2012 review

A great year for trading. I have 3 accounts I use, not gonna report on 401Ks as I have little control over them. Roth1: Holding a profitable Leap. 4 small size profitable option trades. Loss SPXL. 2 stock gains. +38%. Roth 2: Little action. Sold profitable VSI. In out TSLA profit. Loss FAZ. Holding 4 +/-. +17% IRA: Most active, in and out action. Held XIV massive loss for good gain. 5 losing trades in 2 stocks. 3 gains stocks. +110% for the year, 25% above acct high. Overall YTD +39%. Discussion: Still too much trading with emotion, much longer holding periods. Perhaps some better skill with options (no losses but only small size). I am off highs, preserved capital. I could get back into trading on margin but still think I would screw it up. I'll continue to invest in rentals instead of intraday trading.

Old habits

I let too much garbage in my defenses, I wonder if I ought to stop reading new books on the market and stop reading and/or participating in online market related forums. I took a sizable hit, got out fast, quickly regrouped. Better than any other time.

Take that Jimmy Cramer

http://video.cnbc.com/gallery/?video=3000135144

Cup with handle?

Psychology at play

electric rock

ecar

Electric cars

VOLUME

ecar

I think volume expansion is underway.

TSLA holders 9/29/2012

Click images for larger version, make sure to follow through to the other link and photo there. I like what I see when I compare it to last figures! Last figures here http://4nursebee.blogspot.com/2012_08_01_archive.html

How far part 2

10% of world sales 30K car 10% profit $263 profit per share 15 p/e=$3955 share price

How far can it go?

OK, I need more help on my ANALysis auto industry sales are here: http://en.wikipedia.org/wiki/Automotive_industry So maybe we reach 100 million each year before too long Optimistic! 25% of those would be tesla or ecars 25 million units per year @50K each=1,250,000,000,000 in revenue 1.25Trillion 25% profit=312.5billion 113.78 million shares outstanding per finviz Seems to be $2746 profit per share At a reasonable p/e of 15, forward share price could grow to 41,190 ? Currently trading around 32?

This market is nuts!

