Wednesday, January 21, 2009

Buy on the rumor, Sell on the news

Market always reacts to 'surprises'. Imagine it is Feb 14th, the Valentine's day. You come home in the evening. You bring your wife a beautiful diamond ring and surprise her. Your wife gets so excited and she expresses her happiness and cheer to you. The same thing happens in the stock market. When investors get 'positively' surprised, they send the stock market UP.

Let us see what happens in the following scenario. You tell your wife that you'll bring her a beautiful diamond ring in the evening. But, you come home late, and that too empty handed. What will be your wife's reaction? She'll be very disappointed and you may not even get your dinner. The same thing happens in the stock market too. When investors get 'negatively' surprised, they dump the stocks and send the stock market DOWN.

When a 'rumor' becomes 'news', the element of 'surprise' is gone. Investors buy stocks when there is still 'surprise'. They dump stocks when the 'surprise' is gone i.e., when a 'rumor' becomes news (or, when they are 'negatively surprised'). If you want to really ride with the wave instead of riding against the wave, "Buy on the rumor, Sell on the news".

Stock Analysts are JOKERS

Zig Ziglar, the powerful motivational speaker says "Media has successfully predicted 36 of the last 3 recessions". If analysts are smart enough to predict the market, they'll be making BILLIONS every year and enjoying their time in Bahamas or Jamaica. But the reality is, these analysts work for pay checks.

For every analyst who predicts that a stock will OUTPERFORM, there will be another analyst who'll say that the stock will UNDERPERFORM. Whenever an analyst increases the stock rating, the stock goes UP and whenever an analyst reduces the stock rating, the stock comes DOWN. Doesn't this make the stock movement so PREDICTABLE? If 'something' is very PREDICTABLE, it is easy to 'control' or 'manipulate' that. If something can be easily manipulated, what will smart minds do? They'll just MANIPULATE them. Stocks are not an exception. Stocks are MANIPULATED.

There is also one more reason why you shouldn't blindly follow the analyst guidance. Most of the firms, for which these analysts work-for, run some hedge funds or investment funds. So, there is lot of 'selfish' motive for the analysts to give a 'guidance' that is in favor of their investment portfolio. Novice investors like you and me get wiped-off of our savings.

How do you know that the analysts who gives guidance for a stock is 'smart' enough? You don't get to see or interact with them. You don't know about their skills or academic performance. Who knows, the analyst might have even 'failed' in his/her 'financial valuations' papers. There is no way to judge the performance of these analysts. Then, how can we trust these JOKERS?

Listen to the analyts. But don't follow them or their guidance. Do your own research and use your judgment. Don't ever buy a stock just because some XYZ analyst recommends it.

Can we really make money in stocks?

Can we really make money in stocks? The answer is YES. At least, thats what the whole world believes. Otherwise, there won't be so much fuzz about stocks and stock market. If you haven't really made any money in stocks, there could be only one reason for that - "You haven't fully understood the stock market and its dynamics".

Have you always felt that you are in the wrong side of the COIN - when you bet that the market will go up, the market really goes down; when you bet that the market will come down, the market really goes up. Well, you aren't alone. Many of the investors feel the same way. But, don't feel dejected. Stock market doesn't always go in one direction. Whatever goes DOWN, comes UP and whatever goes UP comes DOWN. You have to just identify them before the rest of the market identifies it :)

If you make smart decisions and show lots of discipline, you'll definitely make lots of money in the long run.

Cash is Trash or Cash is King ?!

Cash is Trash or Cash is King ?! Well, it depends on whether bulls rule the market or bears rule the market.

When the market goes up everyday in high gear, people say "Cash is Trash". Cash does not get inflation adjusted. So, owning a stock is far better than just stacking cash under your pillows.

When market continuously falls down like a knife, people say "Cash is King". Investors normally come to this mind set only after loosing all the cash they had in hand. Initially, when the stocks fall down by a few percentage points, investors use all their available cash to 'average down'. However, once they run out of cash and when the market continues to drop down, they start to realize the importance of "Cash".

