Monster Portfolio 2011 Week 33 Results

MONSTER PORTFOLIO 2011

Balance: Inception 01/07/11
$1977.32 Stock
$13.65 Cash
Total $1990.97

Balance: End of Week 32 08/26/11

$2,333.12 Stock
$82.88 Cash
Total $2,416.00

Since Inception: -8.19%

Back out cash inflow and we have a balance of $1,828.00. 


My portfolio gained +6.38% vs. last week results.  Not a bad bounce off the low’s!  I wish I could smooth out the volatility, but it doesn’t appear I can do that with a couple of grand.  For many of you that follow my blog my portfolio is wild.  I own 3 individual companies of course it’s going to be volatile. 

For those of you who are long term investors this portfolio isn’t for you.  It's for those who would like to turn a little bit of money into something potentially larger in a short period of time.  Long term investors should be investing completely different.  Investing in index funds is a perfect way to come accustom to the stock market.  The last month or so has been out of control, but I don’t want that to deter anyone from investing.  If you are a person that can think long term, this short term volatility shouldn’t bother you one bit.  I constantly hear people say I’m going to have to work another 20 years in order to retire. I lost a lot of money in the stock market and I can’t see the end in sight.  Folks there is no evidence that this is true! The market will snap back!  Human nature is to get down on yourself when things aren’t going your way.  I have the same problem, but a few months later I’m back on the saddle looking for a way to make my money back sooner than later. 

If anything I’m a great example of a person that can manage to weather the storm.  I don’t know too many people that can withstand losing 20% in less than a month and still feel good about the stock market.  I take the market downturn as a learning experience, but also as an opportunity to exploit the best situations for potential financial gain.  You have to be active.  When you’re losing money it’s easy to stick your head in the sand.  You are not doing yourself any favors.  Address the situation.  Determine if your investments are still worth owning.  If you come to the conclusion that there are better opportunities to make money elsewhere sell your investment immediately.  If you continue to like your current investments, it’s a perfect time to buy more.  Remember you are investing for your future. 

My philosophy is when in doubt buy more. LOL! I have always made most of my money when stocks are out of favor and have lost a lot at the top.  When I feel great about the stock market that is when I should be selling.  Invest when others are scared and a majority of the time you will come out ahead.  Even though my portfolio has fell back into the red I still believe investing in stocks is by far the best vehicle to create wealth over time. 

Clay-

Current Holdings:
Apple (AAPL)
Cosi Inc. (COSI)
Weatherford International (WFT)

"When in doubt buy more!"

Monster Portfolio 2011 Week 3 Results

MONSTER PORTFOLIO 2011

Balance: Inception 01/07/11
$1977.32 Stock
$13.65 Cash
Total $1990.97

Balance: Week 3 01/31/11
$1596.40 Stock
$352.45 Cash
Total $1948.85

I Don’t even know what to call this mishap, but peer lack of discipline. Excluding cash in flow of $51.00 we have ourselves a balance of $1897.85. I made a terrible mistake and I have paid the consequences. From this mistake the Monster Portfolio 2011 is down since inception to    -4.67%

What happened was WFT reported earnings on Tuesday and basically missed the analysts estimates. I thought I would be smart and I sold off all my shares of WFT on Tuesday to watch the darn thing rally the next day. I listened to the conference call and realized their earnings weren't as bad as the numbers that were given. On top of that I decided to buy Apple the same day because I was angry about WFT. Apple was a good buy, but I missed an opportunity to make big bank on WFT. I misjudged the earnings since then the stock has rallied big time. The current close as of today would have put this portfolio excluding cash inflow at $2068.37. I made an $170.52 mistake. Hey I’m not perfect, but I sure wish I was. LOL! The lesson of this story is don’t try to sidestep a down turn until you get the facts. On the safe side I should have sold half of my holdings as I could have taken advantage of the rally in WFT over the past few days.

