Double Journey

I woke up to find that the market is rallying because we lost only 240,000 jobs in the month of October.  The market reacted by going up 200 points in the Dow.

240,000 jobs is an awful number.  6.5% unemployment is high when compared to where we have been in the last decade.  There are now 10 million people who are considered unemployed.  This is the same number of people in the state of Michigan.  The scary part, it really is going to get worse.  Like I said in my last post, there are more and more employers announcing layoffs.  So this will easily get worse before it gets better. I don’t expect depression like numbers, but I do expect unemployment to continue to rise through the end of the year.

The play here, fade the rally.  For those who don’t understand it, it basically means you should start selling your stock into rallies because the general direction is down.  You are getting a short term bounce, so you should use it to your advantage.  There is one caveat here.  I think the market could easily rally depending what comes out of Obama’s economic summit.  If he came out and gave news that was very investor friendly, like he would extend the capital gains rate past the 2010 expiration, I can see the market having a violent rally upwards.  These types of moves are why most investors should stay out of this market.  It just isn’t a market that amateurs should be messing around with.
Sphere: Related Content

I’ve done some deep thinking this weekend about a lot of different things.  One of the things I thought a lot about was this site.

I started this site out with the stated goal that I wanted to take my money and find some way to double it within a year.  As any regular reader has realized, this journey has been sidetracked for any number of reasons, most notable of which is that my situation in life has changed considerably in the five months since I started this journey.  Back then, I had all the time in the world as I was voluntarily unemployed and was rather enjoying it.  But being the workaholic that I am, I admit I was itching to get a new job and start on the next challenge.

That challenge came much sooner than I could have expected, and it flipped my world upside down causing me to move back to LA.  So here I am now, three months later, and barely made a dent in my Double Journey.  So what now?  Do I pretend that I can find some way to do this in the few months that I have left?  Do I just abandon the whole idea and move on?

Well, I can’t just quit.  And to be honest, I really do like blogging and  running this site.  I’ve learned a few things, even learned a few things that have helped me at work, and I plan to continue this site.  However, I probably need to refocus the site.  I need to come to grips with the fact that short of taking the money and betting on black, I’m not going to find a way to do this in the time frame I originally laid out.

So I will keep doing what I’ve been doing.  I’m going to continue to blog and I’m going to continue to find ways to try and make money.  I’m just not going to put on an artificial time line of a year to go do it.   Is it going to take me two years, five years, ten years?  I’m not sure.  For those who have come along with me so far, please continue to do so.  I will find some way to make this happen, and I could still use all the help and encouragement I could get.  I’m just not going to make it my main focus.  I’ve actually done well in terms of making money by not trying to make money.

All my life I’ve focused on working hard and doing a great job with the belief that money would take care of itself.  So far, it has.
Sphere: Related Content

So I had to buy a refrigerator for my new apartment. Despite living on my own for the last decade or so, I’ve actually never owned a fridge. There was always one in every apartment I rented. This unit didn’t have one, so I had to go out and buy one.
It actually took me a real long time to decide what to get. You see, I’m just not use to buying big ticket items. There are very few times I’ve ever spent over $500 on any one purchase. I had considered just getting a cheap fridge and saving the money. Why get a good fridge when this isn’t a real permanent option and I will in all likelihood move within a year?

The counter argument of course is that I hate buying things that I get rid of after a short time only to replace it with another item. You end up spending way more money than if you were to just buy the better item in the first place and you are incrementally happier with that purchase for the life of the product.

This is part of the reason that this journey will prove and has proven so difficult for me. I am not use to buying things and getting rid of them quickly. I do things for the long haul, and this short time frame is just foreign to me. Well that and the fact that I barely have any time to sleep much less think about how I’m going to make money.

Somehow I managed to equate the stock market with buying appliances.  I really must be some sort of finance geek.
Sphere: Related Content

Yesterday was free trading day at E*Trade. Being that I want to do some short term trades, it would have been a great day to just get in and out of stocks today and hopefully catch a few bucks this way. However, I’m not going to trade while I’m at work, so this really wouldn’t have been possible for me. That being said, I was tempted. But as MoneyNing correctly points out, you shouldn’t let a promotion make you make an impulsive investment. So I’ve stood to the side as I haven’t had the time to properly investigate any stocks.

One thing I do like to do is to look at the days top gainers and losers to see if there is a trade built around them. Sometimes, a stock pops for very bad reasons, or drops for the same reason. One stock that caught my eye was CAKE, The Cheesecake Factory. I’ve not been a fan of this stock for a long time. Yesterday, it went up because hedgefund manager Nelson Peltz has decided to take a position.

