Android and market updates

Got a G1 a couple of weeks ago.
It's remarkably similar in what it strives to do to the iPhone, although it lacks the extraordinary user interface that is the hallmark of all things Apple.
For example, it seems that you can't actually upload an attachment using Gmail (???) but if it's a picture, you can hold your finger on the picture, press the Share button, and it'll ask you if you want to send it via Gmail... That makes it pretty straightforward once you realize it, but why can't you have added it via the attachments? Bah...

Financial crisis continues, bottom seems to be still elusive, and therefore yet to come.
Egy was a good prediction in October 2007, a purchase at around 4.20 would've yielded a 100% return after 1.5 years, had you sold last week... PTSC, on the other hand, still feels like the eternal promise that hasn't yet delivered... At $0.11, it really needs to recuperate...

More later...

Zecco and the future of trading

Free trades are the best thing ever. They allow you to minimize the risks involved in buying shares, especially for people who start with little to invest in the first place. For example, say you start with $10,000. With that kind of money, you can realistically buy 5-10 different stocks with a reasonable holding in each of them. If, however, it costs you around $10 every time you buy and sell, that turns out to be already eating 2% out of your gain. Say you choose a good stock and in a short period of time, like a month or so, it goes up by 10%, you could sell it and be satisfied with a 10% per month profit. But suddenly it drops down to 8%.
Free trades means that I can buy $400 worth of a stock, then buy $500 if it goes down by some threshold percentage, and perhaps buy $600 worth of it if it goes even farther down, and be invested a fair $1500.

I've been using zecco (www.zecco.com) for less than a month now, so it's still a little early to draw any conclusions. Reading up on it can be frightening until you see the dates of publication. I haven't sold anything yet, so I don't know what I've gotten myself into yet. Hopefully it's as good as I imagine it to be.

In the meantime, my stocks have been going down significantly (but are still higher than the S&P gains YTD). Increasing oil prices, decreasing housing prices, and credit concerns aren't going to help the market gain much in the coming months. Tech stocks might be a guiding light, especially after Google's earnings report and possibly Apple's this coming week.
Uncertainty seems to be characterizing this period: for the average investor and Bernanke himself, there really seems to be a dense fog obfuscating the financial future of the country, and the falling dollar seems to have started to do more harm than good. October is famous for black Monday, the anniversary of which was yesterday, so let's hope we've just passed the trough...

PTSC

Penny stocks are notoriously very risky. One stock I've been keeping an eye on since it came up on the magicformula list is Patriot Scientific. My record is mixed with it, I sold it for profit last year and then lost some money after a second purchase some months later.
However, their press release in March said that they would try and give out a dividend consistently every six months. Since the last one was on April 9th, this week I saw that it had been significantly been beaten down, so I decided to take a shot at it. Bought 2000 shares at $0.405 shortly before it crashed for no apparent reason down to $0.34. That still doesn't make or break it, in fact, I could've bought some more, but I decided not to risk it. At the close of business of the following day, however, it seemed like my intuition had been correct (to some extent) when the CEO said that the stock is highly undervalued and the company has been repurchasing their stock in the interest of shareholders. Sadly, no mention of the dividend. Can anyone comment on this? Am I right in saying that if management says that they've bought their own stock they can't issue a dividend because that would be equivalent to trading based on inside information? What I mean is: if I know that I'll issue a dividend and I see my stock falling, of course I'd be inclined to buy like a madman because I know that when news of the new dividend comes out everyone will want to buy like a madman. The fine line here is that they kind of already did announce in March that they wanted to give out a biannual dividend, but they never said when the second one for the year would be issued. Thoughts/concerns/comments?

As for the other stocks I own, EGY went down $0.27 or 5.6%, FRX gained $0.05 or 0.1%, NRF went down $0.69, or 6.5%, VPHM lost $0.08 or 0.9%. For the week, I fell 1.8%, whereas the S&P gained 1 point or less than 0.1%.

