tag:blogger.com,1999:blog-307648592024-03-08T03:12:46.056+08:00Chart-On-DemandCharting our way to winning in the world's biggest casino. Request a stock now and see it charted.Unknownnoreply@blogger.comBlogger151125tag:blogger.com,1999:blog-30764859.post-4146043602105505932008-02-06T12:19:00.000+08:002008-02-06T12:20:25.164+08:00Happy & Prosperous Lunar New Year 2008!<object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/drb77EXA-ho&rel=1"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/drb77EXA-ho&rel=1" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object>Unknownnoreply@blogger.com6tag:blogger.com,1999:blog-30764859.post-69705735650348724262008-01-17T22:15:00.000+08:002008-01-17T22:36:28.317+08:00Dow Jones in Focus<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2MfTOU8YXorMQNJ6niqI_fhAdmd8Ks2gF3gij3OxN77KWXYjjKNUQT9p9P1Hca5f-mtcG6icoLQHe6c0zsSdLXBYdaQ0p1xQaYhsJAntMuu1wWJa2puK8vlA_tsD7fAkjE5-G/s1600-h/dowjones.png"><img id="BLOGGER_PHOTO_ID_5156451663787710626" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2MfTOU8YXorMQNJ6niqI_fhAdmd8Ks2gF3gij3OxN77KWXYjjKNUQT9p9P1Hca5f-mtcG6icoLQHe6c0zsSdLXBYdaQ0p1xQaYhsJAntMuu1wWJa2puK8vlA_tsD7fAkjE5-G/s400/dowjones.png" border="0" /></a> An update on our beloved Dow Jones, from chart, it appears to sit tightly at a turning point at the 12,400 mark especially when it close flat for the day yesterday 16th jan. Infering from the trend channels, it would appear that a rebound seems higher chance than another substantial selldown. However when it does happen(selldown) from here, 12,400 mark, it would be extremely bearish. Take note that overall, the Dow Jones industrial index is still stuck within a 6-month downtrend as seen by the downtrend channel til it disrupts the upper trend channel.<br /><br />A 50% retracement up from 12,400 from the high of 13,780 gives us 13,094 , should the dow jones retraces back up to this level or even better the 61.8% level of 13,257, it would stand a really good chance to breakup from the downtrend. Take note though should it breaks down the upwards sloping channel line within the major downtrend channel.<br /><br />On a side note, i wonder how long the local brokerages or the FTSE-SGX collaboration management going to give in to provding free singapore index feed on the internet platform. Interesting to note for once the local brokerages stands up united against SGX.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-82499598213233651402007-12-24T09:50:00.000+08:002007-12-24T09:56:17.477+08:00Merry Christmas & Happy Holidays!<object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/6oj3jixMGaw&rel=1"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/6oj3jixMGaw&rel=1" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object><br /><br />Wishing u joyous holidays and a wonderful new year 2008.<br /><br />daveUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-26573835054054900032007-12-11T09:12:00.000+08:002007-12-11T10:22:12.930+08:00<p><iframe allowfullscreen='allowfullscreen' webkitallowfullscreen='webkitallowfullscreen' mozallowfullscreen='mozallowfullscreen' width='320' height='266' src='https://www.blogger.com/video.g?token=AD6v5dyQGxR-DZq1DkQvU9s2YyDYbfFqO2pnTA-XRTys1SiTaqv94mbs3djt0GpNRemCjwnRMkjYVsb4eLI' class='b-hbp-video b-uploaded' frameborder='0'></iframe></p><p>A wedding shoot at the Pan Pacific.</p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-80073616312328857922007-12-01T21:27:00.000+08:002007-12-01T21:34:03.330+08:00From Mexico, with Love.<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3EzttRqUwzMTLcrd7rqSHWRKPhDgAtXVh0Xc93GTcGeweTS4GJjnWpbhYZuizBodVmVWqNtfTWzdpXxmeShV2fenXHoZePTzfI3z5fEePdYwLacOAUWhz0AjyKAGIs_LuGYCQ/s1600-r/IMG_1260.JPG"><img id="BLOGGER_PHOTO_ID_5138997001952725186" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCQHc3Fe-1ITfjS2YOTLVyTPo_XRLr8C5WOLvpK7YuriwWS_35ePs3H82-QK1413cb2IawlF4yvrvXVEnDsw4hv2eb1c-Bu2kuUoSU6OZhifszjpazgiMtb0bqajCW3J5h4GJm/s400/IMG_1260.JPG" border="0" /></a>the famous ARCH in the Baja Peninsula, separates the Sea of Cortex from the Pacific Ocean.<br /><div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi1jWuqvU6sfZgN9CQYp7aK6_C0nwvfOvBbGd9JDVBuLvC61_qmXBiWpQFJa6JVudrbb6n80HQbAT38kQydYCJeIgfRekbmAtqFh3FlejeSvE7Zthv6WFdUSX67mPlLA0lfz6Ju/s1600-r/IMG_1364.JPG"><img id="BLOGGER_PHOTO_ID_5138995902441097394" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg82q8Hg_lF-taFUIBtFGjtq9IxxR_cGHkV8I359Bn2xPplGQmzAv9t-zXZVbC-hQll7z59lhpoh6ChWhD5xeQ4b2hQYS-KtMzZ27yfJ8XpE2jiYf8Fbdj-GBDXIhxkFFkrd3rK/s400/IMG_1364.JPG" border="0" /></a> Sunrise taken from our time share apt in mexico, cabo san lucas.<br /><br /><div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMtAmW6LzQJZ63i-Sq1nAqPZHgoQsR086k5y2_R-TTpSKuyc6mdIUvC-6FovR_qFVOKx5CDv60p0w__hEXHoMJcGAN09loXBCcGypQub9jMrZ9hk7_-zV8yptzxWcWDOcXf4KB/s1600-r/IMG_1255.JPG"><img id="BLOGGER_PHOTO_ID_5138995846606522530" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3K3VoNXG3lXSaE5kA8HmNpmwLOKuJPHxEQsOl1DEcobahI55j3iucMDSw-uHgOxiGeZuz0OQKAQ6sxHn-HHmFsV98oRDn6TQ4iSwYtfmgi3ChGD5XC6xkM7ZSG6OA83A_1a2k/s400/IMG_1255.JPG" border="0" /></a> The sea lion colony amongst the rocks<br /><div><br /><div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMHLiS6mSqoeiJKOIbg_NTrXKK2OcU46JBV_3HU_fD_O3hRI45sIppX2t9qx46Y8ZxFyKtLSbDHxKnc5ej-RQ157vg7nhWdr10Qh9sKwufmNPTt0f3BLQPucfRpBWuTYGd7meU/s1600-r/IMG_1274.JPG"><img id="BLOGGER_PHOTO_ID_5138995717757503618" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjFRQQCjXkhFOX9hTDfjrE7V2ikCfWScg0LHBIEeuBStKretEZBVPdE022aS30Dy8vkSpDKkFXf01SiNmZCvpDCPpHVwu1Htn_GG3ATZwXW51VTXqo9N2LEzNQJNjkOIQ668k9Q/s400/IMG_1274.JPG" border="0" /></a>Sunset taken from the cruise ship.</div><br /><div><br />(Pictures courtesy of ateo.)<br /><br /></div><br /><div></div></div></div></div>Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-30764859.post-35545421133460990632007-11-11T11:13:00.000+08:002007-11-11T16:25:35.123+08:00Trading to Win: THE PSYCHOLOGY OF MASTERING THE MARKETS"Trading to win" defines a goal-oriented approach designed to help<br />JL traders maximize their performance in a unique way¡ªby tapping<br />personal resources they might never know they had, by developing a ra-<br />tional strategy for trading, by learning new psychological skills, and by<br />letting go of unproductive, even maladaptive, behavior patterns.<br />This approach puts a special emphasis on learning to get rid of past<br />memories and erroneous notions around which people have organized<br />their lives. This book shows you how to commit to a future goal by sur-<br />rendering to it, and simultaneously relinquishing all thoughts of gain,<br />achievement, or attachment. Sounds paradoxical, you say? It is. That's<br />the point.<br /><br />This system encourages you to trust a higher power that assists you<br />in realizing the power within yourself. Periodically it helps you refocus<br />on your goal, realigning yourself with your objectives. Then, you use<br />your objectives as a filter through which to make distinctions in the<br />present moment.<br /><br />The world of trading is one of high stakes and high-risk activity.<br />The goal is, ostensibly, financial gain. Give up that goal, and you gain<br />the freedom to genuinely listen to the sounds of the marketplace and to<br />be able to read the movement of stock prices in a way that enables you<br />to increase your probability of success.<br /><br />For master traders, the monetary result is secondary to the gratifica-<br />tion that comes from being able to make the right market call. They get<br />their primary satisfaction from having an idea about a stock and imple-<br />menting this idea in a profitable trade. Master traders trust their infor-<br />mation, sense the direction of the marketplace, and assess many other<br />variables before finally executing a lucrative trade.<br /><br />This requires an enormous ability to abandon pride and to maintain<br />equanimity in the face of loss or excessive profit. The master trader<br />knows¡ªand you can learn¡ªthat neither despair nor euphoria should<br />cloud one's judgment. As you improve, the market becomes even more<br />challenging, requiring you to commit to bigger numbers or more com-<br />plex dimensions of the game. If you are willing, this can lead you to<br />give up more of your old habits and to become more at one with the<br />universe.<br /><br />I have watched this occur in real-life traders. For the past six years I<br />have met weekly with a group of professional traders to explore the psy-<br />chological and emotional dimensions of their trading and to find ways<br />of maximizing their performance. The Trading to Win principles dis-<br />cussed in this book evolved from these seminars and have since been<br />tested and developed in several other trading settings. I am deeply in-<br />debted to Steve Cohen for making this opportunity possible and for<br />paving the way to a greater appreciation of these broader issues to the<br />traders in his and other firms.