It Just Doesn't Work

I wanted to take a step away from the market for post here and talk about something else that I think affects all of us in one way or the other. The issue that I want to address is the lottery. It never ceases to amaze me how many people rely on the lottery as THE way to become rich. This would not really bother me if it were just one idea of many, since the chance is there, but this is usually their only idea. When I ask them if they have any other ideas, they either say "no" or something like, "become a doctor." I am not writing this to down talk these people, for this is never my goal. What I am going to use here is an analogy that I came up with and use to explain why I don't think the lottery will make you rich/financially free.

I have decided that I want to run in an Olympic marathon more than anything else in life. I believe it is my destiny, and without achieving this, I won't ever feel like I gave it my all. Now there are two main routes that I have identified that can get me to my goal. One, I can take part in this program that I walk almost every day. Everyday that I walk, I have the chance to be put in a drawing that will get me to the Olympics, no questions asked. Since I already take part in this program, and it gives me everything I need, this won’t be much harder. I will just have to walk a little bit further everyday. The other option I have is to walk the same amount as I do everyday do provide me with what I need. Then, as soon as I get home, I would go out running. I would run as much as I could, and do this day after day. The only problem with this plan is there is nothing saying that I will get to the Olympics, it just depends on my own determination. The first plan at least gives me the chance, even though I am competing against all of the other walkers in the drawing. I decide to go with plan one. I walk a little more each day to prepare for my marathon, and everyday get entered in the drawing. Occasionally, other people win the drawing and get their chance to run in the Olympics, but I am persistent and keep walking.
Finally, I win! I can’t believe my luck; I am going to the Olympics to run in the marathon. I am feeling good. When the race comes around, I realize one horrible fact, I can’t run that far. I have spent all my time walking to get here, and thus am out of shape for running. All I would have to do is run and finish this race and I would feel complete, but I don’t know how. I am so close but yet so far.

In this analogy, I compare becoming wealthy to running in an Olympic marathon (I do this because everyone has ran at one time or another and thus can relate). I walk (work) everyday to become wealthy. Suddenly, I win the drawing (lottery) and I have a lot of money (get to the Olympics). All I have to do is invest (run) and I am at my goal. The problem is that I have spent all of my time working, and no time learning. I won the lottery, but I didn’t know what to do with my money since I never practiced. So in the end, I returned to where I was. This is why I feel that the lottery is not a good investment idea. Most people who win don’t know what to do, so they end up right where they were before hand. The only difference is they are usually unhappier.

I seem to have better luck explaining this to people when I use this analogy. Feel free to critique it as you wish, and use it as you need.


Good Luck With Everything!

Mark Zimmer

BOT takes me to the top

Being short 1,600 shares of BOT, I am putting my whole contest portfolio on the line. My average cost on the position (I shorted two 800 share blocks) is around $128, which is pretty close to its all time high of $135. The stock was up yesterday but closed towards the low of the day (closed at $127), and I knew today would be a great day. Not only did the stock break past its support point (which was $120 intra-day), it just surged downward setting a low of $113. It closed at $118.40, but though it rallied five points, I am still feeling good right now. The gains today were good enough to take me into first place overall, as I added about $15,000 to my account value. My account value as of the close today is $125,287.50; let the good times roll.

Other side notes:

• My shorts on ABP are worth $1.55 per contract; I paid $1.20 for them (this can change quickly though).


• The market had a bad day, as the NASDAQ gave up over 36 points, and the S & P had a distribution day.

Closing Thought – “The road to success is always under construction.”

Regards,

CNR, Never a dull moment

I wanted to start out by saying that the feedback on my last post was appreciated, it is ALWAYS good to receive feedback, so thank you.

