Monday, October 31, 2005

End of Month Review

I was able to save a good amount in the month of October. On a month by month comparison, my net worth increased by 4.43%; which is a lot better than the previous comparison. I didn't have any major expenses and I tried to watch what I spent throughout the month. My total expenses for October came out to $370

My net worth at the end of October was: $29,051

I need to increase my net worth by 10.2% in two months in order to meet my year end goal of $32,000. I think I can do it if I can watch my daily expenses and prepare for Christmas spending.
I'm not going to hold back on Christmas spending, so I will try to save more in November. I also have two months worth of transportation reimbursement I can get back from work. I need to complete the form tomorrow, but then I should get a check for about $280.

I also have a good amount of things I'm going to try to sell: numerous books, a small mp3 player, and my digital camera (it's too bulky). I plan to do at least two more options trades (most likely spreads) and I think I might be able to bring in another $200.
My job does pay a bonus, but I have no clue about the amount. I doubt it will be big since I'm new, young, and I'm not an analyst or trader.

Other news
Jones Soda: The reason why I haven't purchased any JSDA yet is because it will be a transaction that goes against the type of investor I am right now. I rarely hold things for more than one year. As of right now my investing behavior is to hold things for a short term, wait for it to move up, sell and move on. I definitely can't consider myself a buy and hold investor.
I know I will need time with JSDA, but I do think it's a good company. The next quarter will be important, but I think the long-term reward/risk ratio is rather good. I plan to buy a small amount tomorrow (200-300 shares) and this is going to be a long-term investment (unless it goes crazy and I quadruple my money....then I might take my profits and run).
I might make a second long-term investment tomorrow in GSH. This will also be small because I want enough available capital to continue with my short term investments and I also need available capital for my option trades.
I'll try to post about GSH tomorrow; it's risky but I figured in the long run it might work out.
I'm still thinking about it, so I might either buy none or just 150 shares or so.

Thursday, October 27, 2005

Jones Soda

First of all, I followed Neville's advice and changed the comment section so it has the word verification thing; hopefully this stops all the spamming.

Jones Soda
Before this quarter was released I was hesistant with this company because I was unsure of their Halloween promotion idea (as well as a few other things). Well it looks like the Halloween cans were a big success, but now I'm still hesistant with the company!
I read over the transcript for the conference call, and there wasn't really anything too spectacular.
Earnings per share came in at a nice rate and they managed to increase their sales with only a small increase in promotional costs (nice sign). Now I'm hesistant about Q4 and their levels of inventory. They said they can sell the inventory, but it's a good amount of inventory!

Stolk and Cue (CEO and CFO) did seem very confident about the next few months so it will be interesting to see how much sales increase and if they can have some positive cash flow.
I still think they need to diversify away from Target. They hinted that due to their Halloween success (which was quite profitable for TGT), they might have more bargaining power with Target. I rather see them spend more effort into expanding their products through more stores. They are partnered with more chains, but they could expand into the grocery business.
They just seem too Target focused.

I think they are in a great position right now, but the next quarter is going to be important. They basically came under with light revenues and now are really confident that q4 is going to be great. If it doesn't meet these high expectations it might lose some investor confidence for awhile (and analyst confidence- Kanter from Prudential seems to be waiting for expectations to come down a bit).
Long-term, I still think it's a good company. Plus, if they get listed on the Naz that would be great. Also, you have to think some of the big beverage companies are looking at Jones (Pepsi and Coke). Wouldn't this be an attractive target for a takeover? Niche brand/branding, growing sales, big fan following...

One stock on my watch list went down 5.2% today and it got my interest. It's GSH and it's a Chinese railroad company. It is kind of hard to find information on this company, but I found one decent report. I'll try to write a post about GSH in the near future.

Also, I've been giving my opinion to the head trader regarding industries/stocks based on technicals and I hit a few good ones today! Just to be on the safe side, I won't mention any names (because I don't know if they will take a position in it or not), but I picked one industry to go down and all my picks went down, so that was good. One pick actually went down over 12% today, so that was nice to see (I was picking to short).
I say: beginner's luck, but I'm trying hard to improve the streak

Wednesday, October 26, 2005

Things I still need to do

This is basically more of a reminder for myself, but I figured if I made a post it will prevent me from slacking off.

I still need to find out about taking a math class at a junior college. A good friend of mine said it was possible to teach myself some of the basic things (like refreshing pre-calc and calculus), and I have thought about it. If I can fit something into my schedule, I'll probably sign up.