On a good note I did have an opportunity to buy some Apple stock. I have decided to ease up a bit and spread out my holdings a touch. It’s hard to maneuver with $2,000. I sold off WFT and I can’t take that mistake back. I bought some Apple last week and picked up some Westport Innovations (WPRT) today before earnings. The price of WPRT is outrageous at $15.77 and the stock should be much higher. They are set to report earnings on Monday February 7th so I have decided to buy early before the news. I have a lot of work to do to get back on top, but individual stocks are volatile and that is the name of the game. 3 stocks should spread out the risk a touch, but a full diversified portfolio will take a minimum of 5 stocks.

I will come back from this beat down I promise you that!  Don't count me out just yet!

Since Inception: -4.67% overall

Current Holdings:

Apple (AAPL)
Cosi Inc. (COSI)
Westport Innovations (WPRT)

Happy Trading!

Clay-

Westport Innovations (WPRT) Why So Quiet?

I would first like to start out and say I was very pleased with stock market for the week. It has been the first positive week in quite some time. Reassurance is always good with a volatile market. Now let’s move onto the goodies!

Today I would like to bring (WPRT) Westport Innovations back on the map. It has been about a month since I mentioned this small cap stock. WPRT currently has a $656.54 million market cap. That’s very small in comparison to some companies. That means there is plenty of room to grow!

If you’re new to my blog please follow the link below to get up to speed on WPRT.

http://stockmarketmonster.blogspot.com/2010/08/westport-innovations-w-p-r-t.html

So over the past month this stock hasn’t done a thing! And I mean nothing! I want to reassure you that small cap stocks like WPRT come in and out of favor as much as the weather changes in Michigan. Small cap stocks are volatile in nature, but the reward to be able to weather the storm is well worth it.

Right now WPRT doesn’t have any catalysts to move the stock higher. I’m not saying that it won’t on Monday. I’m saying that the perfect buying opportunity is when a stock has been quiet for a period of time. Small cap stocks volume is driven by news. When there is no news the volume drops, hence the price of the underlying company goes down.

The last time I spoke of Westport the stock price was at $18.18. Its current closing price as of Friday was $16.62. So to all of you who were late to this article you haven’t missed a thing. You’re actually in a better position to profit from WPRT. The current price does not reflect the true value of WPRT. Just a couple months back this stock hit a 52 week high of $21.34. The only thing that has changed is the energy bill has been put on hold since the government couldn’t make up their minds before they went on vacation. On a positive note Westport had a great earnings report. Good enough to excite me!

The outlook is still positive as I have said before. Even without the passage of the current energy bill under review Westport still makes money. Just keep that in mind. If you haven’t already bought WPRT now is a perfect time to buy a few shares. Small caps are great companies in the making and take time to develop. Be patient and allow for small cap companies like WPRT to grow. With the elections coming up in November the energy bill will be back on the table soon enough! Until then position yourself for the next big move and wait for the news to roll out! That is how money is made!

Also, I’m curious to know what others are investing in at this time. I would appreciate your response to the questions listed below. This blog is informational, but it was also created for a chance to interact with others about investment ideas and build a community of stock junkies!

1. What are your current holdings?

2. Do you currently have any stocks on your watch list?

3. Have you noticed any positive trends in any particular sector?

4. What’s your favorite stock?

5. If you had enough money what one stock would you like to invest in?

Your response is greatly appreciated!

Have a great Sunday! Go Lions!

Clay-

Have a Question? Send Questions to wheatleycsmk@gmail.com
New Content every Thursday and Sunday.
Occasional Stock Market Commentary during the week.
Feedback Welcome!
Interested? Please become a follower (This gives me an accurate number of readership) I would like to see this number grow! Click the follow button on the right hand side of the screen and follow the prompts. It's easy!

Cosi My Penny Stock. The Chance Of Hitting It Big!

