Week 4

Before I get into my this week's investments, I would like to say what I personally think about macro economic's future and long-term profitable investments.

• First of all, economy is supposed to go up and down, that's how money is made on the market. A psychology behind spending money always stays the same. In 2008 when the financial crisis began, no one cared about spending money on self-actualization aka luxurious items, everyone understood the true value of money. Now, 4 years later, people start spending, stocks starting to climb, earnings recovering. People started to lose their conservativeness. But, as the book "Rich dad, poor dad" pointed out : "The stock prices are too high, when cab drivers start talking about the market." That is a good and simple indicator. Don't spend your time in a cab tweeting. I advise talking to the driver, see what he knows. 

• Secondly, about a year ago I found a perfect chart describing the macro economy. Bigger picture : http://steadfastfinances.com/blog/wp-content/uploads/2010/06/Psychology-of-Market-Cycles-via-Wall-Street-Cheat-Sheet.jpg

Now I suppose we're at the beginning of the blue. How? Everybody is speaking about the crisis in Europe, especially Greece, Portugal, Spain and Italy. But first, they're quite a little part of the world, and secondly, I believe that they will overcome this. This is why the EU was created, to stabilize the economical situation of different countries, which in this case are neighbors by the location. I believe, Greece will have its huge bailout from their debt, Italy has already overcome theirs and I also think Spain and Portugal should take Argentina's example and default, that would be smart thing to do. But that would be a little too extreme and probably won't happen. Moreover : http://www.slate.com/articles/business/moneybox/2012/05/spain_greece_and_portugal_should_quit_the_euro_it_s_the_only_way_to_save_their_doomed_economies_.html

• All in all, the market is supposed to go up and down and the news surrounding it is simpy the noise. But hey, guess that's why the 10% get it right every time and the rest 90% always lose money betting on the market too late. The reason economy will not crash in the moment is that we are ready for it. Before the 2008, most of us didn't expect any crisis to come, because we were literally living in a bubble. Also, I think it might be happening even faster and faster in the following years, because that's how the trend has been so far. It's not impossible that the green peak might be coming already in 2015.

Now, a few words about the future developments. Well, two months ago I learnt about something interesting concerning the energy market in the next decade. More precisely, alternative (green) energy.

• 15 years ago, the first electric cars, that could actually hit the market someday, were introduced. The biggest shareholder on the energy market, Exxon Mobile, bought the license. Now, license applies for 20 years. That means, 5 years from now the per cent of electric cars on the market will rise quickly, because other companies will have unlimited right to sell those. Sure, Exxon has loosened the strap, so the first lithium-ion battery EVs (electric vehicle) could enter the market. Probably Exxon wants to see, how the market reacts to the high price of EVs. That's why all the EVs right now, have a simple lithium-ion battery, which makes it expensive. In the future, the battery technology will develop fast, because already now there has been invented nano batteries, which are able to contain much more energy than usual lithium-ion batteries. I found a simple paragraph comparing the lithium-ion and Carbon Nanotube (one of the many possibilities of nano batteries) :  
• The major difference comes from a typical lead acid battery providing 12-15 kW-hours of electricity or a range of 50–100 miles, where the CNT lead/lead-acid battery will deliver 380 miles distance between charges. This battery could also be recharged in under 10 minutes. The typical lead-acid battery has a recharge time between 4 and 10 hours
• This is a huge step and probably there's more coming in 5 years. That's why I would recommend investing in hybrid car or electric car manufacturer. For example, Nissan, Mitsubishi, Opel, Tesla. Or, though more risky, invest in the battery companies and there's a possibility for them to grow dozens of times. But there's a pretty huge risk involved, because they have decreased rapidly during the crisis. For example : Altair Nanotechnologies, A123 Systems.

Now let's get to my investments this week :

ALXA -2% the pharmaceutical company that had decreased 14% and then had good news about the FDA approval on their new drug. Still hadn't been making its growth, but I think increase will come because it has a rising trend with a certain main-line and channel-line. 

ALXA 1-year history

KIM -1.1% still has the trendlines, basically same chart as last week, between the trendlines. Waiting for a 2-pt aka 10% rise in next 2 weeks. If won't happen then I'll just "sell the fucker" so to speak.

L -3.2% same thing as KIM. 