I’ve always been boggled by Cheesecake Factory. The place is ALWAYS crowded despite the fact that the food is somewhat mediocre and pretty overpriced. It has a lot of choices, but one thing I have learned is that more choices is not always better. I would love to short this stock. I think it may go up slightly from here, but I don’t think that Nelson Peltz buying into this stock is going to keep this stock up. He also bought into Wendy about a year ago, and well, that stock hasn’t done so hot.
Sphere: Related Content

As often as I can, I’m going to try and talk about Just One current event and how I would play that event in the market.  I’m  going to try and be as concise and possible each time.  So if you want the one piece of news you need to know that day, this will be it.  More often than not, it will be a financial story, but sometimes I may just talk about something completely random.

Fannie Mae today announced that it will cut it’s dividend by 30% and also  sell stock to raise capital.  Fannie helps finance almost 20% of all homes in the United States.  They also announced a significant loss for the quarter and had a relatively bleak outlook for the housing market going forward, signaling we have not quite hit the bottom.

Why is this the story of the day?   I think it has tremendous impact on the rest of the financial sector.  First off, companies hate lowering their dividend.  Doing so means that Fannie Mae is very serious that it needs to raise capital and maintain liquidity.  As bad as the housing sector news has been, I think its going to get worse from here as the rest of the nation catches up with the slumps in Florida, California, Nevada and other hot housing markets.  Fannie is down after hours and I think it has more to go.  I do not think you buy in.  I do not think the financials are done bottoming (but it is coming soon).  I stay out for now, and wait for some further drops.
Sphere: Related Content

Next week I will begin to put my $20,000 into the stock market. I have let it be known that this type of trading will be a bit unusual for me as I’m not used to getting in and out of positions in a relatively short time frame. While I’m not going to follow any hard and fast rules, these are the general guidelines I plan to follow.

• I’ll have no more than four or five positions at a time.
• I will stay in a position on average about a week or two but may hold on to some positions for a few months.
• I will find stocks that I think have a strong fundamental story, but I will only be in stocks that have strong technical indicators to suggest a short term rise
• I will short if I have to, but it will generally not be part of my game plan. Shorting can be very difficult and you can easily lose your shirt if you aren’t careful.

Please do not try this at home I’m playing with real money, and things may get ugly. I’ll give a week by week recap of how I’ve done and what my plan is going forward. Each stock that I pick, I’ll give to the full reason why from both a fundamental reason and a technical reason. Sometimes, I may not have totally sound reasons, and I’ll explain that too. Picking stocks can take a lot of time as can starting a new job, so it’s going to be hard to try and balance everything out and still come out on top. Expect the first pick sometime in the middle of the week and we will go from there.
Sphere: Related Content

Just some quick thoughts on the market that opened this morning.  I’m watching it somewhat closely so that I can find my first trade which I will do this week.  Not quite ready to do it yet, but soon.

Two stocks I’m watching today.  The first is ETrade.  Still not interested in buying more of it at this point, just want to watch.  But it had a big announcement today that  Citadel investment has invested $2.55B.  For that money, Citadel got a lot from Etrade, including 17% of the company.  The deal looks bad from a shareholder perspective, but it’s good that a large fund is taking a stake in Etrade.  These funds don’t do this to lose money.  They do it to make lots of money, so it does give some hope to Etrade investors.  Still don’t buy the stock here though.

Dell actually looks very interesting to me.  Again, I don’t think I buy here, but there is probably going to be some action here after the bell.  Dell is going to have a conference call today, something they haven’t done in a while.  Michael Dell has retaken the helm and PC sales have been strong for the last quarter.  I think Dell surprises to the upside.  It has been strong as of late, but I think with strong numbers, Dell can push through the $30 resistance which has held it down for years (much like MSFT temporarily pushed through its resistance).  I think it has $4 of upside, maybe $1 of downside.  Not bad.   Will know what you should do here in about 3 hours.
Sphere: Related Content

After doing some serious thinking (didn’t I say I always think a lot after talking to my friend) I’ve decided to make a slight course adjustment. Like any journey, you find things on the way, and new obstacles are presented to you which will make you rethink your strategy. A little more than two weeks in, I’ve had both happen to me.

The first, and probably most significant thing, is that I’ve decided to take a new job in Los Angeles. While I’m very excited about the opportunity, it greatly affects my ability to execute on my strategy for multiple reasons. I had actually planned on taking some more time off from the working world. Partially to just take a break, partially to get this project up and running. I had been interviewing with a couple of companies without any real intention to take the job. I was doing it to keep my interviewing skills sharp. Ideally, I wouldn’t have even considered jobs until after the first of the year. But when the right job comes along, you have to take it, and it was too good of an opportunity to pass up.

