Tuesday, October 28, 2008

What goes up, comes down & What comes down, goes up

You throw a rubber ball up in the air. The ball goes upto a certain height and comes down again. You throw the same rubber ball down on the ground. The ball touches the ground and bounces back up again. You can see this pattern in stocks also.

When AAPL was trading at $90 in 2006, many felt that it was overvalued. But, the stock kept going up & up until it reached $200 in late 2007. In Dec 2007, many felt that AAPL can easily go to $250 or $300. People strongly believed that buying at $200 is a bargain. Analysts were throwing crazy numbers. But, what happened in 2008?

After the financial meltdown, most of the stocks lost their value. AAPL came back to $90 again in 2008. AAPL nearly lost 60% of its value. It is hard to believe that AAPL, the dream stock of many hedge funds, is trading at $90. Now in 2008, many are betting that it would go down even further because of the poor economy.

There is no 'perfect' time to buy a stock. Any stock that goes up, will come down again. Any stock that goes down, will come back up again. (Ofcourze, the company has to stick around, till the recovery ! :)). If stocks were uni-directional, then nobody would be trading stocks. Don't make emotional decisions when you buy or sell stocks. Develop a plan and stick to it. Don't be greedy or over-optimistic.

Do you have a diversified portfolio?

Have you worked in a team? A team may contain people with different set of skills. Each one of them bring a unique value to the effective functioning of the team. Same goes with stocks. You need to build a portfolio that has a "mix" of stocks from different market segments. That way, if one of those segments is adversely affected, the other stocks can still continue to do good. Portfolio is all about minimizing risk and diversification. During tough times, diversification really helps.

Let us take for example you've invested all your money in Semiconductor business. If a market analyst predicts that the "semiconductor market" is going to be really dull for the next few years, your investment would loose its value all of a sudden. On the contrary, if you have built a diversified portfolio spanning tech, energy, finance, commodities etc., your investment value would not be eroded.

Building a diversified portfolio is like constructing multiple strong pillars/columns for a multi-storied building. Even if one of them goes bad, the others would be holding the structure. It would give you enough time to repair or replace the bad columns.

Buy/Sell Stocks in increments

Do you think you are good at predicting the market? If you really can, you may not be reading this blog. You may be spending your time in the beaches of Hawaii, giving yourself an early retirement. Yes. You should be a billionaire by now, if you can really predict the market peaks & bottoms. But, the reality is ... most of us are not good at predicting the market. So, what should you do if you are an investor? When should you really invest? What is the strategy you should follow?

Say, for example, you have $5000 to invest in stocks. You wake up one fine morning and dump all the money into a stock. The next day, the stock value drops by 10%, the following day it drops by another 10%... what would you do? You keep hitting the "Refresh" button several hundred times a day for the price to come up.

Let me propose a strategy for you. This has worked for me. If you have $5000 to invest, buy stocks for $1000. Wait for a week or a month (depends upon whether you are a long term or a short term investor). See if the stock continues to hold its value. You can throw another $1000 into the same stock after some time. If the stock keeps going up, it is well and good. If the stock lost some value, it is a nice opportunity for you to average out. The drawbacks of this approach is

(a) you may have to pay the broker for each trade that you make. However, the price that you pay is very very less when compared to the loss that you would've encountered if the stock were to drop 5 or 10% of its value.

(b) occassionally, you may have to miss some opportunities. Especially, when a stock goes up by 10% or so every day. But, such opportunities show up only very rarely. You shouldn't be too greedy :)

The same strategy would also work when selling stocks. Sell in portions instead of selling all of them in one go.

Always, Buy or Sell in increments.

Monday, October 20, 2008

Are you a trader (or) investor?

Trading is like hunting & Investing is like harvesting. One fine morning, you can decide to hunt and go out with your spear. If you are lucky, you may come back with a few animals. . However, harvesting is a long process. You have to plough, sow seeds, water the plants and remove the weeds. The returns of harvesting cannot be seen in a day or two. It may take months or years. Patience is the key.

There are lots of differences between 'trading' & 'investing' in stocks. Traders (typically short-term focused) time the market, they act based on news, they don't look at fundamentals of a company. All they look for, is a quick entry and exit. They try to ride through the waves. Investors look at long-term fundamentals of the company. An investor has lots of patience. An investor is more disciplined than a trader. How many 'traders' become famous in history? But, Warren Buffet, a veteran investor is continuing to make his mark.

Are you a trader (or) a investor?

Chicago Trip

Oct 10th 2008

We had a chance to spend a day in Chicago on our way to New Hampshire. We took a Southwest flight from SJC to MDW airport. Southwest had good deals for SJC -> MDW. The flight reached MDW airport at around 1 pm and it was 2.30 pm, by the time we reached Super 8 Motel close to the MDW airport. We were lucky enough to get a free upgrade of rental vehicle from Hertz. The vehicle also had a navigation device. All the car rental facilities are inside the Airport and it was so convenient. Most of the rental facilities were open late in the night (even at 2 pm).

