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Saturday, March 28th, 2009 02:45 pm
randomly, updates
This week in adventures in gambling!
First:
This is purely a question of opinion, for those on my flist that are financial professionals. What is the tipping point where I should consider getting a professional financial manager for my stock account? Is there a particular amount I have invested at which time I need to stop treating this like a particularly expensive hobby and at least start seeking professional advice?
First, Opinion
At my current rate of investment, not including the stuff in my 401K since that's all mutual funds, I should tip over ten thousand even with my current five percent loss by the end of this year or the first quarter of next. While yes, I do enjoy this on a purely visceral level--and will probably if I do go that way start another account for my own personal amusement to play with--at that point I have to admit that I'm going to lose my nerve and start doing really stupid things and I can handle doing that with the equivalent of my lunch and DVD money every month, but not so much with the cost of a new Kia Rio staring me in the face. Also, I went to look at Lenovo laptops and what do you know, if I keep this up, I can buy one with a solid state hard drive and 8G of RAM. My projections--yes, me and my spreadsheets--are encouraging ten years down the line if I am careful, but I'm not careful. I'm treating this like a game of Risk. You see this is dangerous.
Naked Short Selling!
Not actually naked, and possibly the most insane thing I've ever heard of in my life. Thanks to Stewart and company, I went on a hunt to work out the difference between short selling and naked short selling.
Here's what I got. Correct me if I'm wrong.
Short selling is borrowing X number of shares from someone--broker, bank, etc--and selling the shares immediately, pocketing the cash, betting that the shares will fall in price. When they do, buying back the shares at the lower price and returning them to the person borrowed from, and keeping the difference.
So say, 100 shares were borrowed. Each share is worth 100 dollars, equaling 10,000 when sold, minus transaction fees. Then the borroweer waits until the price drops to say, let's make this crazy, eighty dollars a share. So then the person buys 100 shares at 80 each, costing 8,000 plus transaction fees. They give back the shares and keep the roughly 2000 difference as profit (minus transaction fees). Which sounds like a very, very stressful way to make money. You know, unless you already know the stock is going to drop enough to offset the inevitable heartburn.
So naked short selling is not borrowing the shares, or even owning the shares. Instead, you sell shares you do not have, wait for the price to drop, then buy back the imaginary shares at the lower price. Not borrowing or having the shares could mean several different things, including having calls on shares that are not yet in your possession, so you are selling shares you may have. Eventually.
(The entire call/put thing is still just--okay, I'm not going there today. I understand it on a theoretical level, not practical.)
This is bad. Bad because apparently--and God, did this take some math--a company has, say, 100,000 shares they've offered. If you are selling shares you don't have, you are creating shares (imaginary ones, but for the purposes of this conversation, they are financially real), which then give the impression there are 100,000 shares + however many you say you are selling, which lowers the value of the shares.
See, I can't get past this. Like, at all.
What I'm getting from this is as follows: Joe has calls on 10,000 shares of say, BAC, which is a promise to buy those shares at a certain price at a certain time. But he does not have htem. They still belong to John. He tells Maggie he will sell these 10,000 shares, which he still does not have, to her at the current going price. Even though they are still John's. Then the price goes down, and Maggie's stupid, so she sells them back. The imaginary shares, that is. And then Joe gets the money for shares he did not have in the first place. Though apparently, Maggie is actually about five thousand people dumping shares. Or something.
And this is legal. I mean, if I squint, I can see it, but then again, if I squint, I can also imagine I see porn in Rorschach blobs, so really.
I continue to boggle at the wonders of the financial world. It's insane. It also makes me wonder how we even have a viable economic model going on.
Portfolio!
I mailed home my spreadsheet since my home version isn't current and updating it would take too much time. Also, I have new formulas imbedded that I don't remember how I created, so it was just easier that way.
My current total loss is roughly 9.11%, since I still don't know how to divide up my invested principle from dividends and sale profits, or for that matter, how to count the principle stored in the money market account--does that go under Total Invested or Current Value? Without that added in, and without monthly fees, it's about 8.06% loss or so. In other words, I'm still doing this with no real idea of what I'm doing.
I added two new columns for Previous Close and Change, which brings me to fourteen columns per stock to track, mostly for my own amusement.
Finally got rid of Bank of America. It was just too irritating. I am carefully not calculating what I could have made if I'd just waited to sell this week, because it's just too depressing. However, after watching gas prices thoughtfully, I added Exxon, as their shares seem not a terrible price and OPEC finally started cutting production. They are, in fact, the only profitable thing on my spreadsheet right now. Like, fifty-three cents. But I am okay with that. This is exciting.