The pecan harvest is in full swing right now. I’ve had my best crop ever and so have not had to fight off the crows as much. Even the squirrels don’t seem to bother me as much. As I walk about the yard picking up the nuts, at first by hand and now after a heavier nut fall I use my roller, I get some time to think. Having a major interest in the stock markets has me thinking there are major parallels between growing a crop such as pecans and obtaining long term success with money in the market. Before getting to the commonalities in the market it seems like some time should be spent explaining the different kind of traders and investors. First off, I’ve never directly met someone that became incredibly rich from the market. There have been some people I wondered about, thought maybe they did well in life but have never questioned them to know for sure. So these comments come some from observation, conjecture, and questioning those that I can. The first kind of investor is really not an investor. They have their head buried in the sand, do not think about market returns, do not save money, don’t take advantage of workplace retirement savings, don’t have a 401K. In essence, this kind of person has not even planted a single seed or tree from which to grow there money and financial independence. The next kind of investor actually does a little better. They do have some accounts. They likely do the minimum or a little bit more. They don’t play an active roll in management, likely listen to a parents advice or perhaps a “Fidelity workplace representative” and put their money in a target retirement date fund. These folks will get somewhere, just not as far as they could go otherwise. As they relate to pecans, I picture this kind of investor as one that might buy a house with a pecan tree but not actually harvest the nuts and put them to use. They also might not plant more trees. The third kind of investor is really who I would hope to reach out to with this writing. I’ve been in their shoes, done what they are doing, and hopefully grown. This investor really wants to get ahead in life! They are willing to work hard, read books, put some money to work. They play an active roll in managing money, likely in a self directed brokerage. This is where the analogies with growing pecans really apply. My spouse and I bought 10 acres of land when we knew we wanted more space to grow things. We’d been running with the pack in our half acre subdivision but wanted to break out from the norm. Ideally we would have some things we enjoyed growing on the land in plentiful amounts sufficient to pay the taxes each year. Part of this was to plant pecans (of interest is that we heard pecans can generate more income per acre than any other crop grown). So in our first winter after some research we planted 40 trees spaced up and down our driveway and into the back yard. We rented equipment to dig the holes the correct depth, hauled water from miles away to water each tree, trimmed off 1/3 of the top to allow good root development. To be successful with pecans and investing one needs to do research. You can’t just throw a nut in the ground and watch it grow. Sure it might grow into a tree, but it will be a native without known characteristics. So you have to choose what kind of tree you want with desired characteristics. Stuart, Pawnee, Gloria Grande, Sumner; these are some of the choices I have made. They have desired traits for what I am looking for, have been proven by others. They are also on proven rootstock. A tree of known quality is grafted onto known quality rootstock for control. In the apple world Bud-9 rootstock is used to limit the growth pattern to that of a 8 foot semidwarf pattern. I want the full growth pattern in my pecans and investing, so knowing what will do well for the long term is a key focus. If you take an open pollinated nut it will perhaps have some characteristics of the parents but will have other uncontrollable features as well. In investing, I’d say do your research, focus on that which will get you to where you want to go, stay away from planting nuts in the ground hoping you will get what you want. What has worked in the past? Watching pecan trees grow is exciting albeit on a much longer time frame. It can be difficult to sit still and do nothing as they suffer through youth and problems. It can also be difficult to manage them in ways good for long term growth. Pruning a tree to central leader, needed for structural strength, decreases the available wood to produce nuts. So I could harvest more fast if I did not prune but could lose out on the long term survival of the tree. The same is true of investing: failure to properly handle your investments will decrease your long term success. If you under perform the market by even 1% a year, your wealth in 20 years is compromised. If you engage in risky efforts now and lose 50% of your money, you in essence rip up half of your pecan trees and need to replant. Keep your trees in the ground, tend to them, watch them grow. Another problem with pecan trees is the weather. Frosts can kill off the bud break in early spring. Storms can shake the nuts out of the trees prematurely. I generally have an idea of volatile weather shortly before it happens, but in the long term from year to year I have no idea if or when there will be a problem. So I leave my trees in the ground, they will and do recover on their own. The same should be done with long term investing: leave your money put, you can’t tell when or if problems will come. There will always be rumbling. So what happens over time with a pecan orchard? The sticks placed in the ground over ten years ago have now grown beyond the point of easy pruning and are providing good returns. The wood grown last year provides for this years nuts. The wood that grew this year allows for next years crop so I’ve made sure to add some fertilizer to the soil. As it relates to the markets, this exponential growth in my nut harvests is similar to the exponential growth of investments helped along by compounding of interest. I strive to be grow quality nuts so that I can have aplenty in my golden years. I want to do the same with my investments. I’ve stopped yanking trees out of the ground by eliminating risky market bets. I enhance long term compound growth by cutting back on management fees in mutual funds. I also try to focus on proven methods good for the long term. I want that which can grow exponentially and have to hold through some shaky times to get the growth. Walking about my land and observing the natural world I see these things. I hope you do too.

ecar

Thomas Peterffy

This might just make me an IB customer.

CMG

YELP

Just for my records

Now puts sold

I sold those NOW puts for 77% profit. Small money. I am trading more than I thought I would be but things are going well. Options expiry says to me it will be see saw for a while, not gonna do much. I am watching a few select stocks for long term holds.

I said I wouldn't, but NOW

Now is an IPO stock I took a look at and thought was shortable at about 3 months post IPO. My thought was that the IPO lockup was near expiry, at a high, time for insiders to get out of it. Well, the case is that this one has a 180 lockup period. Still, as I took a further look I decided to go ahead and buy some puts for October. I only have a few hundred at risk. The tide seems to be turning down, starting yesterday, about a week ago the same thing happened and it fell hard and fast. It is at all time high. The company is a cloud related service provider with great revenue increases yet in the recent quarter went from being profitable to net loss for the year and quarter, and they forecast staying at a loss for the year. I did not listen to the conference calls or read too much further as I only plan on staying in this trade this week. So, they have been in business since 2005 or so, went from profit state to a loss, stochastics appear to be changing, market might be in a pullback for now. I think my chances are good.

TSLA closed trade

So after I sold VSI I bought some more TSLA. TSLA was oversold based upon similar TA related items such as price ROC and stochastics. It moved down just a little bit from there, I am willing to hold it for years. Over the next week it moved up nicely, I sold the pop premarket today for a less than 2 week 18% gain. Again, perhaps I should have held for more as I expect TSLA to go to the moon...but I am all in much larger in two other accounts. I viewed the pop as a gift to open. I will keep watching. Click 4 week chart for larger view.