<br /><br />(Because of the proprietary nature of many of the issues considered<br />in this book, I have not identified any specific traders by name. All per-<br />sonality profiles represent composites of the various traders and, al-<br />though there are female traders, the masculine persona has been used<br />throughout for realism in this currently male-dominated field.)<br /><br />Reading the market's direction and the directions of specific<br />stocks is essential to trading success. It is like the childhood game of<br />musical chairs. In that game, you have to time your move so that you<br />do not jump for a chair before the music has stopped; you also don't<br />want to linger too long after the music stops so that there are no<br />seats left. This is the trader's dilemma as well. The more skilled you<br />are, the more patience you have, the longer you can stay in as the<br />stock rises or falls before you act. You stay in longer, and therefore<br />maximize your profits. However, you do not stay in so long that, by<br />holding declining stock in hope that it will turn around.<br /><br />The same goes for being able to minimize your losses. Rather than<br />hoping and praying and rationalizing your hesitation by convincing<br />yourself that the stock will eventually turn around, you cut your<br />losses instead.<br /><br />The Trading to Win program spotlights a set of philosophical and<br />behavioral principles that can help you to implement proactive trad-<br />ing strategies. This approach involves commitment, concentration,<br />recovery, and preparation for the next day. It enables you to trust<br />your true self.<br /><br />This approach is not for the fainthearted. It puts much emphasis on<br />proactive trading strategies designed to produce exponential results. It<br />encourages you to do counterintuitive things¡ªsuch as admitting uncer-<br />tainty, fear, and lack of knowledge and asking for help; sharing informa-<br />tion; and facing vulnerability. All of this means letting go of ego and<br />arrogance, which blurs your focus on the marketplace. It compels you<br />to learn to communicate directly and clearly with others, whether they<br />be staff, associates, or floor brokers.<br /><br />Trading to win obliges you to review each day's trades, so you can<br />see how you may have veered from your commitment, what dropped<br />out of your trading, and what commitment you must add to get the de-<br />sired result. You might need to raise the number of shares traded so they<br />are consistent with your level of commitment. You might have to aban-<br />don energy-draining behavior¡ªimpulsiveness, chest beating, whining,<br />and scalping (selling too soon to book a quick profit and missing the<br />larger upward movement of a stock). You'll need to understand how to<br />get out fast when stocks are dropping. You'll have to shed counterpro-<br />ductive habits, such as taking personal calls during trading times or rac-<br />ing home after the bell instead of reviewing the day with other traders<br />and coaches.<br /><br />In addition, you must learn the appropriate role of money. In<br />trading, it's not so much to be rich or secure. It is a way of keeping<br />score. It is a way of defining the framework of events so that you can<br />determine what actions are needed in the present. Paradoxically, the<br />greater the amount of money, the more you must renounce your fo-<br />cus on it.<br /><br />While this program has been developed for professional traders, its<br />principles have value for the ordinary trader as well. Sound trading ap-<br />plies to everyone, including the advanced trader who must regularly re-<br />turn to basics. Since it concentrates on a goal, yet makes you detach<br />your ego from it, it has relevance not only to investing, but to life as<br />well. I define "winning" as maximizing your own potential, as seeing<br />the world realistically, and as living life like the miracle it is. After all,<br />trading is a metaphor for the perilous yet exhilarating nature of living<br />on the edge.<br /><br />What's the Concept, Doc?<br /><br />The objective of this book is to try to get at the underlying thought<br />process behind trades. What are you are really thinking? What's moti-<br />vating you? Is it consistent With your style? Does it make sense for you?<br />Or are you governed at a given moment by emotion, by panic, or by<br />whatever is going on in the Street? The ultimate objective is to be much<br />more capable of reading the tape and reading the changes in the market<br />in terms of what is occurring based on what you understand about it.<br />You'll hear colleagues discuss in these pages things that they don't nor-<br />mally like to talk about, such as weakness or getting away from one's<br />game plan.<br /><br />'Trading, like sports, involves a high degree of uncertainty and un-<br />predictabilityj This means playing in unfamiliar territory. Many books<br />explore basic trading and basic psychological concepts such as relax-<br />ation, but don't link psychology and trading behavior. My aim is to de-<br />velop the thought processes essential for trading in the realm of<br />uncertainty. Whether you are hammered by fear or animated by eupho-<br />ria, both can throw you off your game.<br /><br />It is important to understand why you may lose after you win big,<br />or why you may sometimes feel that you don't deserve to win, or feel<br />guilty about it, or have an attitude about money that colors your trad-<br />ing. To be a super-trader, you must learn not to forget your discipline<br />and not to forget to respect the market. How do you surrender and<br />yet keep your consciousness and your alertness so you can move in<br />and out?<br /><br />Trading is a very high-pressure game. It triggers a lot of defensive-<br />ness that on the surface looks very rational and reasonable. I hope that<br />this book raises your level of awareness of certain critical processes so<br />that you can begin to use them in your work.<br /><br />What Do I Mean by a Strategy?<br />Once you set a specific goal for the year, you must ask how you are go-<br />ing to meet it. How many trades at what size would you have to make<br />in order to make your number? What should your team look like? What<br />general rules must you establish in terms of holding on, doubling up, or<br />getting out of positions?<br />If you reply with a shrug, "Well, I want to do as well as I can," you<br />are less likely to get there. To reach your target, you'll have to elevate<br />your game to a level where you say, "Okay, this is what I'm going<br />to do."<br />Why have rules? Because some moves, which you can find in your<br />own database, consistently work. Forget the standard litany of rational-<br />izations. You can always blame Alan Greenspan, or the market, or the<br />fact that it's February. But regardless of different styles, certain princi-<br />ples remain immutable. If a stock goes down and you own it, you're<br />losing money. "I'm going to make it a long-term trade," you say? You<br />still lost money today. "It's a six-month trade" or "a three-month<br />trade"? Maybe. But today you were hoping and wishing; you read<br />something in Barron's, but it doesn't happen. You may keep thinking<br />that you can make up for the loss, but, in fact, you would make much<br />more if your losses were less.<br /><br />Once you stop having too great a tolerance for a high level of loss,<br />you can start raising your monthly profit and loss (P&L) significantly.<br />Some traders, even substantial ones, stay in positions even if they're<br />dropping, because they are "macho" and can "tolerate pain." The stock<br />will eventually come back, they tell themselves. But you are not a wimp<br />if you get out of a losing position.<br /><br />One trader I know had to learn to get out at three points. Next he<br />learned to get out at one and a half, and he made more money. Now he<br />has to take the next big step: learning that it's okay to run away from a<br />losing stock. So if he's making four thousand dollars and he starts cut-<br />ting his losses, he can make five or six thousand.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-23096636589534119242007-09-21T21:07:00.000+08:002007-09-22T00:07:07.090+08:00Heaven on Earth.