Wave Chasing

Somewhat quiet day, but a good one for the port. The new techniques have proven themselves already, given that I wasn’t able to be at my desk until noon. (OK, I was sleeping off a hangover. Bad me.)

2 positions closed, net +4.78%
– One well above target and one just shy of target
2 positions opened

9 positions in stage 2, the remainder in stage 1.

Quick Stats, at current returns…
Early Retirement Only: 21.5 years
Retirement at the beach: 25.7 years
Ahead/Behind on 10 Year Plan: $33,483.49 Behind
Discretionary spending up/down from 2006 Down 5.33%

I’m a Jim Cramer fan. Lots of people aren’t, and that’s fine with me – everyone is entitled to their opinion. I watch Mad Money regularly and I find it to be both helpful and hilarious. He also has a feature in this weeks New York magazine – check it out.

One phenomenon that still amuses me is the “Cramer Effect.” The show airs at 6PM, when the after hours markets are still open. Invariably a stock that gets a mention on the show goes batshit in the after hours session, and tonight was no different. Below is a chart from GLDD (Great Lakes Dredge & Dock) – the spike you see is what immediately followed after it’s mention this evening. At least 1/4 of today’s volume (300K) came in the after hours. It will be interesting to see if it carries over to the morning opening.

Thing is, he staunchly advises against after hours trading, with good reason – the spreads are out of control and if you go with a market order, you’re going to get your head handed to you. He usually advises even waiting a day or two for the effect to pass.

The beauty of using your own techniques is the ability to make changes when necessary. Not panicking and making changes on a single trade, but a change made to an entire technique.

I’ve decided to remove upside stops and go with all trailing stops. The initial stop will be based on chart analysis and support levels. (Stage n1) When the holding reaches 1/2 to the target, the trailing stop will be changed to break even. (Stage 2) When it gets to the target, the trailing stop will be seriously tightened up and that’s that. (Stage 3)

Should be a little easier to maintain, and today’s trade that ended up so well that I’m glad I’ve made the change.

Wow, what a day.

Bit of a drop at the open on China’s slide, then things quickly turned around and it was off to the races starting around 11:25… I’ll admit to having some high nerves when the Fed minutes were released – it had been such a good day so far – S&P and my port took a bit of a nosedive, but it was short-lived and in the time it took me to go to the kitchen and make a sandwich, things had bounced back and then some. Seems that the markets decided the FOMC decided the minutes weren’t so bad after all.

1 position closed, net +7.87%
– Stage 3 holding closed, well above target
4 positions opened

Ended the day with 8 positions in stage 2, and the remainder in stage 1.

Quick Stats, at current returns…
Early Retirement Only: 22.1 years
Retirement at the beach: 26.1 years
Ahead/Behind on 10 Year Plan: $34,843.61 Behind
Discretionary spending up/down from 2006 Down 4.88%

Day started nicely on lowered oil prices and M&A activity, then turned on us. (Interest rate concerts? Crankiness from coming back after a long weekend?) Jim Cramer put it best: “Soggy.” Bit of a comeback in the last hour. Lots of econ news coming out this week.

Of four holdings in stage 2, three of them held up very well through the afternoon pullback.

2 positions closed, -1.04% net
– 1 stopped out
– 1 stopped on stage 2 pullback (gain)
4 positions opened

3 holdings in stage 2, the rest in stage 1.

Quick Stats, at current returns…
Early Retirement Only: 24.6 years
Retirement at the beach: 29.1 years
Ahead/Behind on 10 Year Plan: $37,231.48 Behind
Discretionary spending up/down from 2006 Down 4.65%

AKA, spending cash. This one is a bitch cause it can get out of control so damn fast. I base my planning on the numbers I suck out of Quicken, and I have data going back to 2003 (damn database limitations, I had to compact the prior years and lost the detailed info.)

From 2003 to 2004, my discretionary spending increased by 4%. From 2004 to 2005, it went up over FIFTY FREAKIN’ PERCENT. And then in 2006, another DAMN 40 PERCENT. I’ve got the numbers in front of me, but damned if I can still figure out WTF has happened here. I don’t recall feeling at all deprived in 2003 or 2004, and I spent a hell of a lot less. At the moment, 2007 is at least on track to drop 5%, which is something, but still fairly ridiculous.

Granted, real vacations started again in 2005, so that is a new, yet steady expense. There were some one time big items in 2005 and 2006 (new computer, new bike) but those aren’t recurring – there should be a drop way back down this year. So, right now, I’m still not really sure what happened in 2005 that set this new insanely high bar for spending, but I’m definitely working on 2005 and 2006 just being a weird spike.