I have always enjoyed these contests that we organize/take part in for one main reason, the total lack of emotion when I trade. I feel that this is probably the most important thing that any stock investor can learn, but it is easier said than done. Sure, you can learn to read all the charts, recognize all the signs, but if you still allow your emotions in the way, what is the point? This is probably the main reason I take part in these contests. Although they are a great way to meet people, practice "systems", and just expand your knowledge base, they are also probably one of the best ways to get your emotions in check. I personally am quite competitive in this contest, so I do care how I am doing, but not so much that I allow my emotions to get in the way. I feel that by seeing the changes (good or bad) in my account day in and day out, it will make me a stronger investor, emotionally speaking.

This brings us to the stock that I have decided to buy long, rather than short like I have been doing in the past. While, I am getting a grasp on shorting, but by no means do I consider myself an expert. The reason for this trade is actually pretty simple, CNR is a fun stock to watch. It is quite close to the minimum price that is allowed in the contest of one dollar. CNR usually jumps around between $1.00 and $2.00. Another aspect of this stock that I like its volume, which is usually around 2 mil per day. What this leads to is a stock that you are able to receive great leverage on, and you don't have to tie up that much money in order to see some results. I so far have took a loss on the first day ( down $.10) but I am going to continue to hold. My reasoning behind this goes back to the first paragraph of working on emotional intelligence. This is not an excuse for taking a lose, but a way to force myself to hang on to something that I fell will mostly like jump up near $2 before our contest end the first part of January. Time will tell if I am right.

The main lesson that I am trying to teach here is don't forget to work on emotional intelligence as well as your knowledge base. I don't feel that people are forgetting this, but it is always good to be reminded of the goal that exists, which is learning.

Good Luck With Everything!

Mark Zimmer

Shorting Like Stocks

What I have been working on for the majority of this contest is getting a firm understanding on stock shorting. There was a time in the not so distant past that I had no grasp on it at all. In this contest, all of my trades, but my first one (which I made a quick gain a boucing SIRI) have been shorts. One of the things that I have been playing around with is finding a few stocks that are closly related and shorting them all at the same time. The idea behind this is that if there is big news affecting these like stocks, it should affect them relativly in the same mannor

The three stocks that I worked with at the start of the contest were KBH, STV, and TOL. All three of these are building companies and the issue that was really affecting them was the hurricane season that is now coming to an end. All three of these stocks performed very well over the summer months, and when the summer started to end, they started to fall. I admit that this might be a stretch for finding a stock to short, but the idea is to find a gerneral pattern, not something that is going to happen right now. These stocks are now starting to get out of pattern at the moment, so I have covered my position. I still am holding 500 short of STV, but that is all at the moment. I am now working on finding another set, so look forward to a post on a few picks in the near future.

I guess the main lesson here is if you are doing all the work researching one stock, researching a similiar one might not require much more effort.

Good Luck With Everything!

Mark Zimmer

Taking Profits. BOT the next BIDU?

Where do I Begin? It has been a few days since my last post, but I am pretty pumped to have Mark on board. As the blog continues to run, new ideas continue to come in and I am sure some will come to light down the line. We are establishing a team, the Falkin team, which we hope can gain some respect here down the line, haha. The trading contest is a great place to find and help people learn more about the market, and I love every minute of it. It seems that there is an increasing number of contestants climbing into the gains category overall. By my count there are now 22, and there are a lot that are right on the brim.

Getting my contest simulator portfolio updated, I have made only a couple moves since last week. I covered both my big shorts on ARD and NGAS, between the two yielding $5098.98 and $114.28 respectively. I lost $1,458.98 on my WRES put options. Always remember to take into account how much time is left before the option expires. I made the mistake of buying the options with only a week left until expiration. Most contracts go by the month, and will expire after the third Friday of the month. My other two put option plays were bought out till November, so I am still good on those for a while. So, overall, after these three closures I pushed my simulator portfolio up $3,754.28, or about 3.5%.

Stepping into the next play, I took a short break to rethink and find new plays that may be available. Yesterday, I went ahead with my next play, which was to short BOT, the Chicago Board of Trade Holdings Inc. The holding company went public just last week, and has run up every day to a new high close yesterday of $130.50. I shorted 800 shares at $131.26, and today shorted another 800 as the stock fell at $124.40 (the stock closed today at $124.99). The thinking behind this play is simple, as I believe this will be another BIDU. You may recall BIDU, which out of the shoot ran up to over $150 a share (IPO was $27) to fall all the way back down to the low $70s in just a few weeks. As always time tells the story; so far so good.  

