| This page will contain essays and links to other essay pages. Many of the essays will be related to the stock market since that is a large part of my life. Safe Stock Market Investing If you want to play it safe in the stock market, you can do this by dividing your money equally into five parts and invest 20% of your money in five different safe stocks. The first stock should be DIA, the Dow 30 ETF. This exchange traded fund is comprised of the 30 stocks of the Dow but it trades as one stock under the DIA ticker symbol. If the Dow cannot rise, then the stock market as a whole will not be advancing either. The next two stocks are REITs, real estate investment trusts. One stock is American Capital Agency, ticker symbol AGNC. The other stock is Armour Residential (ARR). Both of these stocks currently pay a 19% annual dividend. ARR pays a portion of its dividend every month while AGNC pays quarterly. These stocks are great to own as long as the federal government keeps interest rates near zero. The final two stocks are bond funds. They both pay around 8% annually, and you get part of the dividend each month. The first stock is JNK, the SPDR High Yield Bond Fund. The second stock is RCS, Pimco's Strategic Global Bond Fund. So, you have good diversification with these five stocks, and four of them will pay you money to own them. Then, the fifth stock, DIA will normally give you a capital gain of 10% or more each year, and if the stock market is falling, it will not fall as far as other stocks like those in the Nasdaq and small caps. |
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Volume and Volatility
Whenever you see increasing volume in a stock with a resulting chart upswing or downturn, that is the
time to buy or sell depending on the chart direction. The volume increase I am talking about is five to
ten times the normal volume. The volume peaks will sometimes be so high that it looks like a
skyscraper rising in a desert.
A classic example of this occurred in August of 2011 when Congress was in a terrible debate over the
debt ceiling limit. XIV, the inverse volatility index ETF signaled that tremendous volatility was on the
way. The average volume was less than 5 million shares per day prior to its explosive sudden change.
XIV first started jumping up around 20 million shares of volume and eventually hit around 30 million
shares of volume a couple of times. During this high volume period, the stock price dropped over 50%.
If you had sold when the volume first spiked high, you would have only lost a little money
versus a lot of money later on.
Whether you owned XIV or not during the August-September 2011 bear market raid, this volatility
situation affected nearly all stocks. Even if you don't want to own XIV, it will be very beneficial if you put
it on your watch list because it can be a warning signal to sell your favorite stocks in other sectors
before you lose a lot of money. For example, ERX, the 3X energy bull ETF lost over 50% in this volatile
time also. So, you can save yourself a lot of grief and money if you pay attention to increasing volume
in a volatility index like XIV.
More essays...
Whenever you see increasing volume in a stock with a resulting chart upswing or downturn, that is the
time to buy or sell depending on the chart direction. The volume increase I am talking about is five to
ten times the normal volume. The volume peaks will sometimes be so high that it looks like a
skyscraper rising in a desert.
A classic example of this occurred in August of 2011 when Congress was in a terrible debate over the
debt ceiling limit. XIV, the inverse volatility index ETF signaled that tremendous volatility was on the
way. The average volume was less than 5 million shares per day prior to its explosive sudden change.
XIV first started jumping up around 20 million shares of volume and eventually hit around 30 million
shares of volume a couple of times. During this high volume period, the stock price dropped over 50%.
If you had sold when the volume first spiked high, you would have only lost a little money
versus a lot of money later on.
Whether you owned XIV or not during the August-September 2011 bear market raid, this volatility
situation affected nearly all stocks. Even if you don't want to own XIV, it will be very beneficial if you put
it on your watch list because it can be a warning signal to sell your favorite stocks in other sectors
before you lose a lot of money. For example, ERX, the 3X energy bull ETF lost over 50% in this volatile
time also. So, you can save yourself a lot of grief and money if you pay attention to increasing volume
in a volatility index like XIV.
More essays...