Saturday, January 05, 2008

Are you a short term investor? Don't ever blink !

Imagine that you are driving your car at 100 mph in a 50 mph zone. Will you ever blink? You'll be extra alert and you'll never take your eye out of the road.

Well, you should do the same if you are a short term investor. You should never take your eye off the market. There may be golden opportunities which may not last long. You should act immediately to grab the opportunity. For example, my stocks gained about 8% and came down to 1% gain on the same day. If I was a pro, I would have made use of the opportunity. I've seen Ericsson (ERIC) losing its market value by about 25% in less than 2 weeks - when the company disappointed the investors with its 3rd quarter results. What would happen if you are holding ERIC's stocks. Can you afford to loose 25% in two weeks?

Make informed and not sentimental decisions

How many of you track the market on a daily basis? Do you do your homework before buying or selling stocks? Do you just follow your intuition? Well, intuitions may occasionally help out but not always.

I was one of the few fortunate employees who got pre-IPO stocks from HCL in 1998. At that time, I didn't have any idea about what stocks mean. My colleagues told that "when the company goes public, you can sell them and make lots of money !" :) For quite sometime, I didn't know why the stock price goes up and why it comes down. There were instances when the stock price went down even when the Indian market/economy was good, and even when the company made some top tier customer announcements. Later, I understood that the stock follows NASDAQ's performance. Since HCL is an offshore services company, it is too dependent on the economy of the U.S than the economy of India.

You should keep a close eye on the performance of the companies and the corresponding market sectors. Do not give in for the short term market fluctuations. I've seen investors who get worried unnecessarily and dump all their stocks when there is a bad news. They make purchases when the market is good. Do not just make sentimental decisions.

Robert Kiyosaki says "You make your profit when you buy". It is very true. If you make your "buy"s when the market shows GREEN and sell your stocks when the market is in RED, you won't make a lot of money. Reverse your trading process. Buy it when the market is in RED and sell it when the market is in GREEN. Without risk there is no reward. Understand why the market is in GREEN and why the market is in RED. Make informed decisions.

Economy is a juggernaut

The stock market is driven by economy. Investors get happier when the economy looks good and get worried when the outlook for economy is not good. Often, investors overreact for the good/bad signs.

If you have invested money in stocks, you should carefully watch out for the indicators of the economy - like consumer spending, housing market, unemployment rate, jobs growth, exports/imports etc., You should also time your trades (buy/sell) accordingly. Do not ever make a buying or selling decision without even monitoring the economy indicators.

Make hay when the sun shines

This is an old saying but holds good even for stocks trading. I had completed building my portfolio in November with the stocks from NTGR, BRCM, AAPL and ATHR.

The market was very optimistic before the Fed's rate cut in December. My portfolio showed an 8% ($350) increase in the market value. I was waiting to sell them all, right after the rate cut - hoping that it would shoot up even higher. Some of the stocks in my portfolio crossed the price targets that I had for them. But, I was greedy and wanted to wait for more time.

The Fed announced a quarter point rate cut instead of a half point rate cut expected by the wall street. Wall street became very unhappy and there was a huge sell-off right after the Fed's announcement. I saw the stocks grow by 8% and fall to 1% on the same day. I missed the golden opportunity to make money.

I have been waiting for about a month since then and the stocks never reached that pinnacle.

The lesson here is "Sell the stocks when your target is reached. Do not wait for the stocks to go up even higher"

Thursday, January 03, 2008

52-week low doesn't mean a BUY

I bought Broadcom (BRCM) when it hit a 52-week low of 28.75 in Nov 2007. The company had also announced a stock buy-back program. I was very tempted and bought the shares of BRCM for $1000. The stock touched a new 52-week low of 25.78 in the next 6 weeks. I lost more than 10% in 6 weeks. It was a lesson well learnt. I didn't do a proper research on the company. The market ratings were hold & avoid for BRCM :)

I am eagerly waiting to take my money back. Hopefully, the stock will break-even soon. You should never just use "52-week low" as the ONLY metric to buy a stock.

Arizona Trip - If I had to do it again ...

Well, it was quite an adventurous and relaxing trip. If I had to do this again, I will do it slightly different. Here are some of the things that I will change:

1) I will not plan to drive the RV for a long duration on a single day. I should've ideally landed in an airport closer to Flagstaff/Page and should've rented an RV there. That way, I would've avoided lots & lots of driving. The other option is to camp in the places - on the way to Page. That would have prevented some of the tiresome driving.

