how's a guy supposed to win in the stock market?

Question

Yesterday I took a position in an energy company, symbol UPL. The fundamentals looked good, the chart looked good. It went up yesterday .40 cents for a nice start, and it went up .20 cents this morning and things were looking rosy. Then somewhere somebody reported that futures for natural gas were down 5% because of the mild winter, and my stock dropped $1.41. Am I supposed to be on top of every possible situation that can occur?

Answer 1

"The fundamentals looked good, the chart looked good."



Let us start with fundamentals....exactly what looked good about the fundamentals??? I will give you that the company makes money and on a quarterly basis it has been increasing slightly each time...but it has a huge debt of over $1.5 Billion long term and almost $0.3 Billion short term with net income of about $150 million each quarter



http://tmx.quotemedia.com/financials.php?qm_page=802&qm_symbol=UPL:US



Also from a fundamental point of view...what is its main product??? Not oil though it has some....it is natural gas!!! So of course when the price of natural gas falls...this will affect the stock price as revenues fall because of this



so I think you did not look at fundamentals too closely



as far as charting goes...here is the chart for Natural Gas



http://stockcharts.com/h-sc/ui?s=$NATGAS&p=D&yr=0&mn=6&dy=0&id=p58049590545



here is the chart for UPL



http://stockcharts.com/h-sc/ui?s=UPL&p=D&yr=0&mn=6&dy=0&id=p51518516304



Not a perfect match but basically they track each other...so when Natural Gas prices do good the share price of UPL will generally follow



well, my friend...you also need to learn something about charting...the UPL chart is NOT good as you say...it is Neutral at best and even that is an overstatement.



This stock has recovered from a severe drop (as has Natural Gas) .... see how it tracked the lower bollinger band (BBS) now that drop is over...when that happens the share price is in what is called a "consolidation phase" where the price will drift back to the center of the BBs (the dotted green line which is the 20dayMA)...and that is just what it is doing right now...not unlike what happened before on Oct 1)



Here the price will wander around that 20dayMA until the BBs become tight again (look at Oct 24) if conditions are right this is where a major jump (or fall for that matter) will occur...you want the share price to be above the the green dotted line......this won't happen for 1-2 weeks currently



The Slow Sto and MACD are bearish now



http://stockcharts.com/h-sc/ui?s=UPL&p=D&yr=0&mn=6&dy=0&id=p41097873173



this chart show a bearishly neutral RSI, CCI and ADX at present but not overtly so.



To say the chart looks good says to me you thought a couple of upticks meant the stock was going to do well....that is not how charts are properly read



From the sounds of it...you bought this stock at about $25.60



let us look at the P&F chart



http://stockcharts.com/def/servlet/SC.pnf?chart=UPL,PWUADANCBO[PA][D][F1!3!.2!!2!20]&pref=G



The resistance point of this chart is currently $25.80 and yesterday your stock rose to that point and today it could not handle the resistance and fell back. You purchased the stock $0.20 shy of the resistance.



This is NOT a good BUY-in point!!! Never buy just before a resistance as it can fall back on you...as you have seen happen. As a stock rises to a resistance this is a good SELLING point...not buying.



You should Buy when a stock RISES from a SUPPORT....not approaches a resistance.



SO....you have a lot to learn about charting...it takes more than a few upticks in price to decide a good buy or not.



ARE YOU SUPPOSED TO BE ON TOP OF EVERYTHING?? I suppose so it is your money.



Good fundamentals....not absolutely terrible (considering it is a natural gas play) but not that great either

Good Chart....very dicey play and stock purchased at the wrong point



How are you supposed to win at this game....takes a lot of practice and learning...years of it to get it right IMHO....it ain't easy money

Answer 2

If you want to make good investments, yes, you need to know far more than you would believe.



A safer investment would be to get 3 other associates together and invest in property. You start out with 4 people:



1. Money. Someone with money to finance the purchases. It's their position to take the risk in financing the homes.



2. Repair/upgrade. Someone who knows just about everything there is to know about houses and it's their job to fix them up for rent or sale, whichever is the most profitable at the time. The choice to rent or sell is also determined by whether or not you are looking for short term or long term return.



3. Legal. This person is quite often receiving 50% of the profits because attorneys quite often make a lot of money that they want to invest.



4. Realtor. Having a Realtor involved is perfect. They need to be a full-time realtor and good at what they do. It would be most helpful if it was someone that had access to all types of foreclosure information, pre-foreclosures, auctions, etc...



This is a little off topic but a lot safer than stocks. It says a lot with what's gone on in the real estate industry over the last 5-6 years to say that stocks are still riskier!



Owning rental properties is extremely profitable right now because of all the foreclosures. People who have lost their homes still need a place to live. Rental rates have been climbing for several years, adding to the bottom line.



Good luck to you.

Answer 3

I'd suggest that you look at the goals of "investing" in the stock market. Are you investing or gambling? If gambling, you at least know your odds and get free drinks in Vegas. I recently posted about a systematic method of investment that I use at http://www.cultofmoney.com/2012/01/25/tactical-asset-allocation-portfolio-intro/ where I talk about balance in investing and staying away from individual stocks. Additionally, you really should take a look at how imoprtant it is not to loose money. Finally, take the emotion out of investing, you win some, you lose some. If you have a good system that is backtested and has a profitable edge, just go and chock it up to bad luck. If you are buying individual stocks hoping to double your money this year, you'd really have more fun with that money in Vegas, and the result will be the same.

Answer 4

If you're going to be buying specific stocks and playing the stock market, then yes. This is why most people should NOT be trying to invest in the stock market. If you want to make money for retirement invest in long-term investments that offer you a very diverse portfolio. Talk to any financial planner to help you. Either that, or just accept that you're gambling on the stock market and have just about as good of odds to lose your money as you do at Vegas - so make absolute sure the money you're using is money you can afford to lose.

Answer 5

No fundamental information that is released quarterly or yearly will help with hour-to-hour price predictions.



You should expect to be wrong 90% of the time, but manage your trades so that the losses are small. Losing $1000 9 times but making $20000 1 time averages out to a nice profit.

Answer 6

There is a nation wide glut of natural gas. You should have known that fact as part of your research into UPL. However, the company is relatively solid other than its balance sheet is somewhat over leveraged. It is small enough that it could get bought out. It has quite a lot of reserves. But near term there might be a little rough sledding.

Answer 7

Yes.