Dan on January 17th, 2007
One trading strategy I wholeheartedly believe in is CANSLIM. I’m not going to go into details about the method, you can read about it at the link provided and all over the web. It’s a fundamentals based strategy that relies on great earnings and great companies. When I was researching CANSLIM months ago I stumbled onto Pitbull Investor. I used their free trial with demo trading and had decent results, somewhere around 5% in one month. I finally ordered the system a few weeks ago. It’s basicly a simplified version of CANSLIM with the addition of the cup and handle chart pattern. Every week their automated system publishes a list of stocks that fit their guidelines. The past few weeks have created very small lists and none of the companies jumped out at me. Then this weekend the new list was longer. I found two stocks that interested me, WIT and MEOH. Both are fundamentally great companies but WIT is in a cup and handle chart pattern. They were also scheduled to release earnings today. I used the rest of my cash account to buy WIT yesterday at $16.96. Today they beat the predicted EPS of $0.10 by $0.02, pushing the stock up over 4% to $17.84 as of right now. I’ll be holding this stock until it reaches the target of $20.62, it goes sideways, or I find a new stock that I feel has better potential.
Dan on January 16th, 2007
It took a while but I’m finally back in the market. After selling my house I decided to put aside $5,000 to open a new brokerage account. While OptionsXpress has a LOT of great features their fees are a bit high. I’m keeping $1,000 with them as a backup account and for the tools they provide (free L1 streaming quotes, calculators, market scanners, etc). I put the $5,000 in a ChoiceTrade account. I haven’t decided if I’m going to stay with them yet but I’ve begun trading. Their website is bare bones and they don’t allow anything beyond basic options trades (no spreads, etc). Their fees are very low though, only $5 for stock trades (unlimited shares including penny stocks) and $0.75 per options contract ($6 minimum).
Anyway, back to the trading. I opened a long position of AMZN at $37.50 on Thursday and sold one $40 February call (ZQNBH). Online retailers had an excellent Christmas season with Amazon announcing that this season was their best ever. Despite the announcement there hasn’t been a lot of interest in AMZN. I believe that interest will increase as we approach their earnings release at the beginning of February. The implied volatility (IV) is quite a bit higher than historical volatility (HV), meaning that options are currently selling at a premium. If AMZN reaches $40 I earn about 10%. On the downside the stock has to decline about 3.4% before I start losing money thanks to the option. I plan on closing my positions by option expiration (2/14/07). As of now AMZN is up over $1 so everything is looking good.
Dan on June 13th, 2006
Friday resulted in my first investment loss with options. One leg of my condor went against me on a news announcement with almost no chance of recovery. I ended up losing a bit more than my gains from last month.
The important thing about losses is to learn from them. The lesson here is to make sure you know the whole story about a stock before investing. I was unaware of the pending news release. Had I known about the situation I wouldn’t have opened the condor. In the future I will be more careful before opening a position.
On another note I have added some more photos to the gallery. I still have more to add but it’s a start.
Dan on June 7th, 2006
Today was quite busy so I haven’t had time to do much work on the site. I have the gallery online and integrated but the theme doesn’t work with the blog them at all. I have to find one that looks decent or figure out how to design my own.
There seems to be a bug with either the blog theme or WP that is causing a warning to come up. This is disrupting the first pageview and causing the title image to be shifted down into the tabs. It works fine on a reload. I looked at it very briefly and can disable the function if necessary but I’d rather fix it. It’s on my list of stuff to do.
On the investment front I opened a new trade yesterday. I sold a condor that expires on the 16th with a potential return of 23.6% after fees (about 6.8% of the total account). I had been putting off any trades until I opened an account with TradeStation but I felt this was a good opportunity. The trade is based on extremely high implied volatility (IV). When IV is high option premiums are high. This can potentially mean that options are overpriced, thus leading to a situation where their value decreases rapidly. Since expiration is approaching on the 16th the time value (premium) is decreasing at an increasing rate (the time value is rapidly approaching zero). So long as the stock stays between either end of the condor, which is quite likely with this trade, I make money.
I will post another update tomorrow.
Dan on May 30th, 2006
As I may have mentioned before, I took on a lot of debt to start my investment career. I maxed out the majority of my credit cards doing balance transfers and the like. While this has worked out well for me I don’t recommend doing it. I estimate about half of the money I used was lost to poor investments or scams. The other half has been performing quite well and is slowly making up for the lost half. However, in the mean time I have a significant amount of debt and a low credit score. When I initially entered into debt my credit score dropped 100 points in a month and has gone down more since then.
I’d really like to purchase a house to live in instead of wasting my money on an apartment. However, it will be quite hard to get a reasonable interest rate with my current credit score. Even so, I’m still better off buying. However, if I can reduce my debt and bring my score up I’ll be much better off. Not only that but I’ll lower my monthly payments allowing more money to stay in my investments.
There are a few ways of reducing debt and payments. One is to pay more towards the balances every month. While I have been paying above the minimum it really doesn’t make much sense to do this. The 14.99% APR interest my worst card has is much less than what I’ve been making off my investments. Assuming I can maintain my returns at a rate higher than that I would be better off staying in debt and compounding my earnings. Taking this into account I don’t want to use money from my investments to pay down my debt anymore than making just over minimum payments. However, if I can get the money elsewhere I don’t mind using it to reduce my debt. I suppose the return would be a bit higher if I put the money into my investments. However, I feel that I’ll be better off getting out of debt sooner rather than later.
The question is, where else can I get money from? There are two ways I have thought of. One is reducing or eliminating other monthly expenses such as my storage unit. This is money that I’m already spending so it won’t be missed. Rather than wasting it on eating out or some other luxury I can use it to reduce debt.
The second method is selling belongings that I no longer need or use. I’ve been doing this for quite some time now. I’ve sold off almost half of my DVD collection, extra computer components, and other items I owned. Not only did this bring in extra money but it helped reduce the clutter in my apartment. I still have boxes of stuff to sell, I just haven’t gotten around to listing the items on eBay. I’ve sold off most of the valuable items. Now I’m left with $5-25 things that are a bit of a hassle to list and ship. All combined they will still equal a significant amount of money. The proceeds will be used for everyday living expenses and paying down debt.
The next way is reducing the interest rate. This allows more of each payment to go towards the principal balance and reduces cost. I just evaluated my card rates and found most to be quite good. The majority of my rates are below 10%. The few that are above 10% are the ones I’m focusing on either paying off or reducing the rates. I already got one reduced and I’m going to be contacting the others today. I can always do a balance transfer from a lower rate card to a higher rate card, assuming there is credit available on the lower rate cards.
By doing these simple things I can get my debt paid off faster and reduce its cost. The money I’m spending on credit card payments is enough to buy a pretty nice house with a 20 year mortgage, with enough left over for a car payment or additional mortgage payments. Unless I hit an unexpected windfall in the stock market it will take me years to get the debt paid off. However, considering that I used this typically bad debt like good debt for investments that have allowed me to live without a regular job, I’m more than happy to accept that burden 
