Aug 192013
 

Earlier in the Spring I blogged about how undervalued commodity stocks were and hinted that it could be one of the best trading opportunities of the year 🙂 So I explained how I invested $2,000 into some stocks and plan to sell when I can make at least $1,000 in profit. Well earlier today I sold all those stocks, and made a $1,175 return, exceeding my goal (゜∀゜)dancing-tweetie-bird

April 19th 2013
Initial Investment: $2,000
Bought: 50 shares of  G.TO at $28.84 = $1442
Bought: 100 shares of  SLW.TO at $24.16 = $2416
Bought: 100 shares of  SU.TO at $28.205 = $2820.50
Total money spent buying stocks: $6,678.50
Had to borrow $4,678.50 on margin

Today, Monday, Aug 19th, 2013
Sold: 50 shares of  G.TO at $32.51$1625.50
Sold: 100 shares of  SLW.TO at $27.80$2780
Sold: 100 shares of  SU.TO at $35.325 = $3532.50
Total money acquired from selling stocks: $7,938
Dividends earned during swing trade period: $42

Gross profit: = $1,301.50

Expenses:
Commission: 6 trades x $9.99 = $59.94
Interest on $4,678.50 margin loan @4.25%/yr = $66.28
Total Expenses: $126.22

Net profit = Gross Profit – Expenses = $1,175.28 (59% return)

Another successful swing trade is in the can 😎 Woohoo! That was a fun one 😀 Let’s analyze… Continue reading »

Apr 192013
 

Commodity prices are low and resource companies in Canada have lost quite a bit of value recently. But did the world really change that much since March to warrant such a huge sell off? Maybe, I don’t know. The price of gold dropped like a sack of potatoes last week. But even at $1400 per ounce, gold production companies are still making about $600 in gross margin for every ounce they mine and sell, so their bottom line is still good (~_~) Stocks could get a lot worse before they get better again. However if this turns out to be the buying opportunity of the year then I don’t want to miss out(^v^) So it’s time for another swing trade 🙂

I’ve decided to trade Goldcorp, Silver Wheaton, and Suncor in my margin account. This means the bank will lend me money to buy stocks. In this case they’re lending me 70% of what I buy. But I have to cover the remaining 30% with cash. In other words I only need $30 of my own money to buy $100 worth of stocks 🙂 Earlier this morning I plunked down $2,000 to start a swing trade. This means I can buy roughly $6,670 worth of stocks because the bank is financing 70% or $4,670 of it 🙂

Initial Investment: $2,000.
Leveraged up to $6,679.
Transaction details below.

13_04_swingtrade7a, swing trade

I chose these companies because they are high quality, large cap stocks with over 50% institutional investors, so there is very little risk of them going down to zero. Let’s take Suncor for example. Here are 3 reason why I think it’s a good stock to buy now.

1) Stock analysts love this company. According to Globe Investor Suncor currently has 16 analysts reporting on it. 14 of which calls it a strong buy. These people spend way more time studying companies than I do. If their professional consensus shows that Suncor is a strong company then that’s probably a good sign 😀

2) High price target prediction. Stock analysts often have to come up with 12 month projections for where they think a stock will be. 1 year is a long time and it’s hard to get these estimates right. Some analysts will be bearish while others will be bullish so there will always be a range of predictions. In Suncor’s case, this range is between $36 to $48. That’s a pretty good target, considering where the stock is at today.

13_04_swingtrade7b swing trade suncor

3) Near 52 week low point and strong support. Suncor has maintained a nice technical support around the $27/share range for many years now. Today we are pretty much at that point again. If it stays within it’s 52 week range then there is a good chance it will go up from here.

13_04_suncorswing

I hope my leveraged trading strategy pays off 🙂 My plan this time is simple. Sell all 3 stocks once I make $1,000. Or BUY MORE if falling oil and gold/silver prices drag down commodity stocks even lower. I can lower my average cost of buying and make a profit later on. Will I be $1000 richer at the end of all this or will I lose big time? We’ll just have to wait and see 🙂

Jan 062012
 

This is a quick crash course on analyzing stocks using technical analysis, which is a term that describes how to predict future stock prices by analyzing past stock prices. I use tech analysis when I swing trade and so do most research analysts. Let’s use the stock I bought a couple days ago as an example, Goldcorp.

First, the stock has a strong “support” around $45, meaning the last several times the price tried to drop, something fundamental was preventing the stock from falling below $45. And right now, it is trading around that support level with an upward “momentum“, so that’s a signal to buy. Next, the red line is a simple moving average (SMA) which is a line that averages out the closing prices of a stock over a recent period of time to smooth out the fluctuating data. It basically represents the overall trend of where the stock is going. 100 days is the period used in this case. Notice how the stock over the years rarely moved below this SMA? But now it is! So this is another obvious buying signal.

Below is a closer look at the most recent stock data. In this chart I have created a 5 day moving average (green line) and a 10 day moving average (red line.) A “Moving average crossover” in technical analysis tells a trader to buy or sell. When a shorter M.A. (in this case the green line) moves down to cross below a longer M.A. it’s a signal to sell. But when it crosses from below the red line to above, like right now, it means buy.

As you can see from this chart, technical analysis actually works pretty well historically speaking. That’s not to say it’s a guarantee of course. If you are going to trade stocks, please understand the risks and do so at your own discretion. That’s basically technical analysis 101. I made these charts using free sites like Google finance or Yahoo finance. To know more about analyzing stocks, just search the internet. That’s where I learned this stuff from. Here’s a good primer from Investopedia.

Jan 042012
 

It’s only the beginning of the year and I’ve already made a big item purchase. Earlier today I bought 45 shares of Goldcorp Inc. (G.TSE) at $45.95 each. The price is very attractive, the company is well managed, and it’s financials are in great shape. This is a long term hold for me. I don’t care if it drops to $30 next month. I’m confident in the research I’ve done and believe this company will out perform in the decades to come.

Total investment today was about $2000. But since I bought this in my margin account, I only had to pay $600 from my own pocket, and the bank lends me the remaining $1400 at a low interest rate. Leveraging is one of the secrets to financial success (as long as you don’t over extend yourself.) It’s essentially how banks can make so much money, by using other people’s money.

Why Goldcorp? First, I like gold. It’s a good hedge against inflation and I think we will continue to see inflation in the future years to come. I chose a gold producer rather than just buying physical gold (which you can also do) because historically speaking gold companies are undervalued right now relative to bullion. And even if gold prices don’t move up, but the stock market does, then I still benefit. Gold companies are a good place to in be right now, and Goldcorp offers the best value compared to its peers based on growth potential, earnings ratios, and cost structure. And their headquarters is around the same location as Silver Wheaton’s office in downtown Vancouver! Support your local community right (^_^)

Their stock chart seems to suggest an interesting trading opportunity. I won’t speculate on this stock because I plan to hold it until I retire. But next post, I will explain how to study the graph above to try and predict its short term swings in case anyone is curious about how stock analysts try to predict the market.