Henry goes back to trading stocks again using the modern tools available at home.

Trading stocks at home 2007
by Henry B Stevens 09/15/2007

Last week I went flat (sold) all my positions in the stock market. It was perhaps the fifth time in my life I've had a brokerage account for some period of time, and then gone flat.

This essay is about the nuts and bolts of what I did recently and the amazingly cheap and efficient tools I found to establish, maintain and trade my account from my home.

My father and my maternal uncle were both business people, so there was always business and stock market talk in my childhood home.  The Wall Street Journal and many company annual reports were always available to read.

At various times in my life I've had mutual funds accounts, brokerage accounts and I served as a trustee on my Mother's brokerage account.  So I've had experience, but that was nothing like the tools available today. 

The account I set up this time was within my Vanguard account, a Pershing brokerage account. I manipulated the account myself online. I made my trades online and swept funds through my Vanguard account.  All very easy.  But the big bonus was that all my records were in one place.  I could see my cost basis and gain/loss for each position and year's totals instantly on demand.  When it comes time to file with IRS a couple of clicks and Turbo Tax loaded all the info needed into my 1040. This complete bookeeping service was very easy to use.Trading the account was instantly available as were quotes and acknowledgements.

What I've described is available from many sources today.

I had been using Yahoo because some of my special interest groups in other subjects happened to be Yahoo Groups and so I started using Yahoo finance.  I was amazed to find I could keep my portfolio on line, and for a modest fee receive streaming quotes.  My portfolio would just sit there flashing red and green price changes.  Can you imagine what a big deal that was?

The Yahoo Finance site had an excellent charting program.  Call up stocks and indexes and compare different time periods, overlay other stocks and indexes on the same chart-all the while the charts are updating with live quotes and volumn figures.  Wow.

ETF, Exchange Traded Funds, are what I used.  I don't like company stocks because they are subject to hits from left field. A high officer gets charged with some immoral or illegal act and the stock takes a hit. There are surprises.  With an ETF these issues are not present, what moves the price is mostly daily news.

I traded gold, GLD and silver, SLV and oil, USO for basic plays.  My son, also an active trader would give me ideas.  I made money with Ford, F, for instance.  Towards the end of my trading adventure I started using DBC, commodities, DBA, agriculture and DBE, energy- all EFTs. I also used UDN, an inverse of the US Dollar.

How did I do? In 15 months I made $16,000.00. Not a fortune, but still spendable cash.

Why did I decide to stop trading?  Mostly because the activity was swallowing too much of my time.  I also wanted to get back to writing which I had let go, having said my piece.  In the meanwhile I'd thought of other matters I wanted to speak out about.

Also, I'd rediscovered the dirty little seceret the financial industry spends billions of dollars to surpress; the stock market is completely irrational.  All the gee whizz stuff I've described above is a big help to trading stocks at home, but it does nothing to overcome the irrational nature of the market's workings. 

The pitch is that the market can be explained by experts you can hire. But the truth is the high priced hand holding and expensive fees can not cure this basic flaw.

So I got out.

Again.

s/henry

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Oh yes, about the Fed announcement tomorrow, 09/18/2007, it doesn't make any difference if the Fed cuts or not, nor by how much or how little.  The cat has already puked on the carpet under the dining room table.  The party is over. s/henry