Saturday, June 05, 2010

Recent Hot Streak

I've been on a recent investing hot streak. I'm prob jinxing it by blogging about the streak. I've always loved the idea of investing. I've had an outside stock account since Oct of 2008. I'm up a significant bit, but so are a lot of people who have been riding the rally since March 2009. Some moves are long term investments, and I just try to find good entry points. Recently, my success has been from trading against the rally. I'm using leveraged inverse ETFs as short term trades. These ETFs are designed to move in the opposite direction of a stock market index or specific sector. They can be 1 for 1 or 2x and 3x the movement. On a given day, if the emerging market index drops by 2%, the inverse etf, EDZ, will move 6% up. I've been riding this one when the market feels disconnected from reality and jump out when the ETF hits a target number.

Just investing for 18 months and paying attention, I'm getting more of a feel for when to move. I'm kicking myself for not jumping in Thursday afternoon but I, like many Americans, thought that since the POTUS said earlier in the week, we'd have a 'big jobs number', so I thought the market would rally on the big jobs number Friday meaning I could buy some of these inverse ETFs even cheaper on Friday. I was wrong as the jobs number STUNK. The market dropped like a rock, and the inverse ETFs skyrocketed. I'm bumming but just going to be patient. Trading is far different that picking out long term investments, and I'm now getting to that point where it is OK to listen to my gut. It is a short term relationship, not a long term marriage. Research, pick your entry spot, set stop loss points, and have a goal to reach. Hit the goal, get out. You got to set up guidelines. Not rules, as rules are too strict. I know I'd enjoy being a hedge fund trader or macro strategist, but I wouldn't want to have a family dependent on my moves. It is a nice hobby with fun money for now.

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