Now, where is all the money going? I used to suspect that when the big money started selling, the money had to go somewhere else.  That may be true to an extent, but I was reading one prospectus that said the fund could invest defensively (to put it in a nutshell), but I wonder really how many funds invest in commodities, precious metals, etc.  Or do they mostly just go into cash or bonds once they’ve sold their holdings?

     I clearly need to get better at reading prospectuses (or is it prospecti?). 

     First, IBD has suggested that the market is now in a correction.  After teasing us with 5 or 6 rolling distribution days for what seems like the past two years (or at least the past two months since the last correction in August), now’s the time to sell short if you’re into that sort of thing; or write a bunch of put options.  Don’t quote me on options, I’m not an options trader/writer. 

     Apple Computers went from $15X.00 up to over $180/share, then yesterday it dove $10.83/share along with the rest of the market.  I suppose if I’d held on for the past month I could have made a lot more than I did, but hey! at least I made money off that deal.

     The shipping company I bought suffered a catastrophic decline after the last dip I mentioned.  It went back up a little, but I ended up selling for a loss.  It has since gone down quite a bit.

     Same for Crocs footwear.  I had been up a tad, but not up 20% within eight weeks, so I’d settled on holding it for awhile when something happened and it got crushed, I think it went down something like 35% in one day, plunging below its 50-day moving average.  When it didn’t recover, I sold for a decent-sized loss.  Apparently they reported earnings and everyone was unhappy.  News I didn’t catch at the time included Crocs’ expansion into clothing.  You’ve always got to watch for such things, earnings get diluted when growth companies start branching away from their core competence.  Also, this is a disadvantage to being in the Far East.  The market is open while I’m asleep, and there’s no way for me to see the stock action in order to sell before the next day.  In cases like this, the damage is done and I don’t find out until the next day.  Living in Germany wasn’t much easier, but at least I could see early action when before I went to bed and put in a sell order, limiting my potential losses (of course, sometimes the stock started down and then recovered later in the day. . . you can’t win ‘em all!). 

     Force Protection – I have no idea what went on there.  It went up slightly and then dropped 20% and stayed down.  I sold for a loss.  I figured the contracts for the MRAP vehicles would buoy it and another company whose stock I bought, but that wasn’t the case at all. 

     I picked up a Chinese solar equipment company earlier, and it’s gone up nicely.  One of the solar companies I was looking at but did not purchase went up $57.31/share yesterday! I wish I knew why the big jump (so does everyone else).  That said, with the market going into a correction, it’s probably time to sell and lock in the profit from this one. 

     Overall, the losses haven’t quite wiped out the gains, but from June through now, I’m probably only up about 15%.  That’s a lot better than almost all of my mutual funds have done! If I’d sold Crocs when it topped out and trimmed my positions in Force Protection and Garmin relatively early, I’d be up something like 35%. 

     Lessons learned! Check the charts and listen up for the news! Checking the news is easier said than done, of course.  My wife keeps suggesting I use stop-loss orders; while I’m not a big fan of that, maybe my positions are too small to worry about a market maker deciding to shake me out.  Maybe I’ll try that technique.

     Lucky for me I’m not prone to panic, because it went up on high volume the next day!

     Other issues I’ve been scoping out have been Crocs and Force Protection.  They’ve done well this week, but they went up on extremely light volume yesterday while the rest of the market chugged higher.  That leaves me a tad concerned.  Crocs is the maker of the shoes everyone seems to be buying.  The danger there of course is that everyone who wants them has them, and earnings will dry up.  Force Protection makes the Mine-Resistant Anti-Ambush vehicles that are in-demand in Downrangeland.  They’re going to be facing some competition from Oshkosh trucks at a minimum, and depending on which team wins the most contracts, Force Protection may go nowhere.  I’d consider it a fairly good risk, but I’m prepared to have to sell later on with no profit. 

     I’ll offer the standard disclaimer:  I’m an amateur investor.  You must do your own research.  I tend to buy things late and have to sell early, making only a little profit.  By the time you read this, there’s a good chance the stock will be on the way down. 

    Never forget, all you stock investors out there, if the big money is leaving stocks, it’s got to be going somewhere.  The housing market in many areas is in a slump, and the Trumps and Kiyosakis of the world tend to be big in real estate anyway.  Gold has been steadily increasing since the last series of sell-offs ended last October.  Bonds don’t look too good right now unless you’re already holding them (but then, new issues may be better than nothing, at least in the short run). 

    But then, the market could rally tomorrow, too!