Saturday, April 19, 2008

Don't wanna fail? Stock market is not your playground

I'm not a sport fanatic. However, I understand that in any game there is an equal chance to failure and success. If you can't appreciate this, stock market is not your play ground.

I never lost any money since I started earning in 1998. I never made any mistake on financial investments. Well, this is not true anymore. I did some investment mistakes when selecting stocks. My losses piled up when I failed to admit my failure. I saw the value of my portfolio going down everyday like water falling from the mountain top. I do not want to sell the stocks for a loss. I held them until I lost up to 30% of my investment. Thats when, I realized that I should let go my ego and admit my failure. Since I had started small with stocks, the mistake didn't hurt me a lot. However, it is a lesson well learned.

If you don't want to loose, stock market is not your play ground. For every stock that you buy there is a 50% chance of success and a 50% chance of failure. By doing your home work, you can maximize the probability of success. But there are always factors that are beyond your control, that may influence your portfolio. Don't wait long enough to admit your failure. Being honest can punish you in the short term but will reward you in the long run.

No Risk No Reward

Did Christopher Columbus discover America by sitting on the couch? No. He took enormous risk by sailing through rough seas with his fellow men. Can we get valuable gold and diamond without miners risking their lives? Without risks, there is no reward. This is true for stock trading as well.

I bought a few Google stocks recently before they announced their 2008 Q1 results. The whole market was pessimistic and were betting that Google will loose. A report from Comscore indicating that the paid ad-clicks decreased in March added fuel to the fire. I took the risk of buying Google stocks at a cheap price. Google gave a pleasant surprise to everyone by reporting a 30% growth for the 2008 Q1 quarter. The stocks increased by about 20% in a single day. Of course, I didn't wait enough to maximize my profit. However, it helped me to make one of my best profits.

No Risk, No Reward. But do not take blind risks. Make calculated risks.

Wednesday, April 09, 2008

Do you look for stock trends?

Have you ever got cold? I'm sure you would have got one. Did you ever notice how it all started? It would've started with a sore throat. The next day you would've sneezed a few times. The third day, you would've got some running nose. If it is a severe cold, you may also get some coughs. If it is a very very severe cold, some may also get a little fever. You would know at least 3 or 4 days in advance, that you are going to get cold. That is called TREND.

Have you ever noticed trends when buying or selling stocks? As a novice investor, most of my early investment decisions in the stocks weren't based on trends. I never computed moving averages. I never plotted a trend line to predict the stock's directions. When a popular stock goes down by 5% or so, I buy it. The next day, the stock would go down by another 5%. The following day, it would go down by another 5%. I've literally seen my capital getting eroded. A trend line or moving averages would help you to understand the stock's direction. Thereby, you can make wise investments. There are several tools available in the market to plot trend lines. You can even use your Microsoft Excel spreadsheet to compute moving averages and trends.

Always, look for trends. Understand, the reason behind the trend and make investment decisions accordingly !

Saturday, April 05, 2008

Mendocino Trip

29th & 30th March, 2008

Are you in the bay area? Looking for a weekend getaway?

Have you been to Mendocino? The coastal city is about 4 hours drive from the south bay. It is a beautiful and relaxing destination. You can linger on the sea shores or hike on the trails along the coast. The views are breath taking.

I had earlier planned to visit Crater lake (inspite of warnings from my friend that it is a bad time to visit). However due to a bad weather forecast in Crater lake, I had to cancel my trip in the last minute. I had always wanted to go to Mendocino, but kept postponing it. So, I decided to go there for the weekend with my family. I booked my stay for a night in Pacific Mist Inn. The cottage had a lot of bad reviews on the forums. However, the cottage manager assured me that there was a management change and they've replaced all the appliances and changed the interiors.

We started from home at 6.30 am and reached Mendocino at about 10.30 am. We took a short break inbetween for break fast. We took the 101 N / 128 W route and that saved us some time. It had rained during the night. The drive was very beautiful as it got closer to Mendocino. We went to the Mendocino Botanical Garden in Fort Bragg. They had nice collections of Rhododendrons. My daughter enjoyed walking in the garden. There were some trails that'll take you to the ocean. But, we didn't hike. We spent about an hour and a half there. We had our lunch (As always, my wife had prepared & packed delicious food). We then went to Pt. Cabrillo Light House. The light house was about 0.5 miles from the parking lot. My daughter enjoyed walking on her own, from the parking lot to the light house.