<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMJ995NH6fo6DIWPFoYAbjhwQhsfKekHRyBB5pMuf_R67q2ZnekM39XYprD28gnOsFzFULtMg2tkii3Lcg1AnCAdu94jHMTZhOi3t4n5_fj2WnjoiNGTwzTDVd7ihCO57TzsSv/s1600-h/ateo5.bmp"><img id="BLOGGER_PHOTO_ID_5112674051693388850" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMJ995NH6fo6DIWPFoYAbjhwQhsfKekHRyBB5pMuf_R67q2ZnekM39XYprD28gnOsFzFULtMg2tkii3Lcg1AnCAdu94jHMTZhOi3t4n5_fj2WnjoiNGTwzTDVd7ihCO57TzsSv/s400/ateo5.bmp" border="0" /></a> <div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyDhmCnuqO-fV4ke8d4zYt0cumHcDjv0gAUZjQ22PVlo7C7rIlsozMuu6lep6j6Nq1B5hE-0Onpi8K3jra8M2jefXr_qfSzNt6LWHMimzGbKoXXCYORhdFRnjynEkty6li42E-/s1600-h/ateo3.bmp"><img id="BLOGGER_PHOTO_ID_5112672320821568546" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyDhmCnuqO-fV4ke8d4zYt0cumHcDjv0gAUZjQ22PVlo7C7rIlsozMuu6lep6j6Nq1B5hE-0Onpi8K3jra8M2jefXr_qfSzNt6LWHMimzGbKoXXCYORhdFRnjynEkty6li42E-/s400/ateo3.bmp" border="0" /></a> <div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnVrwVA-0jAYqA24JaE8mM9BCBirxO3YyFFyoBHsfdq5TOFdzWWYGhOgn96f-_RhoRhvmbojVEU4X9Ex_yUOb907V8zi1_MHxsZjqA9ee5UuG60THcRnxnLLECE8oAv9llfGhd/s1600-h/ateo2.bmp"><img id="BLOGGER_PHOTO_ID_5112671526252618770" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnVrwVA-0jAYqA24JaE8mM9BCBirxO3YyFFyoBHsfdq5TOFdzWWYGhOgn96f-_RhoRhvmbojVEU4X9Ex_yUOb907V8zi1_MHxsZjqA9ee5UuG60THcRnxnLLECE8oAv9llfGhd/s400/ateo2.bmp" border="0" /></a> <div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEilXjmzcKxDxTgzQSjd92hd7hHI8KEneEnM9Zo6mqtLLtyU0vVeuUYJvc3RxDU52htGU5X7wDRU38yfogauEHJ5Cy1qAOzok5fERqx3EQXg0MkM7in6H7BC2ib47CNsSn8eH7mc/s1600-h/ateo1.bmp"><img id="BLOGGER_PHOTO_ID_5112669984359359490" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEilXjmzcKxDxTgzQSjd92hd7hHI8KEneEnM9Zo6mqtLLtyU0vVeuUYJvc3RxDU52htGU5X7wDRU38yfogauEHJ5Cy1qAOzok5fERqx3EQXg0MkM7in6H7BC2ib47CNsSn8eH7mc/s400/ateo1.bmp" border="0" /></a> </div><div>(Pictures courtesy of Ateo, taken at the North East Cascades and the Pearrygian.)</div></div></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-10212984303083732972007-08-21T20:40:00.000+08:002007-08-21T20:46:57.300+08:00I = Institutional Sponsorship: A Little Goes a Long WayIt takes big demand to move supply up, and the largest source of<br />demand for stocks is by far the institutional buyer. A stock certainly<br />does not need a large number of institutional owners, but it should have<br />at least a few such sponsors. Three to ten might be a minimum or rea-<br />sonable number of mutual fund sponsors, although some stocks might<br />have a good deal more.<br /><br />The would-be winning investor should learn to sort through and rec-<br />ognize that certain institutional sponsors are more savvy, have a<br />stronger performance record, and are better at choosing stocks than<br />others are. I call it analyzing the quality of sponsorship.<br /><br />What Is Institutional<br />Sponsorship?<br /><br />Sponsorship may take the form of mutual funds; corporate pension<br />funds; insurance companies; large investment counselors; hedge funds;<br />bank trust departments; or state, charitable, and educational institutions.<br />For measurement purposes, I do not consider brokerage firm<br />research department reports as institutional sponsorship, although a<br />few exert influence on certain securities. Investment advisory services<br />and market letter writers are also not considered to be institutional or<br />professional sponsorship in this definition.<br /><br />Financial services such as Vickers and Arthur Weisenberger & Co. pub-<br />lish fund holdings and investment performance records of various insti-<br />tutions. In the past, mutual funds have tended to be slightly more<br />aggressive in the market, but banks have managed larger amounts of<br />money. More recently, numerous new "entrepreneurial type" investment<br />counseling firms have been organized to manage institutional monies.<br />Performance figures for the latest 12 months plus the last three- to<br />five-year period are usually the most relevant. However, results may<br />change significantly as key portfolio managers leave one money man-<br />agement organization and go to another. The institutional leaders con-<br />tinually rotate and change.<br /><br />For example, Security Pacific Bank (now merged into Bank America)<br />had somewhat modest performance in its trust investment division up<br />to 1981. But with the addition of new management and more realistic<br />concepts in the investment area, it polished up its act to the point that<br />it ranked at the very top in performance in 1982. In 1984, the top man-<br />ager of Security Pacific left and formed his own company, Nicolas<br />Applegate of San Diego.<br /><br />If a stock has no professional sponsorship, chances are that its perfor-<br />mance will be more run-of-the-mill. The odds are that at least several of<br />the more than 1000 institutional investors have looked at the stock and<br />passed it over. Even if they are wrong, it still takes large buying to stimu-<br />late an important price increase in a security.<br /><br />Also, sponsorship provides buying support when you want to get out of<br />your investment. If there is no sponsorship and you try to sell your stock<br />in a poor market, you may have problems finding someone to buy it.<br />Daily marketability is one of the great advantages of owning stock.<br />(Real estate is far less liquid and commissions and fees are much high-<br />er.) Institutional sponsorship helps provide continuous marketability<br />and liquidity.<br /><br />Is It "Overowned" by<br />Institutions?<br /><br />A stock can also have too much sponsorship and become "overowned."<br />Overowned is a term we coined and began using in 1969 to describe a<br />stock whose institutional ownership had become excessive. In any case,<br />excessive sponsorship can be adverse since it merely represents large<br />potential selling if anything goes wrong in the company or the general<br />market. On the other hand, Snapple, in April 1993, was underowned.<br />The "favorite 50" and other lists of the most widely owned institu-<br />tional stocks can be rather poor, and potentially risky, prospect lists. By<br />the time performance is so obvious that almost all institutions own a<br />stock, it is probably too late. The heart is already out of the watermelon.<br /><br />An Unassailable Institutional<br />Growth Stock Tops<br /><br />In June 1974, we put Xerox on our institutional sell list at $115. We<br />received unbelievable flack because Xerox was then one of the most<br />widely held institutional stocks and had been amazingly successful up to<br />that point. However, our research indicated it had topped and was<br />headed down in price.<br /><br />Institutions made Xerox their most widely purchased stock for that<br />year. Of course that didn't stop it from tumbling in price. What it did<br />prove was how sick the stock really was at that time, since it declined<br />steadily in spite of such buying. The episode did bring us our first large<br />insurance company account in New York City in 1974.<br /><br />They had been buying Xerox on the way down in the $80s until we<br />persuaded them they should be selling instead of buying.<br /><br />Famous Last Words "We'll<br />Never Sell Avon Products"<br /><br />We tried that same year to get another well-known eastern insurance<br />company to sell Avon Products at $105, and I recall the head of their<br />investment organization pounding the table and saying, "We'll never<br />sell Avon Products; it's such an outstanding company." I wonder if they<br />still have it?<br /><br />Professionals, like the public, love to buy on declines. They also make<br />mistakes and incur losses. In many ways, some institutions are like the<br />public. Money management organizations have their experienced and<br />realistic decision makers, as well as their less seasoned or unrealistic<br />portfolio managers and analysts.<br /><br />It is, therefore, not always as crucial to know how many institutions<br />own a stock as it is to know which of the better ones own or have pur-<br />chased a particular stock in the last quarter. The only important thing<br />about the number of institutional owners is to note the recent quarterly<br />trend. Is the number of sponsors increasing or decreasing?<br /><br />Note New Stock Positions<br />Bought in the Last Quarter<br /><br />New institutional positions acquired in the last quarter are more rele-<br />vent. Many investors find that disclosures of a fund's new commitments are <br />published after the fact, too late to be of any real value. This is riot true.<br />These reports are available publicly about six weeks after the end of a<br />fund's quarter. The records are very helpful to those who can single out<br />the wiser selections and understand correct timing and the proper use<br />of charts.<br /><br />Additionally, half of all institutional buying that shows up on the New<br />York Stock Exchange ticker tape may be in humdrum stocks and much<br />of the buying may be wrong. However, out of the other half you may<br />have some truly phenomenal selections.<br /><br />Your task, then, is to weed through and separate the intelligent, high-<br />ly informed institutional buying from the poor, faulty buying. Though<br />difficult, this will become easier as you learn to apply and follow the<br />rules, guidelines, and principles presented in this book.<br /><br />Institutional trades usually show up oil the stock exchange ticker tape<br />in most brokers' offices in transactions of 1000 shares up to 100,000<br />shares or more. Institutional buying and selling accounts for more than<br />70% of the activity in most leading companies. I estimate that close to<br />80% or 90% of the important price movements of stocks on the New<br />York Stock Exchange are caused by institutional orders.