They're both waiting for the fiscal cliff accouncement. It means the US. government will decide how much the wages and the taxes are going to change in order to improve the macroeconomy. The Republicans and Democrats will find the compromise by the end of this weekend, but good news is that president Obama has softened his conditions so the 'cliff won't be that rapid'. The whole market movement on the new year's first couple days depend on that. Moreover : http://www.huffingtonpost.com/2012/11/09/obama-fiscal-cliff-speech_n_2102168.html

Next :  I'm going to buy Wellpoint (WLP) - I like its P/E of 7.94, which means it's underrated by the market. Also I like it's fluctuating price. I just might wait a little bit, so also the triple bottom would be complete, because so far it has been working well for me, so there's no reason not to trust that. Also MACD is should rather be crossing zero-point before the rise not be on the top.

WLP 1-year chart

More about technical analysis next week!

Happy new year.

Week 3

Sex, drugs and rock'n'roll . Why am I starting my post like that? Because entering these three words simply helps me to get to top pages in Google search. There's a useful marketing tip.
Now, about investing this week :
First of all, my brother gave me advice of putting everything, that is a little next level for part of the readers or maybe just some extra text, in italic.
Though I was still looking for stocks with break points (from fall to rise) with technical analysis, I must admit, it was hard to find. At least on NYSE (New York Stock Exchange) and Nasdaq (US. Technology Stocks). So I went to search for good fundamentals. Fundamental analysis is all about the earnings and management. The basics of fundamental analysis : http://stocks.about.com/od/evaluatingstocks/a/Fundanatools1.htm


Now, the P/E is a tool for measuring if the stock is overvalued or underestimated. 
If P/E is
below 10 - underestimated and if you can see the potential for earnings growth in the future before the rest of the market, it's smart to buy.
10-20 - the market has valued the stock correctly in the moment and liquid (bigger the liquidity, bigger the chance to get your money out quickly and smaller the chance of losing your money through bankruptcy)
over 20 - the market has overpriced the stock and you should be careful, because if the market realizes the mistake, stock will face a correction (very important notion, which means that sometimes the news and current good financial situation starts to boost people's ego and makes them feel safe financially. Just like the boom 2006-2008. It means when the stock is overpriced and probably gonna fall, then investors say the correction is about to emerge.)

Perfect example of how easy it is to make money basically without any indicators, just research :
An investor named Chris Camillo, who wrote a book called "Laughing at Wall Street", where he talks, how he turned 20 000 $ into 2 000 000 $ with three years.
In estonian language it's possible to read here https://fp.lhv.ee/news/4668783
All in all, all he did :
1. went to clothing store with his wife, where he found a line with 150 people waiting and after couple hours they all got informed that in the whole country, the new collection is sold out. But there was nothing in the news, so the market didn't now nothing about it. Mr. Camillo made his conclusions and bought the store's stock. With 48 hours his money had been tripled.
2. the pharmaceutical company's new drug had failed some clinical tests and investors lost interest. He kept talking to the specialists and reading the company's reports for a couple months. He understood that though all the negative results in the past, the drug will pass all tests and bought it for 2.95 $. A month later, it costs 20 $. "The illusion has become real"
All I'm saying, keep your eyes opened.

Now let's talk about my last week's investments :

• I made a huge mistake by selling NKE (Nike) too early. I only earnt 0.8%, but the day after I sold it, Nike profits tops estimates and shoots up 6.1%. Another certain mover is always stock's earnings beating its estimates. Also, the retro Air Jordans came into stores and store lines where huge and that hit the news. Probably is gonna rise a little because of the good news and all the fuss.  But be careful, because NKE has P/E of 23, which means moving into risky zone there.
• JNPR made its 2-week rising (triple bottom) and probably gonna slow down now. That's why I sold it, made 5% profit. JNPR P/E is 56, which means it's overrated and probably is gonna fall in long term. It's a smart move to get out.
• A has the same case as JNPR and made 6.6% profit. But A has P/E of 10, so it's liquid (The ability to convert an asset to cash quickly. Also known as "marketability")
• KIM is +1% in the moment, which for 3 weeks is not very productive. But I'm holding it because MACD indicator (the lower one) favors it. But I will keep being watchful, because it has P/E of 55

What is MACD indicator? Video is the best way to learn this http://www.youtube.com/watch?v=k9nds4OpA2I. 

If the blue (MACD) and green (Signal) line crosses the 0.0 (zero point) and blue line is above green line, it means the stock is bullish. But when these two cross each other and blue line is gonna go under a green line, the stock turns bearish. 
Bull market - A financial market of a group of securities in which prices are rising or are expected to rise
Bear market - A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining. As investors anticipate losses in a bear market and selling continues, pessimism only grows.

