Welp, I have lost so much these past few months going long and playing it conservative, That is what I get for going against the trend, Now I have a new gamble, the volatility these past few weeks has been at a all time high, so I sold $VIX puts that expire in 1/09 to try an profit when the volatilty comes back down to historic levels. I don’t understand how the market could stay this volatile for very much longer. I guess I will see 
-Jarred
I feel Like as long as I am loosing shirt I need to be acquiring some sort of experience to make me feel better. Here are a few other things I am going to try and incorporate it into my trading strategy. Remember to put in your stop-loss or hedge against those huge market swings that you think will only happen if we have a repeat of the great depression or something, because huge market swings do happen, and it can really hurt if your on the wrong side of it. Here is another thought, Just because you are investing conservatively it doesent mean your safe. So maybe taking the big risks for big returns isn’t that bad of an idea.
-Jarred
I already knew this, but hopefully I got it this time, - You never want to use all of your margin to fully extend yourself. Margin Calls are killer, and costly. In my opinion the risk just one margin call definitely outweighs the return potential of trying to squeeze out that last bit of available leverage.
-Jarred
I just want to reiterate what i learned yesterday, never, never, never trade against the overall market trend.
I have been adhering to my trading idea set out in my post titled “where most my money is at”. I keep on buying more and more as the market keeps on going down and down. And well to day is my last buy in, im outa money. If the market doesn’t correct soon and trigger some of my take profits I might even get margin called out of my positions, these are stock positions, I’ve only ever had a margin call on option positions. I cant believe I have lost this money this fast. I only have one thing to say “AHHHHHHHHHHHHHHHHHHHH” I have lost about 30% of my whole portfolio on what I thought would be a really conservative strategy. I guess there is a lesson to be learned from all of this thought. You must respect the overall trend of the market. Going long in a bear market is just plain stupid.
-Jarred
Goal: Clear 5% on theory of capitulation
Wait until the end of the day to buy. (We’ll say you got a bad fill @ $7.00, and that makes things simpler)
Take profit and exit position: $7.35
Stop loss: $6.65
Have you ever thought about buying one of these stocks right after it has just been massacred? I’m not talking about one of these Lehman Brothers that has been in a down trend for a year or so. I’m talking about a stock that falls out of bed one morning to the tune of 20% or 30%. After one of these huge drops the stock seems to work its way up. If you had bought on a gap down on Fortune Brands, Costco, or Huntsman you could have made at least 5%. And these are trades, I’m not interested in holding anything too long in a bear market. But you might not have faired too well in Vmware or Elan. Vmware you wouldn’t have lost much and with Elan you would have had to be psychic and known that another huge drop was coming. And you have to be psychic (or crazy) to play biotechs.
Thesis: The 20% drop in Terex (TEX) today was overdone, or at least now reflects future bad times. And the stock will rise at least 5%
Trade: Say you waited until the end of the day and still got a bad fill at $38.10. Let’s pretend you’re going to hold onto for 5% on either direction.
Entry: $38.10
Take Profit $41.01 (entered as a GTC limit order)
Stop loss $36.19 (entered as a Stop Market @ 36.19)
I’ll post in the comment section if this trade would have worked out or not.
I’m a pretty big bear. I think that the market has to head down. My thought is: Who thinks stocks are a bargain at crazy multiples when housing is melting down, our financials have lost the ability to make money, and the overall economy sucks? I say that we should let stocks get cheaper. But I still want to profit on their inevitable way down. It’s frustrating when it rips higher, but I understand that markets don’t go straight up or down. But treading water isn’t too fun either. The volume this week has been weak, very weak. The pros say that the S&P has to break 1265. It looks like the market has bounced off that line numerous times. I sure hope it breaks. But I’m not hanging my hat on it. My only big position (for me) is short PNC. My other shorts in LM and the IWM are negliable. There doesn’t seem like there is much direction. But on a plus side this boring market might motivate me to go out and get a job.
well, I have had now 5 different funds that have hit the 4% take profit as described below. It feels like my whole “hold them until you make a profit” (see my last post) strategy is kinda working. However with about 10% of my portfolio I shorted the market (bought puts) to kinda hedge my long bets. Needless to say with this recent mini rally (the rally responsible for all my take profits triggering) has wiped me out on those shorts. I the end, I have lost a lot more on all my puts that than I have made with a measly 4% on half my portfolio. I think I may be done with the option game for a while, Just stick to picking really good income funds
-Jarred
I’ve been kinda taking a breather from the market lately. By breather I mean that I have been getting my butt kicked. I’ve held most of my short positions through this ridiculous rally. There is no way to describe this behavior other than stupid. I still believe that I’m right on the positions that I still have on the table but I didn’t give myself enough time on the suckers. This is some advice that Jarred tried to give me awhile ago and I shrugged him off. Now, he’s the one that should be laughing.
I think that this rally is just about done with though. We’re touching some good resitence on the S&P at 1290 which I think has a good chance of holding. I’m so sick off all this market rallying on bad news. 300 point rallies don’t happen in bull markets. David Rosenberg says that every 300 point Dow rally has occurred during bear markets. http://bigpicture.typepad.com/comments/2008/08/300-point-dow-g.html
I bought 2 Nov PNC 70 puts at what I hope is the very pinnacle of the PNC run. I’ve really loaded up the boat on this one. I’m not too worried though. This ship is going to sink at least a little bit, even if it doesn’t go to the bottom. And this time I’ve given myself until November. I was pretty excited to see Dow component AIG miss big time on their earnings after hours. That should pull the market down. But I’ve been wrong before.
Also: ZION has absolutely no business being almost $35. I wish I had some free monies to short it.