Frustration Leads to Reality Check

11/24/2008 09:22:00 PM / Posted by Soullfire / comments (0)

I was having a conversation at work today with some of my co-workers and the markets..of course!

As the grim state of the market was discussed, I once again brought up the topic of ways to manage one's funds to reduce risk and limit loss. And once again I was met with immediate resistance that anyone can time the market with any accuracy knowing when to move their funds out of stocks into safer investments.

I tried to explain that it's not about timing it right, but more about moving a percentage of funds into safer investments when the market is making highs rather than being greedy and always expecting the market to only go up. That money put aside can then be used to re-enter the market if the market should fall.

I explain that one can use simple technical analysis of market charts to determine where buying support should be as well as selling resistance. I am told that technical analysis doesn't work and the longer the time frame you use, the less effective it is- which is the opposite of what I know to be true.

If this was my first discussion with them, I'd take it in stride and think little of it, but I've had numerous conversations with basically the same folks and there are a vocal few who have challenged me from the time the market was over 13000 to the 7500 range it hit this week. You would think that attitudes would change as the market deteriorated, but that's not the case. I can tell you it can get frustrating to see folks just refusing to open their minds to a new way of thinking and accepting that buy and hold isn't the end-all and be-all of investing as that method has done nothing but lost loads of money this year.

Finally after hearing someone make a point on how technical analysis is pointless and doesn't work I could take it no longer and told them technical analysis told me to get out of the market last year. The response? Silence. I was then asked if I was 100% out of stocks in my 401K and I said yes. More silence. At this point they can no longer argue with FACT. I'm living proof that one can manage one's finances and not leave it up to the whims of the market. Case closed. After that reality check I was finally able to state the case for managing ones funds without least for today.

Switching to "Defense Mode" During the Market Turmoil!

11/09/2008 10:40:00 AM / Posted by Soullfire / comments (0)

Wow- September and October will go down in history, and unfortunately, the memories won't be happy ones. What a market plunge and revelation of how seriously bad shape our economy is in.

This of course makes it a challenge to invest with a long term point of view, unless you really stretch it out to over 10+ years in a perfect storm recession.

The key word now is "defense". The market has dropped quite a bit from its October 2007 highs. Many folks feel "trapped" in the market- not wanting to do anything since if they move their money out of stocks and stock funds, they fear locking in their losses if the market recovers. The thing is, the market could drop further still, increasing ones losses so there's risk either way. The reality is we all need to be more active in managing market risk, unless you are fortunate to have a financial manager who actually knows what he is doing. In volatile times like these....if you wish to remain in the market, you have to take on the responsibility of managing your risk and market exposure.

If you do have a financial manager, this is a good time to grade them by comparing your returns to that of the S&P 500 or Russell 2000. A financial manager should be able to show a better rate of return than the standard index tracking funds. If not, you're better off just investing in an index fund and saving yourself from paying financial management fees.

However, there is one positive aspect to all this market volatility is that there is money to be made if you switch to short term trading....on the order of just a few days to at most a few weeks. It does require more attention spent on research and risk management, but the returns can be worth it. Stocks are making hugh percentage moves in such a short time, that it's possible to make a years return in gains in just a matter of days.

When the smoke of this Bear Market clears, there will be some excellent opportunities for the long term.

As for now, profits will come to the nimble and swift, which is what I intend on being.

Phase One Done -> Onward to Phase Two

7/20/2008 05:39:00 PM / Posted by Soullfire / comments (0)

Another boring tedious weekend has produced a revised smaller list of possible stock investments from both the long and short side.

Now that my list has been shortened, it's much more manageable. I've calculated estimated price targets as well as investment durations. Now all that's left is to lock in on one of the stocks on the list, and pull the trigger to buy.

This will be a true test of my analysis since I will be entering long positions in this Bear market. Even though there has been quite a bit of selling, the golden rule is "There is always a Bull market somewhere". =)

Now that the tedious part is over, I can move on to more interesting things like reviewing my current positions and making adjustments if necessary.

Time for a confession. I've been watching my short term positions closely, but not so much my long term positions. Admittedly, I moved the bulk of my funds into safer investments that don't need much tending, but I still need be more aware of my remaining positions.

The biggest mistake many people make is to enter an investment and just forget about it without keeping track of it's performance. Instead of "buy and hold" strategy, we can call this "buy and forget". As time goes on, some investments may not be performing as well so you need to be aware to make adjustments if needed. Your investments are the key to your financial freedom so it deserves your attention.

Taxes Done...Onward To Phase One

7/06/2008 05:15:00 PM / Posted by Soullfire / comments (0)

This 4th of July weekend was a fitting time for me to move forward with my investment planning. Celebrating our political freedom and combining it with my pursuit of financial freedom. =)

Right now I'm in the process of searching for and finding good investment candidates. This is easily the most tedious and time consuming part of the process, but very important and necessary for overall success. After all, you're not going to have much success if you start out from the gate with bad investment choices.

What makes this tedious? If I were to ask you to pick a few stocks that had good upside potential and low downside risk, what would you say? Well, if you're like most of my coworkers, you would say the name of whatever stocks you heard in the news or other people taking about, or what you're currently investing in without being able to explain much detail into their answer. And these are the folks that think they know something about stocks. The rest would just say "I don't know and leave it at that.

Those who limit their investment only to stocks they've heard about also limit their opportunities by a big margin. There are thousands and thousands of stocks out there- some going up, some going down and some not doing much at all.

