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Had no idea Baidu was split like that....that's insane growth.

May 11th of this year. I think the correct term is 10:1 reverse split. My bad.

I'm guessing, but when it split is was about 1500 (150.00 after split) bucks a share. That's pretty pricey. It has rolled over a bit since, down to 131.75 as we speak.

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I'm more of a conservative investor. Savings accounts, CD's, mutual funds and an IRA. The only stock I have ever purchased was Ford stock back when it was two something a share. I'm still sitting on a pile of Ford shares, not sure when to sell them.

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I'm more of a conservative investor. Savings accounts, CD's, mutual funds and an IRA. The only stock I have ever purchased was Ford stock back when it was two something a share. I'm still sitting on a pile of Ford shares, not sure when to sell them.

Check into what those mutual funds are. After all, they are likely a collection of stocks, and different funds have different risk and return profiles. If we're going deeper into correction, the riskier (small cap, tech, energy, etc.) funds will fall further.

I with you on Ford. It speared through support a couple of time and came back, now it's done it again, yet their prospects as a company look pretty good within their category. The question is, where is their category (now the bottom 10, according to IBD) and, more existentially, the market going? I don't want to give away too much of my profit.

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May 11th of this year. I think the correct term is 10:1 reverse split. My bad.

Are reverse split a reliable signal to short the stock? Has a reverse split ever fueled price growth?

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Are reverse split a reliable signal to short the stock? Has a reverse split ever fueled price growth?

In this case, no. BIDU has been a great growth stock with a lot of upside, BUT, there was something in the news about them recently that may have changed that outlook. I haven't followed their news that close in the last few weeks.

On the other hand, sometimes a stock will split because the price gets too low - see AIG recently. That is done sometimes to keep the share price above 5 dollars which is a price level needed for institutional/mutual funds to buy into (many will not buy stocks under 5 bucks).

Sometimes they split 2:1, 3:2, or whatever. Sometimes it's just to get some headlines, or to entice people to buy, or if the price gets too expensive like BIDU in this case. 1500 bucks will chase away most retail traders.

It can also be a sign of weakness because the price has went down for a period of time, that can be a shorting opportunity. Before you short anything you need to look at open interest and put/call ratio. There are things called short squeezes and you can get burnt big time. It is also one of the ways the pigmen separate you and your money. Get people short, they jam the stock price. You are forced to cover at a loss (you have to buy shares to give back to your broker, therefore driving the price higher even more).

In today's market, shorting has been a fools game. It can be done via puts or ETFs, but most who have tried it, wish they wouldn't have. If your going to spend the time finding good shorts, just spend the same amount of time finding good longs. "The trend is your friend."

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I have to call a foul on myself. That IS NOT a reverse split, just a split. I had it backwards.

From Investopedia

Investopedia explains Reverse Stock Split;

For example, a 1-for-2 reverse split means you get half as many shares, but at twice the price. It's usually a bad sign if a company is forced to reverse split - firms do it to make their stock look more valuable when, in fact, nothing has changed. A company may also do a reverse split to avoid being delisted.

My bad - squared.

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I can't believe someone mentioned Max Keiser. He's like the nut on the loose, but I like him. He tells it like it is, which is even better. I think he has the background to be taken serious as well.

I like Keiser a lot, but yeah, he's a little overboard sometimes. Just like with everyone else, I take was is useful and makes sense, and leave the rest.

He has a pretty good nose for corruption. And his website is a pretty good clearinghouse of financial news that isn't covered by more mainstream sites.

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Are reverse split a reliable signal to short the stock? Has a reverse split ever fueled price growth?

You can probably support both sides of the argument on this. However, in my experience, having survived about 10 different reverse splits, the stock ALWAYS trades down initially. I've never been through a reverse split that hasn't done that, though I've met people that claim it can be great.

For example, 100 shares trading at $0.50 or $50 market value-- on the date of the reverse split (10 for 1), you should have 10 shares at $5 or $50 market value. But then you trade down to $4...

But the reason why you see a lot of reverse splits, particularly with stocks that fall below $2/share: 1. Depending upon the exchange, they have a limit on what price your shares can trade at and you ahve to be above the limit or risk being delisted. Most stocks want to stay on an exchange, so they do a reverse split to get above the limit. 2. Many mutual funds have limitations where they can only invest in stocks above a certain dollar amount, or are traded on exchanges. Reverse splits are often seen as a way to attract new investors, if they can get the price up to where mutual funds can invest in them.

So long term I think there can be benefits, possibly. Over the short term, it's almost certain to lose value.

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I'm more of a conservative investor. Savings accounts, CD's, mutual funds and an IRA. The only stock I have ever purchased was Ford stock back when it was two something a share. I'm still sitting on a pile of Ford shares, not sure when to sell them.

You might consider looking into some investments that are more defensive in nature, particularly against inflation. A little gold might be a good idea. I'm a fan of physical possession, but even just one of the closed end funds like PHYS or CEF are probably a good idea.

The reality is that what the Fed had done, and I believe will continue in some form, is to steal from "savers" by destroying the purchasing power of your savings. Basically, they are taking your purchasing power and funding continued government overspending with it. Savings accounts and Cd's won't hold up well in this environment, in fact I'm sure you are seeing negative rates of return, in real terms for these investments (return less inflation).

