Swimmer's First Lesson

I checked it on another computer, it looks my blog is working, now I am ready to post something.

My wife is learning swimming recently, I tried to convince her that she can float, she was not convinced. She said every time she tried to release her floating aid, she felt sinking. One day, I bought her a Snorkel, the device she can put on her mouth to help her breathe under water, and she learnt to swim in 1 second!!

Why I am telling you this? Is there any parallel to the market? My answer is yes!

So, what drives the market, fear and greed? Fundamental and technicals? Rumor and insiders? Big boys on Wall street and small investors (grandma and grandpa) on their kitchen counters? All of these above!!

Yesterday Dow went up 300 points, and today it went down 380!! So you are talking about confusions, from the big guys to the small guys, nobody knows where the market is heading. Yesterday, Dow went up, people are screaming, market bottomed out, bottomed out, you need to buy, buy, buy, with all your money, until there was a rumor, GS will make some announcement, Dow crashed 300 points. Later on, GS said, there was no announcement, then in the afternoon, Dow recovered and went up 300 points. Every body said no problem, the worst is over, I am glad I bought 100 Call contracts of QQQQ, great!!!

Well, in this morning, a French guy said, US mortgage is in big trouble, blah, blah, (like we did not know this before) the morning premarket went down to 180 points. In the morning, every said no problem, a buying opportunity, Dow went up in the mid day. Then afternoon, okay we are tired, everybody is selling, Dow ended down 380 points.

Cramer went crazy, everybody went crazy, is that any Buffett, long term investors here? Come on, you are here for a long hall, aren't you!

Alright, that's enough for complaining, everybody is scared, okay everybody is a gambler, you tell me you didn't trade in the last a few days? Give me a break!!! Every trade made money?? Give me a break.

What I am trying to get here is, when I put down my bet, I have to base on something. I can not look around, grandma is scared, she is selling, that's why I am dumping all my portfolio. Okay you can not listen to your brokers either? Why? They are your worst enemies! Whenever they tell you to sell, guess what, they are buying. And vice versa. Why should they tell you the truth, after all, they have to make some money, too. Look how much GS's former CEO bonus was, 200 millions! Where do you think they came from? All from your grandma, my grandma's accounts. The truth is the big guys have the quickest computers, they look at your face, they take your pulses, buy all the stocks you scare to sell. Rob your bank, legally.

So as small investors, what can we do? Well, I am one of the dummies happen to believe that we can learn how to swim in the market. That's why I am a market swimmer.

Okay, cut the story short, nobody is listening to me anyway. My idea is whenever you put your money on the table, before your bet on one way or the other, you need to check on the big guys, how they put their money, it's called following the smart money.

Second, the information is the key, we need to check everything. Forget about P/E ratio, you can buy a PE of 5, and in the next morning it will fall like a rock! Well, I am a long term investor, the stock just had a bad day. Hold it on, hold it on for a long term. Close you eye, check it next year. Next month, you will get a letter, saying the company you owned just filed bankruptcy!

Okay, so the information does not stop at PE, cash flow, Buffett needs to know the money flow for the next 5 years. I am lucky if I know how the company will do the next day.

So this is the information age, we just need to follow a system, don't listen to the talking-heads on the street, you will loss your shirt if you do.

Okay what do we follow? I like to dig into the creepiest things in the world. But I can not follow everything, I have to establish some system. I am still experimenting, but I hope I can share with you something, and learn from everybody willing to share. Okay there is the story:

(1) Follow smart money
(2) Collect all the information, as much as I can
(3) Put the data in the spreadsheet, and find some parameters, let the computer tells me what to buy and what to sell.

So I like Stockbee's strategies, they make a lot of sense, here is what I do on my part:

(1) Based on the smart money I decide to buy or short
(2) Put Stockbee's list into my computer
(3) I use multi-dimensional criteria to select the stock to buy or to sell based on Fundamentals and Techs.

I will post my picks on this blog!!! Let's united together, otherwise we - the small fish - don't even have a chance!!!

Hope you are not too tired to read all the junk thought.

If there is anybody there, please let me know.

Good luck, MktSwimmer