Wednesday, September 30, 2009

October Cometh

Well -- this was a fine month indeed.

I doubt it will ever be quite so easy.  I traded back in 99-'00 -- the net bubble days.  I'm guessing many younger traders didn't.  It was so easy back then -- stupid easy -- like it is now.

When this bubble ends, it'll end abruptly, without warning.  It could have started today.  The Fed can't keep the game going indefinitely.

Many of the stocks I rode to glory like CSGH.ob are massively overextended and put in terribly bearish candlesticks today.  I sold about half my CSGH.ob the past two days but I really don't want to hold through a 30% draw down.  I might though.  It's a long term holding.

BSPM.ob had a massively bullish candlestick though.  I sold some but now regret it.  But everything looks toppy.

Some great traders I follow really seem to be more about "instinct" over some kind of formalized trading strategy.  They're good at sensing things and pouncing.  Or reversing course.  Some of the good traders I follow have recently raised cash levels significantly.  So have I.   They are sensing the volatility.  Today was a good example...  lots of whipsaw and a red day -- back to back.  

Look at the $VIX chart:$VIX&p=D&yr=0&mn=9&dy=0&id=p83158616956

If that were a stock -- I'd buy it -- it's right on the cusp of a huge breakout.  I tried shorting on Monday and it was a disaster but once again -- I was merely one day early.  I usually just panic too early.

All in all, I'm kind of exhausted today.  I feel like taking a day off.  The volatility is making me edgy.  I feel like every stock is a big trap waiting to suck me in.

I still would like to make one big day trade this week.  But maybe I shouldn't push my luck.  I will just be patient, that's all.  I don't need to be trading.

Some names I like for long term at nice levels:  EGMI.ob     I will buy more if it tanks.  Great story.  But right now -- I'll just be patient and see if the market provides any slam dunk set ups I can take for a short term trade.

Daily Charts

 Lately it seems, all the big volume days are down days.

 Definitely feeling cautious here.  Although I expect a decent enough finish on last day of quarter.  But today is a real failure for bulls.  There are lots of sellers out there today.  I doubt they go away tomorrow.

Get Cautious

Not a great day -- I made several very dumb moves again -- fortunately for minimal losses.

I've had several great days in a row.  It's very easy to feel 'blessed' and go out and buy any old sack of shit stock and assume it will rise like recent winners.  That never happens.

Market is bouncy and unpredictable lately.  My take on short term moves has been perfect, as long as you did the exact opposite of my calls.

My 'pump' screen is very red here.  Today is not a good sign -- the dollar is down hard but the markets still can't rally.

For the most part, though, I do best when I mostly ignore the markets and focus on my stocks.

ENDP on my own

I really have not found anyone that like ENDP on the web.

It's a big position in my managed account.  It looks cheap.  I do know a little bit about them.  I know Percodan and Percoset are big sellers but might lose patent in a few years.  I know Lectec is suing them and JNJ for patent infringement on some kind of patches.

This is one of those value names that stays very low I suppose because the growth is limited.  HITK seems to be the 'expensive' looking name that is outperforming.  I liked SEPR at 17 too -- even though I couldn't find anyone anywhere that liked it too.  Eventually SEPR got the buyout at 23.  I'll trust myself on ENDP.  It's one of the only ideas that came purely from my own research/screening procedure.  My target is around $30/share.

still going

BSPM.ob  did a little hop.

My people's pick me a winner once again.  I know very little about BSPM.ob   Basically what I know is: they are a drug company in China.  But once again, the power of the net provides another big win.

My Favorite Favorites...

The stocks I own list is ordered, more or less, by the names I like the best to 'worst'.  The last few names are stocks that I still love -- but may only be short term holds so they may not be on the list long.

If by chance someone were to buy based on my holdings, I recommend you do some research first obviously and as usual: I make no recommendations.  You could lose everything.

I've already made over 100% on CSGH.ob.  It's definitely much more risky now.

And INSM is definitely very risky.  Perhaps I'll list my purchase prices so people can see when I got in.

Tuesday, September 29, 2009

The Power of the Net

I doubt there's anyone even reading this blog.  But if there is, you should.  Look, there are very few super gurus out there and those that are super are probably not blogging and if they are, they're probably charging $50/month.  What's up with that?