VSI closed trade

For a more detailed view of why and when I closed out VSI see back around 9/5. I am still watching it. I did some research to see more about when I bought it. Click image for larger view.

IPO DRTX

Well I am reading on this company and decided to stop investigating. My amateur view of balance sheets is they are running a serious loss without hope of near term profit. They have one drug in the pipeline, state that their failure or success will be determined only by this one drug. A larger company sold the rights to this drug to them, why would Pfizer sell a good drug? Leadership and management seem to have some experience but nothing exciting. Price seems low. On the plus side, if this drug works and gains approval it could do very well. I am not interested in that lottery ticket.

IPO research, review, YTD

First off, net worth is at an all time high. This is attributable to: -sticking with a plan -spending less than earned -saving and investing -decreasing trade frequency / 2nd: Getting out of VSI worried me a little but seems to have been correct for now. I added to another favorite and that has worked well. Real Estate is a good idea One account might be up over 300% YTD, though it was in the hole at start of the year. Others are unremarkable but unconcerning. I was researching IPOs through Sept 2012, not much appeals to me. I will do further research on DRTX and NDP. NDP is interesting as I was just thinking that natural gas is an area that could have some game changers, good new companies that could do well. The downside to natgas is an inability to fully understand and touch taste feel companies in that area, unlike walking into a VSI store. IPOs at 3 month area, at highs, possible shortable EQM, and NOW. I am not.

I made some changes

The biggest thing I have done is switch the largest portion of funds (that are in an annuity and two 401k accounts) over to the lowest cost index funds. The expense ratios are at least half a percent cheaper, up to a full percent. Considering that 75% of professionally managed funds do not beat the SP500, paying them extra to do so severely limits my returns. The loss of 1% compounded over many years hurts. This info compliments of the Bogleheads. I suggest everyone take a look at their forum and also read some of the latest stuff by Jack Bogle. I've also added some diversification to my investing. I've bought my first rental home. The justification for this is twofold. There are two ways for me to think about having a secure old age. The first is to have a large nest egg (3 million) that grows at a modest interest rate allowing for withdrawals such that I maintain current lifestyle while still growing some. I came up with my figure assuming 3% rate of return while not accounting for pension or social security. It is my quit work today figure. The second way to think about retirement is from a cash flow perspective. If I live on say 4K a month, I need to have that amount of income from all sources at retirement. Buying a rental home and having it paid for by the tenant, gives me improved cash flow. Minimizing my expenses will also help. The way I figure things out, putting 20K into a property, renting it out, paying down the bank note early can pay off the property in 10 years. 20K to 60 or 80K in 10 years? THAT"S GREAT! I am already looking at my 2nd home, perhaps my third. My goal is to buy 10 rentals in next 5 years. Time will tell the wisdom of some trades I closed yesterday. They were spur of the moment unplanned. The first is NVAX. I owned very little of it, made around 30%. One could argue it has a bull flag and could do a double or better from here. No real technical indicators, I just figure there is better stuff to own now. The 2nd is VSI. Click charts for blown up view.

The VSI trade might come back to bite me. I've been watching the indicators mentioned for a year or two, seems like trading in and out of stocks when they move in such ranges could really enhance profits and minimize risk. The problems becomes not forgetting the stock, something I have been guilty of. Also influencing my decision was that VSI was upgraded to a buy. I am just suspicious... One old favorite of mine that is doing well is CNO. I saw mention that AIG had broken out, perhaps all of the insurers are moving well. I have not kept up with CNO so am not a buyer but they sure have looked buyable.

TSLA owners 8/28/2012

Research Report IRG

Ignite Restaurant Group IRG runs Joe's Crab Shack and some high end Brick House taprooms. They are 70% controlled by some group after the recent IPO, perhaps 68%. As a growth company still controlled by an entity they are not held to the same standards as other Nasdaq issues (this per the IPO documents). They have limited numbers of restaurants. They have room to grow, though the Crab thing has some limitations as they target being near water in an area already eating high end seafood. I'd have to visit a tap room to understand it better. If they can grow well this could be a good one to hold. Management- a lot of experience, not sure it is stellar. A guy retired from "Sizzler" is on board, is this a plus? I've seen Sizzler go downhill over past 20 years. Another guy from Applebees, which I picture closing its doors soon based on a recent visit. It is near recent highs but too close to IPO to own right now, I'll wait until 3 or 6 months is up but keep it on my watch list for now.

