My 1st Million At 33 – yes, you can do it too

A site to share my tips, tools, and humble thoughts on the journey to wealth

Legal disclaimer     Place your ad here    
  • Categories

  • Archives

  • Spam Blocked

  • Sponsors

  • Archive for May, 2009

    Too busy selling stocks

    Posted by Frugal on 28th May 2009

    I have not been able to post much. Almost everyday, I’m selling some stocks. No complaint at all. It’s always better to sell at a good price than at a bad price. I’m even selling some of my PM mining stocks, since they’ve really gone up too fast. Some stocks that I previously owned has almost doubled in less than 3 months from last low. However, I’m still holding the majority of my PM mining stocks.

    I will update my networth next month. It has been the biggest roller-coaster ride ever in my life, plus some most unimaginable unplanned terrible side shows. But I’m on my track of coming back. If I tell my parents how much money I’ve lost from peak to trough, they will probably have a heart attack. And I’m pretty sure none of you want to go through that experience.

    Posted in Investing | 5 Comments »

    The Echo Wave of the Grand Finale (in 2007)

    Posted by Frugal on 20th May 2009

    Be extra careful of going forward. The good days are counted in weeks, if not in days.

    Stock markets remain exuberant, and possibly will remain so until the end of May. If June turns out to break new recent height, it will defy all experts on advising to “sell in May and go away”. However, it shouldn’t be taken lightly at all. We are simply on borrowed time. The further out and higher we go, the bigger drop later it will be.

    Due to the stock market drop last year, some of my colleagues invite me to regular monthly investment discussions in a small group of 5 people. This has been going on awhile. The last discussion has been one of the most optimistic ever. I’m obviously the standalone bear, while everyone else have turned bullish or slightly bullish. The mood was gradually happy. My own forecast for that last week gathering was that
    “stock markets will have a very shallow correction, but I’m not optimistic for the remainder of the year. Furthermore, I believe that in 2010, there is a possibility for stock markets to break new low.”

    I was not surprised by the upturn in the mood. Surprisingly, even given my words, my colleague concluded that even I, the super-bear, have turned slightly more bullish than last month, and interpreted the turn as a bullish sign. I didn’t say anything, but I actually interpreted his interpretation on my words as a very bearish sign.

    In any case, I have been continuing to liquidate my non-PM (precious metal) positions gradually, knowing very well that the intermediate high may be still weeks away, and also that I cannot sell at the absolute top. I’m about 50% sold-out, and I will continue to take advantages of this rally. Yeah, I plan to go to 0%, plus some more in inverse ETF and shorts.

    In case you followed my-networth page, don’t be fooled by changes in the “cash+leverage”, or “everything_else_besides_home” (which are my stock holding primarily) columns. All of my numbers are faithful posted, but were designed not to be easily decoded. Under “cash+leverage”, the leverage that I have is some hefty cash from my relatives which have become a super-nightmare throughout the last stock market drop, totally disrupting my own investing plan. The “leverage” goes up or down without any direct relationship to my actual buys & sells. And the increase/decrease of my stock holdings usually don’t correlate to the general stock market very well because I have more PM than anything else.

    Anyway, I just want to make sure you’re not mis-led. I do say what I think, and I try to act on what I think (although not with a perfect 100% efficient execution). You can take my advice, or take advice elsewhere. Invest on your own risk.

    Posted in Investing | 1 Comment »

    Sell your energy stocks

    Posted by Frugal on 15th May 2009

    With the exception of uranium, I am not so hopeful on energy industry for this year. If you don’t sell them this round, there may be one more chance after some 1 or 2 weeks of the current short-term corrections. After that, energy stocks will probably drop along the general market, with bigger percentage of course.

    The inventory picture for crude oil is simply terrible. Too many speculators have been playing the contango in the commodity futures market. What has been happening is that short-term price dropped too fast, while the longer term prices held up much better. A contango (higher future prices than current prices) in the futures market encourages traders to take current delivery, store it, and sell the futures at the same time. What resulted is basically additional (false) current demands that cushion the oil producers, at the expense of increase in future supplies from the release of inventory.

    When inventory increases, it simply means that oil producers are not cutting production fast enough to match the fall in demand. That doesn’t bode well at all for the future prices.

    I maintain my position that we will probably see something like a double-top formation in the general stock markets, with a second top forming at about June 15, plus or minus 1 week. After the second top falls off from the support trend line, the “sell in May, and go away” will reassert its power.

    Posted in Natural Resources | 2 Comments »

    Biblical Investing – Great Inflation

    Posted by Frugal on 13th May 2009

    If you believe in Bible, what kind of investment choices should you make? One of the most mysterious chapters in Bible is the Revelation which predicts the end time. The most interesting part I would have to say are the seven seals. When I first read them, some were kind of clear, indicating wars and plagues. Some were not so clear at all, like the third seal (Revelation 6:6):
    “A measure of wheat for a penny; and three measures of barley for a penny; and see thou hurt not the oil and the wine.” (King James Version)

    My first reaction was what does that mean?? A penny? I learned much later what the penny means in Bible. Some versions use a shilling or (the Roman) denarius which is essentially a silver coin about the size of a dime, or about the wage of one day work (Matthew:20:2) at the time when Bible was written. In the New International Version, this is what it states for the same Revelation passage:
    “A quart of wheat for a day’s wages, and three quarts of barley for a day’s wages, and do not damage the oil and the wine!”

