Living On the Poverty Line - Family of Four

I'm lucky enough not to be near the poverty line, but I thought I would do the calculation for exercise. Family of four poverty line is $23,850. Minimum wage full time work is (~15K), so with two adults at minimum wage and working 32 hrs/wk would be poverty line.

If 10% of that poverty line income go to taxes and Social Security, unemployment deductions, then the monthly net income is $1,789 per month.

Affording normal childcare is out on that income. So one of the two adults must be home taking care of the kids. Either that or the kids are left with grandparents or some other situation like a neighborhood grandmother in a trailer being paid $20 per child per day, taking care of 10 kids in a small room -- watching TV. Great for America's future. Even that costs $840 per month. So actually, that's not feasible for the poverty line family. This means the parents need to either work different shifts or one has to stay home (and the one staying home therefore has less social security, retirement options--usually the female, so there is partial source of the societal problem of elderly women who are poor).

Anyway, let's budget for this family. Remember, they live in the same universe as you and me. So same bills, same market! I'm using a suggested budget percentage break-down from Junior Achievement.

Housing (25% of income: $447.25):

Rent or mortgage & HOA: probably need to live in a trailer, with in-laws, or in a tiny studio, all squished together. Honestly in my market, there's no living situation within this price range, even to share a place as a roommate if as a single person.

Transportation (15% of income: $268.35):

Carless is not an option for a family with kids outside of public transportation footprint. Most people live outside of public transportation footprint. The bus pass is usually this much per month or more for riding everyday to work and back.

If there is a car, then it is probably a beater car bought for $800 or so, hoping it will last a couple of years without breaking down.
Car payments, if any (probably none because nobody would lend on an old car)
Car insurance (assuming great history) - $80
Gas (assuming good gas mileage and living within 5 miles of work) - $150
Maintenance - $38.35 (oil change, tire swap or buying used tires, wipers, and anything like bulb going out)
Parking (hope there's no need to pay, because there's no funding left)
Registration - $10
Repairs (hope there's no need to pay, because there's no funding left)

Food (15% of income: $268.35):

Obviously, can't do restaurants. Maybe occasional fast food. The grocery shopping fund is $63.89 per week to cover 84 meals = 4 people x 3 meals per day x 7 days. Free school lunches would assume the kids are school age. But let's assume that... and that's only 10 meals less. So 74 meals a week on $63.89. That's $0.86 per meal. Hey, that's the price of ramen noodles. Or can of beans. Or rice.

Paleo diet is obviously out. So is organic, or most of the fresh vegetables. Fresh tomatoes are way more expensive than just a Ragu on sale. Meat is way more expensive than Oscar Meyer's hotdogs. So the digestive system is obliterated with poor diet choices in the interest of saving money, with processed foods, high carbohydrate diet with less nutrition, just to feel more fulfilled. If what you eat is how you feel, then this family is feeling pretty depressed and toxic regularly.

Using a lot of coupons is has the depressing feeling of knowing that you can't afford regular prices... and the whole system feels rigged. In fact, life is so rough the parents may be self-medicating with some smoking or alcohol. If that is the case, then the food budget is even less.

This is also not accounting for expense of diapers, toilet paper, shampoo, conditioner, tampons, toothpaste, cleaning supplies, and other necessities that would blow this budget if expensive kinds are bought. Hello, Kroger versions of everything.

Entertainment and Activities (10% of income: $178.90):

Our poverty line family wants to have fun and offer the kids the chance to go to soccer club and to the movies occasionally just like any other family. Most likely though, with $42.59 per week, the entertainment is just getting basic Cable and maybe Netflix. Maybe saving up funds for a family computer or TV, which comes from this category. Probably these are acquired second hand because brand new would put them in debt (or deeper debt).

When they buy a TV, people judge. When others buy a TV, it's normal. That's the other stupid thing. It's like, if you buy a TV when you don't have as much money, you are suddenly a bad parent that puts kids in front of TV, a couch potato that's lazy, and have nothing better to do... but in fact, the truth is, the other activities for entertainment are simply too expensive. That Soccer club is $20 per session! For one kid. At least watching a show on TV is together time.