<br /><br />As background information, it may be valuable to find out the invest-<br />ment philosophy and techniques used by certain funds. For example,<br />Pioneer Fund in Boston has always emphasized buying supposedly<br />undervalued stocks selling at low P/E ratios, and its portfolio contains a<br />larger number of OTC stocks. A chartist probably would not buy many<br />of Pioneer's stocks. On the other hand, Keystone S-4 usually remains<br />fully invested in the most aggressive growth stocks it can find. Evergreen<br />Fund, run by Steve Lieber, does a fine job of uncovering fundamentally<br />sound, small companies.<br /><br />Jim Stower's Twentieth Century Ultra and his Growth Investors funds<br />use computer screening to buy volatile, aggressive stocks that show the<br />greatest percentage increase in recent sales and earnings.<br />Magellan and Contra Fund in Boston scours the country to get in<br />early on every new concept or story in a stock. Some other manage-<br />ments worth tracking might be AIM Management, Nicolas Applegate,<br />Thomson, Brandywine, Berger, and CGM. Some funds buy on new<br />highs, others try to buy around lows and may sell on new highs.<br /><br />In a capsule, buy stocks that have at least a few institutional sponsors<br />with better-than-average recent performance records.<br /><br />(Excerpt from 'How To Make Money in Stocks')Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-12780566420451351622007-08-06T21:23:00.000+08:002007-08-06T21:54:19.850+08:00Crossroads<object width="425" height="350"><param name="movie" value="http://www.youtube.com/v/txCOKp6NldM"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/txCOKp6NldM" type="application/x-shockwave-flash" wmode="transparent" width="425" height="350"></embed></object><br /><br /><object width="425" height="350"><param name="movie" value="http://www.youtube.com/v/0LxstgyyuV4"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/0LxstgyyuV4" type="application/x-shockwave-flash" wmode="transparent" width="425" height="350"></embed></object>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-11123521868595529252007-07-21T11:11:00.000+08:002007-07-21T11:13:24.820+08:00Have a Wonderful Weekend.<object width="425" height="350"><param name="movie" value="http://www.youtube.com/v/IZpjYd0sTT0"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/IZpjYd0sTT0" type="application/x-shockwave-flash" wmode="transparent" width="425" height="350"></embed></object><br /><br /><br /><object width="425" height="350"><param name="movie" value="http://www.youtube.com/v/QWNoiVrJDsE"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/QWNoiVrJDsE" type="application/x-shockwave-flash" wmode="transparent" width="425" height="350"></embed></object><br /><br />Enjoy.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-92127265478144546512007-07-09T21:21:00.000+08:002007-07-09T21:34:06.407+08:00L= Leader or Laggard: Which is Your Stock?Most of the time, people buy stocks they like, stocks they feel good<br />about, or stocks they feel comfortable with, like an old friend, old<br />shoes, or an old dog. These securities are frequently sentimental, drag-<br />gy slowpokes rather than leaping leaders in the overall exciting stock<br />market.<br /><br />Let's suppose you want to buy a stock in the computer industry. If you<br />buy the leading security in the group and your timing is sound, you<br />have a crack at real price appreciation.<br /><br />If, on the other hand, you buy equities that haven't yet moved or are<br />down the most in price, because you feel safer with them and think<br />you're getting a real bargain, you're probably buying the sleepy losers<br />of the group. Don't dabble in stocks. Dig in and do some detective<br />work.<br /><br />Buy among the Best Two or<br />Three Stocks in a Group<br /><br />The top two or three stocks actionwise in a strong industry group can<br />have unbelievable growth, while others in the pack may hardly stir a<br />point or two. Has this ever happened to you?<br /><br />In 1979 and 1980, Wang Labs, Prime Computer, Datapoint, Rolm<br />Corp., Tandem Computer, and other small computer companies had<br />five-, six-, and seven-fold advances before topping and retreating, while<br />grand old IBM just sat there and giants Burroughs, NCR, and Sperry<br />Rand turned in lifeless price performances. In the next bull market<br />cycle, IBM finally sprang to life and produced excellent results. Home<br />Depot advanced 10 times from 1988 to 1992, while Waban and<br />Hechinger, the laggards, clearly underperformed.<br /><br />Avoid Sympathy Stock Moves<br /><br />There is very little that's really new in the stock market. History just<br />keeps repeating itself. In the summer of 1963, I bought Syntex, which<br />afterwards advanced 400%. Yet most people would not buy it then<br />because it had just made a new high in price at $100 and its P/E ratio,<br />at 45, seemed too high.<br /><br />Several investment firms recommended G. D. Searle, a sympathy play,<br />which at the same time looked much cheaper in price and had a similar<br />product to Syntex's. But Searle failed to produce stock market results.<br />Syntex was the leader, Searle the laggard.<br /><br />Sympathy plays are stocks in the same group as a leading stock, but<br />ones showing a more mediocre record and weaker price performance.<br />They eventually attempt to move up and follow "in sympathy" the pow-<br />erful price movement of the real group leader.<br /><br />In 1970, Levitz Furniture became an electrifying stock market winner.<br />Wickes Corp. copied Levitz and plunged into the warehouse furniture<br />business.<br /><br />Many people bought Wickes instead of Levitz because it was cheaper<br />in price. Wickes never performed. It ultimately got into financial trou-<br />ble, whereas Levitz increased 900% before it finally topped. As Andrew<br />Carnegie, the steel industry pioneer, said in his autobiography, "The<br />first man gets the oyster; the second, the shell."<br /><br />Is the Stock's Relative Price<br />Strength Below 70?<br /><br />Here is a simple, easy-to-remember measure that will help tell you if a<br />security is a leader or a laggard. If the stock's relative price strength, on<br />a scale from 1 to 99, is below 70, it's lagging the better-performing<br />stocks in the overall market. That doesn't mean it can't go up in price,<br />it just means if it goes up, it will probably rise a more inconsequential<br />amount.<br /><br />Relative strength normally compares a stock's price perfor-<br />mance to the price action of a general market average like the Standard<br />& Poor's (S&P) Index, or in some cases, all other stocks. A relative<br />strength of 70, for example, means a stock outperformed 70% of the<br />stocks in the comparison group during a given period, say, the last six<br />or twelve months.<br /><br />The 500 best-performing listed equities for each year from 1953<br />through 1993 averaged a relative price strength rating of 87 just before<br />their major increase in price actually began. So the determined winner's<br />rule is: Avoid laggard stocks and avoid sympathy movements. Look for<br />the genuine leaders!<br /><br />Most of the better investment services show both a relative strength<br />line and a relative strength number and update these every week for a<br />list of thousands of stocks.<br /><br />Relative strength numbers are shown each day for all stocks listed in<br />the Investor's Business Daily NYSE, AMEX, and NASDAQ price tables.<br />Updated relative strength numbers are also shown in Daily Graphs<br />charting service each week.<br /><br />Pick 80s and 90s That Arc in<br />a Chart Base Pattern<br /><br />If you want to upgrade your stock selection and concentrate on the best<br />leaders, you could consider restricting your buys to companies showing<br />a relative strength rank of 80 or higher. Establish some definite disci-<br />pline and rules for yourself.<br /><br />If you do this, make sure the stock is in a sound base-building zone<br />(proper sideways price consolidation pattern) and that the stock is not<br />extended (up) more than 5% or 10% above this base pattern. This will<br />prevent you from chasing stocks that have raced up in price too rapidly<br />above their chart base patterns. For example, in the Reebok chart<br />shown at the end of Chapter 3, if the exact buy point was $29, the stock<br />should not be purchased more than 5% or 10% above $29.<br /><br />If a relative price strength line has been sinking for seven months or<br />more, or if the line has an abnormally sharp decline for four months or<br />more, the stock's behavior is questionable.<br /><br />Why buy an equity whose relative performance is inferior and strag-<br />gling drearily behind a laige number of other, better-acting securities<br />in the market? Yet most investors do, and many do it without ever look-<br />ing at a relative strength line or number.<br /><br />Some large institutional portfolios are riddled with stocks showing<br />prolonged downtrends in relative strength. I do not like to buy stocks<br />with a relative strength rating below 80, or with a relative strength line<br />in an overall downtrend.