How I made a couple thousand dollars on a bad day in the stock market in one day - understanding market terminology

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My day basically started at midnight - well… i was on the night shift at the pediatric emergency room ER and it was a heck of a day with multiple admissions and some bit of constant visitors that needed treatment. I got home around 8AM and I went to bed, I woke up mid day and went to bed again and woke up at 7PM. I took a look at yahoo finance and behold…the dow was down 150 points but ISRG jumped more than 40 points!

ISRG is a company that make the da Vinci robotics system for surgeons. Basically its a robot with multiple arms that the surgeon uses laparoscopically (with tiny little holes in the belly) and the surgeon sits in the corner and controls the robot from a distance. When I first heard about this technology back in 2003 when I started medical school, I was amazed. It was more amazing when I got to see it in action at the hospital during my urology rotation. The company was priced at 18 dollars when I bought into the company and today it closed just under 200 dollars. Passive income really is great!

There are many ways to make money in the market. You have to decide how you want to approach it. I suggest reading my previous articles about introduction to investing to get started. There are many ways to categorize the market:

fundamental school of thought vs. technical school of thought
value investing vs. growth investing
bullish investors vs. bearish investors

These are basically ways to view the market. You can approach your choice in companies, mutual funds, etfs by favoring the fact that the market in general will grow over time (bullish, growth, and fundamental views) or that you can learn the technical aspects and take advantage of small shifts in the market- like day trading (technical investing). You can pick stocks that are expensive or high in price and high relative to the history of price for that stock (growth investor) or you can pick stocks that aren’t doing that well but fundamentally a solid company (value investor).

To understand the current situation on the market, my thinking is that we are on a bullish trend: this means that the market is moving higher and higher and will continue to do so. Bearish investors think that this “bullish” trend will stop soon and start to go down because the market in general is overvalued (too expensive for what you get). I am betting on the fact that the market will continue to up so I am a bullish thinker. I am also a growth investor because I believe that good companies that have good past performance will general continue to do better. More than likely , i’m going to continue to “let it ride.” People will say that its stupid to do that because past performance doesn’t equate to future performance and this is true- however good companies will continue to do good.

However a good company will not do well if the industry that the company is in is not doing well. In general, the market can be divided into various industry sectors. This includes things such as technology, health care, financial etc. You can trade in the stock market by sectors. You can buy individual companies in each sector or you can buy an index that represents the sector. You can buy the sector by buying an ETF. A sector that I do have is MXI which is the ishare global materials sector. I do this with the basic materials sector because I don’t know the industry well enough that I would be comfortable buying individual companies.

My general strategy so far is to focus my energy on learning more about health care industries because that is the industry that I am currently employed in. I want to minimize my risk by diversifying so I will buy various sectors outside of healthcare. I’m not too knowledgable in outside sectors so I will buy indexes outside of healthcare and buy individual companies in the sectors that I have more knowledge in.

Here are some websites that I like

the street - jim cramers website on the stock market
yahoo finance- best site for stock prices and research.
cnbc - if you can’t watch cnbc on tv, this is a great place to get your business news online
smart money - a great magazine and a great site that is written by wall street journal journalists.
forbes.com - forbes is another reputable resource for finance news.
cnn money - these are the guys that make the “money” magazine
businessweek - weekly magazine for the business world.