Clothing (5% of income: $89.45):

The parents are probably hoping the kids don't grow so fast. The kids are probably getting second hand clothes usually and only occasionally get new ones as gifts from better-to-do family members, instead of getting toys as gifts. Parents usually wear the same clothes over and over. The kids develop holes on clothes, shoes, and get yelled at. Laundering too often wears clothes and adds to electric bills, so laundry is not done as often -- maybe once a week or once every two weeks.

Brand name stuff? What's brand name? These kids will be the ones growing up, the other kids just know to stay away from. They smell funny, their clothes are shabby... and they never invite other kids over, they eat free lunch, and they are overcompensating for feeling inadequate by some kind of hiding or overt behavior, which makes them even more of outsiders.

Other Expenses (15% of income: $268.35):

Electricity - 40
Water/Trash - 18.35
Natural Gas - 50
Internet - 20 (rural is 50, urban is maybe 20)
Phone - 60 (Honestly, have you seen people with no cell phones these days? It's become a necessity, and an assumption of society, so that people will judge you if you don't receive their calls. For example, a lot of prospective employers are surprised if you don't call back within an hour. Friends and family will blink in surprise if you don't text. And yet, this family can't afford it. Not without going into debt.)

Health Insurance - 80

(Forget about it if there is medical expense with copays, then that's most likely on payments or straight going to collections because the family simply can't afford much.)

Savings (10% of income: $178.90):

Most likely, this family is behind from using debt as emergency funding for things. So this portion is going to pay credit card debt, rather than setting aside funds for the future for emergencies.

Also things that are forfeited:
College savings
Retirement funds
Investing of any kind
Vacations
Mental health resources
Grandparents/parents get sick and need home care, or for any funeral expenses
Forget about pets...
Any little thing is a financial obstacle -- bank overdraft fees, getting a speeding ticket, college application fees... not to mention losing a job.

Giving (5% of income: $89.45):

Giving is a luxury. And so are parties, planning for birthdays, holidays, or anything different or special. A bouquet of flowers would blow this budget. So, kids draw and learn not to expect. Parents only buy necessities as "gifts."

People think not a lot of families live this way. Truth is almost 2 out of 10 kids you see in Colorado live in families like this. Approximately 3 of 10 black or Latino kids live in families like this. The "middle class" is largely, a slightly modified version of this lifestyle. The part that's different is slightly larger budget across the board, but with more debt including student debt, car payment debt, mortgage debt, and credit card debt.

Looking at this makes it hard to argue from economics point of view, the supply/demand argument against raising the minimum wage. Companies need to compete, but not at the expense of the future of America. Companies need to learn to compete while giving people a better way to live. Also, if this family made more money, do you think they would put it in a fund and let it sit? No. They would spend it... solves the economic recession problem.

I Lost Money -- Makes Me Not Want to Blog About It!

Ok, so I got bored as I wrote before. And I lost money. But at least I got out and now I will watch out when I get bored. I will watch my emotional levels around stocks and not get too greedy.

I had a minor successes of course, about 30 times. That should have been a clue that I'm doing well with little wins and I should not tweak my game completely out of boredom and greed without a hedge against the kind of risk associated with the new direction.

I wrote on 3/30 in my journal regarding XCO, where I put all my money:

Crap. This thing has been going downhill. 1.06 high, then .97 low today. Yesterday it was 1.04 to .98 range mostly down. Then before, two days of staying at 1.01. Volatility gone. Before, it was going down from 1.20 to 1.01 in a nice straight slide, right after I bought a big stake and bought more as it went down. If there was some volatility move up, then at least I would have gotten out. But no. My only option is to buy more as the stock price goes down, which moves my average cost down, so improves my chance of making it back when the stock goes back up.

So now I have been buying as it slid down, and am at 1.14 average with 90% of my money in it, still in losing position but with more money at stake... gah. What the hell? I am no day trader. I need to do a lot better than this, than sitting with a loser for almost two weeks, paralyzed. I am a joke.

They say it's emotional game. Well, every cent this stupid stock moves, I have a hundred bucks moving up or down. And then the damn thing doesn't move, which is frustrating too. And then if it hits my range and I want to sell to get out of it at least, a thought occurs to me, what if it breaks the ceiling? What if it shoots up after I sell? And I'm selling at a loss. But I need to get out. Aaah.