2) I will avoid hiking in cold weather with the baby :)

3) Some of the campers have rented a SUV/minivan in addition to the motor home. That way, they can drive around using the SUV/minivan and camp in the motor home during the night. I will consider this option next time.

4) Page is a very beautiful location. You can stay there for more number of days to cover all the places in and around Page. You should specifically visit Rainbow bridge :)

Here is a list of some attractions in Arizona. It may be helpful for some of you in planning for a trip to Arizona.

Arizona Trip - RV Experience

Our stay in the RV was memorable. We didn't miss our home at all. The motor home had all the facilities including bedroom, dining area, couch, kitchen, restroom, bathroom etc., The vehicle also had lots of cabinets to store things. It had appliances like Air Conditioner, Heater, Generator, TV, DVD Player, Microwave, Oven, Dish Washer etc., However, we couldn't find a proper place to store the 2 big suitcases that we had. We had to lay them on the dining table. The motor home that we rented had sleeping area for 8 people (6 adults + 2 kids).

Staying in the RV is fun - but driving it, is NOT. It took me a while to adjust to driving within the speed limits. On top of that, there was not enough pick-up in the vehicle (It had just a V10 engine). The vehicle vibrates a lot when the road is not very smooth (which is typically the case). Maneuvering the vehicle wasn't very hard. You definitely need a person to help, especially when you are taking reverse.

My kid enjoyed the stay in RV, very much. She was climbing up & down, all over inside the RV. My wife & I enjoyed it too. We had the luxury of stopping over anywhere to prepare/warm & have our food. Also, we don't have to look out for a restroom when we are visiting places :) We can also take a nap anytime we want. There were plenty of RV friendly parking lots in Page.

I was surprised to see that there was not much information on the web to fix child seat in RVs. We had to fix the child seat on the couch facing side ways. I was not very sure if that would really help during collisions. My kid was puzzled "why she is sitting in a car seat inside the home". She wanted to get down and walk when the vehicle was in motion :)

During our first night in Page, we had left the water tube connected to the water outlet in the camp ground. Due to very cold weather, the water inside the tube & tap got frozen. We had to then use the water from the storage tank on the first day. The next day, we disconnected the tube and closed the tap in the campground. Inspite of that, the water inside the tap got frozen. We had to then rely on the water in storage tank for the second day as well.

I got 200 free miles per day. I ran over 600 miles in 3 days. So, they charged me an extra $13 for the additional miles (47 miles). If I had to rent an RV again, I would not plan to drive 100s of miles on a single day. The whole fun of renting an RV lies in camping and not in driving.

We had 4 hours of free generator usage every day. It was more than enough for us because of our stay in campground. Campgrounds provide unlimited water & electricity. When you are off the campground, you are in a world of limited resources.

We spent about 1.5 hours cleaning the RV. If we don't leave the RV in the 'original' condition, we had to pay $75 as cleaning charges & $500 for damages. Fortunately, we didn't run into any accidents. I broke one of the knobs in the sewage disposal tube. However, the RV rental agency didn't charge anything for that.

Kachina RV rental was very genuine and I would recommend them for others who have plans of renting an RV in Phoenix area.

Arizona Trip - Day 5 (Sedona & Flagstaff)

In the morning we visited Falling Rocks State Park and Red Stone National Park. We didn't hike a lot. We got nice views of the red rock canyons on the way. We went on a trail in Red Stone National park. My daughter was quite attached to the King Fisher bridge on that trail. She didn't want to come back. We had to forcefully bring her back.

We then visited Montezuma Well, Montezuma National Monument and Tuzigoot National Monument. These are some of the ancient ruins. Montezuma well was made out of limestone million years ago and it still gets water from the hot springs. All these monuments are somewhat closer to each other. You can see them all in about 4 hours. Do not expect to see 'exciting' stuff in these places. If you are a history lover, these places will definitely excite you.

Arizona Trip - Day 4 (RV Return, Papago Park, Desert Botanical Garden)

We cleaned and returned the RV, rented a mini-van from the airport and checked-in to Crowne Plaza Hotel. The whole process took until 2 pm. Phoenix car rental facility is the biggest that I've ever seen. You have to drive for about 2 miles from the airport to the car rental facility. The rental facility was bigger than a shopping complex :)

In the afternoon, We went to Papago park to see the Hole in Rock. The Hole in Rock was nice. You can climb upto the top. We then went to Desert Botanical Garden. The Desert Botanical Garden was not as impressive as I had originally anticipated. You can spend about an hour and a half there. We then came back to hotel.

