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Thoughts on the market today!
By fred | July 12, 2008
Yes, I feel like an old horse that was put out to pasture in many respects. To tell you the truth, it is fun not to have to watch the market daily, wonder how your portfolio is doing - hope that selections you made - stocks that took days and days of research to find and select - how they doing?? Hey, I love not doing that any more.
That I still love the stock market, that was such a huge part of my life for so long is a given. Nice however to not have to worry about it constantly.
I still have a few stocks, mostly energy stocks, never look at them much, most are small companies that will, God willing, hopefully mature in a few years.
What generated this letter today is one of my younger buddies asking me where and how he should invest his money today, in todays market. I begged off, said I would like to think about it for a few days. So–my head may be slow but I think the advise I am offering here is extremely valid in todays market.
First, I think you should figure out what kind of investing you are comfortable with. To you want to make money NOW, not later, play the market daily? Second, do you want to take a long, long term view? –say — five to ten years out. Third, mechanically use PCA, (Position Cost Averaging) use this time proven mathematical method of investing. So–those are the three methods I will discuss now.
First off, lets go to long, long term investing. I would select a watch list of companies, large companies that have been smacked hard, beat up badly - BUT companies you feel will not go out of business. O. K.– I will make an example — one I like - Bank of America.
Bank of America stock was almost $55 a share last year, now it is $21. I have had buddies that have made a ton of money on Bank of America over the years. Buying like crazy on their seemingly problems every five or so years. A doctor buddy years ago purchased several hundred thousand shares around fifteen years or so ago when the stock was beaten down to way the hell under $3 a share.
The doctor retired a few years later when it was well over $20. B of A is and should be on your watch list. What I am saying for long term investing you have to have the mentality of a shark. When you smell blood in the water, then is when you bite, then is when you buy. It is the same method of investing as the Position Cost Averaging system, except you do not trade up and down. The biggest mistake of investors is not always buying low, it is not taking profits when the darn thing goes up. For some unknown reason when a stock keeps going up they think it will go up forever and they even buy more. When a stock goes up– it is like the tomatos in your garden, when they are ripe start picking them - take money off the table.
I have sincere doubts that Bank of America will go under, they are just too damn big. ALSO - take a peek at the insider buying, they are starting to buy now, nice hunks, so the insiders of Bank of America must think they are in hog Heaven. A tip off – if you are a long term buyer you should maybe start buying also — if not buying the stock now —then for Heaven’s sake, keep your eye on it and if positive moves up start or keep taking place,– jump in!
Next, let us take PCA, most of you reading his have my book on Position Cost Averaging, if you don’t have the book or have never read it –send me an e-mail and I will forward it to you free as a insert. Again–if buying stocks you do not already own, look for large stocks, stocks who’s shares are down, but stocks you are sure will survive the knocks our nation may have in the next year or so.
In my book related to PCA ‘Making money is simple - Just boring!’ - I often would start off a portfolio with only 30 percent cash and the rest in stock. Not now! I would start a new stock off with a portfolio 50/50. Half in the cash bank and half in the stock. My reason is that the market, the economy in this election year is too tough to call. Your stock may drop some more so you want cash to buy more and more shares as it drops. If is goes up and the system says to sell off shares and your cash position builds up - don’t bitch - in these times that is a good safety measure.
Third, short term trading. I will tell you this - You are a damn fool to think you can trade this market without the finest software, the most brilliant minds can dream up.
My days of seat of the pants investing in the market are long gone. I would not touch short term trading without spending money first for the best there is to advise me constantly. These wiz kids nowdays have computer systems that with the speed of light determine the odds, it is not guess work. Paying a hundred dollars or so a month is peanuts for the advise that will put you on the right side of the percentages in trading. You can make that money up in a few minutes.
Going through thousands of stocks, calulating what they will do under certain situations is impossible for the human brain to do. Machines, computers, programed right will do it for you. Yes, you may take a loss now and then BUT, the programing will put the odds in your favor. If the machine has you right just 60 percent of the time you can get very rich indeed and I understand they are doing far far better than that.
Friends that are using it —-love something called STOCK PICKER RT - said it on costs him less than a $100 a month and he can quit when he wants, put he is having too much fun and making money - loves it.
Making money in the crazy market we have now, any investor needs tools. Investment Systems of Florida are the genius guys behind this software. If interested send a email to: info@investing-systems.com These fellows also have free seminars for you to listen in too, ask to be included. If you are interested in daily short term trading you may be smart to contact them and listen in to a few, get your feet wet and a bit of knowledge. If getting smarts is free, do it! But remember, if you start laying your hard earned money on the line, get the software first or have someone advise you constantly THAT will keep the odds in your favor. Making money short term is something that your old horse and buggy Uncle Fred will not advise you on, for that go to the professionals. These tools were not available to me as an investor years ago, if they had been, I would have used them - BELIEVE IT!
So there you have the way you should handle this market, at least you have my opinion of the way I would trade the market today.
In another year I will be 80 years old, I am not in the money making business anymore, I love to be the observer, look at the markets without the pressure of daily investing. I love my BLOG, shooting off my mouth, listening to others, I love my eBay store talking to folks, I love my garden, I even read a good book now and then. Never did that for years.
Related to stocks and our current market - I think the advise I just gave you is valid, makes sense. Glad to discuss it more if you wish.
Gotta run, it is now almost 80 degrees here where I live in Bellingham, Washington, hot for here, so my plants will need a little water. You worry about the stock market, I will worry about my garden. Hey, at my age I get to smell the roses now and then!
Love ya all, Uncle Fred
Topics: In The Markets |
July 13th, 2008 at 9:09 pm
Uncle Fred-if you are reading a good book now and then,and if you like history,the book”Peter The Great”by Robert Massie is one of the best books I have ever read,and I have read many,many hundreds of books.Thanks for all the thoughts and advice.I always appreciate it when someone who has been around a bit on this earth shares some wisdom.I like not having to learn everything the hard way.Maybe some day when you have time you could discuss with us the most imporatant lessons and rules you have learned,so that when-if- we get to 80 we can say-I have few regrets.Thanks,Mark.
July 15th, 2008 at 2:03 pm
Thanks Mark, I have not read Peter the Great by Robert Masie, however I will ask my bride of 58 years to order it from the library.
Here in Bellingham, Washington we have only one main library and that is in our ‘old town’ area. That is quite a ways from us as we are in the northern part of town, what many refer to as the newer part. Anyway, we have a community college near us and they have a library not open to the public except we can order books by phone and a few days later pick them up and drop them off at the community college library. Saves all of us old duffers a longer drive to old town Bellingham.
At working on $5 a gallon any travel savings is super. A friend of mine, a custumer of my eBay store, in Australia said that fuel for her husband’s truck was almost $2 a liter, and she said that they are talking about fuel being $10 a U. S. gallon in a couple years. She said her husband has already stopped most truck runs and is looking for another way to make a living after driving a truck for over 40 years. Wow! Not fun at his age! Uncle Fred