Of course, that means I have a lot less time to come up with my strategy and to execute it. Active trading is out the window as there is no way I’ll be able to monitor stocks closely enough to get in and out of positions when I should while simultaneously starting a new job. That doesn’t mean I’m not going to put my money to work in the market, I just can’t take the same approach I would have.

There is more data to suggest this is the right course of action. Despite the appearance of inactivity with the money, I’ve actually been monitoring the market and testing a few of my strategies without putting my capital at risk. Most of my strategy would have been positive (which would be good considering how down the market has been in the last month) but it would not get me close to what I need to do. It was a short time frame, so that doesn’t mean too much, but at the same time I know I can’t do this with a full-time job on top of it.

Despite this, THE DOUBLE JOURNEY IS STILL ON. I’m not one to put out a goal and then stop before I accomplish it. I will still attempt to end up with $40,000 on Dec. 18th 2008. I’m just going to have to find a different way to do it. I’ll get it partially through the market, but it is going to be a much smaller focus than it would have been otherwise. This site will have a slight change in tone. I still want to keep it up, and I still plan on blogging regularly about my progress, but in between my ideas I will focus on some other topics that hopefully you will all find more interesting. I love finance, I love talking stocks, but in the end, it can be a dry read.

The secret to a great blog, and great writing in general, is to write about what you know. If you write about something you are passionate about, and you write it well, people will come read. I’m passionate about a few things. My relationships, money, technology, basketball, and of course my job. I think I’ll leave my girlfriends and friends out of it, since I’m not so sure I could tell people how I’ve been able to get so lucky in this department. Technology has been done in a lot of different places and I don’t think I could do better than Engadget or Gizmodo. We have already been over the money idea. Tyler already has a basketball blog and will tell you it’s hard to keep up. Besides, I might throw something at my screen if the Lakers keep losing and I’m writing about it. Since I just bought this computer, and I love the huge monitor I got with it, I want to avoid that situation.

That leaves me blogging about my job and my career. I actually end up talking to a lot of my friends about their job and I love to provide job advice. I’ve been relatively successful in this part of my life and feel I have a lot to offer in this area. Since I’m recently unemployed, and felt I had a pretty successful job search, I will start off with that and see where it goes. I think its a subject with a lot of interesting areas to explore from finding the right job, getting the offer, and dealing with headaches once you arrive. Since I and so many of my friends struggle with these issues on a daily basis, I think it would be at the very least, entertaining and informative.
Sphere: Related Content

Today I had lunch at what anyone with a website would consider Mecca. More appropriately, it would have to be called Mecca Northwest, since I didn’t actually make it down to Mountain View. I didn’t go there to learn any secrets, or to find a job, but rather to have lunch with a friend. This was the “friend” who convinced me that it was a good idea to come up to Seattle. The last few weeks, with the biting cold we have been experiencing, I’ve been evaluating the wisdom of this decision. More about that later.

Google seems like a pretty good place to work. Food everywhere, no doubt I would gain weight if I worked there. They even had a massage chair, which almost convinced me to hand over my resume. Too bad they don’t have a place for a Microsoft Program Manager (than again who does? It’s a job that seems to only exist at Microsoft).

I always enjoy talking to this friend. Whenever we talk, I walk away having learned something or having something to think about. Today, we discussed this site a little bit, but mostly in the context of trying to do something outside of work. It’s obviously something I think about a lot, thus the reason for this site. I realize that it would certainly be possible to get rich doing what I do for my day job, but I’m not sure it would happen as fast as I would like or be as fun as building up something on my own. He of course commented that he would never do what I was doing (I didn’t think I would either) it was certainly good that I was doing something.

Of course, I don’t want to do this strictly through trading, but it is where I’m starting for now. If I can somehow make money in some other capacity, whether it being developing a widget or selling lemonade on the side of the road, I’m certainly open to do it. I’m just not sure how successful I will be selling lemonade on the side of the road in Seattle when it is 30 degrees outside.
Sphere: Related Content

I’m really tired of the media trying to make it out as if the market is in horrible shape. Every time I turn on CNBC, there is some expert talking about doom and gloom in the markets. Now there is no doubt that certain parts of the market are bad, particularly the financial sector. My own long-term portfolio has taken a beating since I own ETFC as well as some energy stocks which have done poorly as of late, but please stop trying to paint the market as bad. The S&P 500 is positive for the year by a few percentage points. Come talk to me when we are negative for the year. Despite what the “chicken” is saying above, the sky is not falling. The way my portfolio is structured, I’ve been waiting for the sky to fall, but thus far, it is still up there.
Sphere: Related Content