Investing: Back to Basics

Investing in the markets is both fruitful and yet exhausting and frustrating at times. In 2011, S&P 500 closed unchanged, after all that happened in 2011 where most of the investors have loads of losses in their accounts, they would be surprised to know that the markets in general didn't really go anywhere and remain unchanged. I wanted to share a few of thoughts about investing.

1. Risk what you are willing to loose. If you have any sort of fixed payments that you need to do in life, please and please pay them off first before you risk anything in the market. Market is always going to be there.

2. I love this quote 'Markets can remain irrational longer than you can remain solvent' by John Keynes. In layman  terms, it simply means no matter what you think about a particular investment both on the upside or downside, the markets can go against you till your account goes into deep red and you get frustrated and take your loss, before your conviction is actually right.

3. Invest but always know what your risk is. Always know how much your willing to risk per investment and how much do you want to get out of it. Never invest based on hope. Always invest based on facts.

4. If you are wrong, accept that your wrong and move on to the next investment. Never let ego or overconfidence on an investment come in your way. It's better to get out and take a small loss, rather than hoping for things to work itself out.

5. If the investment you bought is not going your way. A simple reason is that you bought it at way too high prices or made a wrong investment in the first place.

6. Never ever buy any investment based on what somebody else told you is a good buy or a good sell. Always do your own research. Own your decisions, blaming is too easy.

7. If you invest based on fundamentals, then you better know what the business your investing is all about and what is reported on the financial statements. If your into technicals , you better know what levels or patterns your looking for.

8. Cash is also a position. Many people would disagree with me that however, only those who got hammered in 2011 would agree with me now. Sometimes, it's just better to stay out and wait for the right opportunity.

9. Always remember even though on the longer horizon, markets do move up, however, only 5% of the people succeed in investing.

Wish you all a HAPPY NEW YEAR and hope 2012 as I say it is gonna be a 'MONEY YEAR'

Follow me on twitter @dchsn6

dchsn6

BUY:RIMM

RIMM (Research in Motion Ltd.) reported it’s earning last week on Thursday December 15, 2011  and as I mentioned in one of my previous posts cheap can become cheaper. I am sure with most of my viewers who saw the  TITLE ‘BUY:RIMM’ they would be licking their lips and waiting for the markets to open on Monday and buy a lot more of RIMM shares cause  it’s trading at stupid cheap valuations or if they already hold it , they would want to buy more and average down.

I am sorry to disappoint you guys, in my opinion, RIMM at these prices is in my

‘GARBAGE’  stocks list or should i say ‘ DO NOT TOUCH’ list. Let me break it down for you.

Fundamentals:

1. Product Delays: RIMM over the past few years has suffered most in terms of product delays than any other tech name out there, and surprise surprise, they have announced that their new set of blackberry phones will not hit the market until late 2012 as compared to early 2012 as per their previous announcements.

2. Market Share: In US , RIMM in the smartphone business had a market share of 9% in third quarter of 2011 , down from 24% in 2010.

3. Net Income: $265 million in in Q3 2011 as compared to $911 in Q3 2010.

4. Tehnical Issues: RIMM which is proud of its BBM service, had an outage for almost 2 days.  A lot of users who were debating about whether to switch to Android or iphones couldn’t have found a better reason to switch.

Techinals:

I have attached a daily and a weekly chart, show it to any 2 year old and ask them what do you see in these two charts, a simple answer would be ‘it’s going down’. 52 week low every week tells me something that nobody wants to buy it and sellers are looking at every opportunity they can find to sell it at every up move they see in RIMM.

CONCLUSION:

I am not recommending to short RIMM or buy RIMM. As an investor, I would recommend that there are a lot of other good names out there with good growth stories and future growth outlook that you can be in, rather than buying a stock which you might be stuck in.  Hence, it’s in my ‘GARBAGE’ list stocks for now, cause I don’t see a good risk-reward ratio.

dchsn6

Disclaimer: I have no affiliation to RIMM (Research in Motion Ltd.) and I do not recommend it as a buy, hold or sell. I would recommend the viewers to please contact your Financial or Investment Advisor before making any trading decisions. This post is only for my own personal use and stocks analysis.