For the coming week I'm expecting PTSC to gain some more, tread into the $0.50 zone, NRF to recoup some lost ground, and perhaps VPHM also. FRX should continue to stay under the $40 mark bar some new report. Finally, EGY is the stock to watch. I believe that without further news it'll slowly trickle down to even $4.20 when it should be rebought, based on the board's opinion.

September 29, 2007

Today is my cousin's Alessandra's birthday, so I'll use the blog to wish her a happy one! Auguri Ale, ti faccio gli auguri virtuali!
I'll update more tomorrow.

September 22, 2007

A year and a half has gone by. I now want to take this up a little more seriously. With it, I hope to start a financial conversation with family, friends and whoever else might want to join in. The conversation can span as far and wide as desired, even distancing itself from its original intent of being financial in nature.

The reason I undertook investing in the stock market last year, is that I wanted to try and guarantee some kind of pension to myself that did not depend on others. Since graduate school doesn't give benefits, and takes quite a long time to complete, it was my most obvious choice.

Now then... to business.
The first year of investing has gone well, I was up +19%, or some 6% better than the S&P500. The magic formula was right in most cases, I am happy to say, although in some cases I bailed out of some stocks for fear of the unknown, but in the end it turned out that it would have been better to keep them. However, to keep a realistic and credible measure of what's happening I'll use this blog, and I'll have to update it more frequently, so that readers can follow me and better understand what's going on.

Having almost erased all of last year's gains in the terrible month of August 2007, the day of the Fed rate cut (Sept 18th, close of business), I was back at and slightly above my all time high, and am now hovering around 13% for the year, or twice the current return of the S&P500.

Most of the recovery was thanks to a great and quick return on Inplay Technologies (NPLA), bought at $1.22 prior to their earnings report in mid-August, and sold at $2.25 32 days later. Incidentally, it's starting to become attractive once more. It is -you may have noticed- a highly volatile stock, so I'll issue a caveat emptor for it.

I'm currently still into EGY, which recently got a boost through management's decision of a share buyback program. Got recently into Forest Laboratories (FRX), which seems highly undervalued and trades close to its 52 week low. The recent resolution of patent rights briefly brought it up by over 10% (when I should have sold it) and then somehow retreated back to what it was at prior to the spike. I got into Northstar Financial (NRF) just before the housing market crash, unfortunately, but their hefty dividend (>10%) clearly helps make up for it, and am now back in positive territory. This is the first stock that I have purchased based on my own research and screening. I reckon it's still a good buy, but probably better when the next bad news on the housing market and/or subprime mortgages strikes. In the meantime, keep an eye on when the next dividend gets reported, since it'll be an excellent indicator of how things are going. A dividend of $0.35 or, obviously, higher should boost the stock considerably upward, showing that it hasn't really been affected much by the subprime crash. Finally, I'm also into ViroPharma (VPHM), got in at $8.7, a little late compared to when I wanted to, but still have considerable faith in it, since I similarly consider it undervalued. Am considering selling at around $12.

My strategy has changed somewhat in these 20 months. I believe I am really becoming proficient at spotting lows (although my friend Ani would tell you to wait 2 more days from my recommendation date), so now I'm focusing on trying to figure out when to sell. In buying, my technique now consists in finding companies in the magic formula which have been brought down significantly on a given day due to whatever reason, such as missed earnings by "inconsequential" (in my book) amounts. Early on that very day, the price of the stock will crash to some amount, and then start its walk back the same day or soon after towards a new value that will also take its growth prospects into account. Slower decreases in share prices of stocks suggested by the magic formula also provide excellent opportunities. The difference is that it's hard to predict when the upswing will happen, since it will depend on a piece of news, such as what happened with EGY (share buyback) or FRX (court victory).

