Friday, May 16, 2008

Everything happens for a reason...

I found out today that had I stayed in my full time job (I went part time in Feb '07 to spend more time trading, then quit the part time position in October '07 to trade full time.) I would have been laid off on Monday. Just thinking about all of the things I would have given up had I stayed in that job the additional 14 months before the inevitable lay off gives me a deep appreciation for my position. That first decision in February to go from full time to part time started my destiny into motion. The fact that I started trading at the beginning of a bear market gave me a crash course in how brutal the stock market could be. I've learned that being too cautious is as detrimental as being too greedy. I learned that the market makers will rule you through your greed and fear if you allow them to. No fear, no greed, is so important.

The big story so far this month has been oil, which has sent one of my favorite stocks HTE on a run. Close of day 5/1 HTE traded at 21.83. Close of day today (option expiration) it traded at 25.55. That's a price increase of over 17% in just 12 trading days! Not to mention (yet again) the .30 per month dividend.

The option stars for me so far in May have been V, FWLT, and GG calls. All traded or currently held between 100% and 400% gains. In realized gains V barely edged out FWLT, but FWLT shares I am holding continued to gain while my V options are basically the only red in my trading account. My big losses were POT calls (I should have bought out a month further) and my DRYS puts. That could have been a huge gain if I had bought the calls instead.

Looking at the two year and lifetime charts on POT, I find it hard to believe that I can lose money on call options, but I do. Long term this one is a no brainer though. I have a few swing trade stocks in my IRA that I will convert to POT as I take profits.



I was a little late making my goals for May. As you may know my trading has been limited between February and now based on market conditions and my bathroom remodel. Anyway, about a week ago, I decided to set some goals through the end of the year. I decided to go with a portfolio percentage increase each month, taking into account the money that I need to remove each month from my trading account in order to meet our household obligations. I created a spread sheet that is linked to my "scorecard" where I keep my high level stats for my three accounts. This spreadsheet will automatically adjust the next months goal based on the previous months final balance, so I am set through the end of the year. If I decide my goals are unrealistic, I can easily change the formulas to adjust based on new percentage gains projections.

My goals and current status as of 5/16/08 are
Account % . . . . . Goal. . . . . % Actual

Trading . . . . . . . . 25% . . . . . . . . 29%

Investment . . . . . .12% . . .. . . . . 15%

IRA . . . . . . . . . . . . . .8%. . . . . . . . . 7%

I will be keeping an eye on GOT this week. It has been consolidating since mid April, has had some insider buying and may get a pump soon with the rest of the retail sector.

At this price, a 50 % gain is reasonable once the stock starts it's upward move.

Always perform your own due diligence before making any investment.

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