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6 months

The past 6 months have been a real roller coaster ride in the stock market.  I've made a lot of money, lost a lot of money, and made a lot of money, and I've learned a few things along the way.

For the first 3 or 4 months of trading, I felt like I had the Midas Touch; virtually every stock I touched turned to gold.  I had made over 12% profit in just that short period of time.  I had about half of my money in mutual funds and the other half in stocks.

Then the Sub-Prime Bust hit, and my Midas Touch backfired.  It felt like everything I touched would turn to dust.  I lost about 1/3 of my profits in a single morning before I managed to dump almost everything.  Whenever the market would seem to rally and I would try to get back in, it would crash again, sucking away more of my profits.  As the market bottomed out, I'd lost nearly everything I'd made in the previous 4 months.  I had pulled all my money out of the market, save for a single mutual fund which seemed to be escaping the worst of the disaster.  I began becoming very cautious with my investments, sticking mostly to ETFs and dumping them a few hours or days later.  I became thrilled to earn $50 in a day.

Then came the Fed decision in early September.  I decided to gamble on a rate cut and threw all of my available funds into QLD, the Proshares Ultra QQQ ETF.  I rolled the dice and the Fed came back with a 50 point rate cut!  In a matter of minutes, I'd made over 5% profit!

The market has rebounded back to where it was prior to the crash with the Dow back above 14,000.  If I'd left everything alone, I'd have probably not lost anything (since gains and losses don't really count until you sell), but I'd have probably stressed out a whole lot more.  Despite that, I've nearly regained everything I lost, and am currently at about 10.5% profit, though I do have more realized gains than I did before the crash.

Right now, I'm still feeling rather gun shy.  About 2/3rds of my money is currently in cash, earning a pitiful 1% per year.  I'm still reluctant to just jump in and I keep waiting for the market to come down a bit before I jump back in, but that's really not been happening lately.

Currently I have only 1 mutual fund, the one fund that I've had from the start and the only investment that didn't go entirely insane over the credit crunch, the Matthews China Fund.  I've increased my investment in it to 15% of my portfolio, and it has in turn given a 44% profit.  Annualized, that comes to 237%!  The remainder of my investments are ETFs, the BLDRS Emerging Markets (ADRE), which has made me 16.4% (231% annualized), iShares MSCI Australia (EWA), which has made 11.9% (138.71% annualized) and iShares MSCI Canada (EWC), up 8.9% (a mere 41% annualized).

My biggest percentage gains so far have been the ProShares Ultra QQQ ETF (which Microsoft Money cannot even calculate the annualized percentage, it's over 100,000%!), the ProShares Ultrashort Financial Sector ETF (SKF), 11,063% annualized, and Penthouse International (PHSL.PK), 1,874% annualized.

I've been exceptionally pleased with the Matthews China Fund.  While it did suffer a bit during the Sub Prime Bust, as did just about every market worldwide, it recovered much faster than the US and is still climbing like a rocket.  It has jumped over 8% in just the past week and in the past 6 months has outperformed the Dow nearly 7 to 1! 

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