What I do is browse through about 20 different sites each day.  I keep track of about 30 or 40 good investors that post on various sites.  Then I do my own research and select what I think are the best ideas.  Right now, the smartest people I follow very much like Chinese value microcaps.  In general, I think value investing offers the most reward with the least amount of stress so I like to stick with value.  I also like to trade but my trading tends to get me into trouble.  However, the next group of really successful investors I follow are active investors.  So I tend to allocate the bulk of my money to value stocks and play around with the rest.

Today I sold my CPQQ.ob in my trading portfolio for over $900 profit.  I held it for less than a week so I met my goal for the week.  I made a lot more of course in my longer term holdings.  My mom's portfolio had a monster day today, despite being 50% in cash and the indexes down.  Those China microcap names were huge.

In fact, I usually feel kind of sick to my stomach after making so much money so fast.  I feel like I'm doing something illegal.  I also feel like tomorrow my entire portfolio is going to drop 50%.  I don't have the right psychology to press my gains.  I sold a chunk of CSGH today to lock in the gains.  It's still a big position.

But the point I want to make is that all my success is owed to other people.  By following so many small time traders, I become a much more effective investor.  The whole Internet works for me.  And I work for you.  All you have to do is read my ideas.  It's really that simple.  The synergy of the net is awesome. Twitter is the best tool for traders the 'net has ever created and what's so great is that all of it is free.  Wall Street is run by thieves who screw their clients over, chisel everyone for fees, pay themselves big bonuses, and cry for bailouts when they fail.

Fuck Wall Street.

Together, us little guys with $5 grand or $100 grand or $1 million can outperform every year.  We don't have to pay those fuckers a dime.  And the more we work together, anonymous bloggers or friends or whatever, the more we can win.

I'm never going to start charging (like anyone would pay).  I'm not even going to set up those stupid advertisements on this page.  This is just a personal journal in a public space.  Despite making a half dozen mistakes already in public, I can already feel myself thinking a little clearer.  Maybe you can too.

Anyways, I'm rambling.  Tomorrow I'm going to spend most of the day with my kid so I'm just letting things go.  Not surprisingly, my portfolio often does even better when I'm not around to place stupid bullshit trades like SDS and QID.  (Never again!)  Good luck to you too.  Let's finish this year with a blast of fresh profits.

sold TTES

Hey, I made about $150 bucks -- so I bonafide daytrade for real profits.   Woot!

Still holding CMLS which is also up.  Woot!

INSM flat
HOGS - down further than my exit earlier

 I am smoking this market like a big fat doobie.  And no, I do not smoke doobie.  But seriously, I am friggin' SMOKIN' today.  I owe it to all the people I follow on Twitter/yahoo/i-hub -- whether they know it or not (they don't know it).

Compliance Plays?

A guy I respect on Twitter suggests buying names off Nasdaq Compliance tickers names like AXL and BZ and many others that have jumped several hundred percent since receiving notice.

I must admit I had bought CRDC then sold for a small loss -- at 1.20  -- it was in danger of delisting.  Then 2 days ago they receive a PP  and the stock has jumped 50% from where I sold it.  All happened in about two days.

I checked the list of non-compliant names and it just so happens I own two already that are on the list:  INSM and ROIAK.

 ROIAK received its letter last October but INSM's notice is only about 2 weeks old.  I added more INSM to my managed portfolio.  I'm very intrigued about INSM.

update: checked out a few charts, quite a few tickers popped strongly the very day the Compliance Note came out.  So perhaps quite a few people are playing this game.  It's clearly no slam dunk.  Some issues stay down for months and lose another 50% before finally rising.  I'm sure quite a few go BK and aren't on the list anymore.  Something to think about for sure...

Next Favorite:

 CSGH.ob was my favorite stock and largest holding (still is)

 But now that it's run a bit, my favorite holding is LPIH.ob -- because it has a much longer way to go.  But it will require some time, as all good value microcaps do.  I have no fear about this one.

