Saturday, March 6, 2010
The Double-Bottom
A few years ago my Dad tried to teach me about investing in the stock market. I say "tried" because my father, despite the amount of time he invests in educating himself, knows very little about investing. Sure he can tell you how to read a chart, how to watch the Bollenger Bands, what a Parabollic SAR is, and how to observe the MACD. But despite this knowledge, he continues to invest in shit stocks. He purchased Napster in 2007 and continued to invest in airline stocks throughout the Bush-era oil spikes.
One thing I learned from him, though, was how to observe patterns. The stock market is really not that complicated - it's all based on patterns. The market goes up, the market goes down. Check it out - every single day at around 10:30 the market takes a serious dip and then rebounds and plays out the rest of it's day. The dip is from investors cashing in on all the dumb chumps who made buys during the off-hours. A little tip: never buy when the market is closed.
Another pattern is the double-bottom. When there is a major downturn in the market, it is followed by a short recovery. But that recovery is not long lived before it goes right back to where it was before. The market must do this before turning itself around and making any serious gains. Those who bet on the market before it hits it's double-bottom will usually loose and miss the true Bull Run.
I couldn't help but wonder if life is just a series of patterns that we could chart like the market? There are some people who are complete fuck up's and who's stocks continue to plummet throughout life. Those would be Bear Markets -- you can bet on them but bet that they will loose. Then there are people who always succeed, always improve and do better than before. Their stocks increase like a healthy Bull Market and are easy to spot.
I'm like a typical stock with ups and down's. Last year when I was $40k in debt and had no hope of recovery, other than bankruptcy of course, was a devastating low for me. I vowed at that time to never be at Zero again. But like so many amateur investors before me, I forgot to hold and wait for the double-bottom. I was so excited, thinking that I had hit my absolute bottom. I thought the only direction I had to go was up! So I made my plans, wrote out my forecast, and allowed my heart to dictate my decisions. Ladies and gentlemen, allowing your heart to dictate your decisions is how my Dad lost so much money in companies like Frontier Airlines.
That's the tricky thing about the stock market. Patterns can only be viewed in the past. You can never know for certain what will happen tomorrow. However, I believe I am at, or close to, my second bottom. This double-bottom is not a financial driven one this time... it's mental. What's wrong you ask?
- I've made grand statements and promises to get healthy, fit, hot, and muscular and yet I am the largest I have ever been in my life and my gut is obscene. Obscene I say! I'm a joke and am failing myself.
- I have been beat down and demoralized even more (if you can believe it) at that shit-hole I go to every day known as work. I'm not exaggerating when I say that I have had to coach myself each morning to gather the strength just to go into the office. And there have been some very hotly contested debates in my head on the subject of just quitting on-the-spot with nothing but a small shred of dignity.
- I had another doozy of a fight with my best friend 2-weeks ago and we haven't spoken since. I miss him (for some lame reason). And because I know I'm right in the argument (though I'm not entirely certain there is an argument - he could just be busy with travel and his new boy-toys). But I'm still not going to call him first. He needs to call me.
- There is nothing interesting happening in my life and I have nobody to hang out with. And when I do hang out with friend, all I can think to talk about are my problems. But who wants that... so I keep quiet. I'm to the point where I need to pay someone to listen to my issues.
- All this self-doubt and pore body image has forced me into hiding. TimTom texted last night wanting to come over. I felt so fat and unattractive that I pretended not to be home. How pathetic is that?
So now we come to the question every investor must ask himself: Is this "company" worth investing in? Has it reached it's true double-bottom? Will this "stock" finally turn around and make some gains, or is it a failed company, domed to plummet to under $5 (a price that might as well be $0)?
Well let's look at the forecast. There has been rumors and discussion regarding a takeover by the World Wide Operations Department at Disney, however they have not yet brought forth any solid offers, nor do we fully know what unforeseen obstacles would come with such a transition. The company has the tools and the resources to strengthen it's bottom and trim fat; though they have shown no signs in tapping said resources. The CEO has laid out an aggressive plan that touches upon all of the week areas plaguing it's growth; though middle management continues to be lazy against implementing any sustainable change. And, while cash reserves are increasing and toxic debt has been eradicated, future debt-to-income ratio will certainly again fall to the negative if real-estate investments are not properly dealt with.
If I were a smart investor I would hold my money at this time and wait for better indications of positive change and sustainable growth. But, like my Dad, I will probably instead invest with my heart. Let's hope this investment begins paying dividends very soon.
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