Dear Students,
Today, we are in a different place from where we started. The market continued it's troubles well into 2009. The consumer began to stay home and buy less. Jobs continued disappearing so that at the time of this writing the national unemployment rate is near 10%.
On the bright side, my goings on about Apple, Inc. (AAPL) paid off and I sold all my shares for a 25% profit and I'm now buying an apartment in Manhattan. Of course, the two have nothing to do with each other, but it sounds cool to say that and make it sound, well... pompous, really.
Nevertheless, I only hope that we will be richer, not poorer; healthier and happier, for ever and all time. All the best to you, keep on saving 20% of everything you ever make and invest for the long term, you'll be fine.
Saturday, August 22, 2009
Thursday, October 30, 2008
Past Performance does not Guarantee Future Results
This is a common saying in the financial world designed to warn investors about the uncertainty of the future. Yesterday, in the midst of a rally, I sold a good portion (60%) of my Apple, Inc. stock (AAPL). They say 'sell into a rally', except that the rally is continuing today and I could've had some more success with the stock if I just held on.
Allow me to explain why I did what I did:
First of all, I am strapped for cash. I retained only 6% in cash of my original portfolio and I was feeling like raising some money. I think I have some stocks in mind that I'd like to buy, (stocks that might better perform than what I currently hold), and Apple, Inc. (AAPL) was the best performer this week, so I sold to free-up some cash.
Second of all, I feel like Apple, Inc. (AAPL) is a 'volatile' stock, that is, is will rise greatly and fall sharply like it has in the past year that I've owned it, so I could expect to sell some rallies and generate some cash, then when the price comes down a bit, buy-up some more share at a reduced price.
I just don't know why I sold yesterday and not today. Why not hold the stock? It's a great company and holding on will work well in the long term. Why didn't I sell some 'dog' and simply rescue some cash from an otherwise difficult market to reinvest in something else that will make-up for my losses in another stock?
The fact is, like most investors, I am averse to losses. Although I made a little money (about 0.75%) on the trade, I sold at the first sign of progress, rather than risk another downturn. I tried to 'time' the market instead of trust in a great company with a great product.
All of this is to say that investing has a variety of emotions and reactions that come with it and we are all subject to rash decisions. My portfolio is performing better today than it has recently, but I am left thinking how my recent actions have affected the 'potential' of my portfolio's future earnings.
Allow me to explain why I did what I did:
First of all, I am strapped for cash. I retained only 6% in cash of my original portfolio and I was feeling like raising some money. I think I have some stocks in mind that I'd like to buy, (stocks that might better perform than what I currently hold), and Apple, Inc. (AAPL) was the best performer this week, so I sold to free-up some cash.
Second of all, I feel like Apple, Inc. (AAPL) is a 'volatile' stock, that is, is will rise greatly and fall sharply like it has in the past year that I've owned it, so I could expect to sell some rallies and generate some cash, then when the price comes down a bit, buy-up some more share at a reduced price.
I just don't know why I sold yesterday and not today. Why not hold the stock? It's a great company and holding on will work well in the long term. Why didn't I sell some 'dog' and simply rescue some cash from an otherwise difficult market to reinvest in something else that will make-up for my losses in another stock?
The fact is, like most investors, I am averse to losses. Although I made a little money (about 0.75%) on the trade, I sold at the first sign of progress, rather than risk another downturn. I tried to 'time' the market instead of trust in a great company with a great product.
All of this is to say that investing has a variety of emotions and reactions that come with it and we are all subject to rash decisions. My portfolio is performing better today than it has recently, but I am left thinking how my recent actions have affected the 'potential' of my portfolio's future earnings.
Monday, October 27, 2008
Portfolio #1 Review
Well, the deal is: I am losing money.
This happened because once I got my portfolio I was ready to buy. By then the stock market had come down a lot and many stocks looked cheap. What I did not know, was that the stock market had farther to go down. What happened? By the time I had invested about 95% of my cash, I was in a position to only wait and see. Because I was so heavily invested and the value of my stocks had decreased so much, I am actually feeling a little stuck.
What did I learn? I should have taken the advice of Jim Cramer from about 6 months ago. He said that whatever amount I wanted to invest, I should invest it in small increments For example, $10,000 should be invested over the course of 3, 6 or 12 months, not all at once. I thought the market was cheap enough and as soon as Apple, Inc. (AAPL) recovered some of its losses I though I would sell some shares and buy some other stuff hoping for a big move. So far, my portfolio is down about 8% and it seems to be headed lower.
I am still hopeful for Apple, Inc. (AAPL) to begin its ascent to the top of its seasonal price, but I am so far just sitting here waiting. I hope this strategy works, soon.
This happened because once I got my portfolio I was ready to buy. By then the stock market had come down a lot and many stocks looked cheap. What I did not know, was that the stock market had farther to go down. What happened? By the time I had invested about 95% of my cash, I was in a position to only wait and see. Because I was so heavily invested and the value of my stocks had decreased so much, I am actually feeling a little stuck.