TTES to go

entered TTES at 19.65 with a rather tight stop.  Oversold value play.  I get fair value around $30 assuming very low growth.  Of course, my version of DD is very cursory and not rooted in what you might call... education.

Still, this might be one that PMs want to show in their bag for the quarter.  It's already traded 96k shares today which is a lot for this microcap and it's a little green, which is more than I can say for the markets.

 Obviously, it appears I should not have dumped HOGS, but again, I must warn you that my short term trading is incredibly bad.

 On my list of short term plays is HITK which I never bought... now up a buck from the open (naturally I never bought this one), ROIAK, and CMLS (which I bought and am up a small amount).

 The CSGH.ob though -- lordy -- is a monster.

 Markets down but RTH, C, BAC, AIG green -- shorts need a lot more selling if this is going to stick during portfolio dressing season.

Schizo Markets?

A lot of people are seeing divergences in stock prices versus bond prices.

The market seems schizo.

Does it?

Question:  Will there be a lot of deflation or inflation in the future?

If I were a popular blogger, the comment section would be filled with dozens of comments -- all arguing both sides.  This question has believers on both sides.

Thus: a schizo market makes perfect sense right now.

keep the winner

sold HOGS for small loss (under $100)

keeping CMLS because it's acting well (up $300 so far... )

red markets kind of negates a lot of daytrading ideas (which I'm not very good at anyway).

Having one of the best days in a while though because CSGH.ob is my largest position and it keeps blasting higher.

I think CKGT.ob may be ready for a blast too, but this one is not as loved at the moment.

gotta go with the flow

I bought CMLS and HOGS  -- smaller positions for very short timeframe -- one or two days here.

Both breaking out.

CMLS was mentioned a while ago by someone I follow -- it's up on big volume today... a radio name that probably can benefit from GCI's good news.  I was going to buy more ROIAK but there's no volume.

HOGS is a value play I've always liked.  I think it's fair value should be in the low 20s.


ECG rising rapidly after making a few adjustments in my thinking.

I bought 2k HOGS in managed account at 15.  I expect this to be an end-of-quarter blast.  Let's see if I can pull a fast point on it.

Short Term Catalyst Gauge

I woke up at 6 AM with an idea.

I have no formal way of measuring short term market action but it wouldn't be that hard to put together a simple measuring system each morning, adding positive factors, subtracting negative factors and seeing what the result is.

Let's suppose we just add up all the positive catalysts and say 10 or more means strong rally, 5 is neutral and less than 5 is a down day.

There's no way to create a precise system, but the point is, a crude gauge is better than none at all.  Looking back at Monday, here's what I might have done had I been paying close attention:

End of Quarter Mark-up:  +4
Markets already sold off last week, SPY near support   +1
Yom Kippur low volume, easy to push things higher  +4
XRX and JNJ merger news      +2
strong dollar      -1
Japan / China markets were weak     -1

  I'm sure you could add other catalysts... these were just the major ones off the top of my head and +9 is exactly what we got, if not a +10 rally on Monday.  Okay so here's what I've got so far for Tuesday:

End of Quarter Mark-up:  4
heavier volume coming:  -1
MBIA downgrade:         -1
Sequenom blow-up:      -.5
Asia markets up:             1
Slightly toppy condition due to yesterday's rally:  -.5

It's still too early but so far my crude gauge is at two for Tuesday.  However, new catalysts may come into play at any time.

Strategy:  End of Q mark-up is the most powerful force right now and it's probably why the biggest winners yesterday and possibly today will be previous winners.  Stocks like RINO, WFMI, GMCR, HITK, AAPL  and everything else near new highs are either going to go higher or stay flat.

On the flip side, now is not quite the time to buy RIMM which may be dumped by those wanting it off their books.

My ideas: Possibly HITK although I also like HOGS, also near a new high, or CPBY -- both value China names.  Obviously with my new Gauge showing a big fat zero, today also might be a good day to catch a FAZ move, considering MBI is a problem child.

Anyways, perhaps there's a way to formalize my Gauge... the fact is, I've never really tried to measure the markets each day like this.  Perhaps I'll create  a section on the sidebar of the blog so I can quickly update it.  Also, it needs a cool acronym.  Maybe just  Equity Catalyst Gauge -- so like an ECG, it measures the pulse of the market.  Yes, ECG it is!