Stepping away from the simulator and into my live trading account, I still am holding 2,000 shares of NXXI. Just to recap, I bought and just about doubled my money on the company as FDA results for its leading drug came out good and the stock ran up from my purchase price of $.68 to a high in the $1.30s ( I sold out half my position at $.94 and $1.32, and bought a small but nice stake of 2,000 at $1.01; the stock closed today at $.92). I haven’t taken advantage of using the margin in the account I just obtained approval to manage in, as I still feel I am learning the ropes (my APEX account does not have margin approval).

Overall I am content, and I still am continuing to plow as much information in my head as I can. I bought a new book last week by Will O’Neil, “How to Make Money Selling Stocks Short” and it is full of new knowledge. An excellent read so far, and I am surprised at just how packed it is with charts upon charts with live past examples of where to properly sell a stock short. I am going to have to head on over to Starbucks, settle down with a drink, and really get into it. I hope it can help make my writing better and my calls more accurate. That is all for now as it is time to cook myself some dinner. Hope everyone is having a great week.

Closing Thought - "You are only as good as your word. Don't give your word if you aren't going to give yourself."

Regards,

An Introduction of Myself

I wanted to start out by sending a big thank you to Blain Reinkensmeyer for asking me to take part in this blog. I have known Blain for about 8 months now and over that time I have developed a great respect for him. He is a wonderful teacher, and I am looking forward to working with him.

I am going to use this first post to tell you all about myself. I feel that this is important so that you will understand where I am coming from in future posts. As Blain mentioned, my name is Mark Zimmer. I am 20 years old, and was born and raised in Marne, Michigan, which is just west of Grand Rapids, Michigan. I am currently attending Baker College in Muskegon for a degree in Business administration. I am in my second year of studies there.

I have always felt that having to much to do is better than having not enough. So following this motto, I try to stay quite busy out of school as well. I spend the majority of my working time as a builder. I am an independent sub-contractor and mostly do work for about four main building companies. I also run a recycling company called Treecycle. Currently, we only deal with paper (which also includes magazines, cardboard, and phone books) but hope to expand our collection base in the future. I have also just recently started working on flipping a piece of property with a few other investors. This is the first of such deals for me, but am eagerly looking forward to learning. Currently, my main contribution to helping other people learn is working with the stock investing contest that Blain has talked about. I am the head of prize distribution, and also an assistant to Blain in other areas.

In my free time, I enjoy pretty much any activity that involves requires being outside. Some of my favorite activities are backpacking, bow hunting, ice/roller hockey, and tae kwon doe. I am also an avid reader, and enjoy spending time with family and friends.

What I am really hoping to bring to this blog is another view point on some of the issues discussed, as well as some lessons I have learned in my experience. I don't consider myself a worthy opponent to Blain when it comes to stock investing, but feel that I do have experience in areas that he lacks. Hopefully, we can together provide a little more rounded blog. In closing, I look forward to hearing any feedback from you, and hope you enjoy reading. As I usually like to close...

Good Luck With Everything!

Mark Zimmer

Mark Zimmer joins up

I would like to take this opportunity to say that Mark Zimmer has joined me in writing for this blog. Starting tomorrow, October 23rd, you can look for Mark’s posts. Our disbursement will most likely follow this routine:

Monday – Mark
Tuesday – Me
Wednesday – Mark
Thursday – Me
Friday – Mark
Saturday – Me
Sunday – Guest Writer or off day

I hope you enjoy our new added input and always

To the future,

Exxon falls, and I climb back to the black

I didn’t get to write yesterday, and I regret it since it was such a good rebound day for my simulator. The oil and gas industry basically got hit hard as major leaders fell sharply. (XOM) Exxon Mobile fell on heavy selling, as well as XLE, the spider tracking the smart select oil group in the S & P, also had a big distribution day. What were the results for me? I made almost all of my money back from Monday, and a little more, pushing my account back to around $104,000 and a strong 3rd place. Why third? I am trailing to Ailun, who shorted XLE big time and is reaping the rewards of it right now, and my buddy Mark Zimmer, who is sitting with about $116,000 in account worth. There are 68 competitors in the contest, 45 of which who are active and have made at least on trade in their portfolios.