Alcoa had some kind of personality switch and followed the rally up, so I am losing less with them. I don't know what that means.
Though I did figure out why CRNT was doing so oddly. Apparently, buying shares in foreign companies with American dollars not only has to worry about share price itself, but the value of the dollar at the time of buying. So--I mean, I have no idea, but at least I have a vague idea that my American dollars are not doing well in the Israeli exchange or something. It's--confusing. That's like, an entire chapter in my S7P Guide to Money and Investing and I started glazing over during the first paragraph. Give me time.
And that ends the lesson. For me, more or less.
Child
The locally owned and operated reptile and rabbit store has showed interest in Child volunteering there, which is--I mean, great, but also, um. They have five of the hugest snakes I have ever seen. And a ton of tiny rabbits. I did not buy a rabbit. I think everyone who has been here two years or more just breathed a sigh of relief. Mostly because it still hurts and I own my issues on that score, so you know. There were also ferrets, and this thing that was furry and expensive and hid in its bed, so we coulnd't figure out what it was (not a chinchilla). Adorable.
So today I saw a ball python (flashbacks to that woman who was strangled recently by one), blood python, something else that scared me, something else that scared me, something else...well, a lot. A lot of snakes. And bearded dragons, chameleons, anoles, and for display purposes only, a caiman lizard that looked a bit like a crocodile's runt baby that never grew up.
So I am calling the manager tomorrow of all the stores to find out what I need to do to get him into reptile heaven. Frankly, dragging him out today was hard, but they had a jacuzzi set up with turtles and fish and a huge iguana and it was literally the coolest thing ever. If you live on Austin, it's on Burnet just past Black Eyed Pea, and seriously, this place is cool. It's bigger than their original location, and with better lighting and more space. I mean--there's a freaking jacuzzi of turtles. That cannot be anything but awesome. And that iguana!
Right. Back to your lives. I'm working on editing a fic, so maybe up tonight or tomorrow? I'm going to ask you to keep your expectations very low right off the bat. It'll just be easier on us all if you do not do anything crazy like expect a plot or something. The working title is "The Slutty One" that will be renamed about five seconds before I post. So you know, that should tell you what you are getting here.
First:
This is purely a question of opinion, for those on my flist that are financial professionals. What is the tipping point where I should consider getting a professional financial manager for my stock account? Is there a particular amount I have invested at which time I need to stop treating this like a particularly expensive hobby and at least start seeking professional advice?
First, Opinion
At my current rate of investment, not including the stuff in my 401K since that's all mutual funds, I should tip over ten thousand even with my current five percent loss by the end of this year or the first quarter of next. While yes, I do enjoy this on a purely visceral level--and will probably if I do go that way start another account for my own personal amusement to play with--at that point I have to admit that I'm going to lose my nerve and start doing really stupid things and I can handle doing that with the equivalent of my lunch and DVD money every month, but not so much with the cost of a new Kia Rio staring me in the face. Also, I went to look at Lenovo laptops and what do you know, if I keep this up, I can buy one with a solid state hard drive and 8G of RAM. My projections--yes, me and my spreadsheets--are encouraging ten years down the line if I am careful, but I'm not careful. I'm treating this like a game of Risk. You see this is dangerous.
Naked Short Selling!
Not actually naked, and possibly the most insane thing I've ever heard of in my life. Thanks to Stewart and company, I went on a hunt to work out the difference between short selling and naked short selling.
Here's what I got. Correct me if I'm wrong.
Short selling is borrowing X number of shares from someone--broker, bank, etc--and selling the shares immediately, pocketing the cash, betting that the shares will fall in price. When they do, buying back the shares at the lower price and returning them to the person borrowed from, and keeping the difference.
So say, 100 shares were borrowed. Each share is worth 100 dollars, equaling 10,000 when sold, minus transaction fees. Then the borroweer waits until the price drops to say, let's make this crazy, eighty dollars a share. So then the person buys 100 shares at 80 each, costing 8,000 plus transaction fees. They give back the shares and keep the roughly 2000 difference as profit (minus transaction fees). Which sounds like a very, very stressful way to make money. You know, unless you already know the stock is going to drop enough to offset the inevitable heartburn.
So naked short selling is not borrowing the shares, or even owning the shares. Instead, you sell shares you do not have, wait for the price to drop, then buy back the imaginary shares at the lower price. Not borrowing or having the shares could mean several different things, including having calls on shares that are not yet in your possession, so you are selling shares you may have. Eventually.