I'm tracking my expenses, but I need to plan out a monthly budget. I know a few other blogs break it down by categories, and I might try this and see how it works.

Regarding my last post about information is key, I need to get myself some more info. I get the Wall Street Journal, but I'm also going to look into re-subscribing to Business Week and then subscribing to Barron's and the Journal of Finance. I don't think it will cost too much money and I think it will be worth it.

Although it's still a few months away, I need to think about the new year. Right now my cash levels are too high and I need to invest. Besides that, I should look into setting a 2006 goal, but I will need more info about some cash inflows.

Nev over at his blog, always manages to try new experiments and network. I'm going to attempt to do more of these two things. Right now I'm talking and meeting with more traders from different firms (went to lunch with one today), and I'm looking into joining some investment related groups in the city. In November I'm going to an options training class and I'm going to try to meet some new people there.

Looks like I need to do a lot of things!

Jones Soda comments: I haven't had time to listen to the conference call and I just glanced at the numbers at work. The two big things I noticed was the increase in Accts Receivables and the huge increase in Inventory. I'm assuming they are stocking up for the last part of the year (Halloween, Thanksgiving, and Christmas), but I wonder how this increase (something like +38% from last Q if I remember?) is within range in terms of their past history. Also, for some reason I thought the revenues were a little light. Tomorrow I should be able to print out a transcript of the cc. Any comments?

As for the comment spamming, I switched it so only registered users can leave comments and hopefully it will cut down the spam a little. A guy mentions a little gambling here and there and all the spammers come out....

Tuesday, October 25, 2005

Information is Key

So far, I've been learning a good amount of things at my job. I think the most important thing is that information is key. The analysts and traders stay on top of everything and this means keeping track of tons of stocks, reading many 10-k's, calling up people from around the country, and basically trying to find out as much information is possible.

Everyone reads the Wall Street Journal, that is a must. Besides that, everyone has other sources of information. They all use Bloomberg and read many of the news stories off of there. The traders talk to other traders to see what's being whispered and any preliminary information on earnings. The analysts talk to other analysts that they know, read 10-k's all the time, and listen to conference calls when companies release their earnings. It's pretty amazing how much information they have to keep on top of. During one day an analyst might listen in (and ask a question or two) on two to three conference calls, depending if it's earnings season or not, and then take more conference calls with management of specific companies. We're a big enough firm where we can also bring management in to see us and then the analysts can have a more personal meeting with them. Besides all of this, they keep track of breaking news and how stocks are reacting throughout the day. My reuters station has about 50 tickers of stocks I'm watching. The analysts all have at least a few hundred!
The traders also track these stocks and they also have to keep on top of technical analysis reports and charts.

Right now I barely have enough time to scan a few news articles! At first I was hesistant because I thought they wanted me to only focus on the trades/operations part, but the main trader is showing me more things. Now I feel more comfortable reading news stories and looking at charts. When I first started, I would only quickly glance at a news story and then quickly go back to the operations work.

Information is key!

Thursday, October 20, 2005

Sitting on Cash

In terms of percentages, I have the lowest percentage ever in stocks. I'm sitting on cash and getting ready to put more cash into my brokerage. I'm also getting ready to buy, but I don't know what as of yet. I need to spend time looking for things, and while I have been looking at certain industries (some packaging companies, technically, look decent- but natural costs are hurting their margins). Right now I think it's best for me to remain in cash and just take my time looking for decent investments. The way the market is acting, I'm not even sure if I will do anything for awhile.

I did finally sell something at a decent time. UNTD has dropped over 5% since I sold it a few days ago. I made the decision technically and stuck with it, and it's good that I'm sticking with the plan. I need to remember to not hesitate.

Also, I completed my first option trade! I won't go into the details, but my after commission return was +0.25%. Now, I know it's nothing to brag about, but here are a few details: it was made over a 2 day span and I just wanted to end up with a positive gain. My max profit was roughly 1.15% and I think I could have achieved that, but I wanted to minimize some risk. I'm still learning, but I do want my option trades (lots of spreads) to hopefully average a 1-2% per month. I'm dealing with short term options and using theta (the time decaying factor of options) to my advantage. I'll be limited my profits through the use of certain spreads, but I will also be minimizing my risks. I'm not looking into hitting home runs, but rather just a few nice singles per month. If I can hit my average, I'll definitely take that 12-24% gain over a year's time.

