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Martzee
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I am a DIY investor investing in dividend growth stocks and trading options (covered calls and naked puts) to generate income. My goal is to reach a sustainable and ever growing income so I can quit the rat race. I started trading in 1996, but I wasn't very successful. After some substantial... More
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Hello Suckers Investments
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  • Market Sell Off, Are You Scared?

    I am freaking out! It is not a pleasure watching my holdings evaporating and showing a loss. It is also difficult to hold and sit tight. It is even harder investing more money into falling stocks. Some people say "do not try catching the falling knife..." others say it is a great opportunity to buy more shares, some are crying sell, sell, sell! Which way are you going with your investments? Are you sitting tight, raising cash, trading options, or selling like crazy? I am trying to sit tight, talking myself into not panicking and hold. I hold dividend payers. Those are the companies which should sustain any similar sell off better than others or growth stocks. But my concerns and double guessing are growing and doubts are increasing. Will those stocks really hold and will they recover? Or are we seeing rich people really fleeing out of dividend stocks due to Obama's policies on rising taxes on dividends for rich people. Does he realize that this drop will damage middle class although he is claiming that it wouldn't? Or is it a drop because of many other fears we experienced in the past; because of Europe, fiscal cliff, and many others and the stocks will recover? Does it even make sense seeking the answer? In times like this I am trying to remind myself what dividend investors and professionals say about investing into dividend stocks: When is time for selling the dividend paying stocks? Many experienced investors will tell you, that there is only one reason when you should considering selling dividend payers. If you answer yes to any of the following questions, then you should consider dumping your stock:

    1. Is the dividend in jeopardy?
    2. Has the company changed its dividend policy?
    3. Has the company failed raising the dividend?
    4. Has the company cut the dividend?
    5. Did the stock spiked up (climax top) too much?

    None of it happened recently. Many of my holdings are just out of favor due to either increased investing, or market panic. So why liquidating a money making machine, which is currently paying me $550 annually in dividends? I am sticking to my plan, sitting tight, saving more cash to buy more holdings and as time comes, buy more when those stocks are quite cheap. What will be my next plan? I still am working towards saving 10,000 of dollars into my Lending Club account (my current value is $7,600) and as soon as I save I start focusing on my TD account. The goal will be to raise cash up to another 10,000 dollars, keep 30% in cash, invest the rest, buy more shares on my current holdings (to reach 100 shares on optionable stocks, which would allow me start selling covered calls) and after raising the cash, start selling puts on current holdings (buy in thru the puts). As Mr. Miller says it in his book "The single best investment"

    "Holding successfully requires a kind of spartan attitude, a kind of warrior attitude, in which you hold your ground, never tromping away, through thick and thin, through storms and sun, never becoming excessively excited or happy by profitable rallies, never sinking into gloom or depression or second thoughts when prices are on wane. A warrior attitude in which feelings may be felt, even deeply felt, but not necessarily acted out... As a warrior you understand that there are many ways to win the battle of investing, there are many ways to come out on top in the end."

    So what helps when the mood becomes gloomy? I take my dog and go out! I am getting my cash ready to buy more shares of ABT)" target="_blank" rel="nofollow">ABT, O, JNJ)" target="_blank" rel="nofollow">JNJ, PPL)" target="_blank" rel="nofollow">PPL, or MCD)" target="_blank" rel="nofollow">MCD, T, WMT. Most likely it will be O)" target="_blank" rel="nofollow">Realty Income stock, since I will have 100 shares and will be able to sell covered calls (although options on this stock aren't those among best, but we will see when time comes). Happy Trading!

    Disclosure: I am long O, ABT, MCD, JNJ, PPL.

    Tags: O, ABT, MCD, JNJ, PPL
    Nov 12 4:56 PM | Link | 2 Comments
  • Market in free fall - are we back in recession?

    If you are thinking to be bullish these days (start buying stocks) I would postpone it a bit. We may see more on the downturn in this market. Tomorrow we will see some labor data published and they may stop this fall, but do not expect it much. I would say that data will be worse and we will drop further down.

    A few days ago I was expecting the market to drop to 126 level (looking at SPY ETF, which tracks S&P 500. S&P 500 will be at 1260 level then). Well, we broke down fast and furious. Yesterday I was expecting a bounce for today’s trading back up to 130-ish level and then continuing down to 123-ish level. Not even close. We erased the hammer candle signal without even blinking an eye. The new support at 123 didn’t hold for long. As far as now (11:48 ET) we can see another very long bearish candle and sloping down.

    News and media are now talking about recession. Panic is rising. When taking look at VIX you can once again see a long spike up created by a long bullish candle (currently at 28.13), which is similar to the spike which happened in March 16, 2011. Does that mean that we are doomed? No, not at all. This actually mean that we may be bottoming.

    So how does that work with my previous posture stating that we are heading even lower (by breaking $123 level I am expecting to go to $118 level)?

    Well, if you take a look at the market, we dropped huge within 7 trading days. The largest drop since October 2008 which erased all year-to-day gains of the market ($1.1 trillion of value in just 7 days!!!). Taking the speed and depth of the drop, this market has to correct and bounce back. When everyone is panicking and speaking about recession, we are close to the bottom of this 7-day slide. I cannot say when that happens. Taking into account tomorrows labor data (I am expecting them to be bad), we may bounce on Monday. If so, it will go up to $126 level or near it. However, we broke down on high volume and I in my opinion we are officially in bear market. So overall, we will go down, but we will see bounces (the same way as in uptrending market we see dips). So the expectation is that we will go back up to 126 level, where we bounce down and continue to 118 level and so forth.

    So how to trade in this market?

    It is tough question. For swing trading and short term trading this doesn’t matter. Swing or day traders can trade the market both ways. But what about 401k or IRA accounts? I do not know yet, but I am thinking to move some of my allocated money into cash equivalents and stay aside. This ride donw the hill may be long.

    Tags: SPY
    Aug 04 5:54 PM | Link | Comment!
  • SPY sell-off

    When I said “Everything can happen” yesterday, so today it happened. I expected a bounce, which haven’t arrived. Instead the market opened with a gap. It was a bit obvious last night when watching futures where we will be heading at open.

    So what am I doing? As I said yesterday, I have my stop loss which wasn’t executed, so I am still riding my puts and making money on this downtrend. I will wait where the market closes today and adjust my stop loss accordingly.

    The market is heading to the $123 support level and right now it looks like we are almost there and actually a bit higher than that. We didn’t break through the yesterday’s low, so I guess that this low is our new support. Will we bounce off of there?

    Tags: SPY
    Aug 04 5:54 PM | Link | Comment!
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