How to get Started ...

You probably noticed that I took a few days off in this blog. Generally I post every evening during the week when the market is open. But even I need some time off. Actually, I felt quite weak the last few days (chemo tends to do that people say). Important thing is that we are back, ready for an exciting week, next week. First, you remember that I said April 13th will be positive but low volume day. Guess what, it was low volume positive market day. Why is this important? Because our picks ICE, ISE, OXPS went up 2-2-1% for the day. As a trader, did you know that if you can average 1% return per day = about 250% return per year? This is the holy grail in this business. Sometimes it is so hard to get my 1% a day : -)

Why did I say next week will be exciting? Because I expect the market to be quite positive in coming weeks. As I have said in my previous blogs, this will probably be the last leg up before turning south this year. Tomorrow begins the earnings week (1st Q. of 2006). I think U.S. companies did well in the first quarter. Market will like the reports and move up. I also expect Gold and Oils to cool a bit in coming weeks (does not mean tomorrow). If not, we have a new trend and will follow the new lead. I am not stubborn, I simply follow the trend. That's how you need to approach the market.

The reason for my title is that a few people had asked me if they should buy this or that. Let me explain my thoughts regarding how to start investing in the market:
1. You need to know & determine your unit size (one unit is how much you put into one idea)
2. Personally, I think one (1) unit should be at least $2,000-$2,500 (due to trading cost; most of you can buy or sell stocks for under $10 per trade. If your trading cost is more than 1% in & out, your returns will suffer)
3. Your goal is to have a minimum of at least ten (10) units of investments in different industry (being in 10 different stocks in different industry eliminates about 90% of unsystematic risk; having 20 or more stocks will only improve this number by a few percentage points; I currently have ten but hope to add a few more)
4. Of course if you do not have enough capital to hold10 units, you simply start with one
5. Which broker? Does not matter as long as they charge under $10 per trade online (there are so many choices out there but try to stick with the big ones; less headachs later)
6. I absolutely believe in diversification but hates over-diversifying your portfolios (say if you have $100K to invest, your one unit should be somewhere between $5k-$10K resulting in 10-20 stocks; Not 50 stocks at $2,000 each!)
7. There's no way you can effectively follow fifty (50) stocks (if you disagree with me and believe in 50-100+ stock portfolios then simply buy index funds; chances are it will outperform your 50+ portfolios)
8. If you have 3 stocks and 2 go down, that's normal. If you own 10 stocks and 9 go down, we have a problem (currently among my 10 stocks: 9 up and 1 down)
9. If you have a problem and need my opinion, just ask.
10. This blog was created to help my friends and families in addition to keep my own records
11. Lastly and most importantly, have fun (paper loss is not a loss yet :-< )

BTW, sometimes if you really like an idea, you put more than your usual one unit. Currently I have two stocks with two unit investments; MATK and RICK. IDWD became the size of two units (more than doubled in March) but I invested only one originally. Trying to decide whether to sell half of my gains or let it ride - I will follow closely and tell you what I do.

P.S: I think I have created a stir in the HYTM message board. Many people are cursing me out! If I am wrong about this short position, I will let you know when I get out. For now, I do not believe in their treatment; the company will loose a lot of money. Of course this does not mean the stock will go down in the short run (too many dumb people put $ without knowing what they are buying). Let's see how this one unfolds...