Monday, September 28, 2009

How I Learned To Stop Worrying And Love the Markets

It's irked me that debt-laden companies have far outperformed value names with strong balance sheets for the past 6 months.

But really -- this makes sense.

We know the U.S. is insolvent.  We know the only way out is through inflating assets and destroying the value of the dollar.

Companies with huge mounds of cash are only going to lose value as the Fed prints and prints.

Companies like AIG that are essentially nothing but one big IOU become more valuable each day as their liability of U.S. debt shrinks.

I get it now.  It's kind of a sick game the Fed is playing.  I suppose in the future somehow millions of jobs will be created and everything will be all right and we can get through this.  The Fed just does not care for the down part of business cycles anymore.

For now, my theory that the market must come to its senses is dead wrong.  I know the market is tied to the dollar.  Some think the dollar may rise soon.  But it can't if the Fed says no to deflation.

Really -- it's just a matter of your willingness to drink the Kool-Aid.  I think I'll take a sip.  It'd probably help.

update: And now that I think about it, if this is true, than ROIAK is the mother of all strong buys.

Monday Recap: A Terrible Win

Bottomline:  Yes, I made good money today on my long term holdings.

Virtually all my short term moves were wrong however:

bot FAZ went down
bot QID went down
bot SDS went down
bot ROIAK went down
bot INSM went down
bot CHIO - stayed flat
sold TWGP went way up
sold APWR went up
sold a little CSGH - kept going up

Yes, that's impressively bad.

 I lost even more in the inverse ETFs for my Mom.  However, again, end of day, her portfolio was up over $23,000.  So you have to look at things in context.

Still if you can make good money and literally do nothing right that day, that's saying something.

The reason I did not lose mega-bucks is because the heart of my strategy is deep value investing.  This stupidity with the inverse ETFs is a lesson I keep having to learn over and over again.  It's embarrassing to admit.  I know I lose with those things 90% of the time.  I need to go to Inverse ETF Anonymous.

But all in all, at the end of the day, it was a good day, so I'm not going to beat myself up any longer on losing a few hundred bucks hedging any otherwise awesome portfolio of China value goodness.

I still have the SDS, never got stopped out...  I guess I'll take some more beatings tomorrow.

I'm like Gretzky

I'm pretty hedged in the managed portfolio although market showing nothing but strength.

I think I'm skating where the puck is going to go.

Either that or thin ice.

Hedges Growing

Just realized my managed account is 50% cash, and 15% in inverse ETFs (with close stops)

All I've been doing there is selling and buying FAZ (like a dope).

And the account is still up 20 grand today.  Friggin' nuts.

Yom Kippur

Jews are in temple today.

Therefore, today is the only day you can be sure smart money is not buying.

Beware, and be wary.

Mini Follows

I've now taken 3 postions -- small ones -- based on other people's ideas.


They are all essentially value microcaps.  The key to microcap investing is obviously patience.  Something I am working on.

A few people I follow like CHIO, one of them was/is a big fan of RINO.  Needless to say, he's a good person to follow.

I am a bit conflicted since the markets themselves are very extended and John Hussman is more bearish than he's ever been.  Plus the dollar is staying up.  And the markets are probably rallying on oversold conditions plus Yom Kippur light volume plus end of month dressing.  So a lot of short term reasons to go up.  But not  a lot of reasons to stay up.   I'm keeping my small position in SDS and a bigger short position in my managed portfolio.  

 I sold a little bit of CBPO.ob which has been a big winner in my Mom's portfolio.  UUP is going to call the shots... mostly I'm seeing very little fear but nowadays, the markets can turn on a dime.

I still prefer to panic first, even when there's nothing to be scared of.  It limits a lot of profits, I know.  I'm working on it.

Horrible Moves

Made some horrible moves.

the TWGP I sold in the morning went straight up.

the QID I bought went straight down.  So did the FAZ.  And the SDS.

So I bought some INSM and ROIAK.  But they haven't done anything.

So you'd think I'm an idiot.  But not really.

