1999 Dot Com Rally: Compare to Recent Rally
By Saghir Aslam
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
Comparing two great stock market rallies of recent times. I was very much involved day to day stock market performance in 1999 study, research, regularly on week end spent lot of time business daily particularly Barons which I consider bible of stock market. Up five days a week buying selling starting at 6am home multiple computer screens going giving me different information business T.V. stations in addition be on the phone with different brokers from Goldman Sacks, Prudential, Morgan Stanley, Wachovia and other very well-known brokerage firms as well as some small independent firms in stock market.
In the beginning it was hard to understand even as we moved along and it was extremely difficult as Dot Com stock prices had no time or reason to go up at times it was difficult and various time to pay the going price because companies had no earnings matter of fact many were annually losing millions. How do you invest in a company stock price so high but company losing money? One would scratch his head what’s going on. It was extremely difficult time to invest.
I used the word invest yes very difficult to invest gamble yes and many new investors did just that one of brother who bragged about it in every gathering all the time how much money he is making it has changed their life. I have and am making lot of money. I was surprised when he called me and wanted to discuss with me and get some advice. You all know I do not advice I only share information and request you to use the research. Anyway this brother did come to office we met. His 9openingstatement was Saghir I have lost all the money I made and much more matter of fact worst. When I was making so much money. I decided I want to invest more so I borrowed money against my home as much as I could naturally that means large monthly mortgage payment. Now I have lost all the money that I had and worst for me is I have even lost the money which I borrowed against my home. Now I have large monthly mortgage payment which I am not able to pay. I am so far behind in mortgage payments that the bank is threating to foreclosure if that happens we have no place to go as I don’t have money left even to pay small rent.
Stock market guru Warren Buffet would not invest a nickel in the Dot Com companies. He used the same term what I wrote earlier, its gamble not investment. He further said I invest in the market I do not gamble in the market there are casinos if you want to invest. I am an investor.
Dot Com if one invested in it broke all the investing rules established for decades. It was different, it was unique lot of people made good amount of money most of them lost fortunes.
Dot Com were the days you could buy an IPO flip it within a day or two sometime say day with appreciation of 20% to in some cases are double.
However you could only benefit if you were a good client of a reputable firm with few million invested with them.
Since I was so deeply involved in it I could write a book I mean book with many pages and many stories good and bad.
Current Rally is it Real?
Let’s talk about today stock market rally. Although market has been going up like crazy more than most of us expected, but if you look at it and analyze it. Market is going up with reasons good companies. Company’s great history company’s great performance. It has base. There is reason for market to go this market investors have benefited investors have made money. Even through the market is so high.
STOP Losses are Major Key to be successful not just in this market but every market. As the stocks continue to rise you raise up your stop loss you may pick a winner and continue to raise stop loss after stop loss. Make sure you stick with the rule whatever rule you have established. From the current price not from your cost how much are you willing to loose. Generally stop loss has not much to do with your cost. Each time where the stock price is, how much are you willing to loose. Stop Loss after Stop Loss. (Continue Next Week).
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr. Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, or does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr. Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr. Aslam does not have anything for sale.)