Arizona Trip - Day 3 (Navajo Canyon Ferry, Wupatki National Monument, Sunset Crater)

We got up early and went to the ferry boarding point in Lake Powell. We boarded the ferry at about 9 am. The ferry took as to Antelope Canyon & Navajo Canyon. The walls of Navajo Canyon was 800 ft high. It was a 3 hours tour and you can get breath taking views of the Canyons. My wife & I enjoyed it very much. My daughter caught up with her sleep for 3 hours :)

We had our lunch and started driving towards Phoenix. On the way back, we went to Wupatki National Monument and Sunset Crater. The Highway 545 (which is off of Highway 89) drive was very scenic. There was Cococino forest on both the sides of the road and it was fully covered with snow. It looks like you have to take the Lava flow trail to see the Sunset Crater. My daughter was sleeping and we had to skip that.

We reached Phoenix at around 8.30 pm. We camped in Paradise RV Resort. Paradise RV resort is a good community and the stay was very pleasant.

Arizona Trip - Day 2 (Glen Canyon Dam Tour & Horse Shoe Bend)

After driving the RV for nearly 7 hours on the first day, I dropped the visit to "Zion National Park" from my plan.

We got up very late. We were amazed by the view of the Canyons surrounding Lake Powell, from the campground. I signed-up for the Navajo Canyon Ferry tour for the next day. Unfortunately, the tour to the Rainbow Bridge was not available. We went to Glen Canyon Dam for the dam tour. Glen Canyon dam tour was nice. The tour guide showed us the interiors and also the power plant. We had our lunch and then went to Antelope Canyon. We took a few snaps of the upper Antelope Canyon from the parking lot. We didn't hike there.

We then stopped over at Horse shoe bend. After a 3/4 mile hike, you get a spectacular view of the horse shoe bend. You can see the greenish Colorado river 1000 ft down. It was quite amazing. There was a sand storm and my daughter got frightened because of the cold weather and the sand storm. We took a few pictures there and returned to the campground at about 4 pm. We stayed in Page for that night also.

Arizona Trip - Day 1 (It started with a bummer)

I had planned to visit Phoenix with my friend's family. However, just one day before the trip, my friend's kid got rashes because of being allergic to a cold medicine. My friend dropped off from the trip. I started to think whether I should still rent the RV or should I just rent a minivan. I finally decided to rent the RV.

On 26th Dec, we got up early in the morning and got ready. We were waiting for the cab for our pick up. We waited until 5.10 am (our flight was at 6.25 am) and didn't see any signs of the cab coming for pickup. I called Yellow Cab and was surprised to hear that the cab will be delayed by 25 minutes. I canceled the cab and got help from my friend to drop us off in the airport. I did a curb side checkin and cleared the security checkpoint. The flight takeoff was delayed by an hour due to some fuel gauge issue.

The flight landed in Phoenix at around 9.35 am. We took Super shuttle and reached the RV rental lot. Eric (RV rental guy) gave me a 1/2 hour training+tour of the vehicle. I picked the vehicle at around 12 pm and went to Safeway. We did some shopping, had lunch and left Phoenix at around 2 pm. I didn't feel a lot of difference between driving an RV and a U-Haul truck.

It took about 6.5 hours to reach Page. On the way to Page, I was stopped by a cop for driving at 56 mph in a 50 mph zone. I didn't realize that I was driving above the speed limits. He warned me and let me go. This is the first time I was intercepted by a police. I was lucky enough, not to get a ticket :)

We reached Page at about 8.30 pm. It took about 30 minutes to figure out where the camp ground was. Finally, we called the support number to get directions. The camp ground was in Wahweap Marinas, facing Lake Powell. It was very cold in the night. I hooked up the connections to the outlets (water/sewage & electricity). We were very happy to get access to unlimited resources :) My wife prepared a delicious dinner. We had our dinner and went to sleep.

Arizona Trip - Preparations

Our office was shutdown for the holidays. My friend and I decided to go to places in and around Phoenix. We decided to rent an RV for the trip. That was the exciting part of the trip :)

We booked tickets on US Airways (through Hotwire). We booked a 29 ft motor home from Kachina RV Rental. We booked the camping ground in Wahweap Marinas, Page. We are all set to leave on the 26th Dec. We decided to go to Zion National Park, Glen Canyon and to a few places in and around Flagstaff/Sedona & Phoenix.