DOW 9,000? OMG!
The last 3 months have been very entertaining. I’m the kind of person that loves financial disasters. I’m an event trader. I always keep a stash of money aside for these “disaster” buying opportunities. Whenever someone does something ridiculous, if you’re ready, and watching, you can make some cash. I remember a few years ago, the media really hyped Israel retaliating for missle strikes— it was the end of the world! And the market dropped big time. I went on a buying spree and made some quick cash, because within a few days, everybody got used to missles flying in the middle east, and the market went right back up—and put money in my pocket.
The housing bust was the same opportunity, only amplified greatly. I’m glad I was able to keep my job!! But this was a buying opportunity. So when the DOW got down to 6700, I bought AAPL, FXI, QQQQ, and several others. At the worst of the market, my portfolio was down $110k! As of today, I’ve made $36k profit on the purchases I bought at DOW 6700, and am now about only $20k in the hole. I’m pretty conservative. Some folks lost half their portfolio, and may take years to recover.
The stimulus package has been more hype than reality. Only about 7% has been spent, so its not doing much. As more of it gets spent, the economy will heat up, inflation will rise, and I’ll start looking for a time to cash in my winners. Once the DOW hits 10,500 ( and/or the S&P hits 1150) around October or November, then I need to back away from the table. Because the next disaster is just around the corner— inflation and credit cards. It will be the end of the world again, and everything will collapse. And another great buying opportunity will present itself. It’s always good to be ready.
One of the things they never teach you in school is investing. Most people learn by trial and error (me), which can be very expensive when you make mistakes. Warren Buffett has the right idea. Buy stuff you know about, that you use, that you understand. For years, I despised Apple products. I didn’t understand them. I’m a PC guy. With a PC, you learn to fix everything—tinker with the OS, the hard drives, video cards, the registry. With Apple, you turn it on and use it. What’s that all about?!? Why would you pay an exorbitantly higher price for that luxury? But, after I played with the IPOD, I got it. The Apple stores are always full, too. So over the last few years, I’ve made some nice bucks off of AAPL. I bought some at 93; now its 157.
So, what have I learned from the stock market? Research a list of 10 stocks that everybody has to have to live. Keep that list handy, and enough cash on the side to buy what you want. Then wait. Wait for disaster to strike in the news media! Doesn’t matter if its real or absurd. Take that idiot Kim Jong-il. He’s gotten alot of press because of nukes. But, he’s being ignored again because people are used to his idiocy. So what can you do next to get attention? He’s going to have to launch one. Or what about Amadinejad? He’s threatening a nuclear strike on Israel. That would certainly drop the market for at least a day or two.
So, keep your eyes open. Money is out there, you just have to be alert, be informed, and be ready.
Lee:
I am glad to see that you were able to cash in on aapl. My one observation is: How did you know Dow 6700 was the bottom; certainly not in August 2008; and for every aapl you choose correctly there are many more that would lose. However, if your main point is to buy when everyone else is fearful, then you would be exercising one of Buffet’s theorems: Be greedy when people are fearful and fearful when people are greedy. I look forward to sharing ideas with you.