(The entire call/put thing is still just--okay, I'm not going there today. I understand it on a theoretical level, not practical.)
This is bad. Bad because apparently--and God, did this take some math--a company has, say, 100,000 shares they've offered. If you are selling shares you don't have, you are creating shares (imaginary ones, but for the purposes of this conversation, they are financially real), which then give the impression there are 100,000 shares + however many you say you are selling, which lowers the value of the shares.
See, I can't get past this. Like, at all.
What I'm getting from this is as follows: Joe has calls on 10,000 shares of say, BAC, which is a promise to buy those shares at a certain price at a certain time. But he does not have htem. They still belong to John. He tells Maggie he will sell these 10,000 shares, which he still does not have, to her at the current going price. Even though they are still John's. Then the price goes down, and Maggie's stupid, so she sells them back. The imaginary shares, that is. And then Joe gets the money for shares he did not have in the first place. Though apparently, Maggie is actually about five thousand people dumping shares. Or something.
And this is legal. I mean, if I squint, I can see it, but then again, if I squint, I can also imagine I see porn in Rorschach blobs, so really.
I continue to boggle at the wonders of the financial world. It's insane. It also makes me wonder how we even have a viable economic model going on.
Portfolio!
I mailed home my spreadsheet since my home version isn't current and updating it would take too much time. Also, I have new formulas imbedded that I don't remember how I created, so it was just easier that way.
My current total loss is roughly 9.11%, since I still don't know how to divide up my invested principle from dividends and sale profits, or for that matter, how to count the principle stored in the money market account--does that go under Total Invested or Current Value? Without that added in, and without monthly fees, it's about 8.06% loss or so. In other words, I'm still doing this with no real idea of what I'm doing.
I added two new columns for Previous Close and Change, which brings me to fourteen columns per stock to track, mostly for my own amusement.
Finally got rid of Bank of America. It was just too irritating. I am carefully not calculating what I could have made if I'd just waited to sell this week, because it's just too depressing. However, after watching gas prices thoughtfully, I added Exxon, as their shares seem not a terrible price and OPEC finally started cutting production. They are, in fact, the only profitable thing on my spreadsheet right now. Like, fifty-three cents. But I am okay with that. This is exciting.
Alcoa had some kind of personality switch and followed the rally up, so I am losing less with them. I don't know what that means.
Though I did figure out why CRNT was doing so oddly. Apparently, buying shares in foreign companies with American dollars not only has to worry about share price itself, but the value of the dollar at the time of buying. So--I mean, I have no idea, but at least I have a vague idea that my American dollars are not doing well in the Israeli exchange or something. It's--confusing. That's like, an entire chapter in my S7P Guide to Money and Investing and I started glazing over during the first paragraph. Give me time.
And that ends the lesson. For me, more or less.
Child
The locally owned and operated reptile and rabbit store has showed interest in Child volunteering there, which is--I mean, great, but also, um. They have five of the hugest snakes I have ever seen. And a ton of tiny rabbits. I did not buy a rabbit. I think everyone who has been here two years or more just breathed a sigh of relief. Mostly because it still hurts and I own my issues on that score, so you know. There were also ferrets, and this thing that was furry and expensive and hid in its bed, so we coulnd't figure out what it was (not a chinchilla). Adorable.
So today I saw a ball python (flashbacks to that woman who was strangled recently by one), blood python, something else that scared me, something else that scared me, something else...well, a lot. A lot of snakes. And bearded dragons, chameleons, anoles, and for display purposes only, a caiman lizard that looked a bit like a crocodile's runt baby that never grew up.
So I am calling the manager tomorrow of all the stores to find out what I need to do to get him into reptile heaven. Frankly, dragging him out today was hard, but they had a jacuzzi set up with turtles and fish and a huge iguana and it was literally the coolest thing ever. If you live on Austin, it's on Burnet just past Black Eyed Pea, and seriously, this place is cool. It's bigger than their original location, and with better lighting and more space. I mean--there's a freaking jacuzzi of turtles. That cannot be anything but awesome. And that iguana!
Right. Back to your lives. I'm working on editing a fic, so maybe up tonight or tomorrow? I'm going to ask you to keep your expectations very low right off the bat. It'll just be easier on us all if you do not do anything crazy like expect a plot or something. The working title is "The Slutty One" that will be renamed about five seconds before I post. So you know, that should tell you what you are getting here.
