August 12, 2010 | In: Uncategorized
Wow, Is The Storm Over?
As I predicted in the morning, it was a very very very bad day. I almost accurately estimated how the DOW will close (at around 10,400 – it closed at 10,378). Needless to say, many traders lost quite a bit of money today, and the bad part that it doesn’t seem to be over yet.
I bought CVBF at around 8.30, as I thought it’s gonna rebound, but it actually went down 30 cents, to 8. I’m sure it will rebound but the storm was so heavy today, especially on the financial sector. The thing, CVBF’s management said that they will buy the stock after it dropped heavily yesterday. This is not the stock that it’s really worrying me, the stock that is really scary in my portfolio at the moment is BAC. I will never ever buy this stock again. I lost so much money on this stock it’s not even funny. All my portfolio is in the red at the moment, so is that of most traders.
Lesson learned, in this situation, I should take cover and not buy anything (well I only bought CVBF for a few thousands, all my portfolio is locked). The best thing to do is to wait until some signs of recovery are in the horizon, and buy FAZ. On the other hand, FAS was an excellent stock to buy when the market was bullish last week. In retrospect, I didn’t have much choice, as I don’t like selling when the stock is in the red (this is the sign of a weak and bad investor).
Of course, the prophets of doom are always there to make the picture even grimmer and to scare the investors. Next week will be another week, BAC, C, IMAX, and CVBF, and MFC are all stocks with solid foundations, and, IMO, all of them are quite a bit undervalued. The thing is BAC is falling a lot because management now believes that they want to do the right thing for their customers, which is not charging for overdraft fees for stupid purchases (like a cup of coffee) when the customer goes over the limit (imagine being charged $20-$30 when you buy a $3 cup of coffee). Apparently this decision will cost them around $10 billion in lost revenue, but I guess a lot of people will appreciate this on the long run.
Tomorrow will be bad, but not as bad as today, the market will be down for another 1% in my opinion, and the DOW will close at around 10250. You heard it here first!
PS: Are you noticing that what’s happening is that the market rebounds for 1-2 consecutive weeks, then a major correction will come and erase all the profits? There seems to be a very interesting trend…