Tuesday, October 18, 2005

Another day of red

I ended up selling UNTD and EBF at the open today because I thought it was time to get rid of EBF and UNTD looks like it's breaking down technically. I closed that position with an almost 12% gain, and I didn't want to see my gains slip away. I think it might go down a bit, but I don't think I will re-invest in it.
Now I'm sitting on a bunch of cash and nothing to invest in. The way the market has been acting, I think I might do okay by sitting on the sidelines. I was thinking about looking for some low growth high dividend stocks, but I don't think that's the best plan for me. I normally don't hold stocks for a long period of time and by parking my cash there, it will/might force me to wait awhile for some decent returns. As of right now, my investing mentality is on a year to year basis. I know some people look at the long term, but I'll stick to a short term mentality. Before October, my average yearly return was 23%. I'm assuming it's lower now since October has been a bad month, but I think I can maintain around that average. It might be because I am young (and possibly impatient), but also because I'm surrounded by other investors who have the same sort of mentality. At our place, and others, we want to generate returns (generate alpha). Beating the S&P is not the goal, it's making money. If the S&P lost 3% and we lost 2%, that's useless to us.

I also need to move some money over to my brokerage account. I want to hold about $3000 in my ING account (for emergencies, etc.) and around $2000 in my bank account for bills and spending money. This means I need to transfer over about another $5000 or so into my brokerage account. I still haven't decided if I want to transfer over my Roth, and I still need to fund that. By the way, the Think or Swim software platform is incredible. It's really advanced and it will definitely help me with my options trading in the future.
One more thing: by transferring over more cash I will also have more option buying power. I'm looking into a few ideas where I would write calls and puts, but I'm not ready to go into the details just yet. I think I might be able to generate between 0.8% and 1.3% returns per month. Annualized this is about 9.6% to 15.6%, this is assuming nothing goes terrible wrong (which may be wrong to assume). It's a learning process though, and the only way to learn is by trying new things.

Monday, October 17, 2005

Quick Disgusting Update

I need to catch up on a few things so I won't be able to write a long post.
Earlier today I was reading up on some news and came by this report on Lifecell. The article mentions how Lifecell is going to take a third quarter charge. Lifecell is a provider of human tissue for skin grafts and operations. The reason for the charge: they need to recall some products "that may have come from body parts illegally bought from funeral homes".

Sunday, October 16, 2005

A few updates

Just to note: I fixed some links on the right hand side and added a few more blogs. Hopefully one day I will actually put them in some type of order, but for now I just want to make sure the links work.
If any of the links are broken, just email me and I'll fix it.

New post coming shortly.

Wednesday, October 12, 2005

There goes the retailers

The clothing retailers basically got destroyed today. I was looking at a list of them earlier and it was full of red and decent declines. Here's how some of them did:
American Eagle down 5.58%
Tommy Hilfiger down 6.04%
Coach down 5.24%
Aeropostale down 2.57%
Abercrombie down 4.15%
Limited down 2.23%

Definitely not a good day for retailers or for the market in general as the S&P dropped another 0.6% today.
I have been doing some preliminary research at work involving the S&P and moving averages and based on some historical information, I wouldn't be surprised if the S&P continues downward for awhile. I could take a guess at a short-term bottom, but I don't have any figures with me (maybe around 1160-1165 area).

I did read an interesting headline: Comcast and Google in talks over AOL.

Is anyone doing the Mad Money Challenge? I'm basically even and I see the leaders have made about $40,000 in profit. It seems like the way to do these challenges is to go for one or two stocks that are speculative/momentum plays. Ngas seems to be the choice for a lot of these people.

Personal Finances: I've been controlling my expenses and I need to deposit a reimbursement check soon. Besides that, October is going okay so far.

Monday, October 10, 2005

Is anything going up?

The S&P made a new three month low today and well nothing is looking too good. A few months ago everyone was raving about energy and now those are getting hit hard, followed by the home builders, and now companies are getting hit with rising costs. I have been reading and hearing more people talk about a recession looming (and of course I forgot to save links, sorry about that).
It's definitely an odd time right now and maybe I am safer with more cash on the sidelines. I've also started to think more about the type of investor I want to be in the future. Some are buy and hold, and I know that's not for me. I've been thinking about it more, and I will probably post something longer before the year is over (maybe like a year-end investment review).