We didn't go on the Skunk train in Fort Bragg. The reviews were not very great and there was not much value for money. So, we skipped it. Fort Bragg is a more developed city than Mendocino. It is just 10 mins drive from Mendocino and has lot of hotels, restaurants and gas stations.

We then decided to go to Little River. The view of the 'little river' joining the ocean, was nice. We spent about 1/2 hour there. We then went to Albion little river park. We returned back quite soon because there were not much of interesting things to see there. It had a huge campground. May be a nice place for people who want to camp. We then went to the hotel and checked-in.

The manager in the Pacific Mist Inn office gave us a warm welcome. She suggested us a few places to see in the area. She was very helpful. The cottage was facing the sea shore (we got a glimpse of the ocean through the trees) and CA-1. The cottage was old, but the appliances were new. It was neat & clean. My wife prepared dinner. We had our food and slept early. My daughter got up in the middle of the night and my wife (& I?) had to loose some sleep.

We got up early the next day and went to glass beach. It was very cold and windy near the ocean and we had to return back early. There were some beautiful white colored floors along the walk way near the beach. We took a few pictures there. In Mendocino, there were a lot of marigold (dark yellow) colored flowers along the road side. We took a few snaps there as well. We came back to the cottage, packed up things, had our break fast and checked-out.

We then went out to visit the Montgomery Woods State Reserve. However, the drive & the forest were not as amazing as we had thought. We spent about an hour and a half on the drive. We came back and visited Big River. You can see the Big River marching towards the Pacific ocean and finally getting sucked into the ocean. The view was beautiful. We had our lunch in the Big River and then left to the Point Arena light house.

The Point Arena light house was about an hour drive from Mendocino. We weren't lucky enough to visit the top of the light house because it was closed. We took a few snaps in front of the light house and started to head back home. On our way back, we took CA-1. We took a few snaps in some of the vista points. The ride back home was hectic. I felt as if I'm driving from San Jose to Canada. The drive really felt as if it was very long. We finally reached home at about 9.30 pm. We had our dinner at home, cherishing the memories of our short Mendocino trip. My little daughter enjoyed the trip more than my wife & I had enjoyed. This time, she didn't bother us much during the drive. She was comfortable and contended during the drive. We had taken one of her favorite toys (Baby Tad) and that kept her busy throughout :)

Overall, it was very a relaxing trip.

Death Valley Trip

15th - 18th February, 2008

When I first told my colleagues that I'm going to Death Valley, they asked "What is there to see in Death Valley?". I can answer that question better, now.

Death valley is about 8 hours drive from the bay area. We planned for a 3 days trip. I booked a 4WD vehicle (Thanks to the suggestion from one of my college seniors !). It was hard to find an accomodation in Death Valley. So, I booked our stay in Beatty (El Portal Motel). Beatty is about 7 miles east of the Death Valley National Park (~30 minutes drive from Stovepipe wells). My brother joined us for the trip.

We left home on Friday (Feb 15th) and reached Lone Pine around mid night. We stayed in Best Western for that night. On Saturday, we got up early and drove to Death Valley. We stopped at Father Crowley Point for a short break. We then went to Mosaic Canyon. We were quite amazed by the texture of the stones and the canyon. Walking through the narrow trail inbetween the canyon walls was fun.

We reached Stovepipe wells around noon. We then drove to Marble Canyon. Drive to the Marble Canyon was more fun. We had to drive through rough roads, rubbles and stones for about 4 miles. We were surprised to see one lady there who was camping with her dog. There was no one other than her. We had our lunch in Marble Canyon. There were a few hiking trails there. But as always, we didn't hike. We wouldn't have had that adventure without a 4WD vehicle.

We then returned back and went to the Sand Dunes close to Stovepipe Wells. It was nice to see the dunes for the first time in my life :) We spent about 1/2 hour there and went to Ubehebe Crater. The crater was wide and very accessible. We took a few snaps there and went to Scotty's Castle. We didn't take the castle tour. My friends had been to the castle and they told that it was not very impressive.