<br /><br />In fact, the really big money-making selections generally have a rela-<br />live strength reading of 90 or higher just before breaking out of their<br />first or second base structure. A potential winning stock's relative<br />strength should be the same as a major league pitcher's fast ball. The<br />average big league fast ball is clocked about 86 miles per hour and the<br />outstanding pitchers throw "heat" in the 90s.<br /><br />The complete lack of investor awareness, or at least unwillingness, in<br />establishing and following minimum realistic standards for good stock<br />selection reminds me that doctors many years ago were ignorant of the<br />need to sterilize their instruments before each operation. So they kept<br />killing off excessive numbers of their patients until surgeons finally and<br />begrudgingly accepted studies by a young French chemist named Louis<br />Pasteur on the need for sterilization.<br /><br />It isn't very rewarding to make questionable decisions in any arena.<br />And in evaluating the American economy, investors should zero in on<br />sound new market leaders and avoid anemic-performance investments.<br /><br />Always Sell Your Worst<br />Stock First<br /><br />If you own a portfolio of equities, you must learn to sell your worst-per-<br />forming stocks first and keep your best-acting investments a little<br />longer. In other words, sell your cats and dogs, your losers and mistakes,<br />and try to turn your better selections into your big winners.<br /><br />General market corrections, or price declines, can help you recognize<br />new leaders if you know what to look for. The more desirable growth<br />stocks normally correct l'/2 to 2/2 times the general market averages.<br />However as a rule, growth stocks declining the least (percentagewise) in<br />a bull market correction are your strongest and best investments, and<br />stocks that plummet the most are your weakest choices.<br /><br />For example, if the overall market suffers a 10% intermediate term<br />falloff, three successful growth securities could drop 15%, 20%, and<br />30%. The ones down only 15% or 20% are likely to be your best invest-<br />ments after they recover. Of course, a stock sliding 35% to 40% in a<br />general market decline of 10% could be flashing you a warning signal,<br />and you should, in many cases, steer clear of such an uncertain actor.<br /><br />Pros Make Mistakes Too<br /><br />Many professional investment managers make the serious mistake of<br />buying stocks that have just suffered unusually large price drops. In<br />June 1972, a normally capable, leading institutional investor in<br />Maryland bought Levitz Furniture after its first abnormal price break in<br />one week from $60 to around $40. The stock rallied for a few weeks,<br />rolled over, and broke to $18.<br /><br />Several institutional investors bought Memorex in October 1978,<br />when it had its first unusual price break. It later plunged.<br />Certain money managers in New York bought Dome Petroleum in<br />September 1981 after its sharp drop from $16 to $12, because it seemed<br />cheap arid there was a favorable story going around Wall Street on the<br />stock. Months later Dome sold for $1, and the street talk was that the<br />company might be in financial difficulties.<br /><br />None of these professionals had recognized the difference between<br />the normal price declines and the highly abnormal corrections that<br />were a sign of potential disaster in this stock.<br /><br />Of course, the real problem was that these expert investors all relied<br />solely on fundamental analysis (and stories) and their personal opinion<br />of value (lower P/E ratios), with a complete disregard for what market<br />action could have told them was really going on. Those who ignore what<br />the marketplace is saying usually suffer some heavy losses.<br /><br />Once a general market decline is definitely over, the first stocks that<br />bounce back to new price highs are almost always your authentic leaders.<br />This process continues to occur week by week for about three months<br />or so, with many stocks recovering and making new highs. To be a truly<br />astute professional or individual investor you must learn to recognize<br />the difference between normal price action and abnormal activity.<br />When you understand how to do this well, people will say you have "a<br />good feel for the market."<br /><br />Control Data-Abnormal<br />Strength in a Weak Market<br /><br />During a trip to New York in April 1967, I remember walking through a<br />broker's office on one day when the Dow Jones Industrial Average was<br />down over twelve points. When I looked up at the electronic ticker tape<br />showing prices moving across the wall, Control Data was trading in<br />heavy volume at $62, up SV-j points for the day. I immediately bought<br />the stock at the market, because I knew Control Data well, and this was<br />abnormal strength in the face of a weak overall market. The stock sub-<br />sequently reached $150.<br /><br />In April 1981, just as the 1981 bear market was commencing, MCI<br />Communications, a Washington, D.C.-based telecommunications stock<br />trading in the over-the-counter market, broke out of a price base at $15.<br />It advanced to the equivalent of $90 in the following 21 months.<br />MCI tripled in a declining market. This was a great example of abnor-<br />mal strength during a weak market. Lorillard did the same thing in the<br />1957 bear market. Software Toolworks soared in January 1990.<br /><br />So don't forget: It seldom pays to invest in laggard performing stocks<br />even if they look tantalizingly cheap. Look for the market leader.<br /><br />(Excerpt from How To Make Money in Stocks.)Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-74048374522093207482007-06-21T21:18:00.000+08:002007-06-21T21:42:53.123+08:00What Is .<p><embed src="http://www.youtube.com/v/_IP_Rjx4wVY" width="425" height="350" type="application/x-shockwave-flash" wmode="transparent"></embed></p><p>Highly recommended film to catch. A film that truly gives different meaning to different people. We are given a deep sense of self-awareness for such contemplation of the 'higher truth' . The key is in the discovery, not in the believing.</p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-63023816963155099302007-06-11T20:35:00.000+08:002007-06-11T20:55:19.045+08:00S = Supply and Demand; Small Capitalization Plus Big Volume DemandThe law of supply and demand determines the price of almost every-<br />thing in your daily life. When you go to the grocery store and buy fresh<br />lettuce, tomatoes, eggs, or beef, supply and demand affects the price.<br /><br />The law of supply and demand even impacted the price of food and<br />consumer goods in former Communist, dictator-controlled countries<br />where these state-owned items were always in short supply and frequently<br />available only to the privileged class of higher officials in the bureaucracy<br />or in the black market to comrades who could pay exorbitant prices.<br /><br />The stock market does not escape this basic price principle. The law<br />of supply and demand is more important than all the analyst opinions<br />on Wall Street.<br /><br />Big Is Not Always Better<br /><br />The price of a common stock with 300 million shares outstanding is<br />hard to budge up because of the large supply of stock available. A<br />tremendous volume of buying (demand) is needed to create a rousing<br />price increase.<br /><br />On the other hand, if a company has only 2 or 3 million shares of<br />common stock outstanding, a reasonable amount of buying can push<br />the stock up rapidly because of the small available supply.<br />If you are choosing between two stocks to buy, one with 10 million<br />shares outstanding and the other with 60 million, the smaller one will<br />usually be the rip-roaring performer if other factors are equal.<br /><br />The total number of shares of common stock outstanding in a com-<br />pany's capital structure represents the potential amount of stock avail-<br />able for purchase.<br /><br />The stock's "floating supply" is also frequently considered by market<br />professionals. It measures the number of common shares left for possi-<br />ble purchase after subtracting the quantity of stock that is closely held<br />by company management. Stocks that have a large percentage of owner-<br />ship by top management are generally your best prospects.<br /><br />There is another fundamental reason, besides supply and demand,<br />that companies with large capitalizations (number of shares outstand-<br />ing) as a rule produce dreadful price appreciation results in the stock<br />market. The companies themselves are simply too big and sluggish.