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Old April 16th, 2010, 12:38 PM
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Default Economy Slump?

Today could be remembered as the day the recovery ended.

The "fed" just charged Goldman Sachs with a form of fraud and the stock market is tanking. The same day, consumer confidence numbers came out and while last month it looked like the recovery was on track, for some reason this month is the complete opposite.

The stock market is down 143 points right now and it is trending lower. People are bailing out of the stock market and Wall Street is not going to be happy with the "war on Wall Street."

Biggest drop since January 20th, 2009 (when the market was crashing last year).

Even Apple is down over 3 points.

Kind of ironic that this is being precipitated by our own government who is supposed to be saving us from the bad economy.

I don't know how many of you follow the market, but I am very much a capitalist. I miss the "bubbles", I like "bubbles".

Oh - now down 166 points on DOW
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Old April 16th, 2010, 02:06 PM
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I follow the stock market everyday. But I rarely trade I like Warren Buffet's trading style (value investing). I have the EFT SPY that is how I track the market. At it's lowest it was at $67 per share the high was about $149. It was going good to $121. The stock has lost $2 so far today. My reaction to this in no reaction. Here is why.

This is my retirement savings and I have 15 years maybe 20 years before that happens. My plan is about 5 years before retirement I move out of stocks into CDs to be safe. These price drops, odd as this sounds, they help me because I dollar cost average into my retirement account. Dollar cost averaging is the only proven investment strategy. So I don't let the day traders scare me out of the market. I still believe we are in recovery. The stock market (day traders) intend to over react to things.

Warren Buffet learned his style from Benjamin Graham and I do own a copy of the Intelligent Investor. I have to admit that book is over my head. So this is my overall view. Stock ownership is owning a piece of a company. When you are chose a stock or a group of stocks only chose companies you want to own. Are they profitable? What is the future of the company? Will the product become obsolete in a couple of years (typewriters)? What is the rate of growth? That is the fundamental analysis it tells you what to buy. The technical analysis (charting the stock price) tells you when to buy. To me the fundamental analysis is the science and the technical analysis is the art. BTW I have made some unwise choices buying bad companies and selling good companies to soon. You tend to learn more from your mistakes then from your sucesses so I don't worry about mistakes.

I have a crush on Warren Buffet can you tell. People at work tease me about it. A couple of Warren Buffet quotes to keep in mind:

These quotes are from this website. Warren Buffett Quotes

"Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell."

"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."

“A market downturn, doesn't bother us. For us and our long term investors, it is an opportunity to increase our ownership of great companies with great management at good prices. Only for short term investors and market timers is a correction not an opportunity."

"The fact that people will be full of greed, fear or folly is predictable.
The sequence is not predictable."


"Price is what you pay. Value is what you get."

“View Mr. Market as having a disorder and being in a manic depressive state and take advantage of this state of disorder."
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Old April 16th, 2010, 02:15 PM
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Ironic that this is happening today. My beloved mentioned to me yesterday that it was time to get out of the stock market. Well, we didn't. We hang in there. We are just too young to retire and old enough to know better. Well, we like to think so. If you knew me well, you'd love debating that subject!
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Old April 16th, 2010, 04:59 PM
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If you are young there is no reason to worry really, but while I admit I trade too much, as Buffet would say, I also have to say that it is what works for me - as illogical as it sounds.

Here are the Paul Motter rules for the stock market (these only apply to ME - no one else, so don't try them).

1. You have to watch a stock constantly - the second you look away it will tank.

2. Never set a stop - the second you set one the traders (they) will trade your stock down to that exact price and make sure your shares get sold at a loss. At that point, the stock will turn around and go higher than you bought it for.

3. The rule above is always immediate - you will be stopped out within 20 minutes no matter how low you set it.

4. Buy and Hold does not work - even though I can see I would have been better off not touching my stocks for the last two weeks, the very day I decide not to watch my stocks the market will sell off and I will lose all of my gains.

5. Buy high and sell low: this rule only applies when you bought in too high and you are sure the stock is going even lower, so you are cutting your losses.

6. Every time you exercise rule number 5, you can be sure you sold at the bottom for the day and the stock will turn around as soon as "they" have your shares.

That's why I trade almost every day. At least I can say I walked away from the Internet bubble with plenty of cash. I know a lot of people who were paper millionaires and ended up with nothing. Of course, I did that, too, with the stocks I left in the market while I watched it tank day after day, but they times I took money out at least gave me some satisfaction.

Seriously - the above is a joke. People who have ever tried trading will know what I mean.

Now for real:

I do believe that picking the right companies and staying in for the long term is the best route, but I also think you can make a lot of money on momentum stocks, but you have to watch them closely.

You can buy Intel and forget about it for 10 years, or you can buy Apple and watch it carefully for one year. It is on a tear this year, but when the mo(mentum) goes it is over.

The thing I like best about Buffet is that he is a contrarian. He totally gets the concept of buying things that are out of favor. But like Greenspan even he is admitting the last few years have not been his best decisions.

Analysts are a joke. They downgrade stocks when they have reached their bottom, and put buys on them at their peaks. That is the opposite of Buffet contrarian, buy low sell high thinking.
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Old April 16th, 2010, 06:24 PM
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Default Economy Slump

Wow that is far too complicated for me.

I only have a couple of rules:

I do not understand/agree with US Accounting methods - therefore I don't buy US Stocks.

Drip feed stake money - therefore average purchase costs.

Review stocks once a quarter and once I have made min 500% profit , sell, spend some of the money on a cruise/holiday and reiinvest the rest on low cost stocks.

The above means my blood pressure stays low and I enjoy lots of holidays.
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Old April 16th, 2010, 07:36 PM
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Funny Paul.

I trade pretty much every day. Big losses today. I think we'll get it back next week though.

I chased one (AMD) for three days and today it came down to my buy price & still didn't fill. I got it anyway (raised my price).

It's been a good year. I've got several 'home runs' right now. Thinking about stop losses on them to protect gains but holding them as I think they still have some growth.

Right now I'm hot on a stock, but it only trades on the Bolsa-no etf on US markets-little tougher. I've had good luck with another Mexican stock so it got me looking for more.
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Old April 16th, 2010, 08:37 PM
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I have never once checked anything related to the stock market .This makes me a distinct minority .
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Old April 16th, 2010, 09:34 PM
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I have been investing in the market for fifteen years. The older I get the more I stick to stocks that pay dividends; that is those that have dividend reinvestment plans. The basic rule of investing is that you can't and shouldn't time the market. If you use the principle of "dollar cost averaging", that is when you invest the same amount of money in a stock every month, when the price of a stock is lower, you get more shares for your money. The market fluctuates everyday based on world events; if you stick to stable companies with dividends you should do fine because of "compound interest over time". I think that many investors should head the advice of Warren Buffett.
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Old April 16th, 2010, 11:27 PM
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I have mainly large cap companies, but I toss in a couple of small caps and foreign companies. Paul at one point I have done every single one of your joke investment moves.

Snoozeman do you put in a trailing stop? I was so happy when Scottrade started offering that. I agree with everything everyone has said here. I may keep a small amount of money in stocks when I retire. But I just feel when I'm retired having my all retirement money in stocks is too risky. I will ladder some CDs for protection hopeful inflation rate will be low.
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Old April 18th, 2010, 02:01 AM
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If you are Henry, then so am I!

Todd
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Old April 18th, 2010, 09:50 AM
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Henry and Todd add me to the club!

I don't know much about stocks I like my dollar in bank accounts.
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