My mind won't shut up and can't make sense of what to do.

I carefully made a $100 in the market over a month... and then got bored. Decided to play with the big boys. Bought high, and am worried now about selling low... as the market is going even lower. Nice, Misheel. Nice. I can't cut it with the big boys yet obviously. I need a strategy that will work!

I wrote on 4/1 in my journal regarding XCO:

Sold everything at .99, 1.01, and 1.02. It is a loss I took because I was stupid. In the future, when I buy 5000 stocks of something, I will not hold out with a big loss in hopes it will come back. I will not hold out for a big win. I will get my little win and leave.

Now I need to trade 1 cent up on 5000 stocks 15 times to recoup my loss
or 2 cents 8 times
or 3 cents 5 times
or 4 cents 4 times
or 5 cents 3 times...

And since I don't want to be in one stock like I was ever again, I will spread that across at least 5.

Which means I need to do a lot of trades (15-75 different trades of 1000 stocks each) to make up this one loss. But you know, I don't think I would have learned this lesson just by looking at this chart. When you actually feel it, it's real.

That's why I highly recommend playing with real money, but a little bit initially -- as teenagers, to learn day trading. I'm learning in my 30s.

So here's what I learned:

Optimism: "It will go up and I'll sell. I might make something of this (after all)."

Excitement: "Ooh, see? It went up! I wonder if it will continue. I mean, I'm supposed to ride the trend, right?"

Thrill: "Holy cow! I've got a winner." "This one is going up and up, for sure."

Euphoria: "I'm a genius at picking stocks." "Why didn't I buy more of this before?!"

Anxiety: "Dang, I need this to retrace back up."

Denial: "Well, pullbacks happen. It will be back up soon. I'll wait and see."

Fear: "Shit, will I get my money back?"

Desperation: "I just lost $$ money in _ day(s). What the heck?! I could have made money in these other stocks but I lost money in this instead."

Panic: "Holy cow, what do I do? Sell now to cut my losses? Should I wait? What if this thing tanks and goes bankrupt? But I want my money back. I need it back. My ___(boss/spouse) would kill me. I knew what goes up, can also go down... but how could I be so stupid?"

Despondency: "I suck at this. This is the worst pick ever. Why am I so shitty and stupid? Why didn't I have a better plan? Or any plan? Why didn't I get out of this stupid, shitty, crappy crap of a stock?!"

Depression: "I don't believe it. It is a little higher. But I bet it will fall again. Just my luck."

Hope: "Maybe I can recover some of my losses. Should I sell now? How about now? Before it tanks again, maybe I should sell...??"

Relief: "Thank goodness I stuck with it. I really didn't want to lose _% of my money. At least now I have most of it back..."

Optimism: (see above)

I also learned about industry cycles with economic cycles. I read transcripts and statements from the insiders, filings. I read analysts -- everything ever written about XCO in the last year. I read about oil and natural gas politics. I read about which regions are doing what and how regulations are affecting the industry. I read about solar and wind, and other energy sources. How those companies are doing. 

There is nothing more invigorating and interesting than when you lose money in a stock. It made me suddenly learn a whole lot about stuff I didn't know. But it's all because I don't want to lose money.

So, in the future, I will read up a bit more before I jump in. My new plan includes multiple portfolios all with different strategies on FinViz.com. It is awesome, organized, and... it is complicated, but it will separate out my problem of getting confused with my stocks and selling when I meant to hold just because I was going to make money. I would remember better to only allocate certain amount to day trading and always separate the funds to at least 5 stocks so I don't have my heart riding up and down with it.

Thank goodness we have the extra funds we don't need so I can do this without eating into our living funds. Thank goodness my husband is understanding so he trusts that I am doing my best. He tells me tips and thoughts ("Don't ever buy Twitter -- I still don't think they give enough value to anyone."). But he also listens when I tell him why I like what I like.

Still, I bet he wouldn't like it if I kept getting "bored."

Getting Bored, Going with High Risk

Switching things up. I'm going to focus on the loss leaders in the market.

My little wins are adding up. My training stash is moving up by 0.1-0.5% everyday with a few pull backs, but I have a nagging feeling that I am sticking too conservatively to my little moves, dividend capture, and non-greedy sells after little wins. I need to experience a bear market to really get my feet wet. Will I have enough cash and know enough to buy as it is going down?

