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Why should I bother?


donkpow

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As many of you know, I play a little in the stock market. Specifically, the US markets with micro, small, and mid cap companies. I spend some time finding companies that I think can make me a bit of money. Usually, I'll add a stock to my portfolio with a small investment and then dig in with it to see if it is worth more money. Then I watch it to see how it moves. Last year, I had three episodes that give you an idea how things work in this millieu.

Example #1: not a bad company, low stock price moving in the right direction, company moving in the right direction. I was already increasing my stake in the company. The bastards did a 5-1 reverse stock split. This is when the company consolidates the stock in your portfolio into a less number of stocks. In this case, if you had ten stocks, after the reverse spit, you would have two. The market hates reverse splits. I lost money. 

Example #2: not an excellent company, high risk, low cost to me. I was already leery about this company because the numbers were way off. I went ahead and bought some and kept a close eye on it. I sold out of my position to take a 10% profit. I bought back in with a lower stake and sat back  to catch another swing. Those slackers executed a distribution. A distribution is when they issue more stocks onto the market, generally diluting the value of your stocks. This was the second time they issued a secondary public offering within a year. Somebody sold a million shares within minutes of the announcement. Stock price dropped 50% and now I am sitting on a rock waiting for it to hatch.

Example #3: an excellent foreign investment traded on the NYSE, I bought in and was in the process of building my position. This stock was going to be a big winner based strictly on the quality of the company. The MF'ers did a spin off. Placed the good part of the former company in the European market and left the riskier, lower performing entity in the US market. I don't have access to foreign markets. I lost a little and really only lost because it took me a while to act.

Example #4: good US company, good market position, good industry. I was building my position in the stock. Don't forget, I'm running my own portfolio. A European company announced a merger with this company with quite high stock purchase price. I sold out and made 67% over my investment in like a month. Woot, woot. Winner, winner. Kiss my ass. I win. :lol:

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I got into a service that was a sponsor of one of those all day motivational seminars that were popular about 15 years ago They had name brand people give various talks, finance, personal relationships, health, etc. The sponsors had booths outside the hall to view/talk about the products. No pressure. Overall, really good day.

Investools was a really good product for me. Each stock had a summary page that listed all the pertinent info, graphs, histories, ratios, insider trading, etc. Put up/down arrows on them and gave you guidance on which ones were more important. You could search for stocks based on those arrow criteria, or by business area, of by a bunch of other parameters. You could set up different portfolios of faux purchases to see how things might have panned out (like "Watch these 20 stocks for the next year" articles)

I did pretty well with it, didn't have a lot of money in those days, but I came out ahead. I would have made more or lost less if I had been more diligent with stop loss orders or using some kind of firm strategy as to when to take out profits or been more proactive about dumping clunkers.

One stock I came across, Lithium Exploration Group (LEXG) popped up on the radar. It was moving 2% ,3%, 4% per day for weeks. The overall arrows weren't great, so I think I put in a grand (it was at ~$3/share). Thump, thump, thump, up it went. I took some profits at about $5, $7, $9 per share while bumping up my stop-loss the whole time. It got to $10 and the bottom dropped out. It blew through my S/L & I got out about $7.50 or $8. It settled about $5. It started going back up, I got back in. I kept my S/Ls tighter and still made money on about 3 more soar & burn cycles. It trades for less than a penny now.

I also did well with a company called Hanson Natural (HANS), especially when they became Monster Drinks (MNST).

Then TD bought them. Nothing changed for a long while, until they shut it down. Really, really a bummer. I miss it.

 

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7 minutes ago, 2Far said:

Investools was a really good product for me.

I've been using some free internet resources for my tools. Finviz is my go to tool. Trading through Robinhood.

I just put a little  bit of money in each month. Not much more than say beer money. So my discipline is more like self limiting.  It takes two days to get your cash after a sale so I can't really move as fast as like on some purchases. I'm not nearly as impressed by my wins as I am by my losses. Losses are so much more instructive.

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I looked at groups of companies that had some bad news or bad press & their stocks dropped. I'd set up a faux portfolio, buy some faux stock & let it ride. Did not find any kind of a pattern

I looked at groups of companies that had stock splits (there was a site that kept track of upcoming splits) The prevailing wisdom was that one year after a split, the stock would be back at the original price. Yeah, no pattern there either.

