I was riveting with excitement after leaving our meeting today! I had learned so much from everyone at the table that I may have been a bit overwhelmed by it, and the same may be said by those in attendance. I want to thank all who attended and contributed to our meeting today. I would like to add that I feel, in great measure, honoured and privileged to know and converse among an enormously intelligent and well-informed group of individuals.
I want to send a heartfelt thanks to Kevin Day who never fails to impart on us his wonderful market commentary and perspective, coming from his 40 years of experience in the marketplace. I also want to thank Jeff Harrington for his genius understanding and explanation of the reality of the FED policy, which I will attempt to detail below as best as I can. I want to thank Tommy Schultz, the group psychologist, for helping us all understand the human condition and drive to act in certain ways. Andrew Whatley, I can tell, is learning about the financial markets in bounds with every meeting he attends. Lastly, I want to welcome Allan Derum to the Scarlet Kings and thank him for sharing his story in the auditing profession. We had 6 attendees: (from left to right) VJ Arjan, Tommy Schultz, Allan Derum, Jeff Harrington, Kevin Day, and Andrew Whatley.
Market Success Stories
During the first part of our meeting we mostly discussed our collective profits we’ve made investing.
- Jeff Harrington invested in China Mobile (CHL) in 2007 and took his profits in August-September of 2008. He made nearly 80% on his investment!
- Kevin Day, Jeff Harrington, and VJ Arjan all invested in Freeport-McMoRan Gold and Copper (FCX) early this year and have profited quite nicely, even though we all entered at different price levels. Kevin Day entered at 19.90 (114% profit), Jeff Harrington entered at 29 (47% profit), and VJ Arjan entered at 24.20 (76% profit).
- Kevin Day invested in Dow Chemical in the last few months after speaking with the CEO Andrew Liveris about the buyout of Rohm and Haas and the level of the stock price. He entered at 8 dollars (38% profit).
I am inviting all readers to post their investment/trading ideas every couple weeks, so that all the readers may share and profit together. I, personally, have done much better after our meetings have commenced than before on my own; I hope this will be true for you all as well. I doesn't have to be a very detailed report - perhaps a stock or future, a direction, and a chart or reasons why you think it will go a certain direction, etc.
The log-in for the blog is:
Username: scarletkings@gmail.com
Password: kings1215
GM – Detroit Crime and Unemployment Rates
Allan Derum told us about the conditions in Detroit as he recently took a trip there. The situation is, in his own words, reminiscent of Nazi Germany occupation. Crime is rampant as workers who have been able to work as machinists at GM for generations with limited investment in their own education find themselves jobless indefinitely. Allan narrated how sitting in a diner in Detroit he was shocked to notice several bullet holes fired into the window next to him.
Gold vs. Silver
Kevin Day explained to Andrew Whatley and VJ Arjan that noticing the volatility in gold has made him a little bearish on gold in favour of silver. He thinks that silver, which has historically kept a multiple of 35 below gold, is ready to pop as the multiple is currently at 70. As a result, he recently bought into Hecla Mines, which took a lot of courage on his part as it has fallen from a high of 13 to nearly 1 dollar.
How little we know about the marketplace
“Prices [in the market] will fluctuate.” – John Pierpont Morgan
“The main purpose of the stock market is to make fools of as many men as possible.” – Bernard Baruch
Kevin Day, who is no doubt one of the greatest experts on the market that I know personally, reiterated his conviction that no matter how learned we may be about the market, we know, in complete verity, nothing, and that the successful investor or speculator must be not only very selective in his investment plays but humble enough to recognize when he/she is wrong.
He related a time in the early 1980s right after the Hunt bubble had burst and on the advice of a friend who had become a millionaire in silver speculation, entered at $20 an ounce. He later lost $48,000 and exited, glad to see that the price went lower thereafter. The lessons need not be as hard as he experienced, but one must realize when one has made a wrong decision.
He also believes that the rules are always changing. New rules are created, old rules are thrown out. He subsequently does not believe in the long-term rules of the market. Traders, therefore, are the winners, in his opinion, if they persist.
Kevin, who calls himself the ‘eternal optimist’, sees dark times ahead for the world economy. He did not say how long it would take for a rebound, but instead stressed the importance of following the trend and not to predict what will happen.
The Successful Speculator
Kevin Day was asked the secret to his amazing and profitable market trading and this is what he had to say. Being in the market for more than 40 years, he has developed a “nose for the market” and a patience for the entering at the right price. He also only enters trades with limit orders, given the volatility of the market has increased especially in the last couple decades. He also puts in buy orders hoping that they won’t be hit, and constantly adjusts his limit orders in accordance with price action.
The FED and the Crooks in Office
Basically, the policies initiated by the Federal Reserve is going to make lots of hedge-funds and investment banks very rich and leave the taxpayers holding the toxic assets. The reason the people in power are able to pull off this elaborate robbing of the American public is that the public does not have the knowledge to understand what is actually occurring. I have emailed Jeff Harrington to post his explanation as he has such a clear understanding of this issue, something the author of this blog still has not grasped yet.
The next meeting will be on Sunday May 3rd, 2009. For those who have not attended a meeting, but would like to attend, please email your wish to VJ Arjan at vj_arjan@yahoo.com
| Date | Security | Entry | Current Price | Profit/Loss |
| April 5, 2009 | FXI (iShares FTSE/Xinhua China 25 Index | $25.16 | $30.95 | $579 |
| April 5, 2009 | ILF(iShares S&P Latin America 40 Index) | $26.60 | $28.96 | $236 |
| April 5, 2009 | EWZ(iShares MSCI Brazil Index) | $37.69 | $42.95 | $526 |
| April 5, 2009 | PBJ(PowerShares Dynamic Food & Beverage) | $13.27 | $12.19 | -$108 |
| April 5, 2009 | GUR (SPDR S&P Emerging Europe) | $29.74 | $25.90 | -$384 |
| April 5, 2009 | FCX (Freeport-McMoRan Copper & Gold Inc.) | $29.06 | $42.67 | $1,361 |
| April 5, 2009 | WLT (Walter Industries – metallurgical coal) | $38.75 | $25.40 | -$1,335 |
| April 5, 2009 | RIO (Companhia Vale do Rio Doce – gold mining) | $13.12 | $15.34 | $222 |
| April 5, 2009 | GVA (Granite Construction Inc.) | $35.67 | $40.34 | $467 |
| April 5, 2009 | MT (Arcelor-Mittal ADR) | $26.25 | $25.56 | -$69 |