One of my holdings

Click image for larger

How I think of things

My biggest mistake in all of my trades has been in making too many of them. I could show many charts of companies I have owned and gotten rid of too early and then failed to buy again. Well things are different now. I sleep well at night, tend to not get as excited and emotional, though I do continue to follow the market closely. Here is what I have been focusing on: 1. From Canslim I appreciate that new growth oriented companies with new products and services offer good chances. 2. From BASM I like following good talented leadership. 3. From Motley Fools, I like being able to put my senses into some actual research, rendering many ideas impractical. 4. From experience following the markets I do not like the flavor of the month, hot stocks, pharmaceuticals, pending news approvals, or rumors. I want to combine all these things, run the through my BS filters, and then INVEST and Hold. I sat through some 20% losses doing this, am now profitable. I can't remember the last time I had a 30% profit in a stock ( I remember some hairbrained options). The last honest 30% I had was my first stock trade in NFLX when it was 30 in 2007. Well, I have one now and hope and expect that it will continue to grow much beyond 30%. The only way to get that is to buy the kind of growth stocks I search out and hold onto.

Tesla reports after hours. I say scared money is out, easy move to 34. I've been holding though not as profitable. If they are executing well I will hold.

Rebalance

I've just changed how retirement accounts and an annuity are invested. In general everything has done well year to date up about 15%. What aI did was try and get away from the bottom performing 50% of funds and change to some others. This meant getting rid of small cap and global real estate funds, focusing more on growth, technology, blue chips. I was tempted to chase performance of banking or aim for other sectors but figure I am really in similar well rounded funds with exposure to all many asset classes.

The picture tells the story on my volatility trade

Click image for larger explanation!

VSI

It is flirting with highs. Volume low at present. It has a cup with handle like appearance to me. Others have disagreed. I've owned it a while sub 40.

Model X

Who Killed the Electric Car

Who Killed the Electric Car? from Julien Chaulieu on Vimeo.

http://vimeo.com/19863733

Research-MX

Further research in IPOs has me questioning the wisdom of buying into IPO hype. In buying into a recent IPO I hope to capture exponential growth of a new issue. Ideally I would like the IPO to be a new product or service, purpose of raising funds would be to fund further expansion. It seems like more and more companies are really just subject to brighter men than me making fortunes.

MX seems to be just such a company. It is more than 50% owned by a very reach hedge fund guy that specializes in bankruptcies. It has made him very rich, somehting like top 200 in the country. A lot of my time looking into the company was spent looking into him as it was just odd to see one person listed as 50% owner of a Korean company.

Mx is capturing great market share in the semiconductor field, has a lot of patents, seems to be executing well. The chart shows recent powerful move, in lockstep with SMH. Pullback due. I think recent IPOs ZIP and SZYM could move in similar fashion.

Due to this company being 30 years old, not a new company, I have lost my enthusiasm.

Research Report SREV

The research on this one might have been a little light as I am tired from a cold and physical labor. SREV helps businesses collect money owed to them, only charges them for improvements. Many large companies use them. I did not read IPO documents, seems like they are expanding overseas, perhaps the money was used for this. They have grown 30% this past quarter, not very profitable yet, still showing an accounting loss, right on the cusp of a profit. Currently above the IPO price, but has a bearish tail suggesting short term pull back is due. Leadership seems to be drive by one man, guided by others with lots of experience. Many of management helped other IPOs and techs such as Juniper...

I understand the story on this one, don't really find if attractive right now. Like others I will follow for a while, I feel better about this one than others.

Research Report ST

How interesting the story is on this one in light of a possible presidential nominee. Sensata used to be owned by Texas Instruments, some of their leadership comes from there. They were purchased by Bain Capital, which seems to own over 50% of the stock and has folks on the board. March of 2011 Bain sold some stock when price was higher than it is now, certainly higher than its IPO price and its secondary offering price.

This company makes all kinds of sensors and controls for numerous products, my guess is they keep their fingers on the pulse of everything new and great in the world. As a growth story they are growing but not by leaps and bounds that a Canslimmer might want. Ther are profitable. I can't tell what they planned to do with IPO funds so I assume it was to line capitalists pockets (as opposed to using the money to expand products and services like microsoft at the beginnning or tesla now).