My biggest wins were fast moving stocks that were not my best value plays. Most of my buy ranges are getting blown out of the water with the roaring market so I can't get position. My bias is always to get a deal, so I don't want to buy when it seems everyone wants to buy, buy, buy... yet I suppose this is the trend that true day traders like to see, when buying. I don't know how to read overbought sentiments in the market yet -- I am getting a feel for the moving averages and technical analysis of stocks, based on some blogs written by professional traders.

In order to get better tools at my disposal, I got a Stock Master app on my iPhone. It has a lot of features, with moving average lines, volumes, etc that I don't on Robinhood. I am quickly outgrowing Robinhood.

Multiple reasons:

1. There is too much slippage, where I accidentally hit market buy on AUBN for example, when it was $26.50 or so, and it gave me the stock at $27.25. The market hasn't come up to that since I bought. There was no way I would have bought at $0.75 cents over my purchase intention, when the dividend was only $0.23. This is not the only buy that occurred like this. Lots of sell positions are not updating when the limit sells should activate and the market is well past my sell positions.

Not only is this just a mistake or a delay in processing, it is actually a retail brokerage's ace up their sleeves, that allows them to aggregate all of the clients' positions, and make trades beforehand to make most money on their funds -- which is counter to their small retail clients. See? I am learning something new everyday.

2. The 3-day delay holding up bulk of my money is wearing on me. Sitting 3 business days, anytime I sell means I watch my buy positions I would have taken go away in the meantime. I also get really annoyed by the "get Robinhood Instant" thing that pops up every time I do anything.

3. I can't short. I don't have capability to short or do any margin trades. I am not getting into that until I've grown my stash to at least 25K. But I wish I could flirt with it and just see.

4. The simple and nice screen is getting old. I need to know more and need to constantly look elsewhere for the data.

5. When I purchase the same stock at multiple times, they average my buy price and stocks. This is good for just straight buying and selling, but the way I record and most places record, for tax purposes for example, to calculate loss, etc, you need them separated when you sell partial.

6. Some of my dividends on stocks I bought before the ex-date are not showing up even after the record date. I don't understand. I am giving it more time, and it's only for a couple of stocks, so maybe they will show up later?

7. I wish I can organize the stocks I am tracking into folders. Right now they are all in a long scrolling screen so I go down, down, down forever...

8. I wish I could see 1 week progress, not just 1 day, 1 month, 3 months, etc.

I know on of the biggest failures of traders, is not sticking to a plan, but how do you learn different strategies, if you don't try them? Right?

So here I go bravely to lose my shirt and my husband's too. Just kidding.

This week I am throwing a new thing into the mix. I went and looked up each of the hundred or so loss leaders YTD and stocks hitting their 52 wk lows. In each case, I looked at the news, looked at the range, and looked at recent ratings. I ended up with a couple of companies that are still risky, but that I am going to buy a lot of stocks of... Wish me luck.

Investing In Stocks, Bull v Bear

A mentor who succeeded in mergers and acquisitions, and specialized in reverse mergers told me these two gems regarding investing:

1. Rising tide lifts all boats. You can feel smart while market is moving up.
2. Buy when everyone else is selling. Sell when everyone else is buying.

So, I have started to sell my stocks and leave a lot of the funds in limit buys, or as cash. I will move after a major market correction -- I need 20% to 30% discount on today's high. Bear market is where I will make my wealth, because I am not shorting or doing options yet.. I will let you know, if I get into options.

If some of the stocks have rallied to high, then I'm not buying. Some pundits say that the movers and shakers of the future, will continue to move onto higher prices and that's what it looks like--that those stocks may not go back to lower prices.

However, most of the time, no company is immune from the overall market environment.

For a company to do well in a down market, it would have to have:
1. Products that can be produced even if supply costs or supply chains are pressured.
2. Demand for the products can remain high, even if customers' ability to pay is pressured.
3. Difficult for new competition to rise up and steal business.
4. Price of the goods do not need to be adjusted in a down market.
5. Funds availability is not an issue, borrowing rates are not too high or borrowing too difficult, and reserve funds or liquid assets are available.
6. Employee turnover or lost knowledge isn't an issue.
7. Company is managed well, no excessive spending, no risks to reputation, no legal or financial battles or hurdles.
8. Extra expenses in equipment upgrades, etc. are anticipated and planned for in advance...
And so on.

