After the first time, I use Thinksorswim to do trading again. This time, I have traded a big amount of stock. I have invested more than 40% of total account in stock market. Therefore, my investment is becoming riskier. I also use the same strategy as the first time: buy low sell high and analyze financial statements of companies. Although buy low and sell high can take advantage of the market’s propensity to overshoot on the downside and upside, it is difficult to use this time because financial markets is becoming more and more volatile after October 11.
The US stock market fell sharply on October 11. The Dow Jones index fell 3.15% to 25,598.74 points, the lowest since August; the S&P 500 index fell 3.29% to 2,758.68 points, the biggest drop since February; the Nasdaq index fell 4.08% to 7422.05 points, the lowest since July. I think the reason for the US stock market crash is the uncertainty of the US midterm elections.
The other reason is that the 10-year US Treasury yield rose rapidly after the Fed’s interest rate hike, causing the market to fall sharply overnight.
: Dow Jones index S&P 500 index Nasdaq index Famous technology stocks generally fell on October 11. Price of Tesla fell 2.25%, the price of Amazon shares fell 6.15%. After the first time, I invest 400 more shares in Tesla and 600 more shares in Amazon. I bought Amazon at 1885 per share and I bought 600 shares. The price in October 11 is 1727.42, the lowest since May. On October 25, Amazon announced its third-quarter financial report for 2018. It is reported that Amazon’s third-quarter earnings are better than Wall Street’s expectations, but its quarterly revenue and fourth-quarter revenue forecasts have not met expectations.
After the financial report announcement, Amazon’s share price fell about 9%, the lowest closing level since May. Amazon’s operating income is $3.7 billion in the third quarter, net income is $2.9 billion in the third quarter and net sales is $56.6 billion in the third quarter. Therefore, I have lost money but I still hold them.
However, the price of Amazon fell 1.1% and the price of Tesla fell 1.69% in November 20. The price of Amazon fell to the lowest in this year, 1483.83. The price of Tesla fell to 338.06. The Nasdaq index, which is dominated by technology stocks, fell 3%. Nasdaq index Amazon Tesla After I lost a lot of money for Amazon, I found that technology stocks are fluctuating every day. According to the chart, they are so volatile that they do not even have a tendency to rise or fall. Its price always varies greatly. Therefore, I short the Amazon at 1534.75. Additionally, When I traded technology stocks, I found out I need to pay close and intense attention to related news. So, I watch the news every day on the Wall Street Journal and other news channels to focus on regulation and events.
For example, Tesla. Its market value is decreasing and shares sank by as much as 7.1 percent after news broke that federal prosecutors have opened a criminal probe looking at Musk comments. What’s more, I also find that I have found that technology stocks will last a whole day after a few hours of rising or falling in the morning. I also diversify my investment in order to mitigate the risks. The price of Te s l a has been decreasing for the past 3 months possibly due to the CEO’s wrong speech and wrong business strategy. I still long Tesla stock. On October 24, Tesla released its third-quarter financial report for 2018. Its net income is 311.5 million and its revenue is 6.82 billion. On October 1, the Securities and Exchange Commission of the United States and Musk reached a settlement on suspicion of “stock market fraud”. Musk agreed to resign as chairman of the board of directors and retain the position of CEO. As a result, Tesla’s stock price rose 14.09% to $302.07. I’m very optimistic about Tesla and I’m going to hold this stock and not going to sell it. Because its free cash flow is $881 million in the third quarter and the delivery volume of Model 3 hits an all-time high. I also believe that Te s l has the opportunity to achieve sustained profitability because of the good cash flow and continued expansion of production and sales scale.
I still choose to long PINDUODUO INC, a Chinese online group discounter. Although its stock price keeps going down for a week, I did not short them and expect this trend to end. PINDUODUO released its first quarterly financial report after IPO on November 20 and their share price is 23.05 per share has risen by 16.63% and the market value has reached 25.734 billion US dollars on November 20. The third-quarter financial report shows that in the 12 months to September 30, 2018, the GMV (Gross Merchandise Volume) of PINDUODUO is 344.8 billion yuan.
It is an increase of 386% over the same period last year. The revenue is 33.724 billion yuan, an increase of 679% over the same period last year. Its GMV growth rate is 15 times the average in the e-commerce industry. Therefore, I believe that Te s l a has the opportunity to achieve sustained profitability because the number of users is 231.7 million which increased by 226% over the same period last year. Although Trump has started the trade war between America and China, it is fortunate that the company’s current business only serves the domestic market, and most of the company’s businesses and manufacturers are in the country. PINDUODUO is growing rapidly, injecting fresh blood into the e-commerce industry. So, I long 500 more shares of PINDUODUO. For the stock of New Oriental Education & Technology Group Inc, currently the largest comprehensive private educational company in China, I chose to short all of them because of the continued decline in share price and net profit.
On October 23, New Oriental Education also released its first-quarter financial report for the fiscal year ending August 20, 2018. The financial report shows that New Oriental’s first-quarter net revenue is $859.8 million, increase by 30.1% and the net profit is $123.2 million, decrease by 22.2%. This profit is not only lower than the first quarter of 2017, but also lower than the first quarter of 2016 and 2015. After releasing the financial report, New Oriental share price closed at $52.75 and decrease by $10.09 and 16.06% which is the biggest drop in six years. The price is the lowest in recent times, 52.75 per share. Additionally, New Oriental shares fell more than 5% on November 11 and continue to fall because of the women discrimination public speaking of their CEO.
Therefore, I short all of my 500 shares of New Oriental Education. I still choose to long NIO, a Chinese automobile manufacturer specializing in designing safe electric autonomous vehicles. On November 6th, NIO released the third quarter, which was also the first financial report after the IPO. The total revenues were US$214.0 million in the third quarter of 2018, increase by 3,095.3%, compared with the second quarter of 2018. Gross margin was negative 7.9%, increase by a lot, compared with negative 333.1% in the second quarter of 2018. What’s more, the ES8 production in the third quarter is 4,206 units. With the continuous improvement in delivery and capacity, I have a positive expectation on NIO. On December 3, NIO announced the November delivery and production data. Before November 30, NIO delivered 3,089 ES8s to market, increases by 96% from the previous month. Affected by this news, NIO share price increases by about 5%. The price is 7.01 per share. Therefore, I still long the NIO. I also long some euro. According to chart of the EURO/USD, it shows that the changing trend between these two currencies is quite stable after October. Therefore, I believe that euro is becoming stronger and stronger. If I can do it again, I will choose to buy some more stable stocks in other industries because I possibly can maintain long positions for a relatively long period. The financial markets are becoming more and more volatile. Next time, I will put my money in other portfolios, like gold options, futures, etc. Because they are good ways to reduce the market risk.
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