Wednesday, February 18, 2009

Welcome to 2009...

And we're already halfway through Feb and I haven't posted on here in quite a while.

So lets just say it up front - 2008 SUCKED! Most if not all of my stock picks (except the short ones) lost money. If you weren't diligent with your stop-losses (which i wasn't) you lost alot of money. Well what can we learn from that?

1. Clearly any stock you buy, you have to say up front how much money you're willing to risk on it. If you buy $2,000 worth of stock, what's the most you want to be able to lose? $200, $400? Whatever the number is, know it up front and stick to it. Losses are OK, big losses are not and i'm sure we all had a few that just got away from us.

2. Plan for the economic forecast that is most likely. I think the biggest thing i missed when i posted those stock picks earlier was that in a recession, the products made & consumed are very different than those of the companies I chose. For instance, AK Steel? What do people need steel for in a recession? They aren't building, they aren't expanding, production of *stuff* is way down. Steel prices & volumes go way down - why buy a steel company? GE?! What was that all about? They have a huge financial division, production of everything from light bulbs to GE dishwashers will be way down... Why would this be a good pick? And the list goes on and on. The lesson to be learned, even things with low PE ratios can still fall further!

Anyway, rebalance often, don't buy into these sucker plays, and do your homework. Sean -- OUT!

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