It is very difficult to analyze a company from the outside in all aspects to determine these factors, much less do it for hundreds of companies and come up with the one that will do well.

Since last week, a few of my investments were downgraded to a hold, so then I sold them, per my rules. Of course, I had to sell them at a higher price than I bought them,which meant I had to wait for market fluctuations. I have not gotten in the market at lows, since I just started investing last month and bulk of my funds only became available to me last week.

Starting my investing hobby when everyone else is buying, and I am coming in at a market high... The risk is more than I like.

Emotional aspect of this is, I am eager to get started and put my money in stuff. I am excited to learn about different opportunities and am too easily swayed by what the "experts" say. I like reading about the stocks that are top gainers and top losers because it is curious to me why.

I wonder about the market volume, top movers... because I wonder if I really can start to anticipate the big fund managers' moves based on experience reading these. I also am interested in the funds that are out there... Certain industries are overtly represented in the markets--like you'd almost never see restaurants.. but you see a ton of financial industry stocks.

I wonder if I can start to recognize the dojis, moving averages crossing each other... etc. I started writing code for my computer to pull data on stocks, to replace my cut and paste, research on the various websites I am doing for each stock, onto Trello. I have a board with the stocks as a card, and moved to various lists and labels.

My lists on Trello so far:

-Rejected at this Time (not my buy range price, volatility, earnings cannot be negative, or not rated buy, or product I don't like such as junk food, cigarettes, etc.) or Sold

-Stocks with Dividends Declared and Ex-Dates Coming Up Next Week

-Street Says Buy, B- or Higher, and Dividend is at least 2% Yield

-Limit Buy(LB) Price Calculated, Queued to Buy

-LB Set, Cash Reserved
(Not bought yet, but ready to go. When the buy happens, I move these to Current holdings, need to set...)

-Current Long Term (LT) Holdings with LS/LB set

-Current Holdings, NEED TO SET LS/LB, and divide between LT/ST
(This is a temporary list for me to set LS for the stocks and LB for if I want to buy more, at what price. Then I move it to the LT or ST lists.)

-Current Short Term (ST) Holdings with LS/LB Set

-Hold Strategy Analysis - A more in depth look at Book Value, EPS, Long term potential, Institutional Investing involvement, Dividends payouts, debt obligations, cash flow, and history

-Stocks with High Dividends
In own category because these may be at hold rating or unrated, but I need to learn more about how they can do such high dividends and what is my tax strategy on them, etc. I like 10%+ dividends payout, or monthly dividends as some of them may have, but they are also not sustainable unless some of them are returning capital invested during down markets.

That means the underlying stock prices will continue to erode over time. Is that really worth it? It depends on my tax liability and how much the stocks will erode. That's why it requires a whole lot more analysis than just looking at the juicy dividends.

After all, getting 12 cents per share per month is nice on a $4 share, but if the share is $2 next year, the math doesn't leave me in a good place.

My Labels on Trello:

I'm only sad that blue is one of my favorite colors... and I have it on stocks that I would never buy.

Why never? Because those are the Coca-Cola, Snapple, Dr. Pepper, Pepsi, Monsanto and companies that sell sugar and chemical-laden crap, cigarettes, and stuff that society does not need, and we all end up paying HUGE medical, mental, societal, and environmental costs that cannot be quantified because of these companies' activities.

No matter how good the price of the stock, they would not sit well on my mind to make money off of. I will not subscribe to the fantasy and propaganda.

We are so good at coming up with excuses and reasons why we do what we do... On a societal level, when we all delude ourselves into lower pay, high cost of education, foods genetically modified to withstand pumping with chemicals, hormones, and pesticides, and believing the illusion of independence of individuals, we get ourselves in debt, lonely, drugged, and on a constant treadmill trying to catch up to an ever receding "American Dream"--each of us believing we are only failing because of our own reasons.

Anyway, that's why I will not invest in certain companies. In my small way, that is how I am watching out for all of our interests.

