Phantasmix

Stating the obvious here: Obama is proposing to raise the taxes, particularly on investment capital gains and dividends. If enough people believe Obama (barf) is going to win, and McCain (barf) is going to lose, there may be a lot of stock selling just to lock in the lower tax rate on cap. gains.

Okay, 3 words: I lack it!

I’ve had this “master plan” for about 3 weeks now, but unfortunately don’t seem to have any patience and just can’t stick to the plan (more on that later).

Got mired in a lot of new trades the last couple of days. 7 active trading positions right now.

Let’s rationalize each one:

• (SKF: 119.7602 -5.25%) - still have 50% of the position. It closed at the high of the day. Will keep for now.
• (LVS: 44.64 +4.89%) - low volume today, green on a red market day, but it was red on a very green Friday. Don’t understand the stock. Had a chance to get out this morning with a tiny profit, but held. Should cover this week.
• (VLO: 34.76 -0.74%) - disappointing so far, but I have no problems with the fundamentals of this company, and believe it will go higher soon. Willing to hold until it gains.
• (PLCE: 42.09 +1.47%) - 1/2 the normal volume today, end of day looks like short covering to me. I will hold this one until it fills the gap up from last week.
• (MOS: 106.73 -2.19%) - new short. I have no conviction that I’m right here, but my position is very small (50x). Target $95-100.
• (QLD: 78.15 +1.38%) - this one was scary, I bought it mid-day today, I believe close enough to the bottom of the day. Moneyflow is showing that today money’s leaving (QID: 40.76 -1.31%) (ultra short QQQQ) and is coming in to QLD. The ratio of buy/sells is 107/100. Last Friday SKF was being bought on weakness with the ratio 104/100 and look where it is today. Hopefully QLD will follow suit, however I realize it’s an extremely small sample, statistically Moneyflow is the one indicator I’ll keep track of from now on.
• (JCP: 38.56 +2.01%) - had a chance to get out for a profit today, but convinced it has more downside. Should it go up tomorrow, I will not cover, want at least 2 points on it.

Ok, so the plan.

1. I want to exit at least 4 positions for a gain this week.
2. Must not rush into anything as I usually do.
3. Pick a stock (or ETF, *sigh*) and try to time an ideal entry, then go all in. I want more reward with less trading. I must be certain technically, so no this “no conviction” stuff.

These are the rarely looked at weekly charts. I’m trying to remove the daily noise, need to stop over-trading. Maybe holding longer but for a bigger reward is a better strategy. (I’m contemplating whether I should bother wrecking my nerves with the UYG-or-XLF trade tomorrow. Maybe instead, I should wait for SKF to bottom and average down.)

The only thing that’s just starting - barely - to look in favor of the UYG/XLF is MACD. Just barely.

Today, financial stocks are green, but so what?

Also, check out my SKF page (on the site), might be useful if you trade this ETF.

S&P 500 Price-to-Earnings ratio is climbing as more 2nd quarter earnings results are being announced.

Click to enlarge

Successful investing requires consistently buying stocks that do not reflect the value of the underlying company and then selling them when they do.

Sounds simple enough, right? I mean, Warren Buffett bought Coca-Cola (KO: 52.99 -1.49%), American Express (AXP: 39.98 +2.99%) and Wells Fargo (WFC: 29.88 +3.36%) and just held them until everyone else realized the value (or something close to that).

TheStreet.com

Hm, that’s funny… “consistently buying stocks that do not reflect the value of the underlying company and then selling them when they do.” Turns out, Buffett regrets not selling Coca-Cola, (KO: 52.99 -1.49%) in the 1980’s (KO stock was in the $80’s back then).

If you bought and held the Coca-Cola stock in 1998 - that’s 10 years ago - you’d be looking at a 25% loss, not including the dividends. Including the dividends you’d probably be at break-even or close to that.

I have no problem with buy-and-holding as such, but in my opinion the really lucky stories we all hear aren’t without an element of luck. You have to pick the right stock, the right industry at the right time to make it to that first million.

For example:

“If you had invested $25,000 in CNQ in it in Novemeber of 2001 you would be sitting on over 1.5 million dollars today. Hard to believe, but that shows you the strength of buying and holding.”

Rrrrright, and how many stocks went to $0 since then? And how lucky (or insightful) were they to buy at the very start of the commodities bull market?

Anyway, buy-and-holding is a legitimate strategy, I suppose. What bothers me is this: why is Coca-Cola always on the list of safe stocks, the ones that if you hold for a decade or more you’ll be rewarded?

It’s bogus! © Joe Garrelli

I’m short KO, because it’s a loser stock and I don’t like their product.

P.S. I now update my trades with 2-3 minute delay on the Portfolio page.

When life gives you lemons, throw them at people!!!

Or when the market gives you uncertainty, short the hell out of it. So I have been doing just that. Just to let you know, I’ve been really good about updating my “Stock Portfolio” page. For example, it’s updated tonight, and you can see what I’m holding overnight.

Today I closed 3 trades: 2 winners, 1 tiny loser.

I’m officially addicted to the stock market: though I’m sleep-deprived from having to work long hours lately, I still get up in time for the market open.

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