11

I ended up making a prediction. That made me very anxious. Well, maybe I didn't overtly make a prediction. The thing is, I got excited. I want so much to buy some shares, right now! What is the proper way to handle this?

Well, for one thing, I'm lucky. I don't have any cash to invest. I could sell some shares - I own stocks worth several thousand dollars - but they are all stocks I want to hold on to. I'm excited, but, in effect, not tempted.

I did suggest, in fairly explicit terms, not buying these stocks. Well, I said not to put a lot of money into them. If I were putting money into ABIO, I would be planning to invest one hundred dollars. The larger plan would be to invest $100 in each of quite a number of stocks. I want to emphasize that this is not a very practical plan. You would need to keep an eye on each of those stocks, which would definitely be a chore. Ideally, you would develop some sort of system for tracking your positions. Writing about this is making me think about these things, which is interesting. I think I might write about that more.

ABIO has been making a series of rising spikes. There were three in February alone, one to two weeks from each other, then one in March and one a month later in April, and then one three months later in July, so the time elapsed between them is growing. The shape of the July spike and its surrounding lower prices is consistent with the shapes of the other spikes. The whole pattern makes me expect more off the same kind of thing. Maybe in 9 months ABIO will make another top a bit above the level of the July top. Also, in March ABIO made a top, then pulled back in a set of small waves, steeply descending, then made a bigger wave, and another low price, and even after that it made a top and pulled back for a time, and to a fairly low level, before completing the rally to the April top. Maybe something similar is developing now. Maybe - here's my guess - a price of as low as 90 cents is coming, and then a rally to something like $1.25, then more low prices, then a rally to $1.40, then low prices again, and this would now be, say, six months from now, and then a rally to somewhere near two dollars a share.

This looks very convincing. I feel quite confident about it. And yet, I would be very wary of putting more than a little money in. Let's see. Now, if you are calculating the return you can expect from a trade, you calculate the gross return, and then you subtract the commission. If I could buy 100 shares at 90 cents, and for ninety dollars plus $10 commission ($8, really), and then sell at $1.25, my profit would end up being $15, which is, of course, very small potatoes, although it's 15%, and I would achieve that in a matter of days, or weeks at most, so it's actually a good rate of return.

Now, listen, if I were to put in one thousand dollars, or, let's say, $900, then my return would be $325, after expenses, and that's a 30% return, so the commission has a big effect on the smaller trade. But putting in $1000 would make me very nervous, or it would at least be against my principles. I can't really say more about what to do or not do, here. Let's try to look at more examples, and see where it takes us.