• Now, L has an P/E of 18, which sounds promising and not that risky, which is good. Though it's -1.45%, I will hold it, because the MACD indicator tells me to. It's the same case as KIM. Just gonna post the graphs : 

Now, what am I gonna buy next?
I simply chose from the stocks that fell the most last week and found :

• ALXA is a pharmaceutical company that got FDA approval to its agitation drug. But in a funny way, with the last day + after hours trading it has fallen -20% to 5 pts., which I don't get. Though EPS (earnings per share) is negative, the MACD shows bullish market. It's the biggest risk I have taken so far, but I'm willing to try.

There has been a huge fuss about 'fiscal cliff' all over the news. It means that in the beginning of 2013 the taxes will rise, so companies suffer. But, same time US. is decreasing its debt, which is a very good sign to macro economy. In conclusion, I believe that it might effect the stock market for a first couple a months, because the earnings decrease marginally. But everything will go on as it is, because in long-term it helps US. economy.

Good page to learn investing for an intermediate investor, everything about technical and fundamental analysis :
http://stockcharts.com/school/doku.php?id=chart_school/

Have a good christmas, next week, new post!

Week 2

2nd Week

The end of this week the market indexes (S&P, Dow and Nasdaq) have fallen 1%, which is a pretty agile falling. The reason is a fiscal cliff aka the Budget Control Act,  starting 31 december 2012 midnight. Easiest explanation for The Budget Control Act I could find : Among the laws set to change at midnight on December 31, 2012, are the end of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would take a larger bite, the end of the tax cuts from 2001-2003, and the beginning of taxes related to President Obama’s health care law.
 In summary, businesses pay taxes to health care. Which means, they lose money. Which means, traders start selling and price decreases. Now, what we did here, is called fundamental analysis. It is mostly based on overall state of economy, companies management and balance sheet. Techincal analysis, which I'm testing in this blog, is simply trying to predict the stock's movement and is not that much affected by company's results .

Now, let's see what has happened with my portfolio : 
In total (in 2 weeks) : 
NKE -0.58% . Will sell, because it hasn't worked out as I hoped and there might be coming a fall and a triple bottom. If the movement hasn't been as predicted and it doesn't seem to be going any better, sell the fucker. There's no point just holding your money there and just hope for the situation to get better. Probably it'll get worse. Of course dumb luck might make the stock go up, but that's a rare occasion.

KIM +0.16%; nothing to say about that

A +4.07% - a week ago it was -1.25%

Stocks bought week ago : 

JNPR +2.19% - triple bottom; has risen as presumed and probably gonna sell next week, because in a couple a days the movement will stop

L -2.05% - bought it because of the famous head and shoulders indicator. though it hasn't moved according to that indicator, I will still hold it because at a large scale's uptrend it will bounce up from channel line (below) soon and when it does, I will sell it immideately. If the stock hasn't been acting as predicted and has fallen fast then before "selling the fucker" try to analyse and stay calm. There's a quote about it in Wall Street : "First lesson in business is don't get emotional about stocks - it clouds your judgement."

Guess this is it for the week. Won't be buying anything new next week. Chill.

Week 1

I would start by saying that I have created this blog to study trading with the most sufficient and the most risky securities - stocks. With this blog I can keep record of my trading history and give new knowledge to the followers. Also, keep in mind that out of all the investors who actually have a profit, the average profit is 13% a year. I will try to beat that.
NYSE :
I bought a week ago :
NKE at 97.48pt, which has risen 1.14% in a week. Reason for buying? It shows double-bottom revearsal indicator, which also means it should rise to 106pt with couple a weeks.
Try to notice the similarities of the graphs.

KIM at 19.26pt, which has risen 1.77% in a week. Reason for buying? It was about to bounce off a channel line line, which also means it should rise 5% with couple a weeks.

Only difference with KIM-case is that it's a uptrend. But never trust trends for too long. As they say : "Trend is your friend until it bends."

The third purchase, A,  didn't go so well, I must admit. In fact : I bought it at 38.29pt and it has fallen
-1.25% in a week. Also that has been bought because of the double bottom revearsal (NKE is the example). I still believe in volume increase and that it will break through the red line and will establish a 5% increase in a month.

Estimates for the next week :
I have bought JNPR, because it has a clear triple bottom revearsal which is a more secure form of a double bottom. Expecting a 5% increase in 1-2 weeks. Because it's a stock with a average volume and market cap.
Also, L , because it has a famous head and shoulders indicator. I expect 3-4% a month, slow sustainable growth.

More from those next week.
Check out finance.yahoo.com , where it's possible to find all the needed information about most known stocks around the world.