So, after yesterday’s sour performance in the market, we come to today which thus far is pretty bad (Oil area speaking here). Oil is down over a point, XLE just hit new lows on the day about three minutes ago, and my bets five bets are all red which means green for me. My $80,000+ bet against ARD is proving huge today, as the stock is down over 7% (down $1.66 right now). My puts on ABP, PQUE, and WRES are also all in the money now which is great. I am almost fully margined out with these trades on my 100k starting portfolio, and I look forward to seeing the downtrend continue for the rest of the day.  

Looking down the line Wilma, the next hurricane, is growing in the Pacific and could prove to be a major threat to oil. With this in mind it is important that to keep in touch with news and play my cards right. I think it would be great to see oil back under $60 a barrel. As I went out to Starbucks last night, I saw $2.599 gas which was a lovely site.

I am going to hold all of my positions and sit tight today and see what happens. I will probably post after the close since I did not post yesterday. Later in the week I will do some more searching and see what plays are available for next week. The housing sector may be an area to get into this Christmas season (as in go bearish on) because if the Fed’s do in fact hike up rates, they are doing it partially to slow down the real estate market.
Regards,

A hard day holds a brighter future

The market had an interesting day today as the NASDAQ just closed up about five and a half points; nothing to jump around over though. Thursday and Friday, though both up days last week (NASDAQ), are not enough to signal a true rally. The volume has declined each up day, and we have yet to see a big accumulation day in October. I am still bearish overall in the market, and I look to see some resistance as the NASDAQ nears its 200-day MA.

With the market looking bleak, my bearish sentiment of the Oil and Gas Us Explorations industry group grows as well. But, looks can be deceiving, and I got hit hard today in my simulator. My biggest bets from last week gapped up early today, turning my account into dirt. My simulator account opened at around $106,000, but now sits at $98,416.95. In total I lost almost $8,000 in value, and it is only Monday. I am still holding all of my five positions from last week (got Puts on three companies, and two companies I am short on), and am hoping tomorrow holds a brighter future.

I want to end today with a couple predictions:

1. The NASDAQ has shown no signs of rallying, and I predict its bearish trend to continue into November.


2. The Oil&Gas Us Explorations and Productions Industry Group isn’t going anywhere fast, and I also predict the bearish trends to continue till at least early November.


3. Google rallied today, closing up $8.55, but did so on lower volume. With Distribution surrounding this stock I am a better against it. Though unpredictable, I don’t see Google above $300 for too long.

I also want to end here making a comment about crediting people’s work. I don’t believe in crediting work without someone proving themselves. There are two reasons I write in this blog every trading day: to help people, and to earn my own keep. As I go forth I will start to come out with more and more of my predictions. I hope that anyone who reads them takes note and credits me based on them. I put all my success from the past years trading live aside, as it is irrelevant to me. What matters to me is what I predict here now today, and how right I am. I hope that people can learn through my successes and failures, and become better traders in the end.

My closing belief - Don’t credit anyone unless credit is deserved. People will talk the talk all day, but walking the walk requires skill. Talking about the finish line is not the same as crossing the finish line.

To the future,

A wild day and a few big bets against the best

What a wild day it was today in the market. Things only got nuttier as the day went on and I had a riot watching everything unravel. AAPL ended up rallying four and a half points, making me wonder why I didn’t hold my 500 shares from yesterday. The big mover was XLE, a spider that replicates the energy select sector of the S & P 500. It fell hard early on, and ended up closing at $47.66, down about a buck and a quarter. The big thing to note here though is that one of the contestants in our trading contest was betting such a fall, controlling 70,000 shares in puts that have a $45 target price slapped on them. Needless to say the puts ran up almost 50% today, and he is now sitting in 1st place out of 64 contestants.

