aventures in gambling: five months and counting

After a long weekend of writing, and you know, that freaking Academy alien nipple thing, and before that I was sick, and there was a lot of Merlin porn, I decided to see what the economy was up to these days, because you know, my current hobby is watching the stock market and marveling at the insanity.

Context: Adventures in Gambling, or How I Discovered the Dark Lure of Stock Trading

So, there have been some changes.



After a five day rally (I can see people who know economics twitching when they read this; breathe. I am still not optioning, promise), I am staring vaguely at a roughly fourteen percent overall loss, sort of, except I found out that my spreadsheet does not have the necessary chops to handle selling for profit. This is because I did not realize I would ever, like, make money doing this shit. Which you know, I'm not really, but my spreadsheet is confused by the new cash flow and it's throwing off my statistics, and I had to add a second and third page for total transactions and just, it's insane how much I'm tracking at this point.

Except again, right now, there is no legitimate way to tell the difference between what I contributed originally, what I've basically made from it. I assume this is what "capital gains" refers to?

See, I had been doing this as Total Invested, Current Value, Gain/Loss (etc etc etc). But then dividends came (don't be impressed; I wasn't) and then Bank of America....

This entire situation is because of Bank of America, the freaking cocktease.

You have to understand, this is like some weird, creepy hobby for me, so while I know intellectually this is like, deathly serious market Dow S&P NASDAQ OMG RECORD LOWS it's also fucking entertaining. If you live your life without reading five analysts threatening suicide in financial language, you my friend have missed out. So when BAC started doing dramatic things, and was the only one who wasn't irritating me, I got interested. By interested, I mean, thought, well, let's buy some of that. Because it's fun to watch it dwindle in value or something, who the hell knows how my mind works. But then. It went up.

(I learned my lesson from Alcoa, who went down to like, half their original price. That was almost stressing.)

So I stared at it, kind of boggling, as it rose on the day it lost its rating and I think there was like, a huge loss report, and then sold it, then stared at the less-than-a-meal-for-me-and-child-at-McDonalds profits and thought, ooh. This feeling is why people do this. The making money thing. It was strange.

You see how this is the market's fault for doing this.

So after that, I thought about it, then wrote like, Privileges of Rank or something. I don't remember, but eventually, an alert came, and lo, I bought more, except it was already higher again than the alert and I was bitter. Then it started dropping, and I felt better, because the natural state of the market seems to be downward motion with words like overvalued and market equalization used to explain such things. Then there is the short selling that's thrown about like a cross between a very inappropriate word and legal criminal activity, like prostitution in Vegas or something, but seems to be a really clever way to get an ulcer really fast instead of being boring at it and spreading it over years. The only thing i have learned so far is that if it is going up, get rid of it very, very fast. So naturally, going down, buy more of it.

(This does not work all the time. I have no idea why.)

Which leads me to my spreadsheet dilemma, when the fucker suddenly just jumped, and by this point, I'd set the price I would sell at and sold right then. Well, only 5/8ths of it, for reasons that are complex and have to do with whole numbers and liking a certain symmetry on my spreadsheet. It's hard to explain. Then it kept going up, which was irritating, and now five days later, I'm vaguely resentful and weirdly surprised. I also did random calculations of what I would have made if I'd just not sold, but that way is madness, and also, boring, as I don't have a spreadsheet formula for that yet.

In less inexplicable parts of my lack of long-term strategy (it can be summed up with "Is this fun?" "Yes." "Keep doing it." It's a savings account that takes money and then makes me pay for them taking my money. I mean, really.), I cut off my access to my account during the rally, because here is where I realized the same inexplicable urge that made one, as a cheerleader, lead a cheer calling the opponents Water Pigs, can also affect one when one sees prices go up, up, up--you want to join in and that is bad. To say I know crap about how this works is to overstate the case, but in the last fiveish months of steadily losing value, if there is anything resembling a dramatic raise in price, I do not go near it. Took two of these rallys to teach me that. I do not go. Unless it is still below my target price, at which time I put it in my autobuy thing and hope for the best and cancel in panic early in the morning when the market opens. Which is happening with monotonous regularity.

