Wednesday, February 28, 2007

Market Correction Underway

On February 27th China's markets fell heavily causing a major sell-off in the US. The market is in a correction, which means, don't buy anything. In time there will be a new bear market and then we'll be in for some great gains. This correction isn't something that suddenly happened because of China. I'd like to point out a few days in the last month that were clearly telling us that we have reached the top. Look at the Dow Jones Index. Jan. 9th, we had a drop on higher volume. Jan. 25th we had a drop on higher volume. Feb. 8th and 9th we had drops on increasingly higher volume. Feb. 23rd and 26th we had drops on increasingly higher volume.

Feb. 27th shouldn't have been a huge surprise, and is why you should have a stop-loss in place, especially if you enter the market years into a bear market.

ANGN dropped below my stop-loss of $15.25, so I sold that on the 27th.
CMI dropped on big volume and is heading lower, so I sold that at $135.20 this morning.

The only position I still hold is in VASCO Data Security International Inc. (VDSI). Feb. 20th VDSI was in the IBD top 5 movers. It showed good fundamentals so I took a gander at the chart. It had been in a flat accumulation period for 5 weeks and had flown past it's buy point of $15.60. So, I bought it when it hovered around $17 that morning at $17.05. VDSI actually weathered the sell-off pretty well, which is encouraging. Plus it looks like some things are bouncing back today (that is not permanent), so with VDSI not dropping much, it may continue on it's upward course for a while yet.

My poor decisions so far of entering a bear market real real late, and buying ANGN at the wrong time have landed my account at $4832.00 as of this writing.

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Monday, February 26, 2007


IBD, even for free, provides some information on their website about stocks that are moving for the day. You'll see a list of the top five stocks that have the most volume change (by % I think) and are moving up for the day.

On Feb. 20th SPAR was in the top 5 movers in the morning. IBD is kind enough to provide company evaluations on any stock in the top 5 movers. I looked up SPAR and it's fundamentals were OK, but the price was so far off it's 50 day, that it was too late to get in on that one. The group as a whole is rated pretty high, and the leader of the group was Cummins Inc. (CMI), so I checked out their chart. Whooo boy is that an expensive stock for only having $5k capital...wrong, you get what you pay for you know. Starting Oct 18th 2006 CMI headed into a cup pattern, pulling back to a drop of 19% on Jan. 10th 2007 (A base of more than 10 weeks). A high handle formed on Feb. 17th for only a week when it shot back up past $140.

I liked what I saw, but can't really buy into a stock very much with such a high price. So, I bought what I think is called an "odd lot" (not even multiple of 100) of 10 shares at a price it drifted along at for the rest of the day, $143.00 on Feb. 20th.

A "cup with high handle" isn't a great thing, but good fundamentals, a good group, and high price make me hopeful (I guess they call that bearish in the stock world).

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Friday, February 23, 2007

They are supposed to protect us.

The most important thing you may read today, this week, this year.
From Kotaku I learned about some teenage boys killing a homeless man, and then blaming video games for it. You absolutely need to go read what Gabe from Penny Arcade wrote about it here. The first thing that came to my mind when hearing of the murder was that the parents are broken. Now go read the response that Gabe got back from the stepmom of one of the murderers.
In case you are too lazy to go and read that I will copy the text of the response letter Gabe received (Not that he'll notice it here, but I hope he and the mom forgive me for copying it.), so that it is in at least two places on the internet. I think it should be plastered everywhere you can find to be honest.

Your news post about the kids and the homeless man yesterday made me sick to my stomach, before I even read the CNN article. I knew what it was going to be about before even reading the article. It was not the article itself, or even your post that made me sick, it was the fact that I know this boy. Or, rather that I could be considered one of the “parents” of this boy.

The boy’s father and I have been together for almost seven years, and I had what I guess could be called a “stepmother” relationship with the kid. To say that living with this kid was hell would be a complete understatement.
I don’t think I have ever actively hated anyone in my entire life, but this kid just makes my blood boil.

As I write this, my teeth are clenched, my hands are shaking, and my whole body is seething with the hatred I feel for this kid and what he has done. Seeing the article brings back all the horrible memories from when he lived with us.

He was constantly in trouble in school, with the cops, with us, with his mother, and with anyone else who was an authority figure. Not a week went by that the school or the cops wouldn’t call us for something. His attitude was basically “fuck you, I don’t have to listen to you” said with a shrug.
We tried absolutely everything we could think of to get him to behave like a normal human being… we tried groundings, negative reinforcement / punishment, positive reinforcement, counseling, and anything and everything the counselors suggested. We tried to get him interested and involved in extracurricular activities, like hockey, drama, music, art, anything, but he got himself kicked out of every group he was in with his “make me” attitude. When we would ground him, we took away everything. No TV, no computer, no phone, no leaving the house, no snacks or junk food…. Everything. When he was grounded, he was only allowed to sit in his room and read or draw. He was actually a pretty good artist, and we tried to encourage him to spend his time working with his talent. He would just sit there and take it… the groundings had absolutely no affect on him at all. Most of the time, he didn’t even remember why he was being grounded. At the end of it, we would ask him if it was worth it to have everything taken away in exchange for what he did… he usually just shrugged. He could be grounded for weeks, or a month at a time, and then the very next day would do something to get back in trouble again. Most kids get grounded or punished a couple of times, and then they want to avoid having to go through it again… not this kid, nothing seemed to phase him.

