Sold my Short Positions on Banking Stocks today...

[lendaddy]

Let me live vicariously Wayne, ballpark amounts my man....ballpark

[on-ramp]

the stock market is a scam , a fool's game. all the risk without any control.. you just park your money and hope for the best.

I don't have a single dollar in the stock market. I'm making my money elsewhere.

[futuresoptions]

Thus Futuresoptions LOL

[Aurel]

I`ve invested my DYI engine rebuild budget (~$5k) on a pink sheet stock that an investor friend of mine tipped me about. If if works out well, I won`t be rebuilding that motor and directly buy a newer Porsche. If it does not work out, well, I won`t be rebuilding my engine either

Aurel

[boba]

I don't understand. If you were short and these stocks were going down you should have been making money.

Options are not for the faint of heart, you need to be on top of your positions all the time.

There are many investing styles, trading is a totally different game from investing. You need to be comfortable with your positions and your strategy.

No matter how you go about it, it takes thought, research, and attention to detail to be successful. Just like everything else in life.

Regards,
Bob

[Mo_Gearhead]

"the stock market is a scam , a fool's game. all the risk without any control.. you just park your money and hope for the best.

I don't have a single dollar in the stock market. I'm making my money elsewhere."

What an ignorant observation! Put me in the "Fools category" please. Lets see, I never attended college, (I did inherit about $24K when my mother passed) blue collar jobs early on, then management positions in my last 26 years of work. Studied stock market, invested regularly, ...retired at 52? Gasp!!!

What a fool I've been!

If you don't WORK at studying the market ....do as on-ramp states. It's not for everyone. But don't paint with a large brush please.

[Aurel]

Is shorting stocks a practice that has a positive or negative impact on the companies that own them? Let us see, their stock price is going down, you borrow their stock at a higher present price, then come back later, sell it back to them at a lower price and pocket the difference. On the company end, they are getting interest from loaning their stock, with the hope that this will compensate its decrease in value. While the practice may seem immoral in first approximation, it actually appears like it can help companies that are on the downswing, as they can make some money with their stock rather than eating the losses. On the other end, the buyer is taking the risk of unlimitted losses if the stock goes up again and he forgets to sell...

Aurel

[svandamme]

hmm... call me crazy, but anytime i see 30% up after about 10 weeks, i cash in right there and then...and i giggle a little bit at the same time...

[cashflyer]

When I had time to watch the market regularly and study my investments, I made money. When I stopped paying attention, I started losing money.

The stock market is only a fools game if the investor is a fool.

[on-ramp]

Originally posted by cashflyer
When I had time to watch the market regularly and study my investments, I made money. When I stopped paying attention, I started losing money.

The stock market is only a fools game if the investor is a fool.

most "investors" who have money in the market (funds, 401K, etc) don't have time to "watch it regularly". they are at work 40 hrs a week or more.
they park their money and hope for the best. if it goes up, hurray, they are good investors.
this is great risk with no control.

the rich make money with very little risk. I like to have control of my dollars.

[Aurel]

So, on-ramp, how do you make your money work if it is not in the stock market? Real estate?

Aurel

[futuresoptions]

Lets see... 10% over 3 months.... That would equal 40% annual.... Not bad!......

[on-ramp]

Originally posted by Aurel
So, on-ramp, how do you make your money work if it is not in the stock market? Real estate?

Aurel

Aurel, it's a small business. buy and sell items on-line , similar to what Wayne does. Sure, it's a lot of hard work, research, etc.. but it's all worth it. It's called "active investing", with control in every aspect of the process. The stock market is "passive investing", you just put your money there, fold your hands in your lap, and hope for the best. that's not for me.

with regards to RE, I will get in when prices are much lower than here. This process might take a good 5-10 years to play out. like in the early 90s.
so forget the market, you have to be an "Insider" to make any real money, anyway. Instead, start a small business and work at it every day for 5-10 years. you'll be better off

[kstar]

Two great quotes from a Nobel laureate:

It is not easy to get rich in Las Vegas, at Churchill Downs, or at the local Merrill Lynch office.

and

Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.

Both from Paul Samuelson.

The basic premise is that free markets work and this fact is self evident. Both trying to pick stocks and time the market assume you can beat the market - you can't and neither can the big brokerage houses. The S&P typically beats the great majority of all actively traded mutual funds (Google "SPIVA").

The solution? Flow with the markets and make money in the long run with low cost, passive index funds with a bias towards small cap and small value companies. Anything else is gambling, IMHO.

Good luck!

Best,

Kurt

[kstar]

Originally posted by on-ramp
Aurel, it's a small business. buy and sell items on-line , similar to what Wayne does. Sure, it's a lot of hard work, research, etc.. but it's all worth it. It's called "active investing", with control in every aspect of the process. The stock market is "passive investing", you just put your money there, fold your hands in your lap, and hope for the best. that's not for me.

with regards to RE, I will get in when prices are much lower than here. This process might take a good 5-10 years to play out. like in the early 90s.
so forget the market, you have to be an "Insider" to make any real money, anyway. Instead, start a small business and work at it every day for 5-10 years. you'll be better off

Basically, "active investing" implies that one is trying to time the purchases and sales of securities to exploit pricing irregularities of those securities. The problem is that markets are incredibly efficient and even the big boys have trouble effectively exploiting these "irregularities". Look at the history of any fund vs. the S&P.