I also have learned, in a very roundabout way, not to pay attention to predictions. This isn't because they aren't true, because honestly, a lot of them are. It's that they are true conditionally, as, if you are shorting the market, those suckers work like whoa. So I calculated up what kind of money I'd need to play along with shorting and laughed a while. Long term predictions are on par with fortune-telling, so no use there, and the P/E is freaking ridiculous for an indicator. I continue to believe this is blind blackjack. There's no other way to explain it.

Except. Weird thing, and I can't even prove it, and God knows I don't have the vocabulary for it. The Dow and S&P are shitty, shitty indicators of the market as a whole and how healthy it is, and the NASDAQ has a personality disorder of some kind.

What they are freaking miraculous at doing, however, is predicting the stress level of the people manipulating it, a group comprising less than point one percent of the total population of the country. I spent huge amounts of time translating balance sheets and terminology and reading company histories, when none of these things did jack shit in telling me anything, but did refresh my basic arithmetic. What I should actually be doing is getting the facebook profiles of six to eight mid-range hedge fund managers, check their political affiliation, and watch their Walls to see if they bought a new car recently or when tuition is due at Harvard. That would probably be the best indicator of what is going to happen next.

Comments

[transtempts.livejournal.com]

All I have to say is that Merlin is freaking out and Arthur is trying to be all 'I KNOW ALREADY' and pron is not happening. *sobs*


............but Merlin is finally telling the truth. Mostly. While they argue again. *headdesk*

12,200 words, hon. WHAT?

[seperis.livejournal.com]

*HOWLS*

[transtempts.livejournal.com]

......................

Thank you for your support.

*brightly* HOW IS ROME GOING?

[calligrafiti.livejournal.com]

I may be exploring in this area myself. I'm inheriting some of my Dad's really minor Edward Jones investments, and it's enough money to push around in the market, but not so much that I could reasonably use it for something like a down payment on a house. So I've been poking around Motley Fool and musing about green power investments* and thinking, "why not?" Except then I'd end up with the NASDAQ numbers constantly refreshing on my desktop and I'd never stop looking at it ever.

*Yes, I expect a new bike would have a better ROI than 97 out of 100 "green" stocks.

[seperis.livejournal.com]

I was looking at the Green ETFs, but they are all very...not confidence building.

[deadlychameleon.livejournal.com]

What I should actually be doing is getting the facebook profiles of six to eight mid-range hedge fund managers, check their political affiliation, and watch their Walls to see if they bought a new car recently or when tuition is due at Harvard. That would probably be the best indicator of what is going to happen next.

See, I think you're scarily prescient there.

[seperis.livejournal.com]

Yo, it's that or a dancing chicken on top of a list of stocks at this point.

[harriet-spy.livejournal.com]

Your tax basis in a stock is the price you pay for it. When you sell the stock, you realize a gain (or loss) calculated by subtracting the price you paid (your basis) from the price you receive. [Edited for clarity.] That is a capital gain, and a tax event (outside of a tax-sheltered account). A long-term capital gain occurs when you realize a gain on an investment held for a year or more, and is taxed differently than ordinary income or gains realized from an investment held less than a year. Similarly, dividends are taxed at a different, lower rate.

Now that I have told you this, do not go around shorting stocks. There is literally no theoretical limit to how much money you can lose shorting stocks. I don't mean that you can lose all you have invested. I mean that you can, in theory, lose five, ten, one hundred times your investment.

[seperis.livejournal.com]

OH hell no. Just reading about it caused a blood pressure event, and I don't actually have high blood pressure. Just. No.