We spent the whole day in the downtown area. The city is very beautiful. The downtown is garlanded by Lake Michigan. The downtown appeared to be busy with lots of financial institutions. You could see people from diverse cultural background. The downtown was clean & also safe for tourists. I didn't see 'strange' folks along the road side. We visited Sears Tower, the second tallest building in North America. We then went to see Union Station, one of the oldest train stations in US. A trip to Chicago wouldn't be complete without visiting the Millennium Park. I was amazed & surprised to see the Millennium Park. The park is in the heart of the city downtown area. It was very crowded even on a working day. You could see school tour groups, tourists, people having their lunch, people who are submerged into their novels/study materials & people who are sitting there and just relaxing. The "Bean" in the park carries the beautiful reflection of some of the nearby downtown buildings. The park also has dining and parking facilities.

The parking in Millenium Park was relatively cheap (they charge about $18 for 8 hours) when compared to the other nearby parking facilities. We then walked around in the downtown. I saw lots of buses in the Chicago downtown. If you want to spend a few days in the downtown area, you don't even have to rent a car. You can complete your trip with just the public transportation services. Driving in Chicago downtown wasn't very tough (unlike New York downtown, which requires a bit more driving skill & extra alertness).

We took a 90 minutes ferry tour, organized by the Chicago Architectural Foundation group. We sailed Lake Michigan to see some of the downtown buildings & the Navy Pier. There are several tour operators near the Michigan Avenue bridge. This tour costed about $22 per person and I felt that it was worth it. There were 100s of people who took this tour every hour. We left the downtown area by around 5.30 pm and drove back to our hotel. We wanted to see the Buckingham Fountain but didn't have the time to do it.

Overall, the trip to Chicago was very peaceful and relaxing.

Chicago Trip Planner

Bahamas Cruise (Bahamas & Miami Trip)

26th - 30th Sep 2008

This is one of the much anticipated & exciting trips. I had planned this trip with my friends, a month in advance. We booked flight tickets in AA website. After doing some research, we decided to take the Royal Caribbean (RC) cruise ship. We booked cruise tickets directly from the RC website. RC charged $300 for the first person, $300 for the second person & $200 for the third person. It cost me about $800 for my family. The round trip flight tickets from SJC -> MIA airport cost about $300 per person. (Also read: Places to see in USA)

Day in Miami

We took the AA flight from SJC -> Miami on Sep 25th. One of my friends have to drop-out in the last minute due to a family emergency. We reached Miami airport on Sep 26th at 7.30 am. We had a few hours to kill before boarding the RC cruise. We rented a vehicle from Alamo. There was a very long queue in the Alamo rental location. By the time we took the rental SUV, it was about 10.30 am. Miami was greenish everywhere. You could see large Banyan Trees along the sides of the streets. We went to the Fairchild Tropical Garden. It is such a beautiful place with lots of colorful flowers, ponds, and gardens. You can spend nearly 1/2 a day in the Fairchild Tropical Garden. The tickets were somewhat pricey ($20 per person). Weeekend visits are free and that explains why the garden was deserted on the weekday. This garden was mostly run by retired folks & volunteers. The garden was maintained very well. We took the narrated tram tour. We walked around for about an hour or so. We then drove back to Alamo rental facility to drop the rental vehicle. Alamo has a free pickup/drop off service from/to the Port & Airport (Note: The last pickup/dropoff service to the Port was 3 pm).

Bahamas Cruise

We reached the Port of Miami at around 3.30 pm. It took about an hour to complete the check-in process and to reach the stateroom. Our first impressions of the Cruise Ship was great. In fact, it didn't look like we weren't in a cruise ship. The ship looked like a five star hotel or a shopping mall - with elevators, restaurants/dining areas, bars, huge lobby, casino, swimming pool, theatre, play areas etc., The ship wasn't wobbling at all. It is hard to sense the ship's motion and so, you don't have to worry about sea sickness :)

We got ready and went to the dining room by 6 pm (We had requested for the 6 pm dining slot). We have to sit in pre-assigned dining tables. My friend & I got it changed, so that we can be in the same dining table. You can order food from the menu and also customize the order. The waiters were very professional and courteous. We had a heavy dinner. There was a stand-up comedy going on in the night. We watched it for about 30 minutes. We were too tired and went to sleep early.

We got up early on the second day of the cruise. The ship was docked in Cococay, a private island of Royal Carribean.We had our breakfast (which was a buffet). There was nearly 100+ items to choose from. Even for a vegeterian, there were lots of options. I had a heavy breakfast (as if, I'm eating for the whole day). A small ferry boat took us from the cruise ship to the Cococay island. Cococay is a very small island. There were some shops in the island (including restaurants). There were all kinds of water sports in CocoCay island. In fact, that is the only thing that you can do in CocoCay. I had a nice fun time with my kid in the beach. My kid was busy collecting shells & playing with the sand along the shore. Around noon, it started to drizzle a bit and we went back to the ship. The lunch was a buffet as well. We had a heavy lunch :) My friend had brought some card game and we played it until evening. We then got ready and had our dinner. We spent an hour or so chatting in the upper front deck sit-out area. We played again during the night.