When I bailed on stocks, I put them into a faux portfolio to see what happened down the road. A few were repurchased subsequently.

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6 minutes ago, donkpow said:

I've been using some free internet resources for my tools. Finviz is my go to tool. Trading through Robinhood.

I just put a little  bit of money in each month. Not much more than say beer money. So my discipline is more like self limiting.  It takes two days to get your cash after a sale so I can't really move as fast as like on some purchases. I'm not nearly as impressed by my wins as I am by my losses. Losses are so much more instructive.

ShareBuilder used to let you buy fractional shares of stocks if you were on their auto-invest program. ShareBuilder got bought by ING, got bought by Capital One, got bought by E*Trade.

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1 hour ago, donkpow said:

As many of you know, I play a little in the stock market. Specifically, the US markets with micro, small, and mid cap companies. I spend some time finding companies that I think can make me a bit of money. Usually, I'll add a stock to my portfolio with a small investment and then dig in with it to see if it is worth more money. Then I watch it to see how it moves. Last year, I had three episodes that give you an idea how things work in this millieu.

Example #1: not a bad company, low stock price moving in the right direction, company moving in the right direction. I was already increasing my stake in the company. The bastards did a 5-1 reverse stock split. This is when the company consolidates the stock in your portfolio into a less number of stocks. In this case, if you had ten stocks, after the reverse spit, you would have two. The market hates reverse splits. I lost money. 

Example #2: not an excellent company, high risk, low cost to me. I was already leery about this company because the numbers were way off. I went ahead and bought some and kept a close eye on it. I sold out of my position to take a 10% profit. I bought back in with a lower stake and sat back  to catch another swing. Those slackers executed a distribution. A distribution is when they issue more stocks onto the market, generally diluting the value of your stocks. This was the second time they issued a secondary public offering within a year. Somebody sold a million shares within minutes of the announcement. Stock price dropped 50% and now I am sitting on a rock waiting for it to hatch.

Example #3: an excellent foreign investment traded on the NYSE, I bought in and was in the process of building my position. This stock was going to be a big winner based strictly on the quality of the company. The MF'ers did a spin off. Placed the good part of the former company in the European market and left the riskier, lower performing entity in the US market. I don't have access to foreign markets. I lost a little and really only lost because it took me a while to act.

Example #4: good US company, good market position, good industry. I was building my position in the stock. Don't forget, I'm running my own portfolio. A European company announced a merger with this company with quite high stock purchase price. I sold out and made 67% over my investment in like a month. Woot, woot. Winner, winner. Kiss my ass. I win. :lol:

Situation 1, they did a reverse most likely in an effort to increase per share price so that they could uplist to a better exchange.  Were they on the OTC at the time?  If successful, you make money.  If not, you take a bath, as do they.

Situation 2, the company probably had a convertible note out with a lender that was converted and the lender immediately began to sell shares which destroyed the stock price.

Situation 3, no input from my end

Situation 4.  Congrats.  

 

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3 minutes ago, jsharr said:

Situation 1, they did a reverse most likely in an effort to increase per share price so that they could uplist to a better exchange.  Were they on the OTC at the time.

Situation 2, the company probably had a convertible note out with a lender that was converted and the lender immediately began to sell shares which destroyed the stock price.

Situation 3, no input from my end

Situation 4.  Congrats.  

 

#1, they did the reverse split so that institutional buyers could buy in. The price was too low for most fund manager rules.

#2, nope. They announced all the details, who's what etc. Just a plain ol' money grab. Good companies would pull in private investors. It's a Texas company, so there is that. ;)

#3, Imagine my relief.

#4, Thanks (I win, I win.)

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11 minutes ago, Razors Edge said:

If I was a day trader, I'd be looking at the major cruise lines for a cheap buy and then a return to "normal". 

Yeah, that's part of the Corona Virus thing. A lot of opportunities to be forth coming when the recovery begins. I've got one on my watch list. I can't buy it now but after my sale comes through, I'll bring it into the portfolio along with a new long term investment.

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Up to my 40's, I devoted at least 25% of my stock portfolio to small companies and mostly got burned.

