Finesse !!!

Investing is a completely different ball game depending on how you play it. If you plunge into trades thinking "I am feeling lucky" then what you get is a gambling pit. This is very easy and it is driven by greed, hope and wishful thinking. These are extremely powerful human traits and really difficult to escape. Once you enter into a trade due to these reasons, fear and panic takes over and this leads you to an endless cycle of wrong moves. These are very useful trades to learn but heaven forbid you end up possitive. In hindsight you would find a reason and a very logical one to justify these trades and profit that come from them. You take pride in your abilities. This develops dangerous habits which are very difficult to shun. This leads one to believe that what they are doing is not speculation but investing. Speculation is not bad as long as it is executed as per the plan. You need a plan before entering into a trade and you need to strictly abide with it even though emotions say otherwise. This brings us to other side of the coin. This side is where you calculate and measure everything. You get into a trade knowing exactly what you are aiming for. You know exactly when you want to get out and leave the upside open and downside covered. You know when its not working for you and you kill the trade ASAP taking minimum loses. This is the only way to preserve your capital trying to make money. Decisions are not coined in hindsight but plans are made before hand and executed. This is finesse of trading. I am very far from this. I give into my emotions. I hope I learn it quickly before I lose my shirt.

[update] This sounds like "wars are won before entering into battle" strategy from "Art of War".

less is more !!!

die rich or die waiting
bet less and bet heavy
die rich or die trying !!!

long vs short

It's a whole lot easier to make money on the long side. You can't make big money shorting because the risk of big losses means you can't make big bets. -Warren Buffett (2001 Annual Meeting)

speculation on GG !!!

i know i have been away for a while. lot of things going on . trying to ramp up career and trying to decide on a few other things. Back to do some speculative plays as no time for indepth research and fundamental analysis. playing with the money set aside for speculation ... so dont run and start using all ur money on short selling.

I think GG is too volatile with > 50 cents spread every day and i can see easy money there. Like every speculation this can go either way. hopefully the way it takes will leave my portfolio GREEN.

Dont know what went right today !!!

Before I list down events for today lemme paint a little background. I had bought some shares of Goldcorp(NYSE:GG) when I first got into gold. That was some time last year at 20$ per share. Since new year everything has been shooting up. Specially gold had a very strong rally and our stock GG crossed 25 yesterday. I had been contemplating to get into gold even more but I was waiting for the dip. I felt stock moved 20% too fast and it will get some correction. Here is what happened in present.

1. All tech companies are not meeting expectaions of beating expectation. Tech stock falling. yhoo, amd, goog, msft everything is down.
2. market is down today after 2 weeks of strong bull. And what happens when it goes down after a bull. Ppl take profits. panic to miss out and start selling. The long awaited dip. My friend told me GG was at 23.72 this morning. I remember making a mental note sometime that I would buy GG when it comes back to 23.5. Here it was. Very close to my price. I felt as my I had predicted something :) I know this is stupid. But it happened.
3. I put a stoploss trailing order. As i was ok with current price, my trail was 10 cents. Was this rigth ? Dont know. GG started to climb and my order got executed at 23.82. and then went back to 23.65 to close for the day. All the time I was feeling that market is going down so I should have waited for a day to see how it does next day. And EOD I have bought GG at 23.82 that closed at 23.65. Now I was looking really foolish. GG could go further down next day and continue falling. Was it right to buy GG or not .. i dont know. But I am sure that 10 cents of trailing order was a stupid move.
4. In After hours GG is back up again at 24.08. I have mix feelings about it. I could buy it at 24.08 next day and be sure that it wasnt going any lower. This could be 22 in after hours for all i know.

Should you put trailing orders which are so close to current price ?
Should you try predicting a falling stock ?
Should you not wait for a stock to turn back and assert the move before you act ?

Well .. My combined cost of GG now is 23.06 and I am putting stop loss at 22.00 as I said in my earlier post. 10% below current price and 5% below my cost price. No more surprises for me :)

10% rule !!!

My dad did business his entire life and did a pretty good job at it. He always had 10% rule to his business and I could never really understand it till now. But its kinda getting clear to me now when I am getting my hands dirty.

His 10% rule goes like this. He will take as much risk as necessary to reap 10% gains from his investment. Anything more than that he wiill be happy to pocket as long as it comes w/o any risk. I think this is the key. Not getting greedy in turn increasing your risk.

He repeats this year after year after year. And this can double your money in approx 7 years (going by 72/rate of return rule). You might say 10% is no good and you are doing 20% or even 30%. But to put this in perspective here is a fact. "Stock market has 7% return in last 100 years including dividend". I bet that 10% every year sounds good now.

Infosys technologies (NASDAQ:INFY) fell 11% when it reported its earnings. Good 31% increase in profits but it could not meet the expectation of beating expectations (pun intended). I am still in profit as I bought it at much lower price but I did not put a stop loss order hence losing my gains. NOONE HAS GONE BANKRUPT TAKING PROFITS but in stock market: gains are not profit unless you ring the register. Its all on paper. So here is a new rule for me. I am going to put stop loss orders at 10% to limit my losses and to ring that register if ever sky is falling when I am not looking :)

LIMIT YOUR LOSSES AND CASHIN YOUR PROFITS.

1. With every purchase, put a stop loss order at 10% below the cost price. Or below 200 days moving average. Whichever is a smaller percentage.
2. Keep moving this stop loss trailing order up from here and never move it down. This one is a little tough to follow but I will try to stick with it.
3. Once unrealized gains > 10%, move your sell order at this point and keep raising it with increments of 5%.

Wish me luck :)

Avoirdupois or Troy !!!

I got the answer of my previous post. Thanks to a friend who pointed me to following ....

1 ounce, avoirdupois = 28.350 grams (approx.) -- this is the ounce used commonly in the US. (There are 16 ounces in an avoirdupois pound.)
1 ounce, troy = 31.103 grams (approx.) -- this is used for precious stones and metals in the US; perhaps it is still used by druggists. (There are 12 ounces in a troy pound.)

Here is the link

1 ounce of gold = 31.1 gold grams ???

This is really odd. AFAIK 1 ounce = 28.sth grams and I can confirm this with encarta
here.

Today gold prices from www.goldprice.org are as follows

561.7 for one ounce
18.06 for one gram

but this makes 1 ounce = 31.1 grams !!!!

My best guess is smaller amounts devalue GOLD a little bit and that is why we see this discrepency. I will try to confirm this and yeah .. that post about gold is new money is yet to come.

Towards a million !!!!

I am a rookie investor. The blog name towards a million is self motivating. This is the space where I will be learning and posting my investments and steps towards my goal. I have recently taken up Investments as my avocation and I am liking it. I hope this blog will help me learn stock market, housing market and all other vehicles of making monies.

GOLD is new money. Our next topic.