Looking for good stocks in a field that large can easily be an overwhelming task. To narrow down the field, some will stick to looking at stocks in a certain sector like energy of financial stocks. I myself prefer to use scanning software when I've set up certain search criteria of what I'm looking for in a stock. The scan is run against all stocks in the market and usually spits out 200 - 500 stocks- a much more manageable amount of stocks to examine.

I narrow down the field further after looking over what came up in the scan to usually under 50 stocks. I take those 50 and put them in my "stockpicks" file for later use. As time goes on that "stockpicks" file gets bigger and bigger. It's from my stockpicks list when I get my final investment selections from. Currently, there are about 1500 stocks in the list.

I subscribe to the "timing philosophy" of stock picking where I believe that not only is it important to pick a good stock, but you need to purchase it at the right time. Even great stocks have down periods and you want to avoid buying stocks that have already made a big move up and are headed back down in consolidation. So from my stockpicks file, I cull the list of all the stocks that are in the ball park of good times to buy or short. This is the current stage that I was able to complete this weekend. I've been able to narrow down the list of current candidates to about 190.

Now I've got to look at the remaining stocks more closely with regards to their fundamentals and technical indicators. When I'm finished, I think I will have it narrowed down to 15 - 25 final candidates.

Tedious? Yes. Time consuming? Absolutely. Brain drain? Sure. But when all is done, I'll have a list of stocks I can readily invest in that come from me, rather than a dubious tip or recommendation from a so-called media financial guru or well intentioned but misinformed acquaintances. It also helps me find good stocks that few people have heard of since they aren't yet in the media spotlight.

A Bit Behind the Curve

6/15/2008 04:21:00 PM / Posted by Soullfire / comments (0)

The current major task on the front burner is getting my 2007 taxes completed. That should happen shortly. Man, the schedule D seems to get tricker every year as I expand my investment repertoire.

Once done, I can start going over and adjusting all my current investments.

I'm excited on using blogger as it looks like I'll be able to post a widget that shows my portfolio position performance ranking.

Searching For a Good Unique Blogger Address Reveals a Maxim

6/07/2008 10:57:00 PM / Posted by Soullfire / comments (2)

Trying to create a good blogger website name that's not already taken ca be quite a challenge. When I was looking at different possibilities, all I kept seeing was

"Sorry, the blog address not available"

It seemed as if most of the first good names that came to mind had already been taken. Now here is where it gets interesting. When I go look at the website that has the taken name, almost invariably I make the following discovery:

1) The website has no posts, as if it was newly created, but it's been around for years, meaning it must have been abandoned.

2) The website has just a few posts, and the last post was over a year ago, meaning it has also been abandoned.

Now I don't mind losing out on a website name to someone who has an active website, or a site that had at least a year of activity, but it is a bit frustrating to see all these sites with good names basically abandoned shortly after they were created.

As I was thinking about it, it occurred to me that this type of behavior is the reason why so many folks don't succeed with their financial plans or major goals in general- losing interest and not continuing with the tasks/projects they start.

Just about all of us are eager to achieve wealth and of course we would like it sooner than later. The problem is wealth building usually takes time and perseverance. This time frame isn't quick enough for many and so the financial plan is abandoned- just like those blogger sites that were created with the best of intentions, only to wind up being unused and abandoned after a short period of time.

Success in anything usually requires time and effort. You have to be persistent and stick with your plans in order to achieve your desired results.

We can achieve our goals by being consistent and persistent....words to live by. =)

Let The Mission Begin!

5/30/2008 09:32:00 PM / Posted by Soullfire / comments (3)

In thinking about my savings, finances, and current investments, I realized I need to step it up a few notches and get even more serious about it. I think my motivation comes after working a serious amount of OT at the office which made it clear to me that I need to work smarter, not harder.

This blog will cover all aspects of my investments- long, medium, and short term.

Risk level of my investments should be as follows:

Long term: 401k, IRAs - These are investment selections that are intended to last at least at least a year or longer. These are the kind of investments that don't require much maintenance....the kind you can buy and forget about for a while.

Medium term: 401K, IRAs, Trading Account - These investment selections are intended to last around 6 months up to 1 year. In this area my interest is momentum or swing plays that are on the move.

Short term: Trading Account - These are short term trades that can be as short as a few days to a few weeks up to a couple of months. The intent is apply good market timing to get in and out of stocks on the move and maximize profits. If my trading position last longer than two months, it's because my timing needs improvement.

This method of investment should cover all my bases..

Long term covers the "patient path" to riches. The biggest mistake people make in investing is that people lack the patience required to reap the rewards of investing. If their current investment doesn't jump by leaps and bounds right away they get impatient and sell and switch to something else. Looking for that golden egg, they wind up chasing performance by investing in areas that were last years darlings, but they may not be the stars of this year.

Medium term covers more active management in an attempt to boost performance. My goal is to beat the returns of my long term account.

Short term is my "swing for the fences" account. This is the closest to what someone would call a get rich quick plan. My goal here is to churn out enough profit in short term trading that will rival or even exceed my current corporate salary.

By taking the long, medium, and short term approaches to trading I believe I avoid putting all my eggs in one basket and increase my chances of achieving my ultimate goal of financial independence.

I'm hoping this blog will help me keep track of how I'm doing and serve as a memory marker to keep me on track with my investment activity. I tend to take on too many tasks at work and home and some of my investment plans tend to fall on the back burner.