From Swinging to Investing: A Money Making Experiment……….(click here for home & most recent)

The last day of July comes as bittersweet.  The day I rid myself of AROX I thought would be a great day to celebrate, and today was the day that happened.  However, I took an $800 loss on it by the time the entire order was placed.  People just don’t want it.  The “all or nothing” option didn’t work for the slug because no one wanted all of my shares at .16, so I ended up selling twice today- 2,000 at .16 and the remaining 3,238 at .14- about an hour apart.  At least now it’s over.  Boston traded Manny Ramirez to the LA Dodgers today with Manny’s parting words being “It’s not about the money, it’s about mental peace.  You can’t put a price on that and I have no peace here.”  The thought of AROX renting space in my portfolio, that I’d have to see “AROX” every morning when I opened up E-trade, and that at any time AROX could unexpectedly dip in value, gave me mental anguish.  I got some mental peace today from selling it, but even selling it was difficult and added to the long list of lessons I’ve learned about stocks, especially the OTCs: 

Stocks with low volumes are never good stocks to buy.  They may have huge swings up, but the swings down are just as big, and most importantly, it’s extremely difficult to sell low volume stocks.  People just don’t want these things, and the bid someone is willing to pay for them is often far below the market value, giving a false sense of value.     

OTC stocks are never long-term holds; just because they’re cheap and it’s possible to buy thousands of shares, it doesn’t mean they’re good or will go up.  They catch the best waves, but waves don’t last more than a few minutes, or in these stocks’ cases, more than at most a few days.  OTCs need to be watched carefully all day and ready to be sold at a moment’s notice. 

Now that AROX is [almost] out of my system, I can feel better knowing that all the stocks in my portfolio, except for one small slug AWNE that is merging with another wind company soon, are ones I want to be there.  As of now, I will no longer disclaim AROX or factor it into any of the day’s activity.

Now let’s get trading.

The Dow fell over 205 points today, 150 of those in the last hour of trading.  Oil also fell $2.69 to close at just over $124 a barrel.  The ban on naked short selling was extended until August 12, leading some to call our trading environment “socialist”.  Exxon Mobil (XOM) reported a profit for the quarter that blew all other quarterly profits from all other companies in the history of the US out of the water- $11.68 billion dollars.  Yet, the stock fell 4% today.  Wall Street predicted an even larger profit than $1,500 per second, so when the news came out, people just weren’t happy.  Unbelievable.  Part of me wants to buy into Exxon, but most of me thinks it’s a ticking time bomb.  A lot of the profits, as reported on the nightly news, went back to share buybacks and dividend payouts to shareholders, and I doubt this will fly with the non-shareholding public for long.  I’ll stick to the financials for now.

I waited for the early morning green candles to turn red then just back to green before adding one more financial, MBIA, Inc. (MBI), to my portfolio around 10:00AM.  This brings my portfolio total to 12 financial stocks, which returned $122 with just six of the twelve defying the Dow and staying in the green today.  So far this week, I’ve made about $800 just sitting here.  I’m still coming to terms with the fact that I may have actually and finally made some good stock decisions, and this feeling is a bit surreal.  I have to keep reminding myself that it is actually possible to make money on the stocks, and that I may be someone who does.  The slugs made me feel like such a loser for so long, but hopefully that feeling will soon be replaced with a feeling of success. 

Yesterday the market price was 0.14, the ask was 0.175, and the bid was 0.14 when all of a sudden the market for Alderox (AROX) fell to 0.12.  Where did that come from?  Something shady is going on with that, and like I’ve told myself time and time again, the day I rid myself of this one will be a real day to celebrate.  Today the market dropped from 0.18 to 0.14 with an ask of 0.20, so I put in an order for 5,000 shares at 0.145 to try to average down the 5,000 I already have at 0.29.  The order was partially filled about an hour later- 238 shares of it.  What am I going to do with 238 shares?  I called E-trade, but the best they could do would be to reimburse me the commission.  I decided to let my 0.145 ride until it takes.  The limit order I places was good for 60 days, if it takes, I’ll be good and averaged down to get the hell out of it less scathed than I would be now.  I will win.

After a sideways sort of day, the Dow closed up 186 points.  Oil on the other hand, or maybe on the same hand, also closed up $5.60, the biggest jump since July 10.  The fact that the Dow stayed in the green all day despite oil tells me we may be starting to factor it into the equation, or it could be a result of today’s positive GDP report.  Either way, if it wasn’t for AROX, which I will beat eventually, today was another decent day.  I also got into Mbia, Inc. (MBI) after Mary Caraccioli on Money Matters Today explicitly mentioned them last night as a solid bond insurance company.  I waited until the mid morning red candle sell off turned green and got in at a good spot. 

Now that I’m in good positions with the financials, it’s become a battle against me and AROX.  I’ve managed to clean out my entire closet- every rotten skeleton- except for this one.  It’ll be a tough battle, but I’m not giving up, even if it kills me!

Tough day on Wall Street.  Bush has yet to sign the housing bill and the Dow dipped down 239 points.  Oil closed up $1.47 today to $124.73 amidst concerns that Iran is going to bomb someone.  I personally think that’s a load of crap and oil’s rise was just a blip.  But I could be wrong.   

There were no OTC run ups today, which is a good thing because I spent the morning buying into a bunch of hard hit financials on their mid-morning dips: Ambac Financial group (ABK), Radian Group (RDN), Security Capital Assurance (SCA), Triad Guaranty (TGIC), and took advantage of the down day to double my positions in C, FRE, and RF.  The Dow was in the red all day, so I figured it was as good a day as any other down day to pick up some bargains.  But in all honesty, it was my plan to get into these guys today regardless of the market, so I really just got a little lucky. 

A couple weeks ago, Universal Energy (UVSE) said they’d be finishing a well soon, and the news has yet to come.  So, I’ve been keeping a close eye on that one to jump in and out of.  It didn’t happen today and every day that goes by with no news, the tension builds.  If played right, it should be an easy couple hundred dollars, at least. 

The Dow got battered today, down 283 points to close at $11,349.  Oil rose $1.  I guess the Nikkei isn’t such the indicator of the next day’s US market I had hoped it was!  Nonetheless, it was a good down day to get in.  My balance fell about $400 today, but when the banks pick back up, it’ll more than make up for me not getting in on July 15.  No one ever knows what the next day holds, and that’s the exciting part and the part of trading that gets me up early in the morning.  That being said, having a plan to sit on the financials and wait until they come back has lessened the stress I had been feeling since beginning my experiment one month ago.  I’m sure some experienced day traders are making money, but they’re making a living by naked shorting the large financials, and I haven’t happened across any OTCs that would make them any serious money.  Then again, a lot of day traders work with large amounts of capital, which does open up a lot more possibilities.  Even a 10% day on a $10,000 investment would return the trader $1,000.  For me, I need to wait for the beasts or the stories of hitting oil to make any serious money.  I’m still hunting, but I am happy to have gotten into the market when I did when the financials are where they are.  My summer has again become enjoyable.