I did fairly well today overall, selling my one share of Berkshire Hathaway (this is all simulator activity), and making an intra-day play on MWRK for a quick $3k. Most of my trades for next week though are bigger bets against the oil and gas US explorations Industry group. The Industry group is currently number one overall (there are 197), but everything and I mean everything in the sector got hit hard today. I went through every stock at the end of the day looking for anything that was “holding up”, and bet against it. I bought puts on ABP, KUG, QQW, and shorted 3,000 shares of NGAS and 3,500 shares of ARD. Out of 88 stocks in the group, these were some of the last still trading above their 50 Moving Averages (50 MA), and I don’t forsee them there too much longer. All of the leaders got hit extra hard today, and it only seems that the trend will continue. In my case I hope it does, for if I am right I should be able to push my portfolio 5 to 10% higher.

Beyond the bearish calls in the leading industry group, I am still trying to get a grasp on what is going on in the market. October apparently is always a rough time of the year, almost always a sell off month because of a crash in the past. But, even with history playing into the equation, it still seems to be tough to figure out. I think most of the sentiment is being drawn from the Feds expecting to hike rates a possible half point next meeting, since the economy is still growing and needs to be slowed down. But, hiking rates is and has never been liked by the market, and I think we are seeing that right now.

Even though things have been rough, I have loved the game even more. Finally understanding margin and betting against the market, I feel confident in my abilities to make gains in these troublesome times. With my success in the simulators, I sold my Dad on letting me manage part of his portfolio to trade options with. I don’t have margin approval in my APEX account, and after my last disappointing trade this week, I am comfortable sitting in mostly cash. The only stock I hold now is NXXI, which I doubled my portfolio on a while ago after its leading drug obtained FDA approval (I bought it at $.69 and sold at $.95 and $1.32).

Time will tell where I end up here in this market, but I still say let the good times roll. With the ability to make money when the market is going up and down, I feel ready for anything. I am sitting in 3rd place in our trading contest, still trying to catch my partner Mark and now Ailun for the lead. The whole environment is just awesome, and the forums have been getting more and more exciting every day. I leave for a camping trip tomorrow morning, so I won’t be posting again till Sunday or Monday. Let the bearish trends continue tomorrow and next week.

To the future,

ACMR is over, but I think I am in love with margin

As I start today I want to make a comment on change. Change can be a great thing in your life if you are willing to accept it, go with it, and try. When the door of opportunity opens a crack, I don’t just peer through and try to guess what is around the corner, I hit that door so hard that is swings and breaks off the hinges. Jumping at opportunities is something I love to do, and the risk is rarely on my mind.

With that being said, I woke up this morning hoping for something good to happen in ACMR, because even though it’s only a few hundred bucks loss capped, it's still a loss. The stock opened up down, of course, and it seems that I just can’t win with it. My stop loss is at $15.90, and whether it be an act of the stock gods teasing me or something I am just not aware of, the stock hit $15.90 on the dot marking the current low of the day. Now basically accepting my $274 loss, I checked my order status to find out the order is still good, and I am still in my full position. What the heck? I am all dressed in black ready to close the coffin and here I am still in the position?

The only explanation I found is that the stock hit $15.90, and bounced quickly (could market makers have been trying to pick up my shares, hmm…), which is what it did. Two minutes after the hit the stock was up over $16, which is definitely fowl play in my mind. Now watching it here an hour and some odd minutes later, it is sitting in a range of $15.96 - $16, the only problem is that at $16 there is a ton of resistance.