I’ve got a list of categories that right now plot out to year end as being higher than previous years and I’ve got an close eye on those. They are:

– Auto Service. Not really controllable, but as long as my car only needs basic maintenance the rest of the year, that should end up OK. (Had some weird things go wrong early in the year.)
– Bank Charges. Totally controllable – no reason to go to any ATM that charges fees – my credit union ATM is slightly out of the way, but not so much that the extra 5 or 10 minutes to get there costs more in gas than the $3 hit I take using another ATM.
– Cash. This is partially because the past couple months I was going “cash only” to see if it made a difference in my spending patterns, so my ATM hits went up. It really doesn’t seem to change anything, so I’m going back to using my Discover card (paid in full every month) and at least getting the 1% cash back and being able to track specific categories more closely.
– Computer. This is more of a fluke as I had to spend some $$ early in the year on a repair and a rental. Shouldn’t really have anything more on that category for the rest of the year unless I replace the server, and if I do, that will be with a very inexpensive box.
– Race registrations. I don’t think I’ll be registering for any more races this year, so that will probably end up OK.
– Home Repair. Nothing else had better break around here.
– Meals & Entertainment… Yeah, this one I’m pretty much screwed on. My sports bar is my home away from home, and it shows here. Time to start getting random men to buy my drinks.
– Office. This one should in theory turn out OK, as I have a Staples gift card to cover any other office supplies I may need.
– Travel. I’m not going to hyperventilate too much on this one, as I *am* traveling more these days. It just is what it is.

All I can really say on this category is think before you spend, find your big categories and see where you can cut back and do the best you can.

So, this weeks carnival of dentistry got me rethinking how I’m planning for health care costs. Up until now, I’d just dumped them into discretionary spending. But this big hit made me realize that it needs to be set aside in its own category. Even though I don’t normally spend a lot on healthcare (thankfully), it still skews discretionary spending and I need to be able to have other potential big hits (such as having to actually use my entire insurance deductible in a year) accounted for in my planning.

So, there is now a dedicated health care category in my plans, based on the average spending over the past 5 years. This month’s hit has it at a pretty high number, but hopefully I won’t have something like this happening every year and that average will slowly go down to a more reasonable level. If not, well, I’ve at least planned for it.  The drop in planned discretionary spending does at least partially offset the increased health care, so it hasn’t thrown the overall plan too far out of whack.

Beach Bunny Enterprises is a moneylosing proposition this week. Books down by 6.12%. Also known as a “life happens, and usually all at once” week.

Not helping this week:

- Quarterly fee on the full service brokerage account. But, that account is making good money, so it’s all good. (I have part of my portfolio w/the family broker. It’s sort of “never touch” money.)
- Finding some errors in the master spreadsheet – farther behind plan on 10 year plan now. Better to find it now than 2 days before I go condo shopping. :)
- Annual pool dues. Managing expenses be damned, I want to swim and play tennis. (It’s really not expensive, just that it’s an annual hit – plus there is an “initiation fee” that results in the annual expenses being lowered, but we get the fee back when we sell the house or give up the membership.)
- Thursday’s market slide.
- CA & ADI puking all over me.
- Mortgage payment on the townhouse – hopefully the last one!
- The big one – massive dental expense that will be hitting at the end of June. Since I’ve got a pretty solid number for it, I’m factoring it in now. Some people buy sports cars for their midlife crisis, I’m getting some troublesome teeth permanently fixed.

Not hurting this week:
– RG, NYX, CPS, TGT, MEND, RESP, FNM, & RX – all exited above targets.

* Note: I won’t mention any particular stock I am holding via any paid pick service until I have exited, end of story.  If it came from a public source, I will go ahead and talk about it.

Quiet day, not surprising given the holiday weekend. Market gave back some of what it took away in yesterdays slide. Ended the week with a split port, 14 up, 14 down.

Enjoy the long weekend, all.

1 position closed, +.9 net
– Pullback on stage 2 (gain)
6 positions opened
1 holding in stage 2, the rest in stage 1.

Quick Stats, at current returns…
Early Retirement Only: 22.2 years
Retirement at the beach: 25.2 years
Ahead/Behind on 10 Year Plan: $30,650.96 Behind
(See the week in review tomorrow for the explanation of the big hit.)

Though I am using a multi-stage strategy, there is no point in time where I cannot get up and walk away from the desk. I do not let the positions ride without having a stop in place, at a very minimum. Unattended trades will do one of the following:

– Stage 1 – go up to the initial target and cash out, or go down to the stop and cash out.
– Stage 2 – pull back to the trailing stop and cash out, should be at a gain.
– Stage 3 – pull back to the tight trailing stop and cash out, should be above target.

This is critical for me, as the market can move fast and I can’t always be sitting on top of the charts. Tomorrow will be the perfect example of it, as I’ll be spending my afternoon at the dentist. Things will just have to unwind on their own. Also just a good prep for some days I’ll be out of town next month, and when I’m on vacation in July.