What did I learn? I should have taken the advice of Jim Cramer from about 6 months ago. He said that whatever amount I wanted to invest, I should invest it in small increments For example, $10,000 should be invested over the course of 3, 6 or 12 months, not all at once. I thought the market was cheap enough and as soon as Apple, Inc. (AAPL) recovered some of its losses I though I would sell some shares and buy some other stuff hoping for a big move. So far, my portfolio is down about 8% and it seems to be headed lower.
I am still hopeful for Apple, Inc. (AAPL) to begin its ascent to the top of its seasonal price, but I am so far just sitting here waiting. I hope this strategy works, soon.
Friday, October 3, 2008
Season 2
Welcome Investors!
This semester we are really going to get an education. First of all, even the most casual glance at today's headlines will see story upon story of financial turmoil. Go ahead, Google 'financial turmoil' and you'll find a lifetime of reading on the most important issue facing Americans today. Second of all, the market's volatility (vocab alert!) will definitely make for some interesting trading sessions over the next few months. Finally, I am eager to find out who among us can find the silver lining in all this turmoil and make some money!
Now remember: trading begins on October 6 for all classes! Get in there, get your hands dirty, make a few trades. Don't be shy, but be ready for some interesting results at first. When we meet as a class next week, we'll look at your portfolios, talk about some individual stocks and finally begin to take a deeper look at the world of finance.
Have fun! Remember: the money in your portfolios for the Stock Market Game is not real, but the knowledge you'll gain is priceless.
This semester we are really going to get an education. First of all, even the most casual glance at today's headlines will see story upon story of financial turmoil. Go ahead, Google 'financial turmoil' and you'll find a lifetime of reading on the most important issue facing Americans today. Second of all, the market's volatility (vocab alert!) will definitely make for some interesting trading sessions over the next few months. Finally, I am eager to find out who among us can find the silver lining in all this turmoil and make some money!
Now remember: trading begins on October 6 for all classes! Get in there, get your hands dirty, make a few trades. Don't be shy, but be ready for some interesting results at first. When we meet as a class next week, we'll look at your portfolios, talk about some individual stocks and finally begin to take a deeper look at the world of finance.
Have fun! Remember: the money in your portfolios for the Stock Market Game is not real, but the knowledge you'll gain is priceless.
Saturday, May 3, 2008
Portfolio #2 Review
Portfolio #2 is doing pretty well. Some of the winners include Apple, Inc. (AAPL), CSX, Corp. (CSX), and (SPY), an index fund. Of course, any portfolio would be incomplete if there weren't some dogs in it, like Gold (GLD) and Microsoft, Corp. (MSFT). These stocks would be great for long-term investing, but Gold was great a month ago, but no longer, and Microsoft is tied up in the Yahoo! take-over and the stock is just flat. Exxon-Mobile (XOM) has been O.K., but is failing to impress me.
Overall, I am up 8.25% and that's better than cash in a bank. Furthermore, I expect to continue in this direction for the rest of the game and I feel confident that I have made good investment decisions.
Overall, I am up 8.25% and that's better than cash in a bank. Furthermore, I expect to continue in this direction for the rest of the game and I feel confident that I have made good investment decisions.
Tuesday, April 22, 2008
Apple for the Teacher
Alright,
I was initially wrong on Apple (AAPL), but I've corrected that since and bought up some more shares a couple of weeks ago. What a relief! Apple has been rocketing up delightfully and I have made over 7% so far. (No, it's not the 25% I could have made if I stayed on, but...)
Other stocks of choice include Exxon Mobile (XON) and First Solar (FSLR). These are my entrees into energy stock. No matter what happens in the world, humans will need energy to make things go. Exxon represents the old world energy (fossil fuel) and First Solar represents the new, or next, generation of energy-- that is solar.
Technology. Energy. Hmm... sounds like the future is finally here.
I was initially wrong on Apple (AAPL), but I've corrected that since and bought up some more shares a couple of weeks ago. What a relief! Apple has been rocketing up delightfully and I have made over 7% so far. (No, it's not the 25% I could have made if I stayed on, but...)
Other stocks of choice include Exxon Mobile (XON) and First Solar (FSLR). These are my entrees into energy stock. No matter what happens in the world, humans will need energy to make things go. Exxon represents the old world energy (fossil fuel) and First Solar represents the new, or next, generation of energy-- that is solar.
Technology. Energy. Hmm... sounds like the future is finally here.
Thursday, March 13, 2008
Hot Picks
OK Investors,
Over the course of the next 10 weeks, we will all be finding out a lot about companies, stocks and everything financial. What did you find? What companies do you like? Why do you like them? Would you rate a stock a 'buy', a 'sell', or a 'hold', and why?
Use this post to pick some of your favorite stocks, share some trading tips, and be sure to report back and let us know how your investments are going.
We're just getting started, so there should be lots of traffic as we begin to see how our stocks begin to act in the markets.
Good Luck,
Mr Rankin
Over the course of the next 10 weeks, we will all be finding out a lot about companies, stocks and everything financial. What did you find? What companies do you like? Why do you like them? Would you rate a stock a 'buy', a 'sell', or a 'hold', and why?
Use this post to pick some of your favorite stocks, share some trading tips, and be sure to report back and let us know how your investments are going.
We're just getting started, so there should be lots of traffic as we begin to see how our stocks begin to act in the markets.
Good Luck,
Mr Rankin
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