<br /><br />Pick Entrepreneurial<br />Managements Rather Than<br />Caretakers<br /><br />Giant size may create seeming power and influence, but size in corpora-<br />tions can also produce lack of imagination from older, more conserva-<br />tive "caretaker managements" less willing to innovate, take risks, and<br />keep up with the times.<br /><br />In most cases, top management of large companies does not own a<br />meaningful portion of the company's common stock. This is a serious<br />defect large companies should attempt to correct.<br /><br />Also, too many layers of management separate the senior executive<br />from what's really going on out in the field at the customer level. And<br />in the real world, the ultimate boss in a company is the customer.<br />Times are changing at a quickening pace. A corporation with a fast-<br />selling, hot new product today will find sales slipping within three years<br />if it doesn't continue to have important new products coming to market.<br /><br />Most of today's inventions and exciting new products and services are<br />created by hungry, innovative, small- and medium-sized young compa-<br />nies with entrepreneurial-type management. As a result, these organiza-<br />tions grow much faster and create most of the new jobs for all<br />Americans. This is where the great future growth of America lies. Many<br />of these companies will be in the services or technology industries.<br /><br />If a mammoth-sized company occasionally creates an important new<br />product, it still may not materially help the company's stock because<br />the new product will probably only account for a small percentage of<br />the gigantic company's sales and earnings. The product is simply a little<br />drop in a bucket that's just too big.<br /><br />Institutional Investors Have a<br />Big Cap Handicap<br /><br />Many large institutional investors create a serious disadvantage for<br />themselves because they incorrectly believe that due to their size they<br />can only buy large capitalization companies. This automatically elimi-<br />nates from consideration most of the true growth companies. It also<br />practically guarantees inadequate performance because these investors<br />may restrict their selections mainly to slowly decaying, inefficient, fully<br />matured companies. As an individual investor, you don't have this limi-<br />tation.<br /><br />If I were a large institutional investor, I would rather own 200 of the<br />most outstanding, small- to medium-sized growth companies than 50 to<br />100 old, overgrown, large-capitalization stocks that appear on every-<br />one's "favorite fifty" list.<br /><br />If you desire clear-cut factual evidence, the 40 year study of the great-<br />est stock market winners indicated more than 95% of the companies<br />had fewer than 25 million shares in their capitalization when they had<br />their greatest period of earnings improvement and stock market perfor-<br />mance. The average capitalization of top-performing listed stocks from<br />1970 through 1982 was 11.8 million shares. The median stock exhibited<br />4.6 million shares outstanding before advancing rapidly in price.<br /><br />Foolish Stock Splits Can Hurt<br /><br />Corporate management at times makes the mistake of excessively split-<br />ting its company's stock. This is sometimes done based upon question-<br />able advice from the company's Wall Street investment bankers.<br />In rny opinion, it is usually better for a company to split its shares 2-'<br />for-1 or 3-for-2, rather than 3-for-l or 5-for-l. (When a stock splits 2-for-<br />1, you get two shares for each one previously held, but the new shares<br />sell for half the price.)<br /><br />Overabundant stock splits create a substantially larger supply and may<br />put a company in the more lethargic performance, or "big cap," status<br />sooner.<br /><br />It is particularly foolish for a company whose stock has gone up in<br />price for a year or two to have an extravagant stock split near the end of<br />a bull market or in the early stage of a bear market. Yet this is exactly<br />what most corporations do.<br /><br />They think the stock will attract more buyers if it sells for a cheaper<br />price per share. This may occur, but may have the opposite result the<br />company wants, particularly if it's the second split in the last couple of<br />years. Knowledgeable professionals and a few shrewd traders will proba-<br />bly use the oversized split as an opportunity to sell into the obvious<br />"good news" and excitement, and take their profits.<br /><br />Many times a stock's price will top around the second or third time it<br />splits. However, in the year preceding great price advances of the lead-<br />ing stocks, in performance, only 18% had splits.<br /><br />Large holders who are thinking of selling might feel it easier to sell<br />some of their 100,000 shares before the split takes effect than to have to<br />sell 300,000 shares after a 3-for-l split. And smart short sellers (a rather<br />infinitesimal group) pick on stocks that are beginning to falter after<br />enormous price runups¡Xthree-, five-, and ten-fold increases¡Xand<br />which are heavily owned by funds. The funds could, after an unreason-<br />able stock split, find the number of their shares tripled, thereby dramat-<br />ically increasing the potential number of shares for sale.<br /><br />Look for Companies Buying<br />Their Own Stock in the<br />Open Market<br /><br />One fairly positive sign, particularly in small- to medium-sized compa-<br />nies, is for the concern to be acquiring its own stock in the open market-<br />place over a consistent period of time. This reduces the number of shares<br />of common stock in the capital structure and implies the corporation<br />expects improved sales and earnings in the future.<br /><br />Total company earnings will, as a result, usually be divided among a<br />smaller number of shares, which will automatically increase the earn-<br />ings per share. And as we've discussed, the percentage increase in earn-<br />ings per share is one of the principal driving forces behind outstanding<br />stocks.<br /><br />Tandy Corp., Teledyne, and Metromedia are three organizations that<br />successfully repurchased their own stock during the era from the mid-<br />1970s to the early 1980s. All three companies produced notable results<br />in their earnings-per-share growth and in the price advance of their<br />stock.<br /><br />Tandy (split-adjusted) stock increased from $2 4 to $60 between 1973<br />and 1983. Teledyne stock zoomed from $8 to $190 in the thirteen years<br />prior to June 1984, and Metromedia's stock price soared to $560 from<br />$30 in the six years beginning in 1977. Teledyne shrunk its capitaliza-<br />tion from 88 million shares in 1971 to 15 million shares and increased<br />its earnings from $0.61 a share to nearly $20 per share with eight differ-<br />ent huvbacks.<br /><br />Low Corporate Debt to Equity<br />Is Usually Better<br /><br />Alter you have picked a stock with a small or reasonable number of<br />shares in its capitalization, it pays to check the percentage of the<br />firm's total capitalization represented by long-term debt or bonds.<br />Usually the lower the debt ratio, the safer and better the company.<br />Earnings per share of companies with high debt-to-equity ratios can<br />be clobbered in difficult periods of high interest rates. These highly<br />leveraged companies generally are deemed to be of poorer quality and<br />higher risk.<br /><br />A corporation that has been reducing its debt as a percent of equity<br />over the last two or three years is well worth considering. If nothing<br />else, the company's interest expense will be materially reduced and<br />should result in increased earnings per share.<br />The presence of convertible bonds in a concern's capital structure<br />could dilute corporate earnings if and when the bonds are converted<br />into shares of common stock.<br /><br />It should be understood that smaller capitalization stocks are less liq-<br />uid, are substantially more volatile, and will tend to go up and down<br />faster; therefore, they involve additional risk as well as greater opportu-<br />nity. There are, however, definite ways of minimizing your risks, which<br />will be discussed in Chapter 9.<br /><br />Lower-priced stocks with thin (small) capitalization and no institu-<br />tional sponsorship or ownership should be avoided, since they have<br />poor liquidity and a lower-grade following.<br /><br />A stock's daily trading volume is our best measure of its supply and<br />demand. Trading volume should dry up on corrections and increase<br />significantly on rallies. As a stock's price breaks out of a sound and<br />proper base structure, its volume should increase at least 50% above<br />normal. In many cases, it can increase 100% or more.<br /><br />In summary, remember: stocks with a small or reasonable number of<br />shares outstanding will, other things being equal, usually outperform<br />older, large capitalization companies.