11/02/2011
Chris
Whew, what a wild ride this past few months has been in the stock market. As of the end of October, the best thing to do was to stay put, keep investing your regular amounts and ride things out. October was one of the best months in over 10 years, with the monthly gain for the S&P 500 at right around 11%. That is a welcome change since we saw a large decline towards the end of July into August and September.
As a result our Networth went up 6% overall this month, after being down 1% last month and down 2% the prior month. So overall, slow and steady regularly recurring contributions still makes good sense. It really is quite insane how much debt problems in Greece and Eurpoe are currently ruling over all markets here in the US on a daily and hourly basis.
Just last week all of the talking heads on CNBC were saying how the rally in October was going to continue until year end, if stocks pullback at all you should load up the truck, you might not get a chance to get in at lower prices, etc etc etc. Then Friday we had a 250 point sell off in the Dow and today we had an additional 300 point sell off and all the same folks on CNBC are now saying SELL on any up days in the market. What happened to all the BUY calls they were making last week?! It just goes to show you, these people on TV really don't have any more of a clue than anyone else.
It makes no sense why the Dow would be down over 500 points in 2 days just as much as it wouldn't make sense that the market could be up over 500 over the next 2 days. It has been very difficult to try and time the market and individual stocks lately.
Surprisingly, in my SpikeTrade.com account, I've been doing very well betting that individual stocks are going to go down. I do my research over the weekend, pick one stock that has a chart pattern that looks like the stock is due for a short term pull back, I put my stop/limit entry prices in, enter my target sell and set it and forget it. That is not actual $$, this is a competition in which you get a theoretical $1000 and all of it goes towards whatever pick you choose on a given week.
The way SpikeTrade.com works is that there are approx 12 'Spikers' that are folks that have earned the designation by performing well over a period of months and years on the site. If you get a better return on your trade than the 3rd place Spiker, you end up getting a $20 credit for the week. I ended up getting my first 2 such credits last month and 2 weeks ago I had the 2nd place stock pick overall for the whole group of about 100 people that regularly submit picks each week.
Unfortunately, I did not have an account capable of betting on stocks to go down at that point and am still in the learning stages, so I have not placed any such bets with real $ just yet. However, I do have an account capable of doing that now and the more comfortable I get with these types of trades the more likely I am to try them out for real. I had another positive trade in Spike this week, betting Allstate (ALL) would go down. My return on the trade was 4.5% between yesterday and today and I'm currently beating all of the Spikers.
It really is a great site to watch and compete with seasoned traders in a friendly competition and it's a great learning tool, since the two founders are lifelong traders and provide daily market commentary. I'd highly recommend checking out SpikeTrade.com if you're interested in learning more about stock trading and want to try it out without risking your own $$. Alexander Elder is one of the founders of the site and he has several excellent books on trading. The one I read was Come Into My Trading Room and it's a great, challenging book on technical trading, the importance of record keeping, market psychology, etc.
And since I may have lost many of you, if you're still here, check out this picture of what I woke up to this AM. If the stock market has you down, it's nothing two cats purring on your pillow can't solve!!
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