Stock Idiot

Can anyone tell me what is wrong with Visa: V? I got V on May 2 for $85.47 and got some more on May 7 for $88.24 and it went over $89 on that Thursday, but closed at $87.3 which still at my break-even. However, the down trend doesn’t stop and down to about $83 on last Friday which I thought it was pretty low enough then I got some more V at $82.93.

Today, I was happy for a minutes when V went up to over $84 at opening. However, it dropped down to lowest at $78.1, and was $80 at the time I wrote this post. So what went wrong???

Sigh* well my explanation is the whole market doesn’t do too well recently and some of the gainers in V sold some of their portfolio to sealed their profit. Hopefully, V will gain back its ground soon.

So what did I do wrong?

1: See what the business school usually teach us and I think it is truth. Don’t weigh all or more of your portfolio in one or just a few stocks because the individual risk is too high, diversification should help spread out the risk.

2: When a stock went down, do not try to buy more and dilute your portfolio because the stock can go further down and could give you a bigger hit.

I guess that what I have learned in this lesson.

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Sorry for waiting so long to post my progress in this blog. Well I was busy for my final exam. You may congratulate me that I was doing pretty well in this semester. Well Thank!!

However, I realized that doing well in finance class doesn’t mean I know how to pick a stock. My portfolio hit another low again this week. Last Friday (May 2), I was pretty happy because my 100 share of Yahoo: YHOO raise up to $28.67 which I gained back some of my lost previously which thanked to the $33 bid from Microsoft: MSTF. Well that didn’t surprise me. However, I really disappointed that YHOO didn’t take the bid.

It was a really long weekend for me. Coz I was wondering how much lower could YHOO reach. 19? 20? 21? The price reached around $22 at the opening which pretty closed to what I expected. However, it bounced back up to $24.37 at close. The stock further inched up in the following day and I decided to sell it and I sold it for $25.45 on Wednesday. I was also glad that I sold 40 share of YHOO on last Friday to buy Visa: V at $85.45. In addition, the proceeds from selling my 60 shares of YHOO and 25 share of DBO, I bought addition V at $88.24.

Although the V dropped down to $87.3, I am hoping it will eventually go up again. Let’s see what will happen tomorrow.

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Well! Since I started investing in stock, I read more news than before. Usually when positive news come up, the stock price of the company will jump. However, does it necessary useful for small retailer investors like me would benefit from it??

Last week when Yahoo: YHOO announced that it had come to a discussion of a possible merger with AOL (Time Warner: TWX), YHOO ‘s stock price opened high on April 10, $28.39/share compared to $27.77/share closed the day before. I purchased some YHOO once I announced the news; however, it was too late. I got the stocks with cost at $28.46, and the stock price did inch up a little bit. However, I still have loss due to the commission fee. YHOO ‘s stock price continued to fall for the following days. Luckily, with the recent positive news, YHOO gained back some of its ground, I almost have it in break even.

To talk about my bad decision, I got some Circuit City: CC right after Blockbuster: BBI announced its possible acquisition of CC. BAD DECISION!! I got the stocks at the cost of $5.08/share, and the stocks have plunged recently because of the uncertainty that BBI could come up with the money and whether the merger would benefit either of the companies. I couldn’t wait any more and I sold the stock at $4.7/share. I rather to lose some but not lose more, and I can free up some money to investment in other security.

With the proceeds from the sales of CC I brought some PowerShares DB Oil Fund: DBO. I got it at the cost of $42.57/share. As my previous assumption, the DBO would hit its resistant level at $41, when oil price was about $110 a barrel. After fluctuating for a couple days, DBO broke it resistant level. I understand that I did not get it at a cheap price, and the price has a possibility to go down. However, I would expect the oil to inch up in the long run, at least at the summer, when the demand would be high. I wish I did not make another wrong move again.

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The stock market wasn’t doing well today. Dow Jones, S&P 500, and Nasdaq were down -35.99 (-0.29%), -7.00 (-0.51%), -16.07 (-0.68%), respectively. Although there are coming vary rescue plans from the government, the U.S. hasn’t really get itself out of the subprime effect yet. As the economy won’t show any solid improvement until the second half of the year, the stock market should keep fracturing for the short term.

