Stock Market Risk

[James]

Vic, if you ever stop posting this here, let me know where I can monitor this PLEASE. I would be very interested in how the model works (to settle my OCD mind).

I am finding that the 5.5 is corresponding with some very obvious changes in my holdings. 2, 2.5, 2, 2.5 etc. wasn't really meaningful until I could see sizeable swings on both sides.

 

[Vic]

2-19-03: 5.5

 

[Vic]

2-26-03: 6.5

 

[Vic]

Some may find this interesting.

Click here.

 

[James]

This makes me feel somewhat better about recently dumping 20% of my savings in Treasuries.

I am still hoping for some good results trading.

 

[gwcrim]

I'm not much of a Treasury fan, but I've place a boat load of bonds over the last year or so. Those investors who still haven't begun to diversify out of 100% equities are missing out.

As for trading, it may be the only way to get decent returns out of a market that moves sideways for a long period of time, such as the '70s. Cash and stock dividends are important too.

My short term technical indicators appear to be turning postive. And of course, the short term can become the long term. But you never know where the bottom is until you are past it.

 

[James]

I am watching this trend thing out of curiousity...but to be honest, I am trading a select few stocks and broad market indicators are basically useless for this it would seem.

 

[gwcrim]

I am trading a select few stocks and broad market indicators are basically useless for this it would seem.

80% of the movement of the price of a stock is NOT attributed to the underlying company. It's primarily the market in general and the industry sector. Or to put it another way, 'When the tide goes out, all the boats go down.'

Knowing the overall tone of the market and the industry sectors helps maximize your gains and minimize your losses.

 

[James]

Your particular experience may reflect that but I am not in agreement at this point. It would depend on the stock I suppose.

 

[gwcrim]

Well sure I was generalizing. There's always an exception to a rule. BUT, in the manic market of the last couple of years, knowing when the tide is moving in or out should be of help to anyone trying to make a quick buck or even making longer term decisions.

Haven't you found that the gains you get lately aren't as dramatic as they would have been 3 yrs ago?

 

[James]

I am finding the gains to be more dramatic now. I started trading individual stocks within the past year because I don't trust funds anymore. The annualized return (and total dollars) on the trades I have made have been far beyond anything I have seen from funds or anything else I have done in the past. So I can't really make a valid comparison between what I am doing now as opposed to 3 yrs ago or even 1 year ago.

I re-read my comment and it didn't come across as I intened and I am having a hard time rewording it to see if it comes across better (I have been trying) but I am not saying you are wrong by any means....what I am saying is that the stocks I have been watching/investing in have had price fluctuactions that seemed to be due to the underlying company and not really attributable to broad market activity. Sector specific activity is probably more relevant.

These are just my opinions and I don't pretend to be an expert and I don't do this for a living....I do enjoy talking about it.

 

[gwcrim]

Sector specific activity is probably more relevant.

Though I don't have the exact statistics in front of me, the quoted statement is pretty correct.

If it's not being too nosy, what stocks are you trading?

 

[James]

At this moment, I am in Ford, Flextronics, and Corning.

 

[gwcrim]

Very interesting choices. I guess I could see trading F but it's certainly not a buy and hold prospect. GLW and FLEX sure have potential, though.

 

[James]

Well you get a .1 dividend on F but I never claimed to be using any of them for "buy and hold" :thumb:

EDIT: One of the things I did wrong is that I didn't dump my life savings into corning when it was 1.1. And I still played it a bit conservative when I finally got in at 1.56....but it has paid off quite well and I think there is a lot of potential left. So that one is about 300-400% return for the 7 months I have been in or about 600% annualized. Wouldn't have got that on an index fund or any fund for that matter. The company specific cause in the drop was that they issued a ton of convertable bonds and stockholders went into panic about the disolution effect on the common stock. The fact that fiber optics was hurting already probably didn't help...but wasn't the overriding factor as far as I could tell.

Tyco was another one that I was toying with but didn't think they had as much potential for recovery as some of my other choices. To be honest, I don't even know what has happened with them. Their accounting scandal hurt them, not the market activity.

F is probably going through normal market stuff now, but there are lingering effects of the Firestone/Explorer situation, some recent recalls, and a lawsuit over the Crown Victoria police cars that have been playing with the prices.

 

[Vic]

3-5-03: 6.5

 

[gwcrim]

The following short term indicators have turned positive:

NYSE Stocks Above 10 Wk M.A, NYSE Stocks Above 30 Wk M.A, NYSE High-Low Index, OTC High–Low Index

The long term indicators are still negative.

 

[Vic]

3-12-03: 6.5

 

[Vic]

3-19-03: 4.5

 

[Vic]

3-26-03: 4

 

[Vic]

3-26-03: 4

 

[Vic]

4-2-03: 4.5

 

[gwcrim]

The offense is on the field. It's safe to run plays now. The BIG indicator is positive.

 

[Vic]

4-9-03: 3

 

[Vic]

4-16-03: 3