Friday, March 22, 2013

Krispy Kreme Doughnuts...

I've really enjoyed the time I get to spend researching and learning about individual stocks 
through my job. Everyone invests differently. Everyone has their own strategy. I realize I’m
learning from the best, at the same time, I find myself weary of different strategies. On
that note, one particular book I read taught me how to read stock charts. I didn't
find it myself; it came highly recommended.  Ted Warren, a farm boy who believed and
practiced stock chart reading throughout his life, reaping huge rewards. This is proven
not only by his returns but by the fact his book, written in the 50’s, is still asking high
dollar online. A new one on Amazon is still selling for close of $40.


That being said, it’s a tough read. If you get through the book, understanding and trading
by his principles isn't easy. Once I started showing interest in the market, my boss pulled
me in his office one day and said, “How many times does $5,000 have to double to equal
a million?” I’ve never been that great with math and I was more worried about him
finding that out, than how I could get to a million. He later responded that $5,000 only
had to double eight times to equal over a million. Stocks double every day, it’s just about
picking the ones that double. Do it only eight times in a row and your a millionaire.
 An interesting concept, one I’m not professing to believe is easily achieved or
 even possible for that matter.

The concept I find most interesting, is reading the charts to pick the correct stocks. Ted
Warren’s book talks about how looking at the fundamentals of a company will only deter
you from a great gain. For example, each day I look at quite a few stocks. I have a list
I have saved on my computer with a few hundred I’ve found by looking at their charts.
Sometimes I check on a stock and the symbol is gone – bankrupt. Other times, I’m
surprised on what I find.

In October I added the stock KKD to my list. KKD stands for Krispy Kreme Doughnuts.
The chart looked prime, but I couldn’t get over the idea of purchasing a doughnut
company. I know Krispy Kreme was big in the 90’s - I remember the craze. Since,
I haven’t heard a dang thing about them, let alone eaten one. Their
stock was trading at $7.28 the day it came on my radar. Today their stock closed at
$14.80, that a 49% return on your money in six months. Aren’t interest rates about
3%? Here I am repeating my own advice – look at the charts, don’t get distracted by the
fundamentals.  I would have been one double closer to my million in only six months. If only...

Yahoo Finance

I write this only to share the things I am learning. For every winner, I’ve picked some
pretty great losers too. I’ve found so much excitement in trading stocks. It’s made me
more away of the economy, politics, retirement, savings and good spending habits. Perhaps
buying Ted Warren’s book isn’t the way to go for you. I would have been lost if I
wanted to strike out in the chart reading world alone. I’ve had help. I just challenge
you to pick some companies you like and watch their stock, see if doubles, see if they
bankrupt. It makes waking up early fun. It makes you anxious to check the stock chart
app on your phone.

P.S. This is not an endorsement for promoting the stock KKD.  In fact I'd discourage
you from buying, since the stock has already moved.

Over & Out!

No comments :

Post a Comment