Another mudslide down?

I didn't realize that it's been about 2 months since my last post. My extreme apologies to anticipating readers, if I have any. I would love to hear your comments or suggestions if anyone's out there. :)

So, the markets are just painful to look at. Up and down, but down all around. I'm thinking that this next phase can be likened to a mudslide. The mud comes slow and engulfs and destroys, but it does it slowly. No more of the crazy volatility +-10%, at least for now while the news has been quiet. Just some ups and downs, with a downward trend for who knows how low? 

Things just can't get better right now. People don't just change their behaviors in a split second. Holiday sales were weak, with stronger post-Christmas shopping. Nevertheless, we won't make this economy go up unless everyone starts doing their part and buying more. Of course, manage your debt while consuming, but we need to eat, don't we?

Oh Woe, Things May Keep Going Down

I sold all my positions by yesterday morning except for everything in my retirement funds. Why, after I talked about holding for the long term? To be honest, my nerves couldn't handle seeing the markets in such wide swings, potentially depleting my most liquid assets that I'll need to pay rent, insurance, and bills. Also, the news from the past few days has been all negative. Yes, lower interest rates may help ease the economy's pain, but do you really think all the suffering of individuals and companies are over? Maybe it's still only the beginning. Regular people are reducing their spending...I plan on giving handmade presents this Christmas. Who knows when the blood will stop spilling? I think that I'll take this time in the next few days to envision my ideal portfolio and delve into the specific purchases I would want to make in this or an even worse environment down by 20-50%. 

By the way, I don't count retirement investments such as 401(k), 401(b), IRA, or Roth funds with long horizons as part of my liquid funds. In fact, in my mind, they're untouchable until age 59 1/2. So, I could lose greatly on these assets, take great risks, and be ok. Therefore, I still definitely have stocks there.

I think I'll write an entry on taxes and fees associated with stock selling and buying by the end of this week. Would you find this useful?

Negativity In The Air

Headlines containing words like bloodbath, meltdown, and chaos rule the headlines this morning as overseas markets performed very poorly last night due to fears of worldwide recession. Things are looking bad, but I think they may only get worse as utter despair hasn't yet seemed to hit Wall Street.

With all the bad news, what will happen today?

With all the bad news yesterday with Wachovia's and other profit losses as well as higher initial jobless claims rising to 478,000 last week, I wonder how volatile the markets will be? I just bought SanDisk (SNDK) at 9.60 because it fell over 30% in one day on news that Samsung dropped its bid to acquire it. When there's negative news, the stock markets usually overreact, taking time to correct itself.

Comparing Sports Car Racing & Financial Vehicles

Yesterday, while attending the Monterey Sports Car Championships (I plead very limited knowledge of cars in general, all I know is that I like them small and fast), the last race of the American Le Mans Series, I got to thinking, these drivers on the tracking are speeding at over 200 mph, weaving between other cars, a hunk of fast, powerful metal on cement. The smell of burning fuel and tire fills my lungs. Why am I not behind the wheel? Well, in addition to that, I was thinking, when we see a dangerous a curve ahead, we often slow down. But how do we slow down without being beat by other investors around us and without crashing and burning or denting our nice rims? 

First, have a great engine and vehicle, right? Our financial vehicles should be great, without any huge flaws. Riding a good stock is important, especially on the ride through that dangerous curve.

Second, getting through the curve more quickly than others will require some thought. I know, I'm leaving you hanging. Until tomorrow...

Warren Buffett Writes A Great Op-Ed

Warren Buffett, someone who I greatly admire, and even have a YouTube video link to (on the right hand bottom), just wrote a great Opinion article in the New York Times yesterday, found in today's paper. In majority, I do agree with his views, although I have some doubts as to buying wholly American. He has often said that he buys into companies that he can understand, not thing like technology stocks.

There were some great classic quotes from Buffett that I'm definitely trying to internalize and hope the U.S. will as well:

-A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful

-In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

-Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
and the simplest key takeaway:-Today my money and my mouth both say equities.

To say I have stars in my eyes when he speaks is an understatement. There's a reason why he's worth billions and beats the markets consistently. He doesn't get swayed by the fear and negative consumer sentiment. Another principle of economics, the herd mentality, can be a bad thing. Until we see doom and gloom as if hell is on earth, I'll be continuing my buying strategy.

Dollar-Cost-Averaging To Ride The Bottom

I have to admit, market movements actually do affect my mood and even physical sense of well-being. It always gives me an adrenaline rush to look at those little graphs every few hours. Last night, my dad told me: there's only one person that is able to buy a stock at the lowest price, and only one who can sell it at the highest price. The rest of us have to be alright with being in-between...coming from a man who lost almost everything he put in after the dot com bubble burst.

Hindsight is 20/20. GE touched 18.31 today. I occasionally (fine, I exaggerate, I mean, really often) kick myself, thinking, why oh why didn't I put in order for 18.50? I knew it. I so knew it.

So, what can we do in foresight? There are so many different kinds of trading strategies out there. I just think about dollar-cost-averaging, since this is the best way to profit over the long term. Investopedia says so. Dollar cost averaging is the idea of buying a set $ amount of stock over the course of a long period of time, a period of months and years. For instance, you could buy $100 worth of 1 stock every month. Some days you're able to buy a few shares, some times, when the prices are lower, you'll buy more shares. Over time, the gains will be more than the losses because of the upward trend our markets have.

If you haven't already, why not start now? Doesn't seem to be a bad time since it's been a year since the market peaked. That way, you can ride your way down to the bottom.

Do you agree? If not, I would love to hear other thoughts.