We drove from Scotty's Castle to Beatty. Beatty is a very small town. El Portel Motel was right in front of the Beatty Museum. It is a very old hotel. Motel 6 in Beatty appeared to be new. StageCoach Casino/Hotel was also pretty decent from the outside. We had our dinner and retired for the day.

The next day, we went to Rhyolite (the ghost town) which was very close to Beatty. On our drive from Beatty to Death Valley we could see the spring blossoms. The view is going to be more beautiful during the mid of spring. We then went to Golden Canyon. The name was very apt to that canyon - it was glittering in the sun. Ganu lost his 10$ glass in Golden Canyon :) We then went to Natural Bridge. We had to hike for about 0.5 mile to get there. We had our lunch there and then went to Bad Water Basin. Bad water basin is claimed to be the lowest elevation point in Death Valley. We also took the Artist's drive which was closer to the Bad water basin.

We then went to Dante's view point. The view of the valley from the Dante's view point was nice. You could get to see the whole salt water basin. We spent some time there and left to Amargosa valley. I wanted to see the Amargosa Opera House & Hotel. All the forums were giving very bad reviews for the Amargosa hotel. It is a very very old hotel and the whole area is kind of deserted (What else can you expect in a desert :)).

On our way back to Zabriskie point, we took the "20 mules team" drive. It was nice. You can drive through in a 2WD vehicle also. We took a rough road to see the "Wall in the hole" but we couldn't find the attraction. So, we stopped after driving for a couple of miles. We reached Zabriskie point at about 5 pm. It was way too early for the sunset. We spent sometime there. It is a nice location. We waited until sun set, took some pictures and returned back to Beatty.

The next day, we checked out and started our journey back home. The return drive was not very hectic. We took several breaks. We stopped at Dinosaur point near I-5 & CA-152 intersection. It was scenic. We reached home at about 6 pm in the evening.

Summer gets too hot and Spring is a nice to visit Death Valley. If you are an admirer of the nature, Death Valley is a must to see place.

Friday, April 04, 2008

Let the tools work for you in trading stocks

What if you buy an RV and use it JUST like your car - to go to work and come back home, and ofcourse, to do some shopping.

What if you buy a big house and just use the living room ALONE for everything, like a studio?

I'm not an exception. I'm registered with Ameritrade for about a year now. I hardly use any of the tools they provide. All that I know of till date is to SELL & BUY a few shares by placing LIMIT orders. However, there is a myriad of options and tools they provide. I happened to attend one of the Ameritrade's training sessions ("Market Trading Tactics"). The trainer told about the common mistakes done by novice investors. He also explained about the tools and services provided by Ameritrade.

Wow ! It is really amazing. The system can do trades when you are sipping your Margarita and enjoying your vacation in Bahamas. The tools like "Trailing Stop" can also maximize your profit and minimize your losses. Tools like Strategy Desk can help you to perform technical analysis before making investment decisions. Well, you don't have to be a computer geek to use these tools. Even a novice investor can understand and use it. I wish I had known this information 6 months back.

I'm not saying that you've to use ONLY these tools. But, use the right tools ... tools that you've access to. You'll save a lot of money and time. Let the tools do all the HARD working. You should just do the SMART working.

Stock Investors are weird !

Well, if you are a common man like me, thats what you would think - "Investors are weird". 3 months back, when the market conditions were really bad, an increase in unemployment rate would push all the major stock indicators (DOW/NASDAQ/S&P500) to the ground. In the last 3 months, Fed/Govt. had taken a series of steps to restore the economy (reduced the interest rates, conducted auctions to pump a lot of money into the system, saved Bear Stearns, approved a stimulus package bill).

Today, the unemployment rate climbed to 5.1 percent, an all time high in the last five years. The recession fears are still lingering. Many of us fear that the economy is already in recession. However, the DOW lost just 16 points and NASDAQ gained about 7 points.

How can this be explained? The more I try to understand the market, the more I understand that I cannot understand the market :)

The investors are really weird. May be, they are wired to be weird ?!