I bought Vitesse Semiconductor - one of the first companies to move beyond silicon wafers to gallium arsenide, etc. to make even faster electronic chips - for $3. It dropped to almost nothing and it's bonds were selling for 70 cents on the dollar. But Vitesse itself had tons of cash and bought back those bonds.  I added more shares.  Eventually, I sold it for $14.

But, I also bought a small, kids bicycle company located in New Jersey -whose name I forget now- and whose CEO won some State Award as a top, young entrepreneur. The company realized it had to add accessories because Walmart, etc. wanted to buy from companies that could provide complete lines of products, and made a contract with the then-popular Spice Girls to make Spice Girls handlebar grips, mirrors, bike racks, etc.  The items were all contracted to be made in China.  It looked like the company was going somewhere.  I bought shares for around $7.  The stock went up to around $15.  Then, strangely, the company began reporting losses, the stock price dropped to around $1.50, and two of the company's major officers borrowed $3 million from the company and then bought the majority of the company's shares for $3 million and then took the company private! It was all "legal" but the company's money problems were almost surely fabricated by using loopholes in accounting laws.  I saw the writing on the wall and got out around $2.50.

Today, I have more spending money from regular income sources than when I worked, so I now stick to large, "safe" dividend paying Graham-Buffett-style Value stocks.  But there is definite more of a thrill with small, promising companies stocks.  Maybe I'll move a small part of my stock portfolio into them!

P.S. When the market soars, my "safe" value stocks haven't jumped as much, but they don't drop as much when the market drops. My stocks are doing exactly 1% better than the S&P 500, 4.39% to 3.39% for the year so far - and better than 90% of pro fund managers - right now:

1695189832_BeatingSP5002020_02_21.jpg.1d75d2cf5e33123a33a7cd63d1d664b4.jpg

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2 hours ago, MickinMD said:

Today, I have more spending money from regular income sources than when I worked, so I now stick to large, "safe" dividend paying Graham-Buffett-style Value stocks.  But there is definite more of a thrill with small, promising companies stocks.  Maybe I'll move a small part of my stock portfolio into them!

What a coincidence, me and Warren Buffet are almost the same. :lol: 

Warren "The Oracle" Buffet will be on CNBC Monday.

2 hours ago, MickinMD said:

P.S. When the market soars, my "safe" value stocks haven't jumped as much, but they don't drop as much when the market drops. My stocks are doing exactly 1% better than the S&P 500, 4.39% to 3.39% for the year so far - and better than 90% of pro fund managers - right now:

 

I shoot for 10% minimum return. anything less and I have to work harder. :)

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3 minutes ago, jsharr said:


Did you play any of those?

I don't think the bottom has arrived.  They say Vegas and other similar vacation spots should have a lot of their stocks slammed.  No one wants to be in close quarters right now, so maybe the flipside - like Netflix or Hulu or Disney+ have upsides (but Disney will get nailed the other way).

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1 hour ago, donkpow said:

I have never heard the VIX mentioned at such high frequency.

"Fear Gauge"

They've been hyping that for a few years as a buzz word.  An irrational market doesn't give a rat's behind about volatility.  Or anything else.  We'll keep goosing this market until we can't goose it no more, and then it is the suckers of the world who will take the bath.

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42 minutes ago, Razors Edge said:

They've been hyping that for a few years as a buzz word.  An irrational market doesn't give a rat's behind about volatility.  Or anything else.  We'll keep goosing this market until we can't goose it no more, and then it is the suckers of the world who will take the bath.

Senior professionals always try to create rational perspectives. Some of that is likely to be self serving, IMO. 

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3 hours ago, Razors Edge said:

I don't think the bottom has arrived.  They say Vegas and other similar vacation spots should have a lot of their stocks slammed.  No one wants to be in close quarters right now, so maybe the flipside - like Netflix or Hulu or Disney+ have upsides (but Disney will get nailed the other way).

You should see the things jumping off the shelves in China (besides masks).  Leggos, card games, lots of basics for preparing food at home etc.  You could be a dumpling wrapper mogel now.  Some of the food basics are up double or triple normal consumption.

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15 hours ago, maddmaxx said:

You should see the things jumping off the shelves in China (besides masks).  Leggos, card games, lots of basics for preparing food at home etc.  You could be a dumpling wrapper mogel now.  Some of the food basics are up double or triple normal consumption.

Likely coming here based on some comments already posted by others. 

I wonder what the US was like during the Spanish flu? 

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