Stock Market - 4

So, the current situation is:

Today my portfolio finally reached break even. That doesn't mean each investment finally did, CSX is a long way from doing that, but, perhaps surprisingly, my REIT investment did.

Oh but I cheated. When the market had appeared to bottom,  I doubled my investment in the latter. Hey, it pays a 15% dividend, it's worth it.

I have sold my General Mills stake, and also the gold ETF I bought. I may go back into the latter at a later date but I don't think the price is stable right now. I'm going to look for a different food company.

In the last couple of weeks I bought stock in a telco (Frontier) and an oil/gas company (Brietburn.) The latter has gone down in value, but the former I also bought when the market bottomed and has shot up as a result.

So... hopefully the portfolio will mostly grow from here on, and I can sit and wait for the dividends to roll in. :-)

Stock Market - 3

So, continuing the thread...

As I said a month ago, I started investing in the stock market. Unfortunately (1) I chose exactly the moment the market started tanking, and (2) I'm stuck with a rule that says I can't sell an equity unless I've owned it for a month.

So... the good news is that I finally started to reduce my losses. Indeed, today, when the markets were down about 5%, I "only" lost 2%. The strategy I took was to complement some of the stocks with hedges, these being:

• Gold. Which didn't help today, but it's helped the last couple of weeks
• DOG, an ETF that negatively tracks the Dow. This is a safe way to "short" an index, you risk only the money you spent on the ETF. Indeed, for shits and giggles I set up a watch list where I pretended to sink an equal amount of money in an oil futures ETF, and an ETF that shorts it, and found that... I would have made money had I done it for real. Not a lot of money, but, well, money is money.
• SPXU, an ETF that "ultrashorts" the S&P. An ultrashort ETF is similar to the above, but tries strategies that will double the effect. I bought very little of this, very late in the day (ie, the day before yesterday), and as a result it hasn't done a great deal yet.

Finally, it turned out that buying a bold ETF when I did (BIV) was a good idea. It's probably time to sell on Monday when the Treasury will be flooding the market with them, but for now it's done its job of making things less disastrous.

Still, I've lost about 5% total on my portfolio since I started, and I'm not happy about that. Main problems:

• CSX - nothing about this stock should be negative, and yet I've lost about 15% on it since I bought it. I don't understand why. They've had nothing but good news.
• CIM - I bought this because it was high dividend. I can understand why confidence in the associated industry might be low, although it's still paying very decent dividends (and the company itself has good fundamentals.) This was one of my more dubious decisions, and I knew that going in, so I'm not going to get upset about it. I've lost about 15% on that too, which is a shame because that pretty much matches the yearly dividend.

Other stocks like GIS have been relatively neutral, after looking bad. I got a dividend from GIS, which is nice.

I added a bunch of positions at the beginning of the week, notably a small-cap oil/gas company that operates within the US, and a chocolate maker. Both have lost value but so has everyone so...

Advice? If you're stuck with stock like I am, hedge.

If you're not, don't buy right now.

My next big experiment will probably be with options. But I'm going to avoid pumping in more money until I know where the market is going.

Stock Market #2

So I've invested in the stock market and every freakin' day my portfolio has closed down. Even today, when pretty much the entire market went up.

I'm investing long term, but even so. What's really annoying me is I can't undo some bad decisions, my employer has enough involvement in the finance industry to require its employees restrict their investments - I can't sell anything until a month after I buy it, for example.

Investment that's pissing me off: General Mills. Every report/recommendation is saying "Buy buy buy!", and yet there hasn't been a single day since I bought the thing when it hasn't dropped.

Oh well.

Investing in the stock market

This week I finally bit the bullet and opened a trading account (TD Ameritrade, in case you're wondering, but that's neither an endorsement or a criticism.)

Why invest now? Well, why not? One thing I've realized after looking at the whole thing over the last few years is there's never a "right" or "wrong" time to start investing, you just have to be careful with your strategy and not expect to make a million dollars over night. The two major strategies I'm going with are:

• "Averaging" - invest a fixed amount every {fixed time period} rather than looking for some magical time to invest a lot of money. Averaging is pretty much the only way to play unstable markets. It works on the basis that when the market is down a certain percentage, you lose less money than you gain when it's up a similar percentage. eg: Invest $100 - market loses half its value, you lose $50. Invest $100, market doubles in value, you gain $100.
• Dividend stocks and ETFs only

Now, the latter probably seems superficially sensible, but nonetheless there are deeper reasons why I'm investing that way.

The problem with the economy right now is that most businesses aren't seeing demand. The lack of demand means companies are sitting on cash they don't really know what to do with. Large companies are sitting on large piles of cash, and that cash pile is growing, but they see no reason to spend more because they're selling pretty much all they make.

(This, incidentally, is why that "encourage companies to bring money back from their overseas subsidiaries" thing is not as useful as it sounds. They may physically bring the money into the US, but at best they'll simply hand it over to their shareholders. It is emphatically not going to be used to create jobs.)

Now, this means a number of things, but critically it means that investing in stocks that pay dividends right now is a good idea, because dividends are high, and will continue to be so, even if the market crashes again.

So, anyway, that's what I invested in. And I'll continue to add to the portfolio for a few years, and see what happens to it. Now's the time, especially if, as seems likely, the economy starts to nosedive like it's 1937 all over again.