Today I’m going to Piggy back off Thursday’s post about penny stocks. As I mentioned earlier I personally have invested in penny stocks and I currently own 1 at the moment. The company I own is COSI Inc. (COSI)

Cosi is in the restaurant business. There top competitors consist of Panera Bread and Starbucks to name a few. Cosi is very similar to Panera Bread (which is one of my favorite places to eat), but offers a different taste and the atmosphere is pretty upbeat. Lunch time is extremely busy and you will tend to see a lot of business people partake in the Cosi experience. The clientele is different than Panera and that may be due to the higher prices of the food. Cosi is strategically located in high traffic areas and are found in larger populated cities.

The reason I purchased this stock is the first time I ate there I could see the potential. The food was great and the lunch time rush was outrageous. I remember back when Panera was just popping up all over Michigan I would watch Panera stock like a hawk. That was back in 2002 when PNRA was trading in the mid 20’s. At the time I was in my first few years of college and was broke as a joke so I was unable to benefit financially from Panera’s success. Sure enough Panera is successful to this day. After a little research I see that Panera was trading under $5 from 1995 until about 2000. On Friday Panera closed over $76 a share. A $1,000 invested at $5.00 a share would be worth over $14,000 today. Now that’s what I’m talking about! This is the reason I invest in so called penny stocks.

If Cosi can produce at least half the performance Panera Bread did over the year’s I will have an extraordinary gain in this stock. With 143 locations in 18 states Cosi has the potential to grow throughout the United States. Now that the economy is on the mend I see Cosi benefiting from increased spending in dining. The fact that this small company was able to weather the storm in a terrible economy speaks volumes. With the recent positive news of increased same store sales this may be a turning point for Cosi. Although still not profitable I still have confidence in this small company. With a market cap under 43 Million and a small amount of trading volume this stock is extremely volatile. If you’re going to buy a stock like this please be patient and realize this is a high risk investment. Never invest more than 20% of your portfolio in a speculative play.

Today wasn’t meant for a recommendation to buy Cosi. It’s just an example of a personal penny stock holding. I do however personally like the potential outlook in the long term. Today’s post was to endorse the idea of penny stocks. It’s the chance to hit it big. A long shot! A lottery ticket! Excitement! That’s what I get by owning Cosi. A chance that my small investment will pay off huge in the coming years. This is the wow factor of investing. A reason to continue the journey of financial freedom!

Thank You,

Clay-

Have a Question? Send Questions to wheatleycsmk@gmail.com

New Content every Thursday and Sunday.
Occasional Stock Market Commentary during the week.
Feedback Welcome!
Interested? Please become a follower

Penny Stocks. Invest? Or Not Invest?

Today I would like to respond to a question I had awhile back about investing in penny stocks.

Comment:

Clay, Great stuff... a lot of good information! Let us know your thoughts on the so called "penny stocks" With the market going to way it is going is it advisable to venture that way? or stick to the bigger stocks?

First off in I would like to say in a market like this a lot of companies have been put into the penny stock category. A penny stock is considered any company that trades for under $5.00 a share. Penny stocks in my opinion are very speculative, volatile, but rewarding at the same time. Should you invest in them? Of course you should. Everyone should make room for at least one speculative company in their investment portfolio excluding retirement money and those nearing retirement. Those who are late in the game cannot afford to lose any money. Penny stocks or stocks speculative in nature should be less than 20% of your portfolio. This is only to reduce your risk and keep you from losing all your money in case your speculative play doesn’t work out.

Penny stocks have the potential for huge upside profits and if nothing else it’s a great way to keep you motivated with stocks. Penny stocks keep you on your toes and are extremely fun to watch when the price moves in the right direction. Not all penny stocks are considered equal. There is usually a good reason why a company trades below $5.00. When investing in a penny stock doing your research to find out that reason is key.