[libitina]

BoA is evil hellspawn. Now some people think that is a good thing, but I tell you that steamy turds have more goodness in them than BoA.

Oh, wait - was that not soundly grounded in economic theory?

They will fuck you over any way they can, whether that means they have to do well or poorly. They are out to get you. Yes, you. In particular. (and a whole bunch of other people. In partuicular) Because they are fucking bastards.

But, erm, good luck with your shiny computer game.

[tricksterquinn.livejournal.com]

...I would concur with this about BoA, though from the prospective of a customer not in regards to stocks.

Though they've gotten strangely civil about it lately.

[seperis.livejournal.com]

*g* I have heard from friends who use them.

[tricksterquinn.livejournal.com]

I... tried to read the context but my eyes crossed and I started drooling.

Translation: why I am not looking at the economics track for Dream Job.

I understood very little of this, but my general gist is a) you're nuts. 2) It's strangely endearing. 3) I like your proposed strategy in that last paragraph.

[seperis.livejournal.com]

My strategy is one of "WHEE SHINY" and shaking my fist at certain companies when i pass them. Chicago downtown during Bank of America's last drop was very painful on my elbow.

[tricksterquinn.livejournal.com]

*pats* Hey, if it makes you happy...

Also, that sounds kind of like my attitude towards blackjack. I love winning, but losing is great fun too!

[shinetheway.livejournal.com]

[gapes in awe]

I have a 401k. Somewhere. It is doing it's own thing, completely independant of me, which is possibly because that company laid me off, and also possibly because it was very small. I'm sure it's even smaller now. Heh. Other than that, I have trouble remembering how to make my credit card payments (because that website is *confusing*) and when my cellphone bill will go past due.

I bow before you. [grins]

[seperis.livejournal.com]

It's like fanfic with money, I swear.

[norabombay.livejournal.com]

Seriously.

Because I'm pretty sure that the appreciation rate of my collection of N'Sync music videos, Colin Farrel porn clips, and the best fanfic of the last few years is now worth more than my 401k.

Because 'Rodney's abused anus' never gets old. But the 401k value has dropped 75%.

[shrewreader.livejournal.com]

Okay, so your facebook idea.

I may have to pitch that at a CFP.

Rest assured, credit will be issued. :)

[seperis.livejournal.com]

Would I would not give for a study correlating hedge fund manager's personal lives and the rise and fall of the stock market....

[silentcs.livejournal.com]

I would possibly kill to see these graphs. Extra happiness if pie charts are involved. Or maybe a venn diagram!

[luthorienne.livejournal.com]

Don't short stocks. Not ever. Seriously.

Your capital gain (or loss) is the difference between what you paid for a capital asset and what you get for it when you sell it.

Have you factored in the point that dividend income is taxed at a different rate than other kinds of income?

It's nice that you're having fun with this. As long as you play with money you don't need for other things, like food, it's an interesting hobby. Just don't, ever, in any conceivable universe, short stocks. Because it could get dramatically un-fun, really quickly.

[seperis.livejournal.com]

Not shorting! Promise! I am not suicidal. The most I've done is speculate with Bank of America for short-terms in small amounts, because they are freakishly volatile and I set my price low and early for selling. I don't have the nerve to try and do that with borrowing and I sure as heck won't do that with my own money.

Your capital gain (or loss) is the difference between what you paid for a capital asset and what you get for it when you sell it.

Have you factored in the point that dividend income is taxed at a different rate than other kinds of income?

Yes and no. Yes, I looked, but I haven't actually worked it in pencil, and I don't know anything in tax law until I do it in pencil, which is why I do my taxes manually every year and *then* do them with a free tax program and do match-up. From what I can tell, my loss (so far) covers my gains (somewhat), but all dividend income is automatically reinvested. I'm going to pull the specifics on capital gains and et al and work an imaginary version and project for the year in the next couple of months. I was going to wait until the market stabilized, but I'll be waiting for 2011 at this rate.