So, what do we conclude. Is it good to hold "Cash"? The answer is, "Yes" & "No". The money that you would need in the next 5 years should not be in the stock market. However, in the long run, stocks prove to be appreciating in value and also get inflation adjusted. So, it is wise to invest the 'long term' money in the stock market on 'healthy' stocks.

Sunday, January 11, 2009

2008 Road Trip (Day 9) - Return to SJC from DFW


28th Dec, 2008

We got up early and left hotel by 8 am. We drove for about an hour and a half to the Dallas Airport. Dallas Airport was designed differently. There were a few entry points for departures and you have to know your airline departure gate well in advance. We wasted some time to find out our departure gate (Well, the AA employees misguided twice before we found our correct departure gate). I dropped everyone there and went to return the Rental Vehicle. It took a few minutes to find the way to the Rental location. The Rental location is located a few miles away from the airport.

We boarded the flight on time and reached SJC at around 2.30 pm. We came home by 3 o'clock.

Wow! It was a very memorable trip. Despite the heavy winter weather, we managed to see a number of places. My little one was co-operative throughout the trip. She had her meal on time and took her nap on time. My wife did a wonderful job of preparing our healthy & tasty meals. Mother nature co-operated with us too. Thought it was a bit cold, it never rained when we were sight seeing.

This is the FIRST of its kind trip, for us, on many aspects:

- We got Honda Accord as the rental vehicle
- We did sight seeing continuously for 9 days in a row
- We visited 8 states in 9 days
- I drove 2.2K miles, as a single driver
- We took lesser than 100 photos per day
- Museums & State Capitol Buildings dominated our sight seeing places
- We stayed in 9 different places for 9 different nights

You can find my trip planner here - 2008 Road Trip Planner

2008 Road Trip (Day 8) - Oklahoma City, Oklahoma


27th Dec, 2008

We started our trip at the Oklahoma City National Memorial. We spent nearly 2 hours there. They entry fee was $15 and it was a bit over priced. They have done a wonderful job of creating a lasting impression about the atrocities of terrorism and the trauma that the people of Oklahoma have undergone.

We had our lunch and then visited the Oklahoma Capitol Building and the War Memorial. We went to the Oklahoma Museum of Natural History that was located right adjacent to the Capitol Building. We spent nearly 2 hours there. They museum reflected the history of Oklahoma and they also had a good collection of Indian artifacts. There is a cafe inside the museum. This is our last official sight seeing spot in the Road Trip.

We left the museum and drove to Ardmore, Oklahoma for our night stay. There was a Garden of Lights in Ardmore. We checked-in to the hotel, freshened up and came out to see the Garden of Lights. I was surprised to learn that there was no entry fee. This is the best I've ever seen and it was almost a mile and half long. On the way back, we had our dinner in Burger King.

2008 Road Trip (Day 7) - Little Rock, Arkansas


26th Dec, 2008

We started our sight seeing with Central High School. It is located in a residential locality. They have a visitor center close to the school. The school was very majestic and has a historical importance. It looks like the school is being used even today. We spent an hour in that area and then went to see the State Capitol Building. After spending sometime there, we went to the Old State House Museum. It has a good collection of items used by famous people from Arkansas. Of course, Bill & Hillary Clinton dominated. The entry was free.

We then went to the Riverfront Park. Little Rock is not a 'little' city. The name was quite deceiving though. The Riverfront area was quite busy. You can walk down the Big Dam Bridge and take a Trolley tour of the city. My wife & daughter spent about an hour in the Children's Discovery Museum. My daughter liked it very much. The Riverfront park has a lot of play areas for kids. You can spend nearly 1/2 a day in that area.

We drove to Oklahoma City and stopped at Fort Smith, AR on the way. We visited the Fort Smith National Historic Site that served as a Jail & Execution Chamber for the Indians, during 'those' days. We spent an hour there and headed to Oklahoma City.

