Optimism in the Stock Market

Hey Everybody! it's a New Year and I'm pumped up Baby! The new year is starting out with a bang, market is up 243 points last time I looked. Ahh...beautiful.

STOCKMARKETDOUBLE is also off to a good start-in my quest to double 10k in the market in less than one year. As of this moment the account stands at $12,032, a GAIN of 20% in less than one month.

STOCK MARKET DOUBLE PORTFOLIO
Start Date: 12/12/2011
Starting balance: $10k
Current Balance (interday): $12,032
Gain: 20%

I have only made one trade since I started on 12/12/11. Part of the plan is to only make a few trades to reach $20k, which would be a double.

Because I am not trading that often, I use my time effectively by educating myself. There is so much to learn about the market. I am certain, it's a lifetime endeavor. One of the things I have done is to start a simulated options account. It consists of:

YUM, July $60 calls, bought 10 contracts at $3.60 each (5% loss)
GEOY, March $20 calls, bought 10 contracts at $3.60 each (2% gain)
CHD, July $45 calls, bought 10 contracts at $3.80 each (3% gain)

Which means I am exactly even.


MARKET PREDICTION for 1/4/2012: DOWN
Prediction Record 5-2
Winning Pct. 71%

More on Stock Screens

Stock screens and back testing are invaluable tools that enable you to make great stock picks. For example you may run a screen for stocks with the lowest pe's. This is a great place to start, but it should only be the beginning.

I think its wise to run the results through at least one other screen and then when that is done, have them pass certain other criteria, such as liquidity, for one.

A hypothetical situation that best exemplifies what I am talking about maybe to take the following steps:

1. run a screen for stocks with the lowest pes
2. then run a screen for lowest price to book with the same stocks that you came up with using the low pe screen
3. then choose the stocks that are trading at least 100k shares on average per day.

At this point, pick the best 5 or 6 stocks.

4. then dig a little further and read a little about each company; after doing this, there should definitely be one or 2 stocks that you will feel really good about.
5. the final step, is to do a paper trade with these stocks and see what happens. I can not empahasize how important this final step is. It is an absolute... do not skip this step.

A final note, when I first started investing, I read similar advice and ignored it and it cost me tens of thousands of dollars, save yourself the pain-take a little time to do the research and make yourself tens of thousands instead of losing it.

Stock Screens

Screens, Screens, Screens. Backtest, Backtest, Backtest. It just makes things sooo much easier. I must have experimented with at least 20 different kinds of stock screens and/or styles of investing over the past 3 or 4 months. Luckily, the past 4 months have proved to be a good time for testing because of the volatility of the market. It was easy to see which methods of investing held up well when the market was heading down and which ones reacted best when the market was going higher.

There are so many different sites that you can open a simulated stock account that enable you to keep track of how well your strategies are working out. I highly recommend any of them. The practice of back testing pays huge dividends!