Stepping away from ACMR though, I made some other calls today in my simulators that I should note. I shorted RNWK, which ran up some 30% yesterday, BRCM, which had a heavy distribution day yesterday, bought 500 AAPL, which fell heavily in after hours because IPOD sales weren’t as expected, and had Oct. puts on NDAQ, which was horribly extended over the 50-day moving average. I am green all over the place, RNWK is down 1.57%, BRCM down 1.48%, AAPL is up over a point where I got in, good for $500+ (10:58 AM update: BRCM hits new lows, I’m finally out for a $274 loss), and my NDAQ puts are up 50% as the stock is down 3.45% right now.

So though I lost on ACMR, It feels good to be up in my simulator. I am working on shorting and options before I go for the glory and add margin to my APEX account. I never really imagined myself trading options and shorting in real life at 19, but what the hell, the only person holding me back is myself. I have found that my trading goes far out beyond the money aspect, yes it feels good doing a $500 pop in one day, hell I’ve done five digit runs in a single day, but the symbolism resembles life in many ways. Winning and losing are all based on your attitude; some of my greatest losses have been my greatest wins, and visa-versa.

Well the day is still young, and I feel upbeat as I get to watch a few of these stocks play out. I am looking at AAPL coming close to breaking $50 a share and standing its ground, but NDAQ is has showed some intra-day strength climbing to $29.51 (it has a high of $30.38 on the day). I am leading the way in close competition with my buddy Mark in one of our group simulators, but in our main contest I am still in 2nd to who else but Mr. Mark Zimmer, who has a demanding lead. O man, NDAQ takes a 15 second free fall from that $29.41 to now $28.91, $28.80…$28.70… $28.40… got to love those options…

Regards,

ACMR makes it an interesting week

I woke up this morning just before 9:30 so I could make a play at the market open on ACMR. I spent a good hour and a half looking at charts last night looking for a quick point play. What I liked about ACMR was purely technical. The market has been getting hit pretty hard and the stock has taken a hit as well, falling pretty far. But, the big factor here was the volume on these falling days, and to my surprise I saw only one distribution day last week on October 6th. I also like the spread there is away from the 50-day moving average. Companies will sometimes take a quick movement upwards to close that gap.

Either way, I found the chart to best fit what I was looking for and at the open I put a limit in for 250 shares at $16.90. Early on the stock took a quick upswing, and I only could get in 32 shares or some small increment at my price. This isn’t any good for me because as the stock climbed above $17 I didn’t want to cancel the rest of my order, that would be $10.99 down the drain, so I let it sit (looking back now I should have set the order to “all or none, AON” because that way I either get my whole order filled or it doesn’t fill at all). I went back to sleep (this whole process took maybe 10 minutes), and awoke at around noon to the stock all the way down at $16.60.

Now I went to sleep thinking maybe it’ll run to $18 and I’ll make $10 off the deal, but finding it down (my remaining order got filled at $16.90) wasn’t anything exciting. The question then becomes what will it do on the day, and where is the intra-day support? The intra-day support seems to be at $16.60, which as I type this (2:12pm) just got broken. A distribution day seems to be at hand, and I am puzzled to say the least. I am going to put a stop loss at $15.90, which if it hits then I will accept a loss of about $274 after costs. Watching the buying behavior though I am still bullish on the stock, and I still feel I got a 50-50 shot for the stock to climb to $18 by the end of the week (so in three trading days).

Watching and waiting is now the game, but in the end it is just another day of fun for me. I bought some October 30 puts on NDAQ for almost nothing, betting a $1,000 that the stock is over extended and will retract naturally. This trade was done in my simulator, as I have not added margin approval to my Ameritrade Apex account yet. Oil is on the rise again, hopefully this doesn’t weigh on the even market we have so far today.
Regards,

Stepping back in

I had forgotten about this blog, putting it to rest after the business needed cash to stay afloat. I found that patent attorneys are great people and can be very useful legally, but man are they a pricey bunch. I am bringing back the blog now to be a place where I can type my daily thoughts on the market, talk of any plays I have in mind, and create a better image for myself.

Image is a very important part of the market, for why should we take someone's advice when they have not walked the walk? I think the concept of earning respect in the stock market is a microcosm of life itself. It is good to be back, and I feel good about the future.

Regards,