Market Wrapup

Pure blood bath today people. The market had a nice pullback, which was definetly needed; however, I wish I could have took more profits on Friday. We pulled back about 4% on the S&P and we can pullback another 1-3% probably but I do not feel comfortable getting short here. I added more GIGM, hoping for a takeover bid. In addition, I am back into shippers via EXM and DRYS. I also added LVS because it got a great upgrade from JP Morgan (to Overweight from Neutral) however, the market dissed it with the sell off.

On a day like this, it is important to keep a fresh mind about trading. Many "rookies" are ready to sell everything because of fear but the worse investment decisions are made on fear. For example, follow me on this story. Let's say we had a CROCS addiction and had to go buy a pair everyday, to collect all the colors. So, you call me up and say "RF, we got to go to MACY's today and buy CROCS, I am coming to get you and we are there". I say "ok" and we walked into the store and they are about $30 a pair. Everyone is buying them, so you say ok, why not, I will buy a pair. So we leave, and tomorrow you call me again saying "we need to go buy more CROCS". I say ok, so we go to Macy's and then now they are $10 a pair but no one is buying them. Are you going to buy less? NO, you will probably buy more or buy a pair for $20 cheaper and be happier.

That is the way you got to think about the market. Everyone wanted to buy stocks at 870 on the S&P but not the S&P is at 830 and people are running the of the market (aka Macy's) in fear. The market doesn't make sense alot because investors act very irrational. The moral of the story is that the stock market is weird and people buy on emotion. If you were a buyer at 870 on the S&P, why would you not be a buyer at 830? Nothing has changed from Friday til today, ya know? A big key to winning is to make money of other investor's irrational moves. The best way to do that is keep a high cash level, so if you buy high, you can cost average down to make more $$.

Lastly, I will leave you with some nightly reading.

1. Someone guy from Colorado wrote an article on "The Best Damn China Stock Under $5 Period" yesterday and of course it was FEED lollllll

http://www.examiner.com/x-3765-Denver-Stock-Market-Examiner~y2009m4d19-The-best-damm-China-stock-under-5-period

2. Here is more information on the GIGM takeover rumors. Note the May Calls were on fire today.
http://www.optionmonster.com/news/article.jsp?page=commentary/in_the_news/ma_speculation_boosts_gigamedia_options_33019.html&cookie_test=0