I’d highlighted BKS and NQ as short ideas recently, and both have crashed since I did so.
$NQ’s down 30% since I wrote:
$NQ is down 15% today, and down 50% from its recent highs. I have seen this stock run on no news and crash when real news like today’s earnings restatements and earnings miss hit. This one is still on my radar as a potential short candidate. Will see how the market throws the $NQ pitches at us.
And BKS is down 20% since I wrote:
One short-side trades I’m still considering, but haven’t pulled the trigger on: BKS – Barnes & Noble, as I think its the next Sears/JCP kind of retailer to collapse.
Of course now I can’t believe I didn’t pull the trigger on those two trading ideas when I highlighted them. But that’s how it goes sometimes. We make mistakes.
I do think both are still headed lower and am still considering buying some long-term puts on both at some point. Would like to see NQ pop first. BKS might not ever pop again.
Since I first moved to NYC in 1996 and got my first job answering phones for Andrew Lanyi, a legendary stock broker, I’ve been on Wall Street for nearly two decades now. I’ve seen a lot of ugly underbelly of the Wall Street money machine beast, and I’ve also seen a lot of success and wealth created over the years. I’ve fought long and hard and have learned a lot of very important lessons both from keeping my eyes open and observing others and also from my own hard knocks and failures and losses.
Yes, I’ve had losses and I’ve made a ton of trading and investing mistakes just like everybody who has ever traded or invested has.
I bring all this up this morning because I got a great question, a variation of the most common question I get from readers:
Money and life is complex, and so is my answer.
If you’re going to buy stocks with that money, I’d suggest he check out some of my favorite long-term Revolutionary Investing companies and buy a few shares of his favorite two or three from the longs in the Revolution Investing portfolio. Regardless of what stocks you buy and when you do it the first time, when you first start out investing and trading, you should be prepared for painful times and lessons which will cost you money and profits in your portfolio. You should consider upfront what you would do if you started putting that money to work and immediately saw it blow up.
I remember reading articles in Institutional Investor back in 2007 that quoted “professional” institutional brokers and salespeople explaining how they were selling “risk-free” securities that guaranteed 5% or more income. Within twelve months, those guys employers, the Morgan Stanleys, JPMs, and Goldmans of the world, needed trillions in new taxpayer support and bailouts because those “risk-free” assets weren’t.
I remember the time I was on a panel with bunch of pundits and Lenny Dykstra got up to give his presentation about his options trading formula and before he could get to the microphone, he screamed to the audience, “Forget everything else you heard today, if you follow my options trading plan, you’re guaranteed to make money and never lose.”
Don’t think anybody’s immune to huge losses and wipeouts. Even the Warren Buffett’s and other financiers/insiders of the moneyed world, who had hundreds of billions of dollars invested in the same TBTF banks that would have been wiped out and other assets that too would have been wiped out without all the “emergency measures” and welfare and bailouts and accounting changes that were made back in 2008 too, obviously can’t avoid mistakes too. Buffett’s big money has enabled him to spend the last few decades buying warrants, convertible debt and discounted equity directly from giant corporations in ways that retail investors can’t even fathom, much less get access to.
So think about all that even before buying a single share of any stock in any publicly-traded company. And before you pull any trigger and open up any stock account, I’d suggest asking yourself if that money might be better used in starting a new app company or website business that you have come up with and think could be a big winner. The experience of running a business and more to the point, the upside of betting on your own actions creating value rather than betting on other people at other companies ability to create value for you as a shareholder, is probably the best bet for your money at this age and stage of your life.
In the “Current Positions” reports that I do for my TradingWithCody.com subscribers (get one month of TradingWithCody free by signing up at Scutify.com and requesting it from me), I start off the list of positions with: “Forever assets and other permanent holdings – Media and other private investment/business holdings (9+ because betting on yourself and running a biz is always a best bet).”
You’re 18. You’ve got a whole career and a whole life ahead of you. Bet on yourself first. Stocks and other people can come later. And either way, understand that it will take a lot of time, perseverance and luck to make that few hundred dollars you’re looking to put to work in the stock market turn into something meaningful to your overall future income and investments.