The stock market can be a tricky place. Recession compressed the market to the lowest point since March 1997. Recovery is now in session. Charles Dow said the market was a predictor of the economy. Let’s see if he was right.
Right now: Europe in a debt mess, China is playing with their currency value, jobs are not coming back fast enough—depressing times. But the US economy is gaining recovery traction and will continue even with a credit downgrade.
The Bull and the Bear are always fighting. Sometimes the Bull is stronger, and sometimes the Bear. But overall, the Bull is stronger. Look at any stock, year by year over the last 10-20 years. The ones that are in business today under their original names have flourished and are valued many times higher than at the starting point.
What does this tell us? Hold and wait it out. This is a storm—wait for clear skies—they will come. And if ever there was a lesson of not to invest with the mortgage money, or money that will be needed soon, this is it.
Recap of overall market performance: the Dow reached its historic high of 14,015 on October 11, 2007. It reached the bottom of 6,547 on Monday, March 9, 2009, losing more than 50% of its inflated value over 17 months.
The Dow’s rise to 10,000 was reached on November 5, 2009, a brief 8 months after the bottom. It took another 5 months to reach 11,000 on April 12, 2010 and another 6 months to reach it again on October 8, 2010, then only 3 months to reach 12,000 on Jan 26, 2011, some 86% from its bottom value.
The Standard & Poors 500 Index hit bottom at 683.38 on March 6, 2009. During the eighteen months prior, the S&P 500 declined some 53% from its 2007 high of 1576. By the two-year anniversary, the S&P has risen 93% from its bottom value.
Who could have thought a market recovery of such magnitude and with such resilience was even possible?
One way of looking at the rise of the Dow is that the market only needs another 2,000 points to pay us back.
This is the attitude that causes us to lose money.
The Dow’s peak of 11,258 reached on April 26, 2010 started the slide to 9,757 reached on June 8, 2010 that marked that bottom. This was a drop of around 13 percent after the former rise of 85 percent for a net increase of around 72 percent.
On a shorter scale, the Dow bottomed at 9,904 on February 8, 2010 before rising in 11 weeks to its peak on April 26.
The first drop in 2007 had valid reasons behind it. The mortgage bubble exploded, and the country was heading into a serious recession. There was a 17-month period to get off the downslide. The April – June drop has taken only six weeks and the U.S. economy is recovering. It is the European economies that are dragging the market down, and as the drop increases and people talk to each other, purposeful selling becomes the norm.
We can only hope this market recovery will be as time-relative to the drop as the first one was. With this dip, many investors have held their stocks, and strong stocks held through this drop should recover soon.
Continue to believe that the Bull is stronger than the Bear.
When the market improves …
I will be picking stocks set, in my opinion, for improvement in the near future. Readers are welcome to read along and see how I do.
I set a price in the morning to buy or sell a stock. There will be some buys and some misses. I do not set the quantity, but will report percentage increase or decrease. The round-trip commission is generally $20.
The Buy price is “at most” and the Sell price is “at least.” Advantages are if a stock opens lower than my Buy price, I get the stock at the lower price, and if the stock opens higher than my Sell price, I get the higher price (overshoot). If the daily range is higher than my “Buy” price, I reconsider buying.
There are times when my price misses the stock, setting Buy price too low, or Sell price too high. There are also times when the stock will suddenly drop, which is why I almost always have a following ‘Stop’ price in the range of 3% which sells the dropping stock immediately.
Sometimes the market will take a step back on its journey forward. Everything needs a rest on a climb. If I feel the market is consolidating, all stocks are down, and my stocks are still good investments, I increase the following Stop price to 5-7%. I am looking to ride the consolidation while being protected from a company disaster. I also try to keep my “missed buy” stocks out there with adjusted prices, in case they drop.
When the market is still jittery, and huge up and down days are still possible, I tend to be very conservative, taking a 1% profit or break-even if I feel the stock picture has changed and will not rise in the near future. I only have to clear the $20 round-trip commission.
If a stock has a down day, even on the day I bought it, I put in a Sell a little above or at the close price. It is easier to recover a $0.20 loss than a $2.00 loss. The $20 round-trip commission is small, compared to my stock investment.
Some of my gains are tiny. The easy thought is to hold out for more. Remember, we cannot tell the market what to do; we observe and pull the trigger when we see opportunity.
It pays to look at the stock futures (foreign market results) and pre-opening stock prices around 9am and adjust the sell prices before market opening.
Trading note: When the market seems to be moving against us, we can look to options for a community prediction how the stock will move. And we can use options to recover our capital.