2008 Road Trip (Day 6) - Memphis, Tennessee


25th Dec, 2008

This is a day full of drive. We started at about 8 am from the hotel. There was a 6 hours drive from Birmingham to Little Rock, Arkansas. On the way to Arkansas, we stopped in Memphis to see THE PYRAMID. We stopped at Elvis Presley famous Sun Studio, but it was closed for XMas. So, we skipped the Civil Rights Museum also (assuming that it will also be closed). We took a number of breaks during the drive.

I was surprised to see almost all the shops closed on Christmas. Normally, I've seen that the shops will open in the evening during holidays. There were no open shops in the evening too. The roads were also completely deserted. You hardly see any people walking on the streets during Christmas. We made several trips to Grocery stores and were disappointed every time. It was unique experience. Fortunately, Walgreens was open. We could buy some milk there.

We watched movie and had dinner in the hotel room.

2008 Road Trip (Day 5) - Atlanta, Georgia


24th Dec, 2008

We had our breakfast and went to Atlanta Botanical Garden. This was reasonably good, even in winter. We spent nearly 2 hours there. There was a kids 'discovery' area in the park. I believe, the Garden would be at its best in Spring/Summer. There is also a small train ride ($2 charge). The conservatory had a number of tropical and desert plants.

We had our lunch and went to Atlanta downtown. The downtown was quite busy and a bit more spacious than other downtowns. We parked our car for $10 in the Georgia World Congress Center. There were cheaper parking areas available closer to the Centennial Olympic Park. We walked to the CNN Center. The CNN tour was closed for that day. We were disappointed. The CNN Center was HUGE and beautiful. I wish we were allowed to take the tour. There is a food mart in the first floor and many folks were sipping their coffee and watching news on the huge flat screen.

We then spent some time in the Centennial Olympic Park. They had a very tall Christmas Tree in the center of the park. There was a also skating area in the park, that was quite busy. They had a musical water fountain which was a attraction for kids. We spent about an hour in the park and went to World of Coca Cola.

You should learn from Coca Cola about how to charge people for advertising your brand. World of Coca Cola is a brand building center for Coca Cola. They had a number of age-old Coca Cola advertising posters and artifacts. There is also a demo of Coke manufacturing process. You get to taste 65 different varieties of Coke products across the globe. It was quite amazing to see that Coke has THAT many flavors. You can also carry a complimentary Coke bottle to home, at the end of the self-guided tour. We spent nearly 1.5 hours there.

We headed to Birmingham for our night stay. We stayed in the same hotel that we stayed on the 22nd night.

2008 Road Trip (Day 4) - Birmingham, Alabama


23rd Dec, 2008

We had a good sleep. It was very windy and cold in Birmingham. We got ready, had our breakfast and left hotel by 8.30 am. We also washed our clothes in the hotel laundry facility. We went to the Temple of Sibyl in Vestavia Hills. It looks like this is a replica of the Sibyl Temple in Rome, Italy. We spent a few minutes there and went to the Vulcan Park. Vulcan Park is a nice and calm place in the busy city. We spent about an hour there, learning about Birmingham's history. From the top of the Vulcan building, you can get a glimpse of the whole city. It looks like the Iron Industry was so popular during the WWII times.

We then went to the Civil Rights Museum and learned about the atrocities that the black has gone through in America. The treatment of black people was quite similar to the treatment of the 'untouchables' in India. They've renovated the museum and the artifacts are really good. We also spent sometime in the park opposite to the Civil Rights Museum.

We then had our lunch and went to Desota Caverns Park. It was about an hour drive from Birmingham. There were hardly any people there. They had lots of play structures too. They charged about $18 per person. It is a very old cave and most of the cavern formations are dormant. But, the cavern was HUGE. They had a musical light/water show about Jesus Christ inside the cavern (after turning-off all the lights). That was well done. The chocolate fudge served in the visitor shop was delighting. We, in fact, bought 1/4 pound of fudge and I ate most of it :)

We drove to Atlanta, Georgia for our night stay.

