Note: The numbers below are not the actual numbers but rather a percentage which shows the performance of the mutual funds. This is to protect myself (from what I’m not exactly sure).

The market value as of yesterday (Feb 1st, 2011) the value was $50,217. The book value of the mutual fund is $50,000. This works out to an interest rate of 0.4% over the past 4-5 years. How horrible is that? I realize that it’s been a down market and we are regaining, however, if I could have invested in GIC and had a much higher value.

These are the risks that I accept when investing in a mutual fund and I realize that. However, I wonder what I would have as an interest rate had I committed to rule 1 trading (investing). Luckily, I’m still young and can afford this sort of learning experience.

This provides the ‘kick-in-the-ass’ that I need to get in gear and to find some Rule 1 stocks to start investing and stockpiling. Stay tuned for my analysis and stock-picking ways.

Unfortunately, you need to read Rule #1 prior to reading Payback time. As well, at times, I felt that this could have just been added to Rule #1 since it is referenced many times. Therefore, if you are considering this book than buy both Rule #1 and Payback time and read away.

The basic premises of the book is to “stockpile” stocks by buying when the market is low and selling when they are overvalued (high). Although this sounds like the same thing as Rule #1 this book concentrates on investing rather than trading. Rule #1 teaches you how to jump in and out of the stocks based on the trends using a great company as your basis. This book teaches you to buy a great company as if you were going to own it forever and keep on buying it at whatever price as long as it meets your “stockpile price”.

As with many investing and self-help books a large part is selling you on their system. This is no different with Payback time, however, Phil does back up his advice with numbers and provides an alternative (index funds) if you’re not going to follow his advice. Chapter 2 breaks down why Mutual funds are a terrible idea and how you should consider moving your money elsewhere.

The gold of the book is Chapters 3-6 so I will provide a brief review of each chapter.
Chapter 3 is a higher level review of Rule #1. This is quick refresher and does not provide the same detail with the numbers.
Chapter 4 introduces the Sticker price and Payback time. Both of these concepts are pivotal to successful investing with this strategy and can’t hurt learning for future reference.
Chapter 5 provides the steps required to start investing with the Payback time method.
Chapter 6 provides a quick guide to using floors and ceilings to have an idea when to enter the market.

Overall, this book provided simple explanations, a method that works and made me consider my investing future. If nothing else a book like this allows you to reconsider how and where you are investing your money and if this is the best option.

My recommendation: Read it!

Anyway, he has a really interesting post on October 9th, 2009 named where is the market heading. Basically he’s saying that where at a point right now where the people who were scared of the market aren’t scared anymore and are starting to invest. This means that the market is at the price that it should be… ie: when we should be looking to sell or when WE are fearful.

It’s really an interesting read. Check it out.

The indicators I used to get out were the 20 day moving average, 50 day moving average and the MACD. I also was watching two versions of the charts the 3-month view and the 1-yr view. I’ve noticed that they provide different information and I like to have as much information as possible. I saw the 20 day moving average break through the price around November 30th, then the 50 day on Dec 3rd / 4th. The MACD was trending downward and hadn’t quite crossed but was about to. Anyway, I sold at $193.

Bought 4 shares @ 129.10 = $516.40 (February 29th, 2008)

Sold 4 shares @ $193.00 = $772

Profit = $255.60

Looking back at the trends over the past 1.5 years (chart below) I noticed that I should have sold my stocks original in July 08. Then I should have waited until March 09 to buy again. This would have been a correct Rule 1 trade, however, I wasn’t following things closely enough and missed out. This teaches a good lesson that watching the stocks does only take 15 minutes per day and you can profit greatly if you know what you’re looking for.

I am now in search of another set of companies to purchase. However, as my Rule 1 knowledge is a bit foggy I am going to re-read the book and refresh my knowledge so that I’m ready for my next set of winning trades!

I should have already been out!

Looking at the signals of the stock (which I’ve included below) I can see that the MACD says less people are buying then selling on Sept 28th, 2009 (according to Google) and October 16th (according to Yahoo). Then on October 16th the 50 day moving average cuts above the stock price. Those are the two indicators that I’ve been using and really like their pattern. And based on those signals I should have got out on the 16th or 19th of October for around $7.57 for a profit of $41.75. (woulda, shoulda, coulda doesn’t get you very far in the stock market though!)

That all being said, why am I still in Cold Water Creek (CWTR)? Good question. Mainly because I wasn’t monitoring my share / companies properly. It only takes 15 minutes a day which is completely true but I just stopped monitoring. Lesson learned and luckily it’s only a $41.75 lesson (so far). I will onto my stocks for now and wait to see what happens. Now I’m going to be monitoring my AAPL stocks so I don’t make the same mistake twice!

I will start updating the site again as I have a feeling I’m going to be selling this position soon and will be looking for more companies to buy into soon.  I’ll keep everyone updated with my progress.

Now I’m back to posting.   Interestingly enough I’ve actually missed quite a bit while I was gone.  This ranges from apple’s stock going up (and a bit back down), acceleware’s stock moving to $1.00 (and back down) and coldwater creek’s stock taking a little rollercoaster.

Anyway, I’ll try and provide at least a ‘tri’ weekly post on this blog.  So without further ado we’ll have blog posts here eventually.

So I put in a limit order at $129.10 and left for work. Got to work and checked to see if it went through and noticed that the price had dropped to 127, doh! oh well!


To summarize my stock purchase. I bought 4 shares (yes, 4 it’s a pathetic number and the broker fees will eat a big chunk out of any profit I make. As a trade a day states, it’s a learning experience and let’s call it “tuition.” )

• 4 shares of AAPL at $129.10 = $516.40

As always I’ll be watching the technical indicators to see when to get back out. Let’s hope that those iPhone 8GB sell good in the next year.

As we know I’m a huge fan of Apple and the company in general as I discussed after the big Apple stock drop. I think they have everything that qualifies as a “bang on” Rule #1 Company. In fact, I think if Phil Town was rewriting Rule One he’d consider adding Apple as a example Rule One Company.

Anyway, I’ve been keeping my eye on this stock since I started trading. The stock price was either above the Margin of Safety ( back in December 2007) or the technical indicators were telling me to stay out (during the stock drop). Well, luckily for me there was a stock price drop and after the announcement today looks like the stock price could be back on the rise. Check out the image below.

The technical indicators tell us two important things

1. The Stock Price is just moving through the 30-day moving average
2. The MACD buy line is above the sell line and the average number of buyers is larger then the number of sellers.

So is the stock going to make a HUGE increase like before? Nobody can tell you that 100%. However, with consistent growth rates over the previous 9 years and incredibly good Return on Investment Capital it wouldn’t’ be a bad bet. I have a sticker price of over $200 so I see this as a steal of a deal!

“We’ve been saying for several quarters now that domestic business will be weak until at least late in 2008,” Nichols said. “From what we have seen in the retail environment as of late and order indications, that expectation needs to be extended until 2009.”

He goes on to state that the dramatic decrease in sales is directly related to domestic growth. And a small glimmer of hope can be seen in the international market which had an increase in sales.

“Worldwide revenue and backlog are down overall on continued weakness in the domestic market, while international revenue is up albeit at a slower pace in the fourth quarter than we experienced earlier in the year.”

Anyway, it looks like KSWS has had a tough year. I’m still going to keep my eye on this stock. I don’t expect to purchase anything till the market strengthens.