The cruise ship was docked in Nassau, Bahamas on the third day. We had our breakfast early and left the ship by 8.30 am. However, we have to wait in the Nassau port until 9.45 am, for our Discover Atlantis tour. We used that time to take a few pictures in the Bahamas port & a few pictures in front of our cruise ship :) The Discover Atlantis was a narrated tour and it was nice. It costs a few $$s extra if you book the tour from RC website. Majority of the Bahamas population is of African origin. People sell water bottles & other things along the road side. We spent some more time in the Atlantis resort after the tour and returned back to the cruise ship. We had our lunch & took a nap. We spent about an hour or so wandering in the ship. We then went to the same sit-out area in the upper deck watching the sun set. We then had our dinner and started packing our 'stuff'. We left the suitcase along the side of the corridor (for checkout in the morning).

We got up early on the fourth day, got ready and had our breakfast. It was 9.30 am in the morning by the time we got off the cruise ship, collected our luggages and cleared the US immigration process. I realized that we should have kept our baggages with us (instead of handing over them to RC, the previous night). That delayed our checkout process by about an hour. If we had had our baggages with us, we could've got down from the ship early in the morning. Now that we had checked-in our baggages, we had to wait until our turn, to collect them. In the early morning, there was not many people in the checkout queue. You can just swift through the checkout process in minutes.

We didn't have much time to explore Bahamas during our trip. However, the cruise experience was very memorable. We felt that our time in the cruise ran very fast. The top two things that I liked in the cruise was Food & Service. I was amazed by the level of service provided by the RC crew. I wasn't expecting individual attention - but the RC crew did provide individual care to everyone. Even my little kid enjoyed the cruise experience. She had lots of places to explore in the ship. If I had to do take a cruise again, I would definitely choose Royal Caribbean.

2 Days in Miami

We had to wait for about 1/2 hour (some people have waited for an hour) for the Alamo rental shuttle to pick us up from the Miami Port. The same Alamo car rental shop services customers from both Port & Airport. We rented an SUV and drove to Key West. On the way, we stopped near the famous "7 miles bridge over the sea". There was a nice beach close to the bridge. The water in the beach was sparkling & crystal clear. My daughter had lots of fun in the beach. It took us about 3 hours to reach the Key West area. We stopped at a Starbucks to get our energy drinks (Lattes). We then visited Fort Zacher Taylor's park to see the sunset. We killed nearly 2 hours in that park by taking some pictures & by playing a card game. However, Mr. Sun disappointed us. We then headed back to Miami for our night stay in Metropole Hotel. Metropole Hotel is located in the downtown area. The outward appearance of the hotel was not that great (in fact, it was scary). However, the rooms very nice with brand new appliances - most of them, designer class.

The next day, we got up early and visited Vizkaya Museum & Gardens. We had our breakfast in Dunkin Donuts (I used to think that they just have Donuts. But, DD has lots of other items too. I liked their hash browns. It was yummy!). It was raining heavily when we visited Vizkaya Gardens. I thought we have to abandon our plans. However, the rain stopped in a few minutes. The garden was fresh & gorgeous (Thanks to the morning showers!). There are some nice photo spots in that garden. You could see a few newly wed couples busy with their photo shoot sessions. We spent nearly 2 hours in the Vizkaya Gardens. We had our lunch in a fine Thai Cuisine in the downtown. We then visited a few road side parks, took pictures of the Miami Skyline and then went to Miami South Beach. Miami Skyline was not all that great. South Beach had a long shore line and lots of parking space. It was almost deserted (we visited on a weekday). I personally felt that the Key West beaches are more beautiful than the Miami beaches. We left South Beach, returned our rental vehicle and reached Airport in the evening. We reached SFO at around 10 pm. We had parked our car in Anza Parking, San Francisco. We picked our car and reached home at around 12 pm.

Our Bahamas/Miami trip was very relaxing and memorable.

Miami Trip Planner 

[Update - Bahamas Tourist Visa]

If you are a US Citizen, you don't need a tourist visa to visit Bahamas. If you are residing in US on a work or a visitor or a dependent visa (H1B/H4/L1/L2/B1/B2 etc.,), you need a tourist visa to visit Bahamas.

I applied for my visa to the Bahamas consulate in NY.


The following private website provides the details that you need for applying for a Bahamas visa.


Talk to the Bahamas consulate directly to find out more details.

I was able to get my visa in just one calendar week (5 days). I overnight couriered the application/passport on Monday and got the visa on Friday.

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