<br /><br />(Excerpt from 'How To Make Money in Stocks')Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-30764859.post-10074971824525769102007-06-04T21:04:00.000+08:002007-06-04T21:24:31.572+08:00Sino Techfibre<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7iv8hkD_v4U2ASo2qYC4zwNew5HrZ9CTLbUvQYIrvF0MBZFkXcsL7qf7rRa_l4Dpw8HSrZ6XkRZs5anHZLlo6RqN4Ysy2fiGvv_ziRP53vHzOrHShuqirRYj5ukSltFcVOlo4/s1600-h/2007Jun-SinoTechfib-800x970.png"><img id="BLOGGER_PHOTO_ID_5072197333766994098" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7iv8hkD_v4U2ASo2qYC4zwNew5HrZ9CTLbUvQYIrvF0MBZFkXcsL7qf7rRa_l4Dpw8HSrZ6XkRZs5anHZLlo6RqN4Ysy2fiGvv_ziRP53vHzOrHShuqirRYj5ukSltFcVOlo4/s400/2007Jun-SinoTechfib-800x970.png" border="0" /></a><br /><div>As requested. Sino Techfibre has establish a base support at the 61.8% retracement from the high of 1.64 to the low of 1.10. From todays price actions, resistance levels to break through are at 1.40/1.44/1.52 while support levels are at 1.37/1.30 . Volume count of 10mil and above on an upwards move would be bullish and high chance of breaking through resistance levels.</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-3569270485646109072007-05-22T21:11:00.000+08:002007-05-22T21:21:59.434+08:00N = New Products, New Management, New Highs; Buying at the Right TimeN = New Products,<br />New Management,<br />New Highs:<br />Buying at the Right Time<br /><br />It takes something new to produce a startling advance in the price of<br />a stock.<br />This something new can be an important new product or service, sell-<br />ing rapidly and causing earnings to accelerate above previous rates of<br />increase. It could also be new top management in a company during<br />the last couple of years. A new broom sweeps clean, or at least may<br />bring inspiring ideas and vigor to the ball game.<br /><br />Or the new event could be substantial changes within the company's<br />industry. Industrywide shortages, price increases, or new technology<br />could affect almost all members of the industry group in a positive way.<br /><br />New Products That Created<br />Super Successes<br /><br />1. Rexall's new Tupperware division, in 1958, helped push the com-<br />pany's stock to $50 a share, from $16.<br />2. Thiokol in 1957-1959 came out with new rocket fuels for missiles,<br />propelling its stock from $48 to the equivalent of $355.<br />3. Syntex, in 1963, marketed the oral contraceptive pill. In six months<br />the stock soared from $100 to $550.<br />4. McDonald's, in 1967-1971, with low-priced fast food franchising,<br />snowballed into an 1100% profit for stockholders.<br />5. Levitz Furniture stock increased 660% in 1970-1971, with the pop-<br />ularity of their giant warehouse discount furniture centers.<br />6. Houston Oil & Gas, in 1972-1973, with a major new oil field ran up<br />968% in 61 weeks and later in 1976 picked up another 367%.<br />7. Computervision stock advanced 1235% in 1978-1980, with the<br />introduction of new Cad-Cam factory automation equipment.<br />8. Wang Labs Class B stock grew 1350% in 1978-1980, due to the cre-<br />ation of their new word-processing office machines.<br />9. Price Company stock shot up more than 15 times in 1982-1986<br />with the opening of a southern California chain of innovative<br />wholesale warehouse membership stores.<br />10. Amgen developed two successful new biotech drugs, Epogen and<br />Neupogen, and the stock raced ahead from 60% in 1990 to the<br />equivalent of 460% in January 1992.<br />11. Cisco Systems, another California company, created routers and<br />networking equipment that allowed company links with geographi-<br />cally dispersed local area computer networks. The stock advanced<br />over 2000% in 3V2 years.<br />12. International Game Technology rose an astounding 1600% in<br />1991-1993 with new microprocessor-based gaming products.<br /><br />In our study of greatest stock market winners from 1953 through<br />1993, we discovered more than 95% of these stunning successes in<br />American industry either had a major new product or service, new man-<br />agement, or an important change for the better in the conditions of<br />their particular industry.<br /><br />The Stock Market's Great<br />Paradox<br /><br />There is another fascinating phenomenon we found in the early stage<br />of all winning stocks. We call it "the great paradox." Before I tell you<br />what this last new observation is, I want you to look at three typical<br />stocks shown on the next page. Which one looks like the best buy to<br />you? Which stock would you probably avoid?<br /><br />Among the thousands of individual investors attending my investment<br />lectures in the 1970s, 1980s, and 1990s, 98% said they do not buy stocks<br />that are making new highs in price.<br /><br />The staggering majority of individual investors, whether new or expe-<br />rienced, feel delightful comfort in buying stocks that are down substan-<br />tially from their peaks.<br /><br />I have provided extensive research for over 600 institutional investors<br />in the United States. It is my experience that most institutional money<br />managers are also bottom buyers¡Xthey, too, feel safer buying stocks<br />that look cheap because they're either down a lot in price or selling<br />near their lows.<br /><br />The hard-to-accept great paradox in the stock market is that what<br />seems too high and risky to the majority usually goes higher and what<br />seems low and cheap usually goes lower. Haven't you seen this happen<br />before?<br /><br />In case you find this supposed "high-altitude" method a little difficult<br />to boldly act upon, let me cite another study we conducted. An analysis<br />was made of the daily newspapers' new-high and new-low stock lists dur-<br />ing several good, as well as poor, market periods.<br /><br />Our findings were simple. Stocks on the new-high list tended to go<br />higher, and those on the new-low list tended to go lower.<br />Put another way, a stock listed in the financial section's new-low list of<br />common stocks is usually a pretty poor prospect, whereas a stock mak-<br />ing the new-high list the first time during a bull market and accompa-<br />nied by a big increase in trading volume might be a red-hot prospect<br />worth checking into. Decisive investors should be out of a stock long<br />before it appears on the new-low list.<br /><br />You may have guessed by now what the last intriguing new realization<br />is that I promised to disclose to you earlier. So here are the three stocks<br />you had to choose among on the previous page, Stock A, Stock B, and<br />Stock C. Which one did you pick? Stock A (Syntex Corp, see below) was<br />the right one to buy. The small arrow pointing down above the weekly<br />prices in July 1963 shows the same buy point at the end of Stock A in<br />July on the previous page. Stock B and Stock C both declined.<br /><br />When to Correctly Begin<br />Buying a Stock<br /><br />A stock should be close to or actually making a new high in price after<br />undergoing a price correction and consolidation. The consolidation<br />(base-building period) in price could normally last anywhere from seven<br />or eight weeks up to fifteen months.<br /><br />As the stock emerges from its price adjustment phase, slowly resumes<br />an uptrend, and is approaching new high ground, this is, believe it or<br />not, the correct time to consider buying. The stock should be bought<br />just as it's starting to break out of its price base.<br /><br />You must avoid buying once the stock is extended more than 5% or<br />10% from the exact buy point off the base. Here is an example of the<br />proper time to have bought Reebok, at $29, in February 1986 before it<br />zoomed 260%. The second graph shows the correct time to have bought<br />Amgen at $60¡Xin March 1990¡Xbefore it jumped more than sixfold.<br /><br />How Does a Stock Go from<br />$50 to $100?<br /><br />As a final appeal to your trusty common sense and judgment, it should<br />be stated that if a security has traded between $40 and $50 a share over<br />many months and is now selling at $50 and is going to double in price,<br />it positively must first go through $51, $52, $53, $54, $55, and the like,<br />before it can reach $100.<br /><br />Therefore, your job is to buy when a stock looks high to the majority<br />of conventional investors and to sell after it moves substantially higher<br />and finally begins to look attractive to some of those same investors.<br />In conclusion: Search for corporations that have a key new product<br />or service, new management, or changes in conditions in their industry.<br />And most importantly, companies whose stocks are emerging from<br />price consolidation patterns and are close to, or actually touching, new<br />highs in price are usually your best buy candidates. There will always be<br />something new occurring in America every year. In 1993 alone, there<br />were nearly 1,000 initial public offerings. Dynamic, innovative new com-<br />panies¡ bundle of future, potential big winners.