I think my goal of reaching 41.41% or greater yearly gains can be achieved, I just had/have to figure things out lots of things for some time. However, the 0.5% rate cut by the fed also could trigger a powerful plunge in the value of the dollar, which is touching its lowest levels against many other world currencies. While this helps exports, it also dissuades toward investing in the U.S. market.

I'll try to update this blog once a week to keep track of what's happening. Since it's a period that involves lots of writing (my Ph.D. thesis, in particular) a little more will just go unnoticed.

Thoughts/concerns/comments?

2nd Post

This is going to be a longer than normal post, because I want to start telling a story of my recent history. I had been looking for an outlet to actually start writing something about the business endeavour I started in January of this year (2006) for my birthday, and this blog I recently started provides me with that opportunity.

It all started as I was walking around the Barnes and Noble near the Towsontown Mall, looking for something I might enjoy reading when my eyes' attention was caught by this little blue book. So, since I had been pondering for a while what it would take for me to get to know something about the stock market, and how it works, at the beginning of my 30th year this book provided me with an excuse to start looking into it. Also, I don't seem to be the only person who has had this type of experience.

I decided to give it a shot. In conjunction with the website advertised in the book, I opened a Scottrade account, after advise by the book and by the only investor friend I have, and who has been investing for quite some time (I actually don't how long ago he started). His name is Jon and he's one of Manu's (my fiancee) labmates. His guru is Jim Cramer, so after he found out that I wanted to start investing he told me about Scottrade (and the 3 free trades) and gave me Cramer's "Sane investing in an insane world" for my birthday*.

So I started: put $2500 on the account and bought 4 stocks advised on the website: Vaalco Energy (EGY, 120@5.25), Magellan Health (MGLN, 20@33.02), Innovative Solutions and Support (ISSC 45@13.91) and Marvel Entertainment (MVL, 33@16.40).
I didn't tell too many people about this for a few, pretty obvious, reasons. The first one is that I was buying stocks recommended on a website called magicformulainvesting.com, which unquestionably sounds like the lamest scam site I can think of. A second reason is that I thought the best thing to do was to see how well I was doing, then perhaps gain some confidence, and start telling other people about this endeavour.

The first 3 stocks I mentioned I had never even heard of (then again, almost all the stocks on the website had the same property) but they were highly ranked on the website, so I gave them a shot. The 4th one was further down the list, but it was the only company I recognized, having seen most of the Marvel-based superhero movies around (Spidermans, X-mens).
With 3 of these companies (egy, mgln, issc) I was off to a good start, actually making money, up $300 after 10 days (12%). In fact, as of today, with egy and mgln I haven't had a single day in which I was losing money on them.
This has a (positive) side and a negative side: the (positive) side I put in parentheses because it's positive only if in the end I really do end up making money which, so far, has been happening. The (positive) side, of course is the fact that it's easier to continue investing if things go well, not so much if they don't. The negative side, is that it doesn't prepare you for how to handle - how should we call them? - adverse situations, of which I will speak in a later post.

I put this post up to let you know about my experience with the stock market, and perhaps to get some feedback from those of you who have had a similar experience investing with the blue book, and anything else you may want to let me know about.

In case you're curious, I'm currently up 20% (as of 7/28) and have had a fair share of swings (but haven't touched negative total money yet!)
Let's hope the streak continues!


* A little addendum: from that book, I took out 2 pearls of wisdom: one is that it makes sense to invest in the market MAINLY when you're young, because the older you get, the less you can risk losing what you have (unless your pension/retirement plan is unlike what I think mine will be). So he describes this nice graded scale of what percentage of risks you should be on the stock market (as opposed to indexes, savings accounts) the older you get.
The second main thing I liked was the cyclical graph he has (the only non-text-filled page in the book, I think) in which depending on where the Fed's interest rates currently are, he tells you what to buy and what to sell... or at least sort of does

First post

Haiku:

This is this blog's first.
It's not dramatic at all,
Then again, let's start.