Example: In early June 2009, HRB was a Buy at $15.69, but dropped to $15.00 (June 23). Call options expiring July 17 showed a lot of interest from $15.00 to $20.00 meaning buyers of these options were optimistic it would rise into that range. Selling a Call at $15.00 would net me $72 per hundred shares and I would be covering my loss. If it rose, my stock could be called away and I would be about even. If it dropped I would lose anything less than $15.69 minus $0.72 per share.
Put options expiring July 17 show the most interest at $20.00 meaning buyers of these options were protected up to $20.00 less the Put cost ($3.90), putting the protection at $16.10 per share.
The option market traders are a lot smarter than me, so I went with them and kept the stock. The outcome was that HRB soared to a High of $17.44 on excellent earnings June 30, when I sold HRB at a great profit.
Be patient. You are the hunter.
| Current | Nov 10 |
SELL ready= |
..*Sold | |||
| Symbol | BUY date | -price | SELL date | -price | ..Chnge | |
| Owned | ||||||
| ANH | Oct 24 | 6.37 | * | Oct 28 | 6.53 | *+0.13 |
| ANH | Nov 03 | 6.25 | * | Nov 09 | 6.33 | *+0.08 |
| ANH | ||||||
| HOGS | Oct 26 | 8.80 | * | Oct 27 | 9.73 | *+0.93 |
| HOGS | Nov 02 | 9.00 | * | Nov 09 | 10.01 | *+1.01 |
| HOGS | ||||||
| LIWA | Oct 10 | 3.95 | * | Oct 13 | 4.61 | *+0.66 |
| LIWA | Oct 19 | 4.41 | * | Nov 09 | 5.62 | *+1.21 |
| LIWA | ||||||
| TLB | Oct 18 | 2.45 | * | Oct 31 | 2.67 | *+0.22 |
| TLB | Nov 03 | 2.59 | * | Nov 09 | 2.48 | |
| Tracked | ||||||
| AM | Nov 08 | 15.55 | * | Nov 09 | 15.48 | *-0.07 |
| AM | ||||||
| ASIA | Nov 08 | 7.83 | * | Nov 10 | 8.06= | |
| BABY | Nov 02 | 8.29 | * | Nov 09 | 8.43 | * |
| CCC | Nov 08 | 15.29 | * | Nov 10 | 14.95 | *-0.34 |
| CCC | ||||||
| CELL | Nov 08 | 10.06 | * | Nov 09 | 9.86 | *-0.20 |
| CELL | ||||||
| ELNK | Nov 08 | 6.94 | * | Nov 09 | 6.88 | *-0.06 |
| ELNK | ||||||
| ES | Nov 08 | 3.83 | * | Nov 09 | 3.91 | * |
| GM | Nov 08 | 24.20 | * | Nov 09 | 23.07 | *-1.13 |
| GM | ||||||
| ITUB | Nov 08 | 18.60 | * | Nov 09 | 18.04 | *-0.56 |
| ITUB | ||||||
| NLY | Nov 08 | 16.46 | * | Nov 09 | 16.37 | *-0.09 |
| NLY | ||||||
| OME | Nov 08 | 10.70 | * | Nov 09 | 10.04 | *-0.66 |
| OME | ||||||
| PHH | Nov 08 | 17.29 | * | Nov 09 | 16.90 | *-0.39 |
| PHH | ||||||
| ABG | Nov 10 | 18.18 | * | Nov 10 | 18.46 | |
| ARIA | Nov 10 | 10.50 | * | Nov 10 | 10.72= | |
| NTRI | Nov 10 | 11.12 | * | Nov 10 | 11.45= | |
This article is worthy of all the great comments already made. I just want to add my two cents into the mix. This is valuable content with dead-on sensible points.
Your article grabbed my attention. I like how well you have expressed your views and how compelling your content is to the reader. I am thankful I got to read this top quality informational article.
If more people that write articles really concerned themselves with writing great content like you, more readers would be interested in their writings. Thank you for caring about your content.
Your information is very digestible. I enjoy your style of writing. Your points are clear and reasonable and I agree with a lot of your ideas. You have a lot of interesting views. Thank you.
I bookmarked this content so I can review it further later. I have to ponder on few of the points you made. I do agree with most of this information.
One thing I really like about informational articles is that they can influence a reader’s thoughts. This article is one of those articles. I am highly impressed with your work and hope to read more.
Whatever you’re doing to write this content, keep it up. Your writing is interesting and I think you’re right on track with your views. I know you put a lot of effort into your work.
Your article must be popular. If it’s not it really should be because you have really loaded up this article with impressive information. Keep up the great writing. Thank you.
Good job at getting your points across here. I am in agreement with you on most and I think this is a great quality article.
I enjoy good reading material like this. It made me think and ponder on many things during the reading. I had to reread a couple of lines because I got so engrossed in this article.