What about buying some commodities?

As the stock may be risky and may not promise any return for the moment, what about buying some commodities like Oil? Gold? or Basic materials? It is much easier for small investors to bet on commodities prices by investing in ETFs, considering the limitation for small investors to get into future market.

Until recently I was holding some PowerShares DB Oil Fund: DBO. I only had 10 shares of them though. It was actually a mistaken to hold such a small position concerning the commission fees. I sold them today for $39.64/share. After all, I made about $5. It doesn’t seem much but thinking of my holding period was 33 days, and the annualized yield was about 14.5%.

As I expected, the DBO hit its resistance in about $40 while the crude oil was trading about $109 a barrel. I am watching if it could break it resistance level and possibly could go up to about $43. Then I may want to get some position at some point.

On the other hand, if it fall back. I may get some position around $37, and hope it would go back up to it resistance level around $40 again. I would keep this perspective at least for a couple week.

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Actually, I haven’t researched for what to buy in next week. However, I may want to buy more PowerShares DB Oil Fund: DBO this week. The DBO was trading between $36 and $40, as the crude oil was trading between $100 and $110 a barrel. I think the trading range has established with resistance at about $39 or $40. I am planning to buy some more DBO when if the price goes down to about $37 or $38 then sells them around $40.

On the other hand, if the price keep high, I may vary my plan. In addition, I would buy at least 50 shares this time. Since my trading cost for a round trip is $14. My 10 shares of DBO have to gain at least $1.4 for a break-even. For 50 share, I can come to a break-even with just a gain of $0.28.

However, I saw a video clip on CNBC’s Fast Money. It suggested the oil price was keeping high mostly due to the weakening of U.S. dollar value. The oil price may go as high as $120 a barrel, if it breaks thought its resistance at $110. However, due to the possible of recession in the U.S. and eventually decrease the global oil demands from China and India whom biggest client is the U.S. Thus, the oil price may go down eventually.

Although the analysis sound reasonable to me, I think for the short run, oil price should keep above $100 a barrel for a while.

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With the biggest Jobs lost of 80,000 jobs in March, the stock market did not do so well on Friday. Dow Jones was down -16.61 (-0.13%), S&P 500 and Nasdaq inched up +1.09 (+0.08%) and +7.68 (+0.32%) respectively. The S&P rebounded from its low around 11 am hoping the further rate cut in the next Fed meeting. However, after it peaked around 1:30pm the market ended with small gain.

S&P 500

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Cash Balance $3,653.36
Market Value of Securities $389.60
Total Portfolio Value $4,042.96
Net Fund Added $4,200.00
Loss on Value ($157.04)

Portfolio:

DBO 10 $38.96 $389.60

Transaction:
No transaction this week.

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I am sure there are many different voices about whether the U.S. is undergoing recession now. I am certainly not a expert to speak about that. However, the comment from Ben S. Bernanke, Federal Reserve chairman, that U.S. economy may be contract in the first half of 2008. Two consecutive quarters of negative GDP growth was treated as recession. The talk from Bernanke certainly flagged the sign.

The S&P 500 started to drop from noon following the earlier gain in the morning. Although the market spike again around 2pm S&P 500 finished losing -2.65pt(-0.19%) closed at 1,368.

Oil went up again

Today, the weather was nice and warm in Georgia. The sign of summer is coming. Was it a good or bad news? It’s certainly not for car drivers. The oil price went up +3.8% at $104.86 per barrel. The oil price actually went down more than a dollar before noon. However, due to the concerns of the coming summer driving season, which would drive the demand of oil higher and consequently higher oil prices.

I am holding some PowerShares DB Oil Fund: DBO. I was happy that it ended up $38.30/share, +$1.25(3.37%) gain because of higher oil price. However, I felt sick that I have to pay $45 plus to fill up my 99 Cramy tomorrow, considering that I was paying less than a dollar per gallon when I just moved to the U.S. in 2002.

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