CSGH, ENDP, LPIH, TIII and OCNW are all up a lot and the IRA is nicely green anyway.  But I gave up a nice chunk of change because I panicked.

I still think this rally is crazy.  I pay too much attention to charts and news that I shouldn't.  Still, it's not like I went "all in" on FAZ or QID.  (I lost about $250 total on both).  I still have some SDS with a wider stop (and bigger loss).

As for ROIAK and INSM -- I bought a little bit of both.  Neither I know too much about.  I'm buying them because some other people I trust like them.  Some other people I trust liked RINO but I of course, did not buy that one.  (Actually I did, I just sold it a while ago for small profits.)

So basically, I'm having a great day as an investor and a horrific day as a trader.  As I said, I'm a terrible short term trader.  Probably the worst.  If I could just stop myself from trading, I might actually make a lot of money one day.

Panic First

I tend to develop fits of panic now and then.  Today I was convinced we were ready for a huge drop.

Not surprisingly, I was completely wrong.  However, I still decided to go ahead and panic anyway and sell a bunch of positions.

First off was TWGP.  That was a mistake and I took a nice loss, though reasonable (.5% of my IRA).  Probably should have waited but I realized it was a mistake for various reasons.  Fortunately, I have big wins in other names to offset.

I went ahead and bought SDS/QID even though I almost always lose with these names.  And sure enough, I'm losing.

 My favorite names continue to be  .ob China micro caps like CSGH.ob and LPIH.ob

Well, I'll take my losses in the hedges I'm sure.  I panicked first.  Sure, there was no need to panic (as of this writing) but I'm not afraid to panic first.  Maybe that makes me a bad trader.  Probably.  But it's in my nature.

Not Surprised On ASPM

When you see a buyout -- like ASPM up 55% on Covidien's $12/share offer, many traders probably think -- I wish I could have known about it.

Actually, I'm not surprised.  One of the blogs I follow had a write-up on ASPM about 17 days ago.  The author outlined why ASPM was undervalued.  He even suggested that ASPM could be a buyout target for a company like COV (the only buyer named in the article).  Unfortunately, I passed on the idea.

But at least I'm following the right people.

Sunday, September 27, 2009

Ominous Undertone

Some traders are born to short stocks.

I am terrible at shorting.  It just never seems to work out -- completely against my psychology.  And yet, I keep finding myself sucked in by the allure of making money when the markets drop hard.

I can't tell you how many times I have told myself: Do not short stocks ever again.

Well, once again, I am feeling the urge, the powerful urge to get into SRS or FAZ and lose a quick grand or four as I buy the bottom, average down, and sell out at the top (bottom) of the range.

But there's something ominous on the horizon now.  I can feel it and the futures are already deeply red even though the markets already sold off last week.

Definitely some ominous developments out there... take your pick.  The fact that the Fed is not going to be able to buy back long-dated Treasurys in bulk anymore... leading to higher rates... is good enough for a massive exit into $USD.  The Fed needs this to happen to keep the 10 and 30-year bonds from collapsing.

Remember when you first learned how to ride a bike?  Your Dad pushed the bike behind you and then when you got the hang of it, he let go and you rode down the street in all your glory?  The Fed is about to take its hand off the markets.  But I think the market is more likely to crash into the curb and rip its need up on that broken beer bottle lying in the street.  Not a pretty sight.  Time to pay very close attention.

I've been scanning the 'nets all day and there's an ominous undertone that's about to turn into a blaring siren of panic soon.  I think it's okay to panic.   As long as you panic before everyone else.

Goal for the Week

My goal this week is to make at least one excellent day trade or short swing trade for $500 or more profit.  To accomplish this goal, I will need to be very patient and wait for the market to provide the ideal entry.  I have a few tickers I'm watching like CMLS, CPBY and a few others.

However, the markets are still extended and might not be so generous this week.

Saturday, September 26, 2009

Latest Ideas

I went through several ideas this Saturday.

One fellow who I follow on Yahoo who I have determined has a fair amount of knowledge like the radio stocks CMLS and ROIAK. Here's a write up from another blogger who likes CMLS:

There are several other people I follow who like ROIAK in particular. My read of the charts confirms there is some support for both of these names. They kind of scare me because of all the debt. CMLS earned about .35/share last qtr., not bad for a stock at $1.57. However, book value of -$6.00/share is not good.

