April Reading and Research

I plan to read Morningstar, S&P outlook and Valueline regularly from now on for buy and sell ideas. A useful book that is now on my wish list is Paul Wagner's "The Duly Diligent Stock Investor"

http://www.amazon.com/dp/0615708714/ref=wl_it_dp_o_pC_nS_ttl?_encoding=UTF8&colid=3RZ0426V93W98&coliid=IK6JLANKC97AG


The classic investment texts are great (Jeremy Siegel, Ben Graham) but here is a concise book that just tells you how to methodically put together a watch list and then evaluate the list to narrow down the companies. I really want to read this book.

Thanks for stopping by... 

April Activity - trading advice

Picked up some AT+T at 32.50, sold a put for 32 which expired, collected premium. Here's some trading advice, your mileage may vary on this but for me it works....

•  Don't buy at the open, but it is ok to sell at the open. Price action is too weird with the opening frenzy.
• Use a limit order when purchasing stocks that trade with low volume, have big news that affects price, have a big spread between bid and ask price and that you definitely know you want to purchase at that specific price. If you use a market order you will get whatever price is in effect at the moment the transaction occurs-it could be not what you think given the conditions listed above.
• Sell a put option if there is a stock you'd like to own at a specific price but would be ok if you lost the opportunity because the price went up before it hit the strike price. You'd then collect a premium anyway.
• Sell a covered call if there is a stock you already own that you would be ok with selling if it hits a certain price but that you also would not mind continuing to own if it does not. Again, you collect a premium if it never hits the strike price. 
• Use a limit order when selling stocks that trade with low volume, have big news that affects price, have a big spread between bid and ask price and that you definitely know you want to sell at that specific price. If you use a market order you will get whatever price is in effect at the moment the transaction occurs-it could be not what you think.
• Use a market order on stocks with high trading volume, high liquidity, low bid/ask spread (these conditions are the opposite of those listed in the 2nd list entry above) and when you are absolutely positive you want the buy or sell transaction to occur at or within a few cents of the current price.
• Generally, find any excuse you can to not trade; a huge mistake especially for beginners is to overtrade, churn their portfolio and pay excessive transaction fees. Let time do the work-you are getting paid to wait if you are an investor collecting dividends on large cap stocks. I have gotten impatient, traded when I should not have and lost money as a result. If your companies are solid, the current price is irrelevant unless you are a swing trader.