Keep an eye on Microsoft

Hi all!  Hope everyone is staying safe in all the market volatility.

I've been keeping an eye on MSFT since recently hitting the upper trend line. Now that its heading towards its lower long-term trend line, it might make for a low risk entry into this stock.  Buy around $24.50 with a stop around $24.  Risk $.50 for a $2-3 potential pop.

You can take ideas from other traders, but remember to trade your plan. Its your money. You press the buy and sell buttons. Understand the risk and don't forget to take profits!

Happy Thanksgiving to everyone!

Learn From My Mistakes

Last week, I took a vacation with the family.  I knew that I wouldn't have immediate access to a computer to trade anything.  I have a hand full of stocks that I plan on holding for the long term, like NLY and FE.  There was also a stock, FTWR, that I held because I sold most of my holdings from an earlier trade.  I was aware that I still held 200 shares, but felt the downside risk was minimal and there was the potential for a breakout over the upper trend line.  Unfortunately for me, they came out with a press release that they missed a loan payment....or, something like that.  The stock tanked around 60% over a couple days.  So, my plan is to watch and see if it recovers one of these days, as it is not really worth selling.

In hind-sight, I should have exited my entire position prior to leaving for an extended period of time. Luckily, the mistake was not too costly and won't break the bank.  But had that been a full position, I would be kicking myself pretty hard.

Stay safe out there. The market is still crazy.

Watch List for Week of 11/14/2011

Here are a few stocks that could be opportunities for swing trades next week.

WM near the bottom of the channel. If it breaks above the 50 sma, it could head towards the top of the channel. Target is around $35 or 200 sma. Stop around Nov lows ~$31.

VDSI is flagging after a high volume breakout. Support around $8. Target $10. Stop at the recent lows.

PPP flagging after recent breakout. If it breaks over recent highs, it could head to fill the gap around $4.25. Might need to time to develop the flag.

Buy & Hold

The goal for anyone investing is to make a profit.  A lot of times that profit doesn't come immediately.  Patience is an important part of investing.  When I first got into buying stocks, I only bought to hold for long-term gains (more than one year).  I made some good profits using the buy & hold method, but also took some pretty nasty losses by not having an exit plan. I still buy & hold a portion of my portfolio because it provides some stability and income to my investing.

Over the long run, the stock market has trended up.  This is a good argument for buying high quality stocks and holding them for more than a year to take advantage of annual gains and/or dividends.  My strategy for buying & holding is to research high quality stocks and diversify money into a handful them.  Have a realistic profit target in mind. Likewise, establish a stop point where you will get out of a position if the fundamental picture of the stock changes.

I currently hold mostly stable dividend paying stocks for a longer term perspective.  $FE, $NLY, $COP, $ABT and $T are some stocks I've held over the last couple years.  Some examples of a buy & holds that didn't work out too well -- I bought $BP a month before they had the rig blow up in the gulf.  The day I heard of their problems, I sold for a small loss, which turned out like a good decision.  Another stock $SBAY I got into early on and followed the promise of a growing Chinese economy and internet user base.  I started with a small position but continued to add as it dropped to what I thought was a bargain. I still hold 150 shares at around .07 cents each....not worth selling so I'll continue to hold...but down a lot more than I want to be.

Where I've had success in the buy & hold strategy is researching, understanding the overall market trend, understanding the trend of the stock and buying in when I feel there is a good risk/reward.  I also have an exit plan that I stick with, both profit and stop loss targets.  No one will always buy the low and sell at the absolute high of any trend, but if you can get a good piece of the move, you can be profitable.

~JP

Blog Post #1 - Purpose

Yo! This is my first blog post! My goal is to post lessons I learned from my investing experiences and expose some potential opportunities. Hopefully, some folks can benefit. Enjoy!
~JP