Still, I did a quick DCF calculation. If CMLS can earn $1/share next year and grows 5% for the next 10 years... it's worth $3.75 today. So I can understand why this guy like CMLS. You have to assume there won't be a double dip recession and drop in ad revenues. You also have to have the balls to buy a stock with -$6.00 book value. The last candlestick was one of those 'dragonfly' sticks, the low of the day just touching the 20 day MA. So technically I like the way this ended on Friday. (I read a book on Japanese Candlesticks so I like to refer to them every once in a while because it makes me sound super knowledgeable.)

I do not own any CMLS. I'm not sure I like this idea. Shouldn't I wait for the very best ideas? The ones that your gut says you should buy? My gut is not so excited about CMLS but maybe it's worth a trade, especially at the current price, with a stop below the 20 day MA. I might commit a small, 2% position. I'm more comfortable trying to grab $500 - $1000 in a swing trade than taking a big position. I have plenty of cash sitting around.

My review of general indexes is that the market is tired and wants to rest, so I'm not sure CMLS will go up in such an extended market. On a scale of 1 - 10, buying CMLS on Monday rates about a 6. Maybe a 7 depending on premarket action. What do you think?

I Will Follow

I live in Maine. I was an English major. I never worked on Wall Street.

Look, there are a dozen reasons why I should fail. The odds are stacked against me. I've been trading for 3 years with limited success. But I have begun to turn the corner a bit this year. But naturally, everyone is up huge in 2009 so chances are, I'm not actually doing anything special.

Nonetheless, I'm going to tell you my secret strategy that has helped me improve my performance this year. There were two big steps:

1) I admit I know very little about small cap investing.
2) I am willing to follow those who do know more than I.

So what I have done this year is change my perspective. Being a lonely trader in Maine means I'm at a big disadvantage. But what if I could hire, say, an unlimited number of analysts, pay them nothing, and have them constantly feeding me their best ideas every single day of the week?

Well, I can.

I am now fully harnessing the power of the Internet by following the "best of breed" investors via the world of social networking. Each day I browse through the discussion boards at Yahoo, I-hub, and Twitter, paying close attention to those people who I have flagged for their past picks. I then do my own cursory study of recent filings, and finally, consult the ultimate partner - the charts - to determine if I should follow along.

Now I know most of you probably do the same thing, but honestly, I've never seen anyone so blatantly admit that their entire strategy is based on following other people's ideas. Especially people I don't know personally. Many traders have big egos. They want to be in control of their lives. They don't want to have bosses. They certainly don't want to be followers.

I will follow.

Of course, I am still the boss. Look, I have to sift through dozens of ideas each day. I have to decide what to buy, how much to buy, when to sell and when to add more. I'm still working on those aspects of money management. (For the most part, I tend to allocate around 5 - 10% of my portfolio to anyone one idea. I usually hold no more than 15 positions at any one time. I almost always seem to be holding around 20% cash or more.)

But for the most part now, 95% of my picks come from the 'net.

What have I come up with recently? (next blog)

Back to Journaling

Thought I'd restart this. It's been a very long learning curve for me. I'm not cut out for daytrading but I found I could make some profits if I took my time, did a lot of research, then did a lot of waiting.

I manage an account for my mother. It is now over $1 million an I'm very proud of this accomplishment.

But let's get down to business. What do I own now? Mostly small cap China names. I own:
CSGH.ob LPIH.ob LLFH.ob CPQQ.ob NEP APWR TWGP AXPW.ob and a few others.

My take on the charts right now? Markets are simply far too extended and need to 'chill' to wring out the excess speculation. However, the above companies are very cheap. It's important to think like a business owner (Buffet-style) and not get caught up in what the "markets" are doing. The market is now, more than ever, very short-term focused. This leads to strong trends that can feed on itself and lead to big runs, both up or down.

Good traders who use technical analysis can win, but I think they have to work way too hard and take on far too much risk to succeed. By focusing on value, I can accept drawdowns and usually win in the long run. But allow me to reveal my new secret strategy that I employ. (next post)