The 50 day is under the 200. We are in a new bull market. As an IPO play it does not strike me as an exponential growth story. It did remind me of what seems to be a great business incubator type company, CY, Cypress Semiconductor. I find ST not even worthy of posting a chart. I'll probably keep it on a list for a while but get rid of it.

breakouts

SZYM donchian 4 wk at 11.9, it is close now. Volume no clue but the day is young. I don't have any cash to play and am not an owner.

SZYM

Research Report ZIP

Recent IPO but in business for a number of years. They focus on large communities and universities that have established public transportation systems. Good organic and purchased growth with evidence of vehicels and number of customers increasing. I find the story not quite believeable but that is the kind of thing that had me sell out of NFLX too early. Gadgets in cars a nice feature, lots of young customers. Presentations seem well laid out and they are executing well. Recent Donchian b/o, perhaps extended. I'd rather buy a pullback when price rate of change goes red again. Odd how steady the price decline has been, early purchasers are pained. I can't recall seeing any in use in DC. No tell as far as institutions.

I'd say this could be a buy now, or after a pullback for a nice long term investment. They look like the have room to grow and business model that has been working.

Research report NVAX

Novavax is a player in the vaccine develpment market. Vaccines typically are made with chicken eggs using live viruses, then the virus is inactivated somehow. From what I can gather, NVAX makes their vaccines without live virus hence no need for biological controls during manufacture. They also use new techniques: insects as growth vectors, and virus like particle engineering. The company website suggests they can make vaccines faster, perhaps with immunological benefits over traditional vaccines, perhaps even faster.

GE is partnered with them. Many overseas companies are partnered with them. US Govt has given them funding for further research. Many vaccines are in clinical trials, not just for bird flu, but also for several other viral illnesses.

The leadership looks strong by background. Much of the leadership has been with the company for just a few years. This could be a weakness or just a sign of growth.

The market has not shined well on price. Institutions are generally getting out or lightening up on this issue, price and average trend is down.

I suspect the bottom is in. Disclosure: I am a small owner. It made a Donchian b/o.

Overall update

2011 was nearly disastrous: I was too early on some trades, did some risky things with options, CHURNED in and out. The second half of the year I just held on to a few key issues, even through losses, 2/3 are profitable now, the other one is much less painful. I have been sleeping well and am a lot calmer. I probably had some trading related depressive issues; these were healed with time, sane behaviour, and renewed hope for the future.

Work 401K stayed pretty consistent all year. I sat through ALL TIME HIGHS (a truly amazing figure) and the 20% fall, now back to peace. I've considered some movement but am overall well positioned in some broad spectrum stuff. The one change I made was cutting back on what is contributed. For a couple years it was the absolute maximum possible but I have come to realize that cash in the bank, not in a retirement account, is what is most needed to change my lifestyle for the better. I am a young man, further retirement associated funds are a long way off from being of use without penalty. So I am looking to significantly boost ready cash funds beyond the 3-6 months reserves.

Trading room office construction has begun. Electric rough in done, expect the air ducts to get done today. With some luck I will insulate and drywall this weekend. The plan is to keep this room bland in color and design to allow creative energies from within to flow. I do not want distractions.

Focus for future
I do not think I can be a good short term trader. I see some things on intraday charts on issues I follow, they absolutely could be profitable but only with low share size. Perhaps I will do some of this later. But my focus is absolutely more professional like, I am searching for the next big growth companies. I am kind of blending the best of what I have read and observed.

Trades are guided, though not bound, by position sizing risk management previously described here in a video, also on my youtube chanel.

Research focuses on smaller growth oriented companies, typically IPOs of the past several years. I review IPOs after they go public, search for business models I can understand, growth stories I can believe in, look into the management and perhaps even the competition. I like the idea of new technology and avoid pharmaceuticals. I do not follow group or industry behaviour, I fear missing out on a great time to buy for the future.

Principal trading ideas flow from these stocks, buying them almost without regard to chart pattern or what the market is doing. I suspect I could just as well trade around those I am most familiar with, selling the bursts and buying the panics. I also am keeping my eyes on behaviour of volatility, it seems to be tradeable for months long swing trades. I think it will take some time to come down to historical relative calmness, then I will look into buying in for some changes in climate. I suspect this will come late spring or early summer.

I think there is also money to be made with buying and selling bursts and panics in the overall market, see that it could be easy to make 20% or more a year doing this and am keeping an eye out on this.

The X factor