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I am president of a stock club – in effect that means that I make sure that the flow of conversation doesn’t stay too long on a single topic in our club meetings. Beyond that I really don’t possess any powers to speak of, sort of like the President of the United States. Once per month our stock club meets, in private in the woods under torch light wearing nothing but dark cloaks, to discuss our collective portfolio. The typical meeting starts with our Secretary of the Treasury telling us how badly we did over the last month – I like to blame capitalism for this but I really don’t have a leg to stand on. Then we go on to talk about the overall state of the economy holistically as well as any other news that we feel might be useful to the club. Exciting stuff right? I know.
This last month was a bit of a nail biter as we didn’t really make any choices – I don’t mean this in a bad way. The one thing that we collectively agreed upon is that the stock market, and investing in general, is so far out of whack that nobody can really appear to make any conclusions on anything. In effect the present stock market investor is totally emotional and bordering on completely irrational and thus trying to make a logical decision on anything is basically impossible. Let me shoot you an example:
For Motor company is the only American Car Company that didn’t NEED to be saved by the USA people and government. They have actually been showing a profit. They have the most successfully sold 1 ton pickup in the world – the F150. They are launching a new line of Ford Focus cars, six to be precise, that allow Ford to sell the exact same car with different packages in the cheapest way possible. They just signed a deal with Toyota Motors to work together to design the future of energy efficient cars. In summation, Ford is F’n around. These guys are serious about getting stuff done. Stock valued by many to be at the least, $23 US. Present Ford Motors stock price on Wallstreet? $10.75. WHAT WHAT?!?! Wait for it… WHAT? How does that make any sense? According to basically anyone that knows anything about stocks, Ford Motors is presently being traded for less than half its actual worth – and nobody is buying it.
Why say this? Let me illuminate you to another one letter stock Z – also known as Zillow. What does Zillow do? Zillow has a website that allows people to search for properties for sale in the USA. They can’t actually buy them online, but they can look for them. The funny part is that the Zillow website isn’t even complete. I tried it, half the time the search breaks, shows data without being filtered, etc. Zillow, as a company, doesn’t actually make any money yet. Rumor has it they don’t even have their own data – they just scrape data from other data sources in real time, like Google. So a company that has no real income and a broken website that dishes out data that the company doesn’t even own is worth what? $36.11. Wait for it… WHAT?!?!
Nothing makes sense any more. Up is down. Left is right. Cats and dogs are living together. I still think the real money to be made is in buying foreclosures and renting them out. At least then you get cash every month – of course I am not so sure that my investment group will go for it.
It would seem as if you are facing what the majority of other normal, honest investors are facing. Allow me to state, the “buy-and-hold” philosophy that has held true since the 1940s is no longer relevant. Will this last? My crystal ball has not indicated such detail.
During my time as a trader on Wall Street for a marquee house, I learned that it is the short-term or momentum trade that earns the money while the rest of the pack buys and holds on for dear life (read: they are suckers). Your trading group needs to forget fundamentals (price-to-earnings, etc.). You need to think about herd mentality. Buy when everyone else is just thinking about buying, sell when everyone else is truly buying. If you don’t position yourself at the very left-hand front edge of the stock purchase bell curve, you lose. Another way of stating this… if you are positioned in an equity right next to the Arizona Grandmother’s Stock Club pick of the week, you are fucking toast.
“The point is ladies and gentlemen that greed, for lack of a better word, is good.”
Sort of off topic, however the article linked espouses nothing new perhaps, but something I have believed my whole life.
http://www.cnn.com/2011/OPINION/09/07/rushkoff.jobs.obsolete/index.html?hpt=hp_bn1
Mr. Gekko.
First let me say that I love your Geico commercials. Good stuff.
Next – if you have any stock tips, let us know.
Keep em coming.
commodities. trade via dark pools. the closer to the speed of light of your throughput the better. use algorithms based on real-life based scenarios. always use stops. always have “plan b” algorithms based on those stops not working. trade with the knowledge that goldman sachs spent 2 billions dollars in the first six months of 2011 building what i’ve outlined here.
most importantly… best of luck.