Stocks

[Chris]

How is everyone's portfolio doing? It has been so topsy turvy lately I've been paying extra attention to mine.

Of course July had a nice run up until late in the month and it all took a nose-dive. I was down almost to break even, which sucks. I didn't sell though, just bought more.

Since the end of August then my portfolio is up 50%, it is something ridiculous like almost $2k a day.

The last couple days have been decided wonky too, one day up big, one day down big, one day up big, one day down big.

However, I think I've been luckier than others. The up days have all been driven by solar panel companies. Starting last winter I started buying a lot of them, the time is just right and science or technology aside, politics dictates more solar energy is needed.

So for instance today most stocks are down, but FSLR, one of mine, is up 30%. That stock is approaching being up 1000% on the year. All the other solar companies are doing pretty good too.

I get worried about the weak dollar and inflation though, because really, my portfolio may be up 50%, but if the dollar is down 30% then I really didn't gain that much in actual wealth as far as what I can buy with my money.

Thoughts?

[FPU]

Buying more losers is bad trading, most professional traders use stop losses to protect their principal, so if they buy at $100.00, the stop loss of 10% takes them out of the position at $90.00.

Professionals adjust their stop losses up as the stock price increases, called a trailing stop.

Your goal is to make money, not to lose it all or get emotional or as the pro's call it "getting married to a stock".

[Generalissimo]

You sound like you're doing well Chris, and congratulations on this, but as you rightly point out the growth in August is 'ridiculous'. Obviously it wasn't like this across the stock market, but seen as though there was a credit crunch recently it does seem a bit strange that stocks have risen. I think it's unsustainable, and I'd be looking at reducing my investment in the stock market if I was an investor right now. Oil is about $100 a barrell too, how much is this going to effect profitability of enterprises with low profit margins that rely on transport? There's a lot of risks at the moment. Even google, who relys on advertising, is going to see a hit because of this as transport will be more expensive, and a lot of the ads are selling products that need to be transported. The higher prices will lower quantity of the products demanded, and cause less advertising.

Off topic: And on topic of weak dollar, how I wish I didn't live under the strong pound right now! I used to get about 55p per dollar, now it's about 45p.

[Chris]

FPU, I don't get married to stocks. I'm also not a trader, I'm an investor. Because I am in the highest tax bracket and if I sell a stock before I've owned it for a year I pay around 40% tax on my gain instead of 15%. That is a pretty good motivation to buy and hold.

Buying when things are down, and selling when things are high, is how you make money, not buying when they're high and selling when low like you suggest.

Sean, Actually it wasn't August, but September and October that had crazy growth, and it wasn't really the market overall, just the sectors I invest in. Most people are down over the same period, I'm way way up. I think the subprime thing is way overblown. GDP and unemployement have both been good lately, so I see the economy as strong. The only worry on my horizon is anti-growth tax increases depending on who wins the next election. If for instance the capital gains tax more than doubles like might happen that is going to kill the stock market as well as business investment and development.

I think a large portion of the oil cost can be attributed to the weak dollar, same of course with the increase in gold. The rest apparently the Saudi's miscalculated demand and caused a pinch on supply that they will supposedly remedy sometime this winter.

In anycase, high oil is good if you own alternative energy stocks, which I do.

As far as moving out of stocks, where would one move into? Dollars? With the horrible inflation going on? Gold? Gold has gone up so much recently I worry about a correction of some sort there as well. Invest in your own business? I've got about as much of that going on as I can handle right now already.

No, I think stocks are the way to go unless you're happy with the low return of bonds. You just gotta pick things smart. I like the alternative energy stocks because that is the way the political winds are blowing and they'll continue to blow that way in recession or economic downturns. Also, try hitting larger companies in different countries, or those who serve different countries, so a single country recession affects less of your portfolio. Diversity.

[Todd W]

My apple stocks are doing mighty well Wish I had more.

[agua]

My apple stocks are doing mighty well Wish I had more.

I wish I had some

[Westech]

My reasonably conservative portfolio is up around 7% YTD after the recent decline. It took a hit, but I'm still happy with the overall performance.

I'm considering municipal bonds as a long-term alternative to stocks, cash, or metals. When taking their tax savings into account you can get the equivalent of a 7-8% return with little risk if you plan to hold them to maturity.

[Chris]

oh yes, Apple doing good for me too.

[deronsizemore]

I haven't got into stocks yet. I'd like to though, just don't know what I'm doing. Going to start reading up.

[demosfen]

Investing in stocks (assuming we are talking US stocks) now is a really bad idea. A more effective way of achieving the same thing would be to put your $$ in a shoe box and mail it to Federal Reserve as an anonymous donation

Most people still don't seem to understand what's going on - we are headed into a depression that will make the one in 1930's seem mild. Bernanke is on a mission to destroy dollar and no one except for Bartiromo, Cavuto, and Co. has anything good to say about the economy. Gold is traditional safe heaven in a hyperinflation scenario . Some people are religiously opposed to investing in this 'barbaric metal' for whatever reason, in that case I'd go with foreign currencies and some commodities

[Chris]

I never expected you to recommend gold there Demofen.

[Billyray]

Most people still don't seem to understand what's going on

I'm with you Demosfen. I watched the Dow fall in '87 and the current situation scares the hell out of me. There are a lot of scary factors out there at the moment and they aren't positives.

[demosfen]

I never expected you to recommend gold there Demofen.

I am shocked myself, don't know how that happened. Silver is much better, it outperformed gold like 400% during the last bull market in metals. Gold is a very conservative investment comparing to silver, sort of like CDs vs. stocks

[Generalissimo]

To be honest I'm not going to go as far as demosfen, but I do think the recession that is coming is going to be larger than the last few we have. Greenspan has said there is a 30-40% chance of a 'full-blown recession', and he's more likely to underexaggerate than exaggerate. Oil at $100 is pushing up prices of transport, and making investments less viable. This is especially true in third world countries, and this has shot up their prices of food (which led to the events in Burma, as well as basically a war between farmers and the government in areas of India). We haven't felt the full effects of the credit crunch either yet.

I think metal is a good idea to put money in at the moment. Even if a recession doesn't happen, the increasing fears of one will push the price of metal up.

There is this naive view some people in business have that since the new millennium we've escaped recessions, as we will only have small things like the 2001 web issue. In economics generally people see that there are crashes every 7 to 11 years. These can be of different proportions based on what caused them.

The US has currently got $4 trillion of debt. Before the current government it has only ever managed, from Washington to Clinton, to make $1 trillion. This is a massive debt that the US is only able to sustain because of the Chinese and others reinvesting back in the US dollar. They are getting scared as it devalues. When they get too scared (or it is in their economic or geopolitical interests to do so) they will sell all their reserves and we'll see the crash.

[Chris]

I'm with you Demosfen. I watched the Dow fall in '87 and the current situation scares the hell out of me. There are a lot of scary factors out there at the moment and they aren't positives.

You know, if you had bought at that fall, you would be up crazy amounts right now. Even if you bought right before it instead of right after you would be up crazy amounts if you had held your stocks instead of running.