I'm still up in all my holdings except for one (EBF- basically even with dividends). UNTD has been climbing upwards and hopefully it continues for awhile. I still need to add some more stocks to my portfolio and I do like the idea of looking into small-caps or even micro-caps, although that can be risky.

I missed out on a good eBay sale. There's a concert that I knew would sell out fast and I tried incredibly hard to buy some tickets. I logged on to the site and right when the tickets went on sale I tried buying them. I was unable to get the tickets I wanted. If I had, the total cost would have been around $110 for two tickets. The last time I looked on eBay, the same type of tickets were going for $500...maybe next time.

Thursday, October 06, 2005

A tough week

The S&P has had a rough week, as you can see here. There is definitely a lot of pessimism out there: inflation talks, rising rates, uncertainty about oil, and profit warnings. I have an old copy of Barron's on the floor (from about one month ago) and it talks about how the market might go up 10% by the end of the year. Looks like that's not going to happen...

In other news, rebalancing portfolios is a pain in the ass. We've been doing this over the past few days and it causes a ton of problems and work. Basically we have out portfolios in line, but sometimes they need to be rebalanced by selling some shares in one fund and buying it in the other. You would think it would be easy, but it's not. It creates a ton of trade transactions because they can't just switch the shares from one portfolio to the other.

On a normal day the trade report I work off of is usually around seven pages long. That's not too bad and in the morning it might take me under two hours to get through everything. When we rebalanced yesterday my trade report was 35 pages long! Also, when the trades are done at the end of the day I basically have less than two hours to process them and send it to the company that handles are trading platform (which then send it to our prime broker). I always have enough time, but yesterday I only finished with two minutes to spare. In the mornings I deal with the previous day's trades and any trade breaks (mistakes made by the various brokers, etc.). I sometimes get one or two trade breaks, which isn't too bad. For instance the shares might have been booked with a different commission than what we reported or the shares when to the wrong account. This morning I open up my inbox and see my trade breaks report, it was three pages long! One guy at one of the brokers we used screwed up, and then on top of that there were many other mistakes. It literally took me all the way up till the market close to figure everything out. Then I took a breath, and had to process today's trades. We did a small rebalance so it wasn't too bad, but it was still pretty hectic.

Tuesday, October 04, 2005

A little extra income

I received a reimbursement check as well as some money from an eBay sale. This should add about $250 to my net worth, so I'll take that. I've also finally gathered a stack of books I might try to sell on eBay or Amazon.

The market has not been too fun these past three months. It's been filled with a ton of anxiety, and with that strong emotion comes volatility. I've seen stocks start off the morning going up over $1 and then ending the day down $1. I haven't been able to spend too much time looking at stocks, but I have been spending more time looking at graphs.

One of my new technical analysis projects is trying to find patterns of price run-ups or downward momentum and how far it moves from particular moving averages. It's going to require a ton of numerical data and I'm finding a hard time gathering the info from the software we use. So far it is pretty interesting though. I'm also trying to teach myself technical analysis by looking at graphs and using moving averages, MACD, and rsi to see if they will go up or down. After writing down my reasons I'm sending my recommendation to the head trader and then he will see if I made a good choice or not. We've been spending more time looking at particular stocks (I can't mention any particular ones) and trying to see his reasons behind certain transactions. It's been a learning experience.

Monday, October 03, 2005

End of Month Net Worth

September was full of fairly big one time expenses: two birthday gifts, the gym membership, the CFA program, and doctor bills. Awhile ago I mentioned I had to get my leg checked out (everything is fine), but the bills kept on coming! I had limited health insurance because this was during the time I was unemployed. Bills: $30 to see the doctor for 10 minutes, $37 to get blood taken out of me (5 minutes), $437 to practically enter the hospital, and $37 to get a 5 minute examination.

Anyways, back to my net worth. I managed to increase it by a little over 1%...
Before I calculated everything I thought I was actually going to go down a bit, so I'll take the 1% gain. As of the end of September the figure is $27,818

I'm a decent amount away from my end of year goal, but I think I can still make it.

Stockdiva left a comment about a stock picking contest going on with Mad Money (Cramer's show). The link is here for anyone interested. I'm going to look into and hopefully sign up.
You know what's odd? I work at a hedge fund that deals with stocks all day long, and I really haven't been able to catch up on any particular stocks or sectors. That needs to change.