2008 Road Trip (Day 3) - Jackson, Mississippi


22nd Dec, 2008

We got up early and left hotel by 8.30 am. We went to the Jackson Zoo. We realized that all the animals were also celebrating their Christmas holidays. Yes... they were all gone on vacation. We saw a few Ostriches, a couple of Zebras, a Deer. There were some peacocks too. We had to leave early because it was VERY cold and there were not much animals to see.

We then headed to the downtown. We visited the City Hall, State Capitol Building and the War Memorial Building - all by walk. Since it was very cold, we decided to go to some museum.

We visited the Nature and Science Museum in Jackson. It is a must-to-see place, especially if you have kids. They have Dinosaur miniatures and they look very real. We spent about an hour there.

We then went to Mississippi Petrified Forest. It is a privately owned property and they had a small walking trail. There is nothing significant about this forest. But, you can walk around the trail to see some of the petrified trees.

We left Mississippi at around 5 p.m and reached Birmingham, Alabama in the night.

2008 Road Trip (Day 2) - Shreveport/Monroe, Louisiana


21st Dec, 2008

We had a very nice sleep and got a bit early, today. We had our breakfast and left hotel by 9 am. We first went to the Gardens of the American Rose Center. But it was also closed for the winter :)

We then went to Barnwell Memorial Garden. We spent nearly 2 hours in that area. We went to the Eldorado Casino and spent sometime there (Hey! I made $1.50). There was a Riverview Park near to the memorial garden. It was a bit cold, there. It looks like there will be cruise ships during the regular season. We had our breakfast also in that area.

We then went to see "The Duck Pond". The Duck pond wasn't that attractive. But, there were lots of play structures for the kids. My daughter had an amazing time there. She almost climbed on all the play structures. There were also lots of picnic tables. It is a nice place to spend the afternoon.

On the way to Jackson, Mississippi, we stopped at Monroe. We went to Biedenharn Museum & Gardens. This place was beautiful. It looks like people will visit this place for taking professional wedding photos. We spent about an hour and a half in this place.

We visited the Aviation Historical Museum of Louisiana. It is a small-renovated musuem that houses lots of World War II aviation pieces. There were no huge aircrafts, so we were a bit disappointed.

We had our Starbucks coffee in Pecan Land Shopping Mall. My daughter went on the carousel and she enjoyed it.

We drove to Jackson, Mississippi and reached there by 8 pm.

2008 Road Trip (Day 1) - Dallas, Texas

19th & 20th Dec, 2008

We reached SJC by 2 pm to catch the 3.15 pm American Airlines flight to Dallas, Texas. The flight was delayed by 2 hours and departed only at 5.30 pm. No wonder why these airlines are in a deep mess. AA charges you for even the check-in of the first bag and doesn't even provide a snack during the flight. We reached Dallas at around 10.30 pm. We rented a car, purchased some groceries on the way and reached our hotel by 12.30 pm.

We had our breakfast and left hotel by 9.30 am. Our first sight seeing place was Ft Worth Water Gardens. It was in the Ft Worth downtown area. The Water Gardens was unique and awesome. We spent about 30 minutes there and left to the Ft Worth Botanical Garden. The Botanical Garden was almost deserted. I believe Winter is not the right time to visit this place. My kid was sleeping and so, my wife stayed in the car. My brother and I went inside. They didn't charge us inside the Botanical Garden. They charged $1 for the conservatory. The conservatory was maintained well - it had mostly tropical plants.

We then went to Reunion Tower. The tower was closed for maintenance. We had our lunch in that area and then went to Fair Park. Fair Park had all sorts of recreational activities. Some of them were closed for winter. We went to the Planetarium and to the IMAX movie theatre. The IMAX movie theatre was the best that I've ever seen. It had a half-dome screen. They showed an inspiring movie (Amazing Caves) about folks who go out on cave exploration. It was wonderful.

We started from there and drove to Shreveport, Louisiana for our night stay. We reached Shreveport by around 9 pm.