Note from Muck About PM markets 5/27/16
This afternoon, after lunch, I hit the sell point for the silver speculative stocks I own..
I always, when I purchase stocks, let the winners run until they get tired and have a pre-set sell point in case they have a sell off.
My silver portfolio, in whole, tripped the lower limit of my current profit point and I dumped all my spec silver stock about 10 minutes ago (3:45 PM EST)..
I always check my speculative stock values at 9:45 AM EST (giving time for the markets to settle out) and I check them again at 3:30 PM EST. If I show an overall profit for the day at the 3:30 PM check, I’m aboard another day.
If I show a loss at the PM check, I check the loss against my preset max loss level and if it exceeds it, I have the last 30 minutes of the market day to clear my holdings and maximize the profits I have left.
This rally in Silver stocks ran me up to a $15,000.00 profit. My lower cut off was $10,000.00. Today at 3:30PM, my profits dropped to $9934.00. I dumped all my holdings for that amount, less fees, and pocketed a $9899.00 profit net.
Sure I dropped an extra $5,000 but I could have made and extra $10,000 or more if things had continued to go up —- which they didn’t. There are two general kind of investors who trade. There are greedy ones and there are broke ones and there are those who ride the wind up and get out when the wind changes and goes the other way. Greed – “By, God, I know this stock will go to $50 and only paid $35 a share and I’ll not sell until it get there!”..
The stock drops to $15 a share and now he faces a much bigger loss than he would have if he had set a profitable tentative sell point of say $60 a share and a sell point of say, $40 a share.. That way he STILL shows a profit on the trade – not as big as our trader wanted, but it beats the shit out loosing all your profits and extra money besides.
I have learned that one MUST accumulate and personally possess a stock of gold (preferably small American Eagles like 1/10 oz and up and bags of circulated US silver (pre-1964). Personal possession only.
Then have some fun TRADING (NOT INVESTING) in paper silver and gold – more silver than gold because silver has more uses than gold (industrial as well a monetary) and is less likely to be manipulated. (although it sometimes is).
So speculate in paper precious metals paper and buy and hold forever (at least until you need to use it) the physical stuff.
Now, excuse me, I need to get ready to take my sweetie out to dinner on my profits from the trade today. I think I’ll have plenty left over to increase my bottom line when the trade clears!
Enjoy – but be wise, not greedy and NEVER hold a stock that goes below your sell point “in hopes” it might come back up. It may stay lower than your sell point longer than you can manage to accept the losses!
Note, this is addressed to those willing to trade – NOT BUY AND HOLD. BUY AND HOLD went out with the Bull Market of 1966 and has not been seen since.
MA
Bravo !!!
Trade, take profits, and always have a sell stop
nice little successful formula you have created there
young man…vote up this white man!
Buy and hold = “and it’s gone!”
One thing I forgot to mention.. After the correction, these speculative stock will very likely rally again into higher territory as all signs (both fundamental and technical) show the PM’s in a new Bull Market.
In my case when silver rises above my “sell point” I will, once again, take a small speculative position in my favorite miners. As it goes up, I’ll watch it. If they should exceed the highest price/share where I didn’t sell last time, I will go in with hip waders on, reset my sell point to the high I let pass the first trade and see where we go and set my loss point where they peaked out the last time ($15K).
The idea is not to by low and sell high. Too damn hard to do.. The idea is to BUY into strength and SELL after the strength has petered out. and the stock(s) start a correction. So it’s Buy a little high and Sell a lot higher.
I read a column in out daily rag this morning where a lady “investment advisor” said that to ignore the power of compound interest is to miss out on profits. My first thought what “WTF, lady, which year do you think you are in??”. Interest bearing bonds, CD’s and such are certificates of certain confiscation with 1% yields, tax to pay and inflation running at almost 5% regardless of what the squirrels at the Fed are saying. You’re lose a minimum of 4% a year if it just sets there. Stay away from bonds until (and if) the Fed dares start to rase them. Then pick a good ETF that shorts Treasury bonds and load up. Remember, the principal of a bond drops like a rock as interest rates rise,
If no one understands this very basic fact, I’ll write a Muck’s Minute on the subject and illuminate those who don’t..
Have a wonderful weekend to everyone and be safe out there..
MA
Good for you, muck. I got all of the money I could withdraw from my IRA out a few years ago, just what I put into it, not any gains, so I wouldn’t have to pay the penalty, a few years ago. What’s left is money I am prepared to lose. I don’t trade, day to day. I was a ‘value investor’ and I did ok on a couple stocks. Now I just have a few gold mining stocks left in there, which is money im prepared to lose. I’m down on all of it, but I just leave it there. It’s more entertainment than anything. I’m long gold miners and short(via ETF) the S&P. ETF decay has really eaten into my money even though the market has basically gone sideways.
I will say this, the two things I held into the longest made me the most money. UPS, which I considered a kind of short of brick and mortar retail, did very well. Also advanced auto parts, which I bought due to the average age of vehicles on the road constantly going up since the last crash(more people keeping their cars longer, and average people learning how to do some things themselves instead of paying a mechanic to do it) has led to good profits for those kinds of companies. It was kind of like a short of the big three auto makers. Both of those did quite well. I sold it all when QE officially ended. And, wouldn’t you know it, last time I checked both were up setting like 10% since then too, so I got off early. But oh well, I’m not getting back in. The downside potential greatly outweighs the upside. I think it’s a lot more likely for them both to go down 30% or more than go up another 10.
