shorting is so risky. This is why I hardly ever leave my PC during the day when I have short positions like today. The opposite of the above statement to go long on a stock would be
Look for a stock with a forward moving momentum near its 52 week high.
See if the company has increased earnings over the last quarters or has beat estimates.
Check to see if there is news pending that may cause the stock to go up further
Check the days to cover that the shorts have at average daily volume. The above mentioned squeeze works to your advantage here.
If the news comes out and the stock goes above the 52 week high most shorts will be underwater and most likely will cover
This will act as rocket fuel for the stock price.
In my trading account:
I am currently short with puts, Lear, Fannie Mae, Borg Warner, Ford,
I am currently long with calls Icos, Leap Frog, csco (sold this morning)
I am currently long stock with covered calls Csco, Corning, Icos, and I did the imclone trade I posted about a couple of days ago.
I am currently long uncovered CMGI, Left over from 2000

 

[Spider]

Good discussion. I have only done the buying stock and selling covered calls, myself, with EMC and NOK. Just been thinking about experimenting with some short selling.

But if we're not looking for huge returns or home runs, is there any kind of equity investments that can guarantee, ....say at least 7% or more, every year, for 10 years?

 

[steveny]

Good discussion. I have only done the buying stock and selling covered calls, myself, with EMC and NOK. Just been thinking about experimenting with some short selling.

But if we're not looking for huge returns or home runs, is there any kind of equity investments that can guarantee, ....say at least 7% or more, every year, for 10 years?

There are no guarantees with the market

" The secret of success is the determination to succeed and not the determination to avoid failure. While one person hesitates because he feels inferior, the other is busy making mistakes and becoming superior."

 

[KGP]

" The secret of success is the ... determination to avoid failure. ."

Do you equate this to rationalizing an unanticipated move in terms of the price/direction of the stock? I think many times people take a position and when it moves unexpectadly away from their would-be close position they rationalize that "oh well, it's a good stock, so it will come back my way eventually."

 

[steveny]

Do you equate this to rationalizing an unanticipated move in terms of the price/direction of the stock? I think many times people take a position and when it moves unexpectadly away from their would-be close position they rationalize that "oh well, it's a good stock, so it will come back my way eventually."

I had never thought of it that way but it sure makes sense. I always interpreted it as... If you don't play then you have no chance of winning or losing and through losing you gain experience you use win with.

There was another saying that goes
A successful CEO was asked how he got to where he was in life and he answered "good decision"
when asked how he made good decisions he said "through experience".
When asked how he gained the experience he answered "bad decisions"

 

[KGP]

I had never thought of it that way but it sure makes sense.

Yea, but I should have been a little more specific. What captures my interest is trading extreemly liquid stocks in high volume positions, anticipating a move one way or another, whether it be because I might see market makers lining up or whatever, and holding that position to an pre-determined exit point for only a marginal position gain, with the position typically held no longer than a few minutes. So, if I enter long at 25 and pre-determine that my exit is going to be 25-3/4, should I see the stock move even the slightest bit (1/16th or so) the other way it would (should) be a quick exit, thereby mitigating a loss. On the other side, I ride the position to 25-3/4 and exit, taking a profit. The overall long-term profit comes about by limiting the losses by stciking to your pre-determined exits, limiting the moves that take place opposite of the anticipated move. Where one can go wrong (as I tried to explain above) is when the move goes the wrong way and the trader rataionalizes with the thought "it's a good stcok, so it will come back my way." As we know, being a "good stock" has nothing to do with market price.

 

[O-Ace]

KGP, so you're interested in day trading or even scalping liquid stocks like MSFT?

 

[KGP]

KGP, so you're interested in day trading or even scalping liquid stocks like MSFT?

Yes, the direct access route. Love to if I can ever find the time to learn more and to get a comfort level. After that, I'd look at it like a few trades a day, here and there. Wouldn't expect huge profits, just something to do other than the typical investment thing. Right now I'm just too darn busy with the primary job.

 

[O-Ace]

KGP; I used to do that with liquid stocks. Usually, went for quick 20-50 cent profits which is not too bad on 1-2K sh per trade. If you go this route, I would recommend just focusing on 2-5 liquid stocks that have decent daily range and then specialize in trading the same 2-5 stocks every day. I have a friend who trades the same stock every morning. Shoots for 30-35 cents on 3-5K sh...he's done within 30 minutes and is usually up over $1K. Not bad for half an hour a day

 

[steveny]

Yea, but I should have been a little more specific. What captures my interest is trading extreemly liquid stocks in high volume positions, anticipating a move one way or another, whether it be because I might see market makers lining up or whatever, and holding that position to an pre-determined exit point for only a marginal position gain, with the position typically held no longer than a few minutes. So, if I enter long at 25 and pre-determine that my exit is going to be 25-3/4, should I see the stock move even the slightest bit (1/16th or so) the other way it would (should) be a quick exit, thereby mitigating a loss. On the other side, I ride the position to 25-3/4 and exit, taking a profit. The overall long-term profit comes about by limiting the losses by stciking to your pre-determined exits, limiting the moves that take place opposite of the anticipated move. Where one can go wrong (as I tried to explain above) is when the move goes the wrong way and the trader rataionalizes with the thought "it's a good stcok, so it will come back my way." As we know, being a "good stock" has nothing to do with market price.

This can be done if you stick to your own set of rules. I am labeled a pattern day trader with my broker for trading this way. To support your theory here are some examples. I was at one point doing just what you say collecting .25-.50 on 1-5k share blocks on movement in WCOM and DYN. If the stock would fall back more than .20 I would sell NO MATTER WHAT. Looking back now I am very lucky I made those rules and stuck to them. I learned to set these rules because of buying CMGI at 17.00 and watching it fall to >1 all the while saying "it is a good stock it will come back". Now I hold it only to sell at a loss to offset gains.

BTW...I feel that the whole pattern day trader rule that was set in place after the bubble burst is BS. IMO the reason the bubble even was able to expand in the first place was people that knew nothing about the market were investing through the new method of the internet. Now that those small investors (25K or less) have lost their money, the SEC passes the pattern day trader rule (rule 431) and now the doors to the market are closed for them to day trade.

 

[KGP]

I would recommend just focusing on 2-5 liquid stocks that have decent daily range and then specialize in trading the same 2-5 stocks every day. I have a friend who trades the same stock every morning. Shoots for 30-35 cents on 3-5K sh...he's done within 30 minutes and is usually up over $1K. Not bad for half an hour a day

EXACTLY! That is just how I envision doing my thing. But, by focusing on just 2-5 stocks, you would have to be even more disciplined becasue your field of vision is narrowed, creating the temptation to trade just for trades sake (call it greed), when an entry position really isn't there at all. I would think 2-5 core stocks, with another 5 followed pretty close as well. Ideally it might be 2 stocks from 5 different sectors.

 

[KGP]

I was at one point doing just what you say collecting .25-.50 on 1-5k share blocks on movement in WCOM ..

LOL, that is the best move I have made in the past 3 years, to trade WCOM! Liquidity never seen before and price fluctuations all day long, with some of them huge. For me it was really dumb blind luck, but it sure was one hell of a ride!