Some stocks are put there because people panic and worry that the outlook of the company is grim and many flee out of fear. One stock that comes to mind is Ford (F). Ford from Sep of 2008 into the end of April of 2009 traded below $5.00. Many were worried that the automotive industry would never turn around. GM was struggling and on the verge of bankruptcy, cars weren’t selling and many thought Ford would follow GM's footsteps. There was no reason to own Ford and therefore the stock price fell to levels way past belief. If you would have spotted the potential of the economy turning itself around and buying Ford at that time you would have made a small fortune. (Current Price $10.62 a share)  That's over a 900% GAIN since the Nov 17th 2008 low of a $1.01 a share. This is a great example of a penny stock winner.

On the negative some stocks go down into penny stock territory and never come back. A great example of this is Lehman Brothers (LEH) this was a big head liner when the stock market began to crash in 2008 as the financial market began to tighten, banks were losing money on defaults of loans, and one of the biggest financial institutions that didn’t make it was Lehman Brothers. This by far was one of the biggest losses the stock market had to bear. People were in disbelief that a great company like Lehman Brothers was in so much trouble that it had no choice, but to close up shop and file for bankruptcy. The bad/misleading thing is that still to this day Lehman trades on OTC (Over The Counter Market). This is highly unregulated and Lehman continues to trade because brokers continue to make commissions off this company even though it's virtually worthless. This is an example of one stock that will never come back. This is very unfortunate, but this can happen to even the best of companies.

Some people think that investing in penny stocks is a sure fire way to make money. I explained in detail that this isn’t the case for all penny stocks. People think their cheap and would rather buy thousands of shares of a penny stock than to buy 10 shares a good quality company. I would say you have a better chance of keeping your money by investing in the good quality stock, but there is nothing wrong with a speculative play along side a portfolio of good quality stocks. You never know that speculative stock could be the next Apple!

Here’s the thing with penny stocks. Penny stocks go up on large volume. There needs to be a good reason for volume to increase drastically since many fund managers aren’t allowed to touch penny stocks. A great penny stock will have a story that is very enticing. A company may have a new gadget or product that has the potential to be huge. Many drug companies trade at low prices for the potential of a new up and coming drug that could get FDA approval. Penny stocks are driven by positive news. If the volume is stagnant and there is no near term catalyst to move the stock you could end up sitting on your stock for years. Holding onto a loser is not fun and is highly advisable that you dump your stock if the reason you invested your money changes to the negative. Also, if you happen to come across a penny stock newsletter or a pamphlet in the mail please beware that most likely this is a scam to increase the volume of stock to allow for a few people to sell their shares while you lose money. It's called pumping and dumping!

The downfall is penny stocks are volatile in price and can drive a person to panic and sell for a loss. Many will end up going to zero, but the potential to find those hidden gems is still worth looking for as long as you invest a small portion of your money. A good strategy for investing in penny stocks would be to allocate your speculative money over a basket of penny stocks (5-10) this way you can spread your money around and diversify just like you would with any other investment. You will have a few that go to zero, maybe some that don’t move at all, but your odds of finding that potential moneymaker is definitely better than betting on one single stock. Diversification allows you to preserve your capital and continue the fight if some of your stocks happen to flat line.

So yes it’s okay to invest in penny stocks, but be prepared for volatility and the chance to lose your entire investment. On the positive as I said earlier you could stumble upon the next Apple! I have had my fair share of winners and losers in the penny stock territory and continue to believe that money can and will be made investing a small portion of your portfolio in penny stocks. One good penny stock to watch is Citigroup (C). Citigroup trades under $4.00 at the moment and is being held down by the continuous selling of shares by the government. Once the volume lets up I see this stock moving higher. It's a great turnaround story and my buddy/investment guru Jim Cramer has the same opinion. Thanks Jim Cramer for the heads up on Citigroup!

Happy Trading!

Thank You,

Clay-

Have a Question? Send Questions to wheatleycsmk@gmail.com

New Content every Thursday and Sunday.
Occasional Stock Market Commentary during the week.
Feedback Welcome!
Interested? Please become a follower