Thank you for sharing your knowledge on this topic with your readers. I, for one appreciate how much work you went to in putting all this together. Thanks a bunch.
Found your web site and decided to use a fast read, not what a usually do but nice one. Nice to see a blog for any change that isn
Thought-provoking articles are few and far between from what I’ve been reading as of late. You have a real gem here. It has really created a lot of thought in me and I thank you.
You have a real talent for putting your thoughts into clear, original content. Your article is easy to read and understand. You have brought forth some really good points that I agree with and appreciate.
Very cool blog!
Your fresh take in this material has a lot of thought-provoking ideas that really took me by surprise. I share your thoughts on many points. You really made me think.
Interesting blog, not like the others! This is the kind of information people expect from all blogs
I hope you always write because you do a great job with informational articles. Your use of solid content with original views is impressive. Thank you for your dedication to your readers and good writing.
I’m glad I found your article. The information is smart and interesting. This is a must-read for everyone. I, for one appreciate your hard work.
I am unable to read articles online very often, but I’m glad I did today. This is very well written and your points are well-expressed. Please, don’t ever stop writing.
You make great use of your words in this article. I am impressed with the valid points of interest you make here and I agree.
You made some really great points in your material here. I couldn’t agree more with you. I hope many people gain access to this information.
You are a really motivational writer whether you intend to be or not. This article has inspired me to become more conscientious about my writing.
I enjoyed reading your informative article and considering the points you made. You make a lot of sense. This is an excellent piece of writing. Thanks for sharing this so we can all read it.
I have a high standard I abide by for choosing reading material, especially online. Your article met my standards then flew right by them. You’ve written a great article with loads of great informational content.
Sometimes I read an article that truly impresses me. Your informative content has done that. I agree with many of your views within this writing. You are good at keeping the attention of your readers.
Good writers are very difficult to find. You have done a great job in finding such an asset and given the freedom to express different views on this interesting subject.
I can’t tell you how much I have enjoyed reading your article. You have this information well formatted and you’ve used interesting and unique content to get your points across.
Such a excellent site you’ve got.
Any reader that enjoys interesting and quality information like me will really like this article. What I like about this article is that it is engaging, intelligent without being threatening and it has well-defined points.
Got some time to undergo all the comments, but I genuinely ended up getting something beyond searching in the actual publish. It was develop into unbelievably useful in my opinion along with, I’m certain. to anybody publishing comments! It’s not normally that 1 could be informed, and in addition entertained concurrently. Most likely you additionally obtained one factor out of writing this report.
I’m very impressed with this engaging subject matter. Honestly, what makes it so engaging is the unique ideas and writing style of the author. Thank you for this useful commentary.
Good blog! I truly love how it is simple on my eyes and the data are well written. I am wondering how I might be notified when a new post has been made. I have subscribed to your RSS which must do the trick! Have a great day!
Great article! This is one piece of information I can understand and agree upon with you. Thanks for keeping it straightforward and easy to read. You are a talented writer who creates high quality content.
It’s apparent you are dedicated to excellent writing. I truly related to the main points mentioned in this writing. This is really great original information.
This is great a great original informative article. I never thought about this topic this way. Thank you for giving me some things to consider.
Very interesting approach. Are you interested in doing guest blogging in our site my name is Chow Etan
Reading your article has allowed me to take my plans and change them with ideas I have never seen prior to this. Now I can make what I had already planned, and make it better.
I have a high standard I abide by for choosing reading material, especially online. Your article met my standards then flew right by them. You’ve written a great article with loads of great informational content.
I normally wouldn’t be able to find such great content as this on other sites. You have done a great job with each unique point made on this topic. Thank you for your hard work.
Your article is great! Your viewpoints are valid and well-represented. This is useful and interesting data that I can appreciate. You are obviously knowledgeable in this area. You kept this content smart and very engaging.
I thought I had a grasp on this topic until I read your article. I was very mistaken. You have taught me something today. Your article really opened my eyes.
You must have a lot of patience to research, plan and write this kind of solid information. Your article has several good observations with which I can relate. Thank you.
I really like your article. I agree with many of the points you’ve written here. This is a lot of good quality information. Thank you.
You have written an article that has started an invigorating debate among my friends. How exciting to stir up such a wonderful debate. Your research is very useful. Thank you.
The quality of this article surpasses many others I’ve read. You have a keen eye for detail and your research was solid on this subject.
Opposing views are a great way to write such an interesting informative article. Your word choices and dictation have made this such an enjoyable article to read, producing quite a thought process along the way.
free play music // Jan 29, 2012 at 7:39 am
Great Blog…
I’m typically to blogging and i really recognize your content. The article has actually peaks my interest. I’m going to bookmark your site and hold checking for brand new information….