But consult your investment advisor, I'm hardly an expert.

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I don't mess with any of this. I invest 8% a year into a T Rowe Price fund that has a targeted retirement year that I picked and I let them do the rest. I figure that's what they're paid for. When it reached it's low point in 2008/2009 I didn't care because that meant I was just buying more shares.

Well, you are missing part of the equation though. Your investment is valued in dollars. If the dollar is devaluing, you are just buying more of a devaluing asset by continuing to buy that fund. In the end, your purchasing power of what you are investing, will have decreased (even if the fund increases in value).

I'm not saying that will or won't be the case. But we have seen the dollar devalued by the printing trillions over the last few years. And I'd expect to see more of the same coming over the next few years.

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You might consider looking into some investments that are more defensive in nature, particularly against inflation. A little gold might be a good idea. I'm a fan of physical possession, but even just one of the closed end funds like PHYS or CEF are probably a good idea.

The reality is that what the Fed had done, and I believe will continue in some form, is to steal from "savers" by destroying the purchasing power of your savings. Basically, they are taking your purchasing power and funding continued government overspending with it. Savings accounts and Cd's won't hold up well in this environment, in fact I'm sure you are seeing negative rates of return, in real terms for these investments (return less inflation).

But consult your investment advisor, I'm hardly an expert.

I have been getting positive rates of return. All I really want to do is set aside money to have it available when I'm older. I just place it in low risk, low reward investments.

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I have been getting positive rates of return. All I really want to do is set aside money to have it available when I'm older. I just place it in low risk, low reward investments.

Fair enough. But inflation is somewhere in the 5-10% range right now. Probably closer to 10 than 5, according to many people. Unless you believe the CPI, which is a complete manipulated garbage number. Even if you like the CPI, I believe it's tracking to 3.5% or thereabouts. And I'm not aware of any CD or saving account paying close to 10%.

Pretty much every savings account and CD account is earning a negative real rate of return right now (this is different than getting paid interest, or maybe you already realize that).

FYI - I have this same discussion with my father, who like you, just wants low risk low return investments. It's a purchasing power issue. If you aren't earning a rate of return in excess of inflation, you are actually losing purchasing power, even if you have more money in your account via a 1-2% return.

Edited by ballmich

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The market closed early today so I did a little work to see what it might hold for us next.

I think next week may be interesting because of where we are. I put together some charts, but bear with me, I'm not sure how they will show up on here.

First, the S&P500 index (which is what I watch) for market direction. This is a daily chart that goes back to June of last year, before QE2 started.

may_27_snp.png

Notice the dotted line channel in the top right hand corner. This is where we are today.

Next is closer view from the beginning of January.

may_27_snp_channel.png

A closer view with an oval around today's candlestick. Notice the shape, and how it got close to the trendline, then retreated.

candle.png

This is the daily one minute chart showing how close to the trendline it got, then drifted downward throughout the rest of the day.

today_one_minute_chart.png

Also notice the black horizontal price line. The market gapped up this morning and closed almost where it opened, so not much movement today was available if you tried to get in.

The channel is sloping downward since May 2nd, the 1370.58 current top since the crash. I want to see what happens with this channel before I commit one way or another. I would like to see it break out of the channel with volume before I make a decision.

With QE2 ending next month, and knowing outflows have been rising (per ICI data) the market may be ready to turn over, or see a correction, and a better buying opportunity down the road.

Just my take.

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Screwball - Nice work, thanks. What website are you using for your charts? I've used a number of them, but haven't settled on any one in particular, and yours look different from the ones I have used.

You are right, we are in a downward trend. Outflows from the equity funds. End of QE2. Margin Debt is at a 3 year high as of April. Thin trading volumes. You are right that we need to see if we break the channel, but if we take out the support, we could go down pretty quickly.

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That is from my trading platform. It has a screen capture feature. It's Think or Swim but licensed by TD Ameritrade who bought them out a couple of years ago. I moved to them from another broker because of the charting package. I love it.

I use technical analysis religiously. My old brokers charting package wasn't very good. When I switched my trading improved greatly. Without TA it's like flying a plane with no instruments.

TA should be a part of every traders toolbox, although some will tell you they are a bunch of hooey. I was skeptical but spent countless hours studying them. IBD's founder William O'Neal's (spelling?) books are heavy into TA and they use it all the time (entry and exit points). There is a book you can get from Amazon called "Technical Analysis of Financial Markets by John Murphy which is pretty good, but long (550 pages). The website stockcharts.com also has a lot of information that is free. But I read everything I run across. TA also include candlesticks, which also tell stories.

As far as the hooey stuff, the Wall Street people use them. They even employ people who have went through a TA school and are certified technicians. If you have the ability to draw on charts and watch the market you will be amazed at how well they work.

I was worried about the width. Images that are too wide screw up the threads. I'm curious as to how it came out since I have a wide screen. It looks good on my screen but maybe not others. Just curious for future reference.

