A combination of factors left this blog bereft of updates. I haven't even looked at it for months. First of all I started posting on three different blogs. Texans For Romney (I love Mitt), Letters to Samuel - a blog dedicated to my younger brother Samuel - the coolest Bryner of us all, and Big Jay Reviews Everything - a blog that totally rips off the title from Orson Scott Card's weekly column at rhinotimes.com.
I did several entries on those other blogs. During that same time period my sister-in-law and her two kids came to live with us, which has been time consuming. Also during that time period the division in the corporation I work for doubled in size, requiring me to invest a great deal of time keeping my act together professionally.
I still haven't lost my interest in the stock market.
I do, however want to make a post in response to a random passerby who left a comment back in July. I wish I could have responded sooner.
Here is the comment:
"Virtual account? Does that mean you don't actually invest but just go through mock trades in preparation for when you will?
If you can make 30% in a matter of days, please invest real money now. Investing on a virtual basis has too high an opportunity cost."
That sounds like sarcasm to me. Maybe the individual was actually telling me to invest real money. But I doubt it. It sounds like an elitist barb tossed my way. So I would like to take the opportunity to respond.
I am not investing real money in the stock market, other than working toward fully funding tax deferred accounts that I can fund, namely my 401k program, and a Roth IRA. I am also working on saving money for an emergency fund, and generally reducing my family overhead. Money means different things to different people. I eventually want to be at a point in my life where my life energy, and my attention can be focused elsewhere on something besides earning money to pay my bills, and put food on the table. When I get to the point where my modest needs, and those of my immediate family can be met without my active involvement, then I will feel comfortable moving on to different projects.
But at this point in my life, money, and more specifically the job I do to earn money, takes up a disproportionate amount of my life energy and attention, compared to the other things in life I would like to spend my time doing. That's just my reality for now. Along those lines one of my goals is to get to a point to where $100,000 comes my way on an annual basis without my active involvement. One approach to doing that is saving $2,000,000 and investing it in bonds yielding 5% annually.
But I know a handful of people who do much, much better than that. That is what got me involved in studying stocks, stock options, and currency contracts. My field is facilities management. I actually worked in the facilities department for a company that specializes in training people to invest in the equities, and currencies markets. Part of my corporate benefits was that I got to go through these courses for free, as opposed to paying $45,000 to go through all of the courses. The education was good. But I'd like to know if I can actually do the trades consistently, and manage the trades while simultaneously holding down a professional job. I actually know people who have taken a small trading account of $10,000 and traded it up quickly to $50,000 in a very short period of time.
The thing that first got me interested in actually learning this stuff was when I was at the library with a group of friends. A couple of them were talking amongst themselves about stuff I did not comprehend. A few minutes later one of them had clicked a few clicks on his laptop, made some trades, watched the orders get executed. And ZAMMO. He had realized gains of $30,000. In just a few minutes. Whoa. What did you do dude? I have to learn what you just did.
I have learned a lot of stuff. Now I'm just working on getting positioned to actually be able to make trades with real money. But I happen to believe that I don't want to be making active real trades with real money if I'm risking the grocery money. And I don't want to fail to fund my 401k, and Roth IRA account just because I'm goofing off in the stock market.
But I will get to the point personally where I do have the funds to make real dollar trades with. At that point I also would like to have the confidence that I can execute trades profitably and consistently. That's why I have been practicing with a virtual account. I want to see just how big of an account I need to start with, and how much margin to keep in the account. What strategies work for me, and what strategies don't work? This is information I would like to know before actually putting real money into the system.
If that comment was sarcastic - "Put real money in now" - I want you to know that I do know people who consistently trade, and consistently beat the market. And yes they do make gains of 5% - 50% in a matter of days.
I've learned that I'm more of a base hit kind of guy. If I'm swinging for the fences all the time I have a lot of strike outs, and that raises my blood pressure and does all kinds of havoc on my sleep patterns. I end up doing all the wrong things at the worst possible times. But if I go for a reasonable return - say 1% - 10% each month. I do fine.
And for my long term money - the stuff I don't ever ever want to lose - like my 401K, and my Roth IRA - how do I have those allocated?
Right now the dollar is weak. That means that international stocks are doing better than domestic stocks. So I have 50% of my portfolio in international stock funds. They've done great the last couple of years. Eventually that will change. I'm looking for a trend reversal in the dollar. When the dollar starts doing better, I'll switch the 50% I have allocated in stocks back to a basic Standard and Poors index fund. The other 50% of the portfolio is in a broad based bond fund. I got the idea from Ben Stein who calls the 50/50 allocation the couch potato portfolio. In my 401k I just don't worry about it. In my Roth IRA, I sell out of the money covered call options at resistance on the S&P ETF when possible to augment (in a very small way) my holdings, but basically I'm looking for the market return. And in retirement accounts, ultimately that's what I'm looking to do.
But one day I'm going to have $10,000 in capital to deploy somewhere. And that 30% ROI in a mere 12 days is always going to be whispering in my ear. At that point I want to have practiced actually doing what I hope I can do for real.
In short.... I would be crazy to actually be buying and selling derivatives for real. At this time. But that won't last forever. And I plan to set myself up for success in the meantime.
And if that day never comes... hey I'm stuck alone in a hotel room in a strange city. This is more productive in my opinion than watching HBO.