And we’re not talking the usual teenager stuff, like coming home late, or refusing to do the dishes. We’re talking stealing cars, setting fires, drinking, getting picked up for drugs, beating up handicapped kids at school (yes, really) stealing things out of our house… all with this “I’ll do whatever the fuck I want” attitude.

We had absolutely no idea what else we could do. We already had him in counseling, and we did everything the counselors suggested. We tried rewarding his good behavior (what little there was) to try to get him to see that when he behaves like a normal human being, things are good and people enjoy being around him. Nothing phased him at all.

Then, things took an even worse turn when he decided that whenever he didn’t get his way, or we did something he didn’t like, he told his counselors and teachers that we were abusing him. (Never happened.) And for some inexplicable reason, everybody believed him. I understand that child abuse is a very serious situation, and that they have to take every possible case seriously, but this was clearly a case of him manipulating people to get what he wanted. We had people from the school, cops, and social services over at our house or calling us on a weekly basis stating some new abuse that he had made up. At 14, the boy was already 6’3” and over 200 pounds. Of course, there was never a mark on him, because no such abuse ever took place.
One particular night (cops involved, as always) he decided that he didn’t have to listen to anything we said, and that he wasn’t coming home. He went to live with his mother, where things got worse by the day. He stole everything out of her home and sold it. He invited gang-bangers and drug dealers to her home, and she feared for her safety constantly. She called the cops numerous times because she feared for her safety, but again, the boy said that she abused him, and the cops always took his side. (For reference, the mother is about 5’3” and barely clocks in at 115.) He planted a loaded gun in her room, called the cops and told them that it belonged to the mother’s boyfriend. The boyfriend actually ended up serving time because of this fucking bastard kid. She had two other young children in the house, and the gun and the abuse charges were an intentional plot to get the other two kids taken away from her. She tried restraining orders against the kid, but since he was a minor, they wouldn’t allow it. Every time he got picked up, she pleaded with the cops to take him to jail, maybe that would finally get though to him, but they just kept bringing him home to her. I don’t understand why everyone who was involved with this kid just blindly took this juvenile delinquent’s word over all else!

The night that he and his friends murdered that poor homeless man, the mother said that he was acting particularly cocky. Then he threatened to kill her. We had absolutely no idea of what he had done until they found the man’s body. He was immediately waived into adult court (at 15) and sentenced to 15 years. We were all absolutely sick with grief for this man.

We were also sick with guilt… “What could we have done differently?” was a constant question in all of our heads. After the kid was sentenced, all the cops, counselors, social workers, and people at the school that had been dealing with him contacted us and his mother and apologized for not taking us seriously. They are all trained to take all accusations of child abuse seriously, and as a part of that they blindly took the kid’s side for everything, and dismissed us as “the lying abusers”. Many of them told us that they wished they would have taken our pleas for help seriously. Everyone thought we were exaggerating about how fucked up this kid was.

I completely agree with your statement of “These kids were twelve kinds of nuts and that’s a fact.” But the reason I am writing this to you is that, after reading your news post yesterday, I felt that I needed to defend the boy’s parents. His mother and father and I did absolutely everything we could think of to try to keep this kid in line. Even the kinds of things that normal teenagers get in trouble for would have been a blessing compared to what we’ve been through with him.

What I gave you today is a very small sampling of the kinds of things we were dealing with every single fucking day with this kid. When people hear about what he’s done, I can always sense the “I’m sure there was something you could have done” comment coming up. What would you have done? How do you deal with a kid like this? Like I said, we did everything the counselors suggested, and nothing seemed to matter.

If you want to add another element to the “nature vs. nurture” idea, this boy has a brother. Both boys were raised in the same house, with the same values. The brother has developed into a kind, considerate, responsible, and independent young man. He is currently working his butt off right now to save up money to go to school for architecture. The only thing I regret is that we spent so much time and energy dealing with the bad kid that this boy missed out on having a normal family life with a normal sibling relationship.
I am sorry this got so long. I have been reading PA since the very beginning, and I feel that both of you are very much like me. I think we are the same age (29) and I have been a lifelong gamer like the two of you. I can’t stand hearing about the so-called correlation between games and real-life violence. Video games DID NOT make this kid who he was, and it’s unfortunate that the correlation is there.