"Passive investing" implies one is not going to try to time purchases and sales of individual securities and assumes the markets are efficient, i.e. individual securities are already priced close to their value. The passive investor seeks a diversified portfolio that best represents the market as a whole and buys and holds that portfolio.

IMHO, one should follow the "passive" advice but to focus on the groups of securities that have performed the best since the early 1900s, which are small cap and small value companies.

A close study of the history of free markets gives a clear picture that indeces typically outperform actively managed funds and small cap and small value biased funds outperform the big indeces like the S&P.

FWIW.

Best,

Kurt

[on-ramp]

Kurt,

Those who "actively invest" stocks make the most money. These are the day traders, the fast flippers, buy and sell hundreds of thousands of shares every minute. these are the guys that walk around the trading floor every day. they are not long term, no way. also, the people who use software tools like Wizetrade, Quicktrade, EZtrade, whatever. just buy/sell stocks ever 10 minutes, like theres no tomorrow. the rest, have to wait 10-20 years to find out how well they made out. passive investing will never make you wealthy. btw, my original "active investing" mention did not concern stocks.

[kstar]

Originally posted by on-ramp
Kurt,

Those who "actively invest" stocks make the most money. These are the day traders, the fast flippers, buy and sell hundreds of thousands of shares every minute. these are the guys that walk around the trading floor every day.

Empirical and historical data show the exact opposite of what you stated above, FWIW.

. . . snip . . .

passive investing will never make you wealthy.

Again, this is contrary to decades of market data and contrary to the philosophy of many of the sages of Wall Street.

btw, my original "active investing" mention did not concern stocks.

Sorry, my mistake!

Best,

Kurt

[kstar]

On-ramp: The guys who do get wealthy on the trading floor are the big brokerage houses who make commissions and spreads on each trade - the "bookies" as Eddie Murphy's character "William" Ray Valentine so appropriately called them.

The vast majority of stock pickers and day traders and managers of active funds ultimately underperform the indeces. Don't take my word for it though, just check out the SPIVA (S&P V. Active Funds) numbers, among many others.

Also, don't underestimate the power or market returns over many years; this method does create significant wealth and is undeniable.

Just like you can't typically beat the house in Vegas, you can't typically beat the "market" either. Some do, of course, but those that do fall into a category that might best be described as lucky.

FWIW.

Best,

Kurt

[Shuie]

I wish I had sold my JCI when it ht $125 last week like Id originally planned. I was at work behind a corporate firewall all last week and couldn't get to to the Schwab website as I watched it go to $129 and then back down to $119. Lesson learned: If you are short on a stock or have a goal, set the limit order immediately

[competentone]

Originally posted by Aurel
Is shorting stocks a practice that has a positive or negative impact on the companies that own them? Let us see, their stock price is going down, you borrow their stock at a higher present price, then come back later, sell it back to them at a lower price and pocket the difference. On the company end, they are getting interest from loaning their stock, with the hope that this will compensate its decrease in value. While the practice may seem immoral in first approximation, it actually appears like it can help companies that are on the downswing, as they can make some money with their stock rather than eating the losses. On the other end, the buyer is taking the risk of unlimitted losses if the stock goes up again and he forgets to sell...

Some friendly advice (based upon your description above) regarding your earlier comments about buying a pink sheet stock:

The pinks sheets are an extremely risky place to be speculating; only the most experienced investors/traders should enter those waters. Your description above, relating to shorting stocks, tells me that you are not experienced enough to be speculating in anything traded OTC (Over-The-Counter).

Your "friend" who got you into whatever it is you bought, may have the best-of intentions, but my general advise (hard to say definitely without knowing the specific security you've purchased) would be that you close your position and spend some time studying the markets before making any more trades.

Companies themselves have nothing to do with the short sales of their stock.

A short sale involves borrowing shares (not from the company, but from a broker -- who is in most cases representing another trader), selling those shares into the open market with the expectation of buying them back at a later time for a lower price. One gets to keep the difference, less commissions/fees ("interest" on the borrowed shares), between what one sold the shares for originally, and what one bought the shares back for -- if the trade goes as the short position holder expects.

If the stock price actually goes up after a person takes the short position (that's what happened to Wayne for some of the time he was holding his position), one is in a position where one has a "loss" on paper. If one closes that position by going into the open market and buying the shares to return to his broker, one has lost money on the trade.

Wayne didn't close his position while he had the loss, he waited until the stocks began to fall again and he could buy the shares he borrowed back for less than he had originally sold them for -- making a 10% profit from the trade.

And while Wayne is probably right that the stocks he was shorting are likely to go lower in the coming months (meaning he would have made more money if he had continued to hold his position), his move to close his position sounds like a wise decision if the trade was "consuming" him.

Everyone's "goals" and "tolerance of risk" are different when it comes to investing; if you try to invest outside of your "comfort levels" the stress will get you -- if not financially, then in other areas of your life.