My Wealth Journey

I have a gambling nature. Not the kind that likes to go to the casino and just gamble away thousands of dollars but I love taking chances when it comes to money. Last week I shorted AKAM at the wrong time and ended up losing about $1,200 in a few days. Note to self, never short something when just about everyone and their mom are bullish on the stock.

On Tuesday, I decided to short New Century (NEW) and made back around $700 today when the stock just plunged. I do realize this isn’t a bright idea but I only do this with less than 10% of my SEP IRA.  Losing any amount of money hurts… I just bought a bit of money to my SEP IRA and bought some shares of a healthcare ETF (VHT)  at $57.30 so that I won’t try to do anymore stupid gambling with my money.

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The subprime market has officially imploded. Fremont General has physically closed its doors in their Orange County offices while looking for a buyer for their subprime lending unit. New Century is facing possibly criminal charges. Stocks of Fremont, New Century, Novastar, Countrywide and other subprime lenders have dropped like the world coming to an end. New Century went from a little over $30 to $15 to under $5 in less than a month.

Most experts saw this coming. Heck, it doesn’t take an expert to see this coming. It is only common sense to realize that someone making $30,000 a year can’t afford to pay for a $600,000 home. Even at $90,000, a mortgage for a $600,000 home will be tough.

I don’t think we have seen the worse yet as there will be certainly borrowers  with good credit will stretched the truth in their loan application in order to afford a $800,000 home.

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Wow, last night, China’s Shanghai’s Composite Index dropped by over 9% because of valuation concern. I unfortunately held a small position in FXI and CHL. This drop just reminds you that some foreign markets can be volatile and to be properly diversified. Oil also dropped because of the perception that China’s demand for oil will be decreased because of possibly slowing in the economy due to possible action taken by their government to curb inflation.

I think this is a healthy correction and still see China’s market heading higher over the next few years.

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Novastar (NFI) reported earnings after closing yesterday and BOOM! The stock dropped over 30% and has dropped over 50% within the past few weeks. Novastar is a subprime mortgage company that is facing the fact that a lot of the loans they approved will not be paid back. First New Century, now Novastar, so who is next? HSBC got hit a while ago but not as bad as these two companies.

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Even though the markets were closed today, XM and Sirius announced a merger that a lot of people have been expecting. Some people don’t know if the FCC will approve it but I think they will make the necessary change in the law allowing this because of other competitions such as HD radio. I don’t know how much Sirius’ stock will jump because of this but XM’s stock looks like it may jump at least 3 or 4 bucks when the market opens tomorrow. I had some Jan 08 $5  calls for Sirius that I’m hoping will  go up.

http://biz.yahoo.com/ap/070219/xm_radio_sirius.html?.v=11

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What is going on with Yahoo stock? It has been jumping like crazy the past week since they launched the update to their advertising. I sold a little bit of my holdings in Yahoo after it jumped to 29 or 30 to diversify a bit. The stock is actually more expensive than Google’s (GOOG) stock based on their P/E.

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