Investing in Stocks, My First Month

I am tracking my investing here. I'm a beginner, easily lost. But I would like to learn how to buy and sell stocks with reasonable success.

Here are some of my ground rules I have laid out so I don't mess around too much:

1. Use play money. Don't threaten our retirement savings or other funds set aside for specific purposes.

So this has a caveat. I am putting some good chunks into this in short order of time. It does mean a lot to our family, that I am going to put 9K in the stock market that I'm playing with, by May. Since we have hardly any equity in our house, a little bit of savings towards our kids' college, 401K for both my husband and me, we own our cars outright, have no credit card debt and practically no student debt (one I have will be paid up by a grant soon from work), I feel we can risk our tax return, some savings, and some other accounts I had been socking money into -- consolidate into this stock market investing and learning endeavor. I would not say we are financially strong, but we have been making smart choices and been working hard to not spend money we don't have.

2. Buy and sell stocks rated as a buy by www.TheStreet.com, and be careful about unrated stocks.

Pretty self-explanatory, but this basically means that I am leveraging thoughts of analysts who spend a lot of time on industry information and who is best in industry, and quantified objective analysis. While they may miss opportunities for good stocks by rating it as a hold or a sell when it's actually ready to rally, the odds are, they are keeping me safe in the green zone. 

I don't know how to pick those winners... not yet, and maybe I never will. 

But I certainly will not be doing penny stocks or companies going down in debt, drowning from lower earnings YOY, giving out too much in dividends and shooting themselves in the foot by limiting their future growth opportunities, companies that are mismanaged, or companies that have had major legal issues or liabilities. These kinds of things are already considered into the analysis done by the smart folks with finance degrees. Why should I work hard and belabor this for every stock, just to see a slightly finer point from their analysis? If it was my job or I wasn't working full time already at another job, sure. I would go line by line and double check their analysis, and maybe have more insight. But I am only doing this on limited time.

3. Buy and sell stocks for free.

Right now since my stocks are only totaling so much and I'm trading 1-15 shares at a time, I'm at Robinhood. Free trades. If you want to check it out, use my link and it may give me a perk towards getting my account to instant trade level. Not money. http://share.robinhood.com/misheec 

Just full disclosure. Robinhood is not perfect, but if you're a beginner, it's the perfect tool to get started. The prices are not as up to date if you do market buy and market sell, but my limit buy and limit sell works great with it. Deposited money from bank to Robinhood will not show up as available to invest in stock for 3 business days and likewise for sold stock funds. However, the buying and selling of stocks is real time. Also, I have found that Robinhood doesn't have all the stocks. It has most of them, not much penny stocks, some like MNDO missing for mysterious reasons...

4. Buy at a preset price, not at market price. Sell at a preset price, not at market price.

Limit buy and limit sell, which are an options at most trading accounts, is something I'm using a lot. This is one of the key things that create barrier between my emotions and the buy. My analysis and strategy is actually followed if I just do limit buy and limit sell.

This does create a rigidity to what I'm doing, that doesn't account for real time news, changes going on, and market winds. But I don't care. I'm not here to buy everything I set out to buy. Just a few out of the limit buys. Same with selling.

5. Go for stocks with dividends. 

Until I learn to read growth stocks' statements, evaluate the management, current holdings, debt, and risk, I will focus more on the mature or almost mature companies at are paying dividends. Why? Simple...

How to earn money from stocks

There are two ways to get paid from any business, as a business owner.

1. Sell it.

2. Pull out the profit from it.

In stock terms, it means:

1. I sell the stock at profit from when I bought it.

2. Capitalize on the dividends from a stock.

My Strategy

So my form of day trading, pattern trading, and value trading combination is basically combining the ideas above.

Specifically, I am starting with stocks that are about to pay dividends. It's called dividend capture strategy, but I kind of stumbled on the idea on my own. Of course, the beginner finds out that others think alike...nothing is original. So, this is not new.

The market maker subtracts the dividend amount from the stock on the date dividend is already considered decided on who gets it... this date is called the ex-date.  Buy stock before dividend ex-date, sell on or after ex-date at prices that defy the market maker's action. That's the strategy.

There are multiple opportunities I see around it, just deducing here.

