I’m so thankful I wasn’t over-leveraged myself, althgouh I did have to do some mammoth re-organization. The size of the drop caused a lot of people and funds to have to emergency liquidate to fund margin-call or customer withdrawals. I think this mangified the drop big time. As soon as investors get a litle money they’re going to throw it back in.

Took a look at your blog. Was a fun read for a few posts, I’ll have a better look later. Your description could be me … Forays into the stock market, property, angel investment. Very cool! Are you from Canada?

Short-term volatility plays are a great way to make some day money esp now, but there are probably still some huge one-day drops in the market lurking in some of the companies you mention.

Have you compared the results day trading versus a longer strategy? I used to do exactly what you wrote about, using oil mostly but switched to a horizon of a few months to a year. I was picking up a couple hundred volatility dollars a day while taking big risk, but the returns are greater holding for longer and the taxes are lower. That’s only what I think. 2007 was a fantastic year as was H1 2008. We’ll see what 2009 holds. My play fund shrank so I don’t have as much room, but now the previous picks just seem that much better.

With your regards on #2, I think we can all agree that has happened at one point or another.

With margins calls, that is the reality of the game dont you agree?

Hopefully Q3 the job numbers can start to rally and pump some confidence and give us some better rallies though right now isn’t a bad time, esp for day traders.

Look forward to reading more!

1) I don’t know why anything changed in the way stocks were valued. I missed that information. I continue the same as I have been, and I haven’t noticed most of the FP bloggers doing a big about-face, they just keep talking about allocation and business cycle. That’s good advice and what I use for 75% of my stock market money. They rest is play, and I can afford to lose it.

2) You don’t know the news and I am terrible at predicting bottoms or tops. In fact, lots of the time when I sell things get better and when I hold things get worse. I just set a plan and hold until the plan is fulfilled, which is often medium term – maybe 1 year. I do worse when I change the plan.

3) I don’t use stop-losses. But I did make money day-trading when everyone else’s stop-losses stripped during the various free-falls. Not to mention their forced sells due to margin call and being over-leveraged.

4) I don’t look at indicators. I don’t know of any reliable ones. Money press is worthless.

5) I already injected a little extra capital into a couple of speculative plays and they’ve returned 50% already.

My advice? My general feeling is that banks will return first. They’ve been decimated and no there’s nothing to do but make money the same old way they have been through fees off the backs of consumers. Brokerages especially will start to make money as the traders come back. As soon as businesses start to recover at all they’ll shoot up like rocket ships.

I’m also buying a couple of mining companies because metals are in the toilet and I believe they’re too low. Again, base materials are going to be required immediately upon recovery.

Spring is coming and that’s when things will start happening. Little spurts at first and increasing towards the end of the year. There will be some very big up days this year and if you’re waiting on the side for indicators then you’re going to miss them. It’s going to look flat and depressing and then BAM! a big jump, some more flat boring, BAM!, flat. Like that. Just keep the money in during the boring and sad times.

My opinion.

-what is a reasonable value when the whole global economic climate has changed the way stocks will be valued from this point forward.

-why would you not have sold when you know the news was to get worse from Sept – Dec. Its was not a surprise to all when stocks were in free fall, a stop loss should have triggered an exit point from which you could re-evaluate your financial strategy..right? Then you could have sold at a 10% or whatever loss compared to a 50% loss, and then ride the spikes now. That is called profiting.

-the stocks did not go down 50% overnight, but did have steady steep declines from the socks I can see. Unless your referring to FRE/FNM which disappeared overnight (which is rare regardless of the media manipulation) people that are investing their money should have taken the time to look at key indicators and know its better to get out and wait.

-if you are one of the people that some how slept under a rock, maybe I can see the point of keeping your money in the stock now and hoping to god that one day BAC/C/GS/AAPL or whatever big stock will come up to what you paid for. Its going to be a long time for returns of 100% to come back.

Since you feel there is a rally going on, I am interested in picking your brain and hearing what 5 stocks you feel are poised to pop back to previous highs.

Thanks.

#2 Maybe the high value did turn out to be unreasonable but the current low value is now reasonable, so how can you justify selling?

#3 By the time you find out it went down 50%, it already went down.

I say again, people have to keep the money in play to catch the big up-spikes. Missing the up-spikes by playing it safe then returns go way down.

some stocks that were sold during their declines are better off doing so in my opinion. The way I see it, those that have stuck with their portfolio without changes during their turmoil are going to have to wait years before their values get to even and then they can think about all the time wasted not making money.

For instance, when RIMM (or APPL) was declining, some days it did fall more than others but if you got out in mid-sept during the “crisis” you would have got a smaller loss and be able to buy back in later when the rallies began.

I know this might not fly for all stocks, but investors need to remember, for a stock that goes down 50%, you need to have it rally 100% before you break even, kinda seems like a long shot if your going to sit in the same company hoping for those few “big rallies”

You’ll be extremely sad if you get hit by the surprise losses but miss out the surprise gains.

I’m trying to remember the book that explained it the best and I think it was “Fooled by Randomness”.