I’d enjoy a article on bonds and what to do if the fed ever dares, or is forced to raise rates.
Muck, do you have a formula on setting your buy and sell points? What helps you determine you are buying into strength and selling into weakness? If the answer is charts, then plan a article on how to read charts!!
I would love to learn to your way to trade vs buy and hold.
Thanks again for your minutes!
Muck , so you’re an admitted evolutionists , global warming apologists and now you have a gambling addiction .Muck,you could have really made something out of yourself but time is running out.
I think of that song by Roy Clark….. Yesterday, when I was young…listen to it muck.
@Gayle: You are “investing”, not trading. This is NOT an investor’s market. My humble advise is that gold is subject to manipulation buy traders, central banks and whatever to suppress the price whenever possible, not’s not the time to be in gold stocks except as you have done – for entertainment with money you are willing to see go up in smoke.
My advise would be to do a few hours of research into silver miners (CDE, SSRI, PAAS, SLW) being my favorites but there are more out there. Check the fundamentals because fundamentals do indeed mean something in trading. Silver is much less manipulated than gold because it has so many uses and a better market system for setting prices that gold. Gold is also in turmoil – over and above manipulation – because Singapore and China are getting into the act as exchanges and will compete with London on setting gold prices.
Remember, this is NOT an investors’ market. Buy and Hold is d-e-a-d under a 20 year target. Now at least and subject to change is we get a financial reset. Then both gold and silver will be tradable because the demand for gold would go way and above the ability of anyone to manipulate it and you might have a hard time buying and physical stuff at any price!! You’re doing good – now do better..
At card 802: I have no “system”. I set targets – let your winnings run and cut your losses short. That advise is good since they opened the first stock exchange under a tree before the United States came into existence.
When you by buy silver (easier to talk about one group), purchase it on a slump – as it happening now, when it looks like it finding a bottom – i.e. the stocks bounce up and drop, bounce up and drop. when the stock achieves a level higher than all the “bounces”, take up a small position and w-a-i-t. If it keeps going up, then add to the position and put in either a written stop or a mental one above your purchase price but below the current stock price. If the stock continues to rise with small reactions and bumps , if the stock does not drop to you stop-out point, just have a coffee and r-e-l-a-x. Keep raising your stops as the price goes up. Then pick what you “feel” is a good goal for a profit and keep it in mind.
If the stock exceeds your profit limit point and does not drop back to it, reset your stop-out to the high you wanted to get to. Now, you are guaranteed a profit if the stock does undergo a significant correction – say 10%, hits you initial stop point and you sell it. Rinse and repeat.. Fundamentals yes. Technical analysis yes but in a VERY LIMITED way to help you feel your way along a bottom – or a top..
bb: You are really into pulling my chain aren’t you.. I hope you enjoy it because you are getting to be a bore. I may be getting old in body (and I working that in the gym), but in mind and thought, I’m far better now than I was at the prime of my career. I really like that Roy Clark song – and I’ll listen to it in another 20 years.
MA
I want to comment….. but can’t.
Momma always said “if you can’t say something nice, don’t say it”
Well done MA. Congratulations.
P.S. All the day traders I know, are either Wally World greeters, or gas jockey’s at Costco.
MA – Interesting regarding your take on “trading” vs. “investing”. I liken it to classic cars. Some are “collectors” (i.e. buy and hold) and some are “enthusiasts” (i.e. driving what they buy).
Your approach on trading makes a lot of sense. Is cool you are willing to share it here. I once enjoyed the gamesmanship and the rush involved with locking in windfalls as well. In fact, reading your article above made me want to grab my surfboard again (for a minute). 🙂
HOWEVER, given the corruption in the markets, I have chosen not play anymore. I believe ALL paper backed assets are doomed at some point. Although I can appreciate your strategy of converting the profits into physical – unless I have a solid way of predicting the future (false flags, etc) – I choose to watch from the sidelines currently and converting any of my “paper” to “real” (in all its forms). In any event, I would rather be 6 months early as opposed to 1 minute late, ya know?
That all said, I merely stating my personal opinion(s) above as opposed to offering any solid solutions. I am, after all, an idiot who thought WITHOUT ANY DOUBT the shit was going to hit the fan in the Fall of 2013. Then FOR SURE in 2014. And then ABSOLUTELY in 2015….
@Gator: Bad Gator! All my speculative funds are in my IRA – I can buy and sell and if I make a good profit, I don’t have to pay Capital Gains on any of it.. I will pay income tax when I eventually withdraw it, but I withdraw from my IRA the minimum required by law which still lets me avoid filing with the IRS.
Eventually, I will use the IRA up and never pay a dime for the capital gains I make on the trading profits.
Sorry you did that.. The name of the game is avoid taxes. Starve the bastards. use tax sheltered funds to trade with..
@Undetermined: I understand. When I worked atop a 9,000 mountain in Ely at a NASA tracking station, one of our down-town mechanics who cared for our vehicles had a barn next to his shop. I ask him what was in the barn and he replied, “My retirement!” and offered to show it to me. The barn had brand new Corvettes one for each year they were sold, batteries out, wheels off and on blocks. He went around twice a week with a portable battery rig and started each one and warmed it up.
I’ve always wondered which island in the pacific with dancing girls, little guys waving his fan to keep him cool and an infinite supply of any drink of his choice.. I wish I knew..
MA
MA