Hi Blaine,
Thank you for the kind words of encouragement. It has been a challenge trying to put into words for others the things I have learned by trial and error! But, it really pleases me to know that other people can mutually learn and prosper from a common interest.
As a young lad, I remember pondering to myself, "why are poor people poor, I asked?" No one would answer me. I finally came to the conclusion that if I really did not want to be poor I should check out what the poor people did and not do it!
Conversely, if you want to learn about something, seek out the people who are doing it successfully and do what they are doing! Thank you so much for sharing your experience with us. I'm sure we all can learn from your story. And, I bet you won't make that mistake again, right?
CRITIQUE: Duramed Pharmaceutical (DRMD)
SITUATION: Hit broadside with bad news from FDA, Stock price heads south!
REASON FOR BUYING: " I purchased shares of Duramed Pharmaceutical (DRMD) on what looked as a down but strengthening stock price. My intent was to hold off for a short time while the price strengthened, then sell the call contracts."
COMMENTS: Two books that I often recommend as a must read before anyone starts investing in the stock markets is by William ONeal's "How To Make Money in The Stock Market - In Good Time and Bad" and then, Wade Cook's, "The WallStreet Money Machine." If the person asking for my opinion looks at me funny and replys, "read two books, do I really have to do that to make money in the stock market?" Can't I just learn as I go?
I turn to their face and tell them to please don't get involved in the stock market because they don't have the right mental fortitude and desire! It's not impossible to make a good sum of money, but this is no easy game you can just walk right in and make money! I had some real dogs before I started making money on a regular basis. And, I read every book I could get my hands on.
DAMAGE CONTROL?: Blaine, you pretty much answered your own question! I must compliment you on learning your lesson well! You stated:
"I like the format you have set up here. I have always believed (especially after the DRMD experience) that a companies fundamentals are very important. I appreciate your commentary on why you want to own the stock. I believe it is of primary importance. The details of your thought process give me ideas for consideration in my future positions. "
The highest level of the reasoning skills is the ability to self evaluate what we have done or assess our situation from a distance without "coloring the observations." I agree with you that your speculation with DRMD was not rooted on solid earnings or something tangible that would attract other investors to own the stock, and hence, drive the prices back up. SUPPLY vs. DEMAND!
I own the stock USRX that dropped like a rock ($20 points within two weeks) from untrue rumors a few months ago. As soon as I purchased the stock the bottom dropped out from under me! Today, I still own the stock and I have a profit!
The past three weeks the stock has dropped at least 5 points and I still managed to crank out $ 1,875 with two turns of covered call writing. My net from the two calls minus the lower price value of the stock comes out to $275.00 up! In other words, I only made $275.00 the past two weeks! But ahhhhh! I did not lose money when everybody else did. The fact is some other dude's money is helping me do that! Now, that is a very nice gentleman! Don't you think?
You are going to be a killer covered call writer Blaine! You are going to perk your broker's attention very soon! |