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Screwball - Nice work, thanks. What website are you using for your charts? I've used a number of them, but haven't settled on any one in particular, and yours look different from the ones I have used.

You are right, we are in a downward trend. Outflows from the equity funds. End of QE2. Margin Debt is at a 3 year high as of April. Thin trading volumes. You are right that we need to see if we break the channel, but if we take out the support, we could go down pretty quickly.

Might go up too. I can't remember a time where the market has ignored so many bad pieces of news. Once you watch the markets for so long, you kind of get a feel. A feel I can't explain (see the guy in Floored) but a feel. This market right now just doesn't want to go down. We've had a few corrections, but nothing major. You can't fight the trend - you lose.

I'm speaking as a trader, not an investor. There are various strategies to playing the market. It's all up to the individual.

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I have been getting positive rates of return. All I really want to do is set aside money to have it available when I'm older. I just place it in low risk, low reward investments.

There is nothing wrong with that. Some of us (I can only speak for myself) are greedy. :happy:

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What stocks? Were you long or short?

You have to be really careful with small & midsize Chinese stocks trading in the US on the NASDAQ. A good number of them are fraudulent reverse-mergers.

china stock fraud sec probes reverse merger network: Tech Ticker, Yahoo! Finance

I can't speak very intelligently about this, since I really haven't gotten involved with investment in China. But I know that there are certain hedge funds that are completely focusing on finding these fraudulent companies and shorting them into the ground. Many are making 200%+ do this, reportedly.

Yeah there's been a lot of monkey business, and tons of shorting. I'm currently long on both Yongye (YONG) and Telestone Tech (TSTC) - I briefly had a position in Trina but gave up on solar for now. Nice pop for TSTC today I see, and I have not given up on YONG. Vast majority of my holdings are in growth funds, but I play with a few stocks. Made a killing on Six Flags a while back, and did well back in the day on CLF, PCU, and MRO (before the big crash). Took a bath on ENER (yeah another dumb solar pick). I have some CLF again, also some Chevron and Nuance. Western Digital was good to me.

Anybody getting back into Apple?

Edited by DaYooperASBDT

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That is from my trading platform. It has a screen capture feature. It's Think or Swim but licensed by TD Ameritrade who bought them out a couple of years ago. I moved to them from another broker because of the charting package. I love it.

I've been test driving it. I don't like the way it looks (I hate black backgrounds), and it's hard to work with, not intuitive at all. For example, I put in a test order, a buy limit, on paperMoney, and can't figure out how to cancel the order (right click, there's no option to cancel, despite what the documentation says), so I guess I'm stuck with the order? That's not right.

It seems like the kind of thing you have to study thinkorswim really hard to learn how to use it even on an elementary basis.

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I've been test driving it. I don't like the way it looks (I hate black backgrounds), and it's hard to work with, not intuitive at all. For example, I put in a test order, a buy limit, on paperMoney, and can't figure out how to cancel the order (right click, there's no option to cancel, despite what the documentation says), so I guess I'm stuck with the order? That's not right.

It seems like the kind of thing you have to study thinkorswim really hard to learn how to use it even on an elementary basis.

You should see the order on the screen. It has an "X" on the balloon. Click the "X" and it gets deleted. Or, go to the monitor tab at the top, activity and positions, working orders. You can cancel from there as well.

chuck.png

You can change the background by going to style, settings, appearance. You can choose any number of colors.

On their main site there are tons of tutorials for how to use the software. The manual isn't the best, I'll give you that.

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Yeah there's been a lot of monkey business, and tons of shorting. I'm currently long on both Yongye (YONG) and Telestone Tech (TSTC) - I briefly had a position in Trina but gave up on solar for now. Nice pop for TSTC today I see, and I have not given up on YONG. Vast majority of my holdings are in growth funds, but I play with a few stocks. Made a killing on Six Flags a while back, and did well back in the day on CLF, PCU, and MRO (before the big crash). Took a bath on ENER (yeah another dumb solar pick). I have some CLF again, also some Chevron and Nuance. Western Digital was good to me.

Anybody getting back into Apple?

Solar stocks are very volatile. You can get burned quite quickly. I trade them but the keyword is trade. FSLR was the leader in that space at one time. It hit 317 at the peak before the crash. It's now sitting at 121.37. Opps.

Apple has had a great run. I would do a bunch of research before committing to that one. Not saying it isn't a buy, but due diligence is in order. It broke below it's 50 day moving average, which gives me pause. If it gets to the 200 day I might be tempted.

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For those of you that subscribe to IBD, make sure to read the latest paper's "The big picture." It's on the front page.

Interesting week to come.

As of 9:18 tonight, the dollar is getting hammered, and the S&P futures are up almost 6 handles.

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Stocks return 8% per year.

I think when you get greedy and try to make 9% a year you risk losing much of your portfolio.

8 percent is a lot better than inflation and will make you a millionaire.

I am your average Joe Blow and really just stated the above because nobody really knows how to make money except for the people who are insiders.

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It depends how diversified your portfolio is, and what the S&P 500/NASDAQ is at the time of purchase price and liquidation. It's a Bear market, so shareholder interest will be lukewarm. The board will share insider insight at the next shareholders meeting.

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