The thing that really gets me with this whole thing is that the kid knows full well that by equating what he’s done to a video game, that he will generate controversy and media coverage. It makes me sick that the media is jumping all over this, because that is exactly the result that he wants.
The only good thing (if there is such a thing) that has come out of this whole ordeal is that the kid is behind bars. That is exactly where he needs to be.
Again, I’m sorry about the length of this. Thanks for allowing me to “tell my side” of the story.

A man has died. The boys who killed him will be in prison where they belong. Those who ENABLED this murder through ignorance and neglect should be in prison too. Don't they call this negligent homicide? Accessories to murder? I don't mean the parents, I mean the cops, and the counselors, and the social workers who were told the kid had problems and ignored it.

Thursday, February 22, 2007

Buying ANGN at the wrong time.

How I first came across Angeion Corp. (ANGN) last week I don't remember. I don't have an IBD subscription yet, so I don't know if it's ranked very well in it's group. The little I know of it's fundamentals are that they've had good growth. So basically if ANGN follows CAN SLIM I don't know. What really interested me was the chart. I think all I was looking for was a stock above $15 that had decent growth. There are tons of those, but I liked the pull back on Jan. 25th from a high of $18.50 to an average of $16.00 for 2 weeks. I thought that is the beginning of a flat base. On Feb. 15th (Thursday) it headed to it's 50 day MA, at which point I decided that if it bounced off the following day on above average volume that I would buy it (remember this is all imaginary money). Well it bounced all right (Friaday Feb. 16th), but on only 50% of the average volume. Then I noticed that Monday was presidents day (market will be closed) and that the whole market volume was down to about 1/4 average volume, which made ANGN about double the my head. So, Tuesday I bought 100 shares at $16.40, because it didn't go above that until an hour and 45 minutes into trading, which surely would be enough time for a broker to finish a market order from the night before.

My mistakes:
1. Basically ignored everything about CAN SLIM. I don't know any of the fundamentals. I need to treat this like it were real money from now on instead of like a silly experiment.

2. A drop from $18.50 to $14.01 on Jan 30th is more than the 15% of a flat base. A drop of 24% might not be enough to be forming a cup, I'm not really sure. If it turns out to be a flat base it still needs at least 3 more weeks of being flat and I jumped the gun...a lot. If it turns out to be a cup, it has even longer and boy am I a fool.

3. I completely ignored what I know about volume rules.

4. The buy point is $.10 above the $18.50 high. The stock needs to make a new high and show that it's going to keep on going. I jumped in too early, and it could be weeks before it crosses that pivot point.

As of right now it's sitting around 16.80 making for more than 2% gain after commissions. The stock may very well just hang out, even dropping below my purchase price, for weeks. Unless it drops to a loss of 7% ($15.25) or I find something much more promising, I'll just keep my position and see what happens.

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Wednesday, February 21, 2007

Working on an early retirement

First, note the disclaimer at the top of this page. It's new and shiney and stuff. A year ago I knew little to nothing about investing. I have a 401K with a little more than $1000 in it. At this rate retirement is going to be rough. However, a few months ago I stumbled upon some things that prompted me to do some learnin' 'bout stocks.

At the top of this site you'll see a link that says "Next Blog". I don't recommend clicking on it for the most part, but one day I was bored and I did. I was taken to a blog about investing in stocks. It was October and this new investing blog had just begun at the beginning of that month. That blog has since moved and is now found here. Basically, he writes everyday about decisions made in a virtual account that started at $100,000. He has since added a smaller virtual account that started at a more manageable $10,000.

BHCO mentions a guy named Josh (aka Maui Trader), who is good at making money in the stock market and also sells consulting services on the investor paradise website. Once the site was no longer free I stopped reading it, but what I got before then has been useful. BHCO and Josh use a system called CAN SLIM, which was created by William J. O'Neil. Josh also recommends a number of books to read of which I've read 2 now, Reminiscenses of a Stock Operator (Edwin Lefevre), and How to Make Money in Stocks (William J. O'Neil). O'Neil created a newspaper and now a website that provides gobs and gobs of information. With all of that I thought to myself, "self, I could maybe make some money in that mysterious old stock market."

So on Yahoo's finance site I created an account to watch stocks I think I would choose. I also created a virtual portfolio that tracks what happens with imaginary stock trades I do. I decided my fake account should more closely resemble reality, so it starts with only $5000 cash (I swear I really could save that much if I just concentrated on it...honest). To be realistic I'm including a commission of $7 for each trade which is reasonable because Scottrade offers that.

I won't be posting very often about it, because there really won't be that many trades made when you don't have much capital. I will explain why I chose the companies I did and the timing of buying and selling decisions that I make. In the end if I can do this for a while and not lose money, then I might open a real account.

ps. I think the ordeal with Verizon is finally over, so I'll finish that story.

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