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

OMG! The death cross

Frankly I don't give a $%&^! Is this the end of the world? I think I referenced this summertime activity in my April 7th video, said to monitor for leaders if and when we had a summertime lull, gave examples from a few years ago. Last year we had about an 18% pullback in the spy from 122 to 101, then took off BOOOM! Perhaps we get the same, though many say 3rd year bull not so good. My plan is to go over a lot of charts in coming weeks and decide on what to focus on in the coming months. Click chart for larger.

The Big Money

I have recently read another good book in the theme of buy and hold like Lynch, in fact Lynch reviews the book. If you want to do a search for it the ISBN is 0743258703

The book tells good stories about how analysts used to do business. It suggests finding stocks based upon: Business Model, Assumptions, Strategy, Management. It advocates following seven steps of: Market timing, patience, knowledge, discipline, emotions, time horizon, benchmarks.

If you are not a purely daytrader I suggest this book to you. I welcome discussion of stocks that fit the philosophy of this author.

Some good reads:
Smash the debt Ceiling: http://www.newyorker.com/talk/financial/2011/08/01/110801ta_talk_surowiecki




Neat article on a rich man and his company: http://www.newyorker.com/reporting/2011/07/25/110725fa_fact_cassidy

Rich mans rules: http://www.bwater.com/Uploads/FileManager/Principles/Bridgewater-Associates-Ray-Dalio-Principles.pdf

TSLA

I have been following Tesla for a while now, trying to justify the price and work on some assumptions of the future. So what I did last night was examine other auto maufacturers market cap, worldwide market share, and then come up with possible justified market cap if TSLA produces enough vehicles to match prior production at their NUMMI plant. This would equate to 1% of world production at 450,000 vehicles a year. The table here (might have to click on the image for larger) compares three large companies and figures out what TSLA market cap would be. For example, Ford has 46.9B in sales and has 18.4% of market share would suggest that 1% of market share could justify future cap of (46.9B/18.4) 2.6B. The comparitive cap shows in the 4th column.

My discussion
This does not account for non auto sales such as drivetrains to Daimler and Toyoda
This does not account for likely higher margins on early TSLA models
This might not be a good way to determine value, but it does suggest they have a ways to go to justify current price compared to GM and F but could grow 3-4 x to equal TM.

I'd like educated feedback on TSLA, my attempt at price justification.
Thank you.

New video

I forgot to talk about presidential cycles. From what I read the third year has a history of being the best for the market. That is where we are now.

For best quality, switch to HD viewing. Useless otherwise...