    Once you understand the units, it is more clear. First of all, silver which was the monetary unit was worth much more in ancient time, compared to our modern time. If we use an hourly (federal) minimum wage of US$6.55, and 8 hours a day, that will be $52.4, or about 3.75 one-ounce (28.35 gram) silver coins (at US$14) or about 23.5 denarius (4.5 gram of silver content). We are earning 24X in silver than ancient workers. So either it means that silver is vastly undervalued, or our wages are so much better valued than ancient workers. I’m guessing it’s probably somewhere in between, especially silver is no longer used as monetary units.

    Secondly, the other part is that the wage of one entire day can only buy you very little amount of wheat or barley, barely enough to satisfy one man’s hunger. It is obvious that it means at the minimum that there is a great food inflation, if not inflation in general. However, it’s basically impossible to only have food inflation. Food is the most essential commodity. Food inflation will drive all other inflations.

    As I contemplate what Bible means for the current global economic pictures, it is also important to note that United States is a predominantly Christian country. I think those scenarios if it comes unfolding could apply to US more than other countries through a US dollar depreciation.

    We are obviously not through the current phase of economic deflation possibly until 2012. However, the next phase of great inflation is probably just around the corner. Keep the goal in sight.

    Posted in Gold/Silver, Natural Resources | 2 Comments »

    HSBC cutting my credit line to $3000

    Posted by Frugal on 7th May 2009

    Being the second bank after Citibank, HSBC has cut my credit card line from $7200 to $3000.

    I don’t know how they evaluated this, but it is for certain that they don’t care that I have paid down all of the balance every month, and that my credit FICO score is at about 800 (well, if that means anything at all). And the speed that they do it is amazingly fast. Right after the monthly statement is cutoff, the credit line is changed immediately. I’m guessing that there must be increasing numbers of people who are behind and going delinquent.

    Under normal circumstances, I would never advise people to get lots of credit cards. However, you should really get extra credits while you still can (and still holding a good job), before both banks and economy go tumbling down again. You should apply credits to different bank/companies, so that you could reduce the impact of credit card issuers cutting your credit lines after the fact. Especially for people who don’t have a lot of emergency reserve, I strongly advise you to load up your credit availability.

    The wrong way to use your credit cards is to think that they are your money. Credit is not cash. Credit is for your extra financial buffer. Frankly, I think people need to be prepared for being out-of-job and without any income for 2 years at the minimum. Assume that you will go into “early retirement” for 2 years, and make sure you have enough credit/money to come out from the other end of tunnel.

    So far, it appears that American Express still has very high credit limit. I have more than $15000 on that card thru Costco. If you need lots of credit, maybe you could try that.

    It goes without saying that you should not get a card that has annual fee, build up more debts, etc. Better yet, you should get those cards that pay you back. Between the two cashback cards of HSBC & American Express last year, I had $500 max cashback from HSBC, and over $200 from American Express. That’s a total of $700 cashback. Not too bad at all. For some more details, here is my old post on this.

    Posted in Credit Cards | 8 Comments »

    A Rally Into FantasyLand

    Posted by Frugal on 5th May 2009

    As I have stated, people needs to take advantage of this rally to sell out of their stocks. This is the “prayer answered” for those who have suffered big losses.

    What’s ahead? My own opinion is that the rally is soon going to stall a little at about here. Many people are looking for selling out at Moving Average of S&P500 reaching 950. I’m not going to count on that. The market will always do the least unexpected. So either it stops just short of 950 at maybe 935, or it surprises every bear out there with a much stronger recovery to 1000 or above. I’m a bear, and I would definitely like to be pleasantly surprised.

    The energy stocks are the stronger ones that have staying power through this counter rally. I have not sold out my energy stocks. In fact, I only just started to lighten up a little. There is a not-small possibility that they will stay strong until early July. I will continue to watch them very closely for a clean sell-out in the coming days/months.

    Looking at upturns in gold stocks in the last few days, it appears that the last sector has waked up to the bullish train. And that is a bad omen. Once the last bullish guy joins, you know what happens next. Precious metal mining stocks will be subjected to stock market fluctuations. I think there is still room to run in both PM and general stock markets. The initial reaction of a stock market fall for PM stocks will be down for sure. I expect them to hold support this time, although the magnitude of fall will always be more exaggerated than general stocks due to its higher volatility.

    I have pinned that stock markets with a high likelihood will not be able to go beyond August/September timeframe. In my opinion, it’s more likely that it will drop starting in mid-July with a bigger magnitude. Nevertheless, towards the year end in November/December, another counter-rally will be attempted. I hold the opinions that the second counter-rally will reach a height that is going to be at least 5% lower than the current or July height. I will not wait for that to sell, nor I won’t be shorting into Nov/December.

    Let’s enjoy the temporarily sunshine for now. Best luck trading.

    Posted in Investing | 5 Comments »