1. buy at lower price than after ex-date, sell (profit is the margin and the dividend)

2. buy at same price as after ex-date, sell (profit is dividend)

3. buy at higher price than after ex-date, but the price is still at a profit after dividend is considered, sell (profit is dividend minus the price move)

4. buy on or after the ex-date, at price lower than normal price correction (if it over-corrects) then sell when it "normalizes"
5. buy 2 or more days prior to the ex-date and sell day before ex-date when the interest peaks, so someone else gets the dividend but I might get even more than the dividend in market move

6. keep the stock until you get your sell price (holding until limit sell goes into play)

7. keep the stock for the dividends mainly (if the stock pays more than the market average of 2% yield per year, the likelihood of losing money on this investment is more palatable...)

8. keep the stock indefinitely for growth (This is not as likely for most of the high dividend companies, because they are not in major growth stage. So actually, this strategy is best for certain stocks that cross my path in a more unusual way... like new products that I like and all my friends like. Or I see an overall demographic trend, problem being addressed by something in a unique way. However, sometimes mature companies are doing innovative things, are experimenting a lot, buying startups left and right... and if I see those activities as something that will pay off in the future, that's when I would implement this one. But again, that's a lot hope.)

These assume market is going up generally, and/or it is going sideways but with enough volatility to support the trades. So, basically in a bull market, I would make money. 

To hedge this risk, I am going to make some moves to buy when the market moves down and reserve those funds solely for this.

That means 50% of my funds are on reserve to buy at certain market correction prices with a value proposition on mature stocks. I am taking the 52 week low, adding a little margin depending on how mature the company is and the growth opportunity it has. Then putting limit buy on those stocks at those market low prices.

The myopia of this strategy is that my parameters are only 52 weeks, and history does not dictate the future. So, it is not a great strategy if we face a big market correction, but my unsophisticated trading and thoughts for now are basically summed up by the above. 

I figure if there's a huge market correction, I will sell one of our cars and put it in the stock market because I will be probably able to buy a new car in a year or two off of the proceeds. He-he. 

Again, that's another assumption. Market ups and downs are cyclical. There is some evidence that the market ups and downs are artificial. If so, it doesn't matter for my investing as a small fry like me, but just a slightly disturbing thought... 

Anyway, my very unrealistic goal is 10% gain every month on my capital invested. So far, last month I made 10% when the market moved 4%. I made 5% on my stocks invested today when the market moved sideways 0.4%.

Best of all, 93% of my gain is already realized (sold and converted into cash) by the fact that the limit sells lock in my gain immediately. At any time, most of my funds are in cash, not in stocks--because of my reserves of limit buys, and my sells coming back.

Sometimes a stock runs off on a big rally after I sold at a little profit, and it looks like I "lost out" on a big rally. But that is exactly the kind of thinking I don't subscribe to. I am not greedy. My strategy is to limit my emotional involvement and hanging on that kind of hope. I am simply not qualified to know why stocks move the way they do -- except in hindsight, after several news outlets confirm what happened, lol.

My limit buys don't come to fruition often, especially when the market is rallying, because I'm conservative. Stock needs to move down 1% from pre-announcement of dividend for me to limit buy. But that also means most of the stocks I do have are in the green. In fact all of them but one was in the green today, and the one that's not in the green is a long-term hold that I got at a lower price, so the red didn't eat up my profit much.

I will continue to study and learn to analyze companies individually, and really get a feel for whether the company is moving in the right direction. For now, what I have outlined above is an analysis-free way to trade, which can be computerized, if I can write the code... or get a software that would do it for me. I don't know which one is best for me.

I will just keep at it manually until I learn of one or learn to code. Will keep you posted.

Over and out,

Misheel.

Oh...

Tax considerations

Since my tax bracket is so low, I am not going to care as much about tax consequences of my little bit of piddling trading. If I make enough income to be taxed, I'm kind of pro-tax anyway, even if I will take all the deductions I can. I am happy to support our government, and abide by the law.

So, I am not putting my efforts into an LLC and tracking expenses, and minimizing my income tax risk from this activity yet, until I feel I need to complexify my life that way. Obviously I'm not a tax professional and am not giving legal or financial advice. Please do not misconstrue simply what I am choosing to do, to imply responsibility to you.

I will probably change my mind as necessary, and as often as it makes sense to do so... and am just learning.