<br /><br />(Excerpt from 'How To Make Money in Stocks')Unknownnoreply@blogger.com4tag:blogger.com,1999:blog-30764859.post-86476378485255158662007-05-08T21:13:00.000+08:002007-05-08T21:20:54.086+08:00A = Annual Earnings Increases; Look for Meaningful GrowthIf you want to own part of a business in your home town, do you<br />choose a steadily growing, successful concern or one that is unsuccess-<br />ful, not growing and highly cyclical?<br /><br />Most of you would prefer a business that is showing profitable growth.<br />That's exactly what you should look for in common stocks. Each<br />year's annual earnings per share for the last five years should show an<br />increase over the prior year's earnings. You might accept one year<br />being down in the last five as long as the following year's earnings<br />quickly recover and move back to new high ground.<br /><br />It is possible that a stock could earn $4 a share one year, $5 the next<br />year, $6 the next, and the following year¡X$2. If the next annual earn-<br />ings statement were $2.50 versus the prior year's $2 (+ 25%), that would<br />not be a good report. The only reason it may seem attractive is that the<br />previous year ($2) was so depressed any improvement would look good.<br />In any case, the profit recovery is slow and is still substantially below the<br />company's peak earnings of $6:<br /><br />Select Stocks with 25% to<br />50% Annual Growth Rates<br /><br />Owning common stock is just the same as being a part owner in a busi-<br />ness. And who wants to own part of an establishment showing no growth?<br />The annual compounded growth rate of earnings in the superior firms<br />you hand pick for purchasing stock in should be from 25% to 50%, or<br />even 100% or more, per year over the last 4 or 5 years.<br /><br />Between 1970 and 1982, the average annual compounded earnings<br />growth rate of all outstanding performing stocks at their early emerging<br />stage was 24%. The median, or most common, growth rate was 21% per<br />year, and three out of four of the prominent winners revealed at least<br />some positive annual growth rate over the five years preceding the giant<br />increase in the value of the stock. One out of four were turnarounds.<br />A typical successful yearly earnings per share growth progression for a<br />company's latest five-year period might look something like $.70, $1.15,<br />$1.85, $2.80, $4.<br /><br />The earnings estimate for the next year should also be up a healthy<br />percentage; the greater the percentage, the better. However, remember<br />estimates are opinions. Opinions may be wrong whereas actual reported<br />earnings are facts that are ordinarily more dependable.<br /><br />What Is a Normal Stock<br />Market Cycle?<br /><br />Most bull (up) market cycles last two to four years and are followed by a<br />recession or bear (down) market and eventually another bull market in<br />common stocks.<br /><br />In the beginning phase of a new bull market, growth stocks are usual-<br />ly the first sector to lead the market and make new price highs. Heavy<br />basic industry groups such as steel, chemical, paper, rubber, and<br />machinery are commonly more laggard followers.<br /><br />Young growth stocks will usually dominate for at least two bull market<br />cycles. Then the emphasis may change for the next cycle, or a short<br />period, to turnaround or cyclical stocks or newly improved sectors of<br />the market, such as consumer growth stocks, over-the-counter growth<br />issues, or defense stocks that sat on the sidelines in the previous cycle.<br />Last year's bloody bums become next year's heroes. Chrysler and<br />Ford were two such spirited turnaround plays in 1982. Cyclical and<br />turnaround opportunities led in the market waves of 1953¡X1955,<br />1963-1965, arid 1974-1975. Papers, aluminums, autos, chemicals, and<br />plastics returned to the fore in 1987. Yet, even in these periods, there<br />were some pretty dramatic young growth stocks available. Basic industry<br />stocks in the United States frequently represent older, more inefficient<br />industries, some of which are no longer internationally competitive and<br />growing. This is perhaps not the area of America's future excellence.<br />Cyclical stocks' price moves tend to be more short-lived when they do<br />occur, and these stocks are much more apt to suddenly falter and<br />encounter disappointing quarterly earnings reports. Even in the stretch<br />where you decide to buy strong turnaround situations, the annual com-<br />pounded growth rate could, in many cases, be 5% to 10%.<br /><br />Requiring a company to show two consecutive quarters of sharp earn-<br />ings recovery should put the earnings for the latest twelve months into,<br />or very near, new high ground. If the 12 months earnings line is shown<br />on a chart, the sharper the upswing the better. This will make it possi-<br />ble in many cases for even the "old dog" about-face stock to show some<br />annual growth rate for the prior five-year time period. Sometimes one<br />quarter of earnings turnaround will suffice if the earnings upswing is so<br />dramatic that it puts the 12 months ended earnings line into new highs.<br /><br />Check the Stability of a<br />Company's Five-Year<br />Earnings Record<br /><br />While the percentage rate of increase in earnings is most important, an<br />additional factor of value, which we helped pioneer in the measure-<br />ment and use of, is the stability and consistency of the past five years'<br />earnings. We display the number differently than most statisticians do.<br />Our stability measurements are expressed on a scale from 1 to 99.<br />The lower the figure, the more stable the past earnings record. The fig-<br />ures are ca^ulated by plotting quarterly earnings for the last five years<br />and fitting a trend line around the plot points to determine the degree<br />of deviation from the basic earnings trend.<br /><br />Growth stocks with good stability of earnings tend to show a stability<br />figure below 20 or 25. Equities with a stability rating over 30 are more<br />cyclical and a little less dependable in their growth. All other things<br />being equal, you may want to choose the security showing a greater<br />degree of consistency and stability in past earnings growth.<br />Earnings stability numbers are usually shown immediately after a<br />company's five-year growth rate, although most analysts and investment<br />services do not bother to make the calculation.<br /><br />If you primarily restrict your selections to ventures with proven<br />growth records, you avoid the hundreds of investments having erratic<br />earnings histories or a cyclical recovery in profits that may top out as<br />they approach earnings peaks of the prior cycle.<br /><br />How to Weed Out the Losers<br />in a Group<br /><br />When you investigate a specific industry group, using the five-year<br />growth criteria will also help you weed out 80% of the stocks in an<br />industry. This is because the majority of companies in an industry have<br />lackluster growth rates or no growth.<br /><br />When Xerox was having its super performance of 700% growth from<br />March 1963 to June 1966, its earnings growth rate averaged 32% per<br />year. Wal-Mart Stores, a discount retailer, sported an annual growth<br />rate from 1977 to 1990 of 43% and boomed in price an incredible<br />11,200%. Cisco Systems growth rate in October 1990 was an enormous<br />257% per year and Microsoft's was 99% in October 1986, both before<br />their long advances.<br /><br />The fact that an investment possesses a good five-year growth record<br />doesn't necessarily cause it to be labeled a growth stock. Ironically, in<br />fact, some companies called growth stocks are producing a substantially<br />slower rate of growth than they did in several earlier market eras. These<br />should usually be. avoided. Their record is more like a fully matured or<br />nearly senile growth stock. Older and larger organizations frequently<br />show slow growth.<br /><br />New Cycles Create New<br />Leaders<br /><br />Each soaring new cycle in the stock market will catapult fresh leader-<br />ship stocks to the attention of the market, some of which will begin to<br />be called growth stocks. The growth record in itself, however, is only a<br />starting point for would-be victorious investors, and it should be the<br />first of many earnings measurements you should check.<br />For example, companies with outstanding five-year growth records of<br />30% per year but whose current earnings in the last two quarters have<br />slowed significantly to + 15% and + 10% should be avoided in most<br />instances.<br /><br />Insist on Both Annual and<br />Current Quarterly Earnings<br />Being Excellent<br /><br />We prefer to see current quarterly earnings accelerating or at least main-<br />taining the trend of several past quarters. A standout stock needs a<br />sound growth record during recent years but also needs a strong current<br />earnings record in the last few quarters. It is the unique combination of<br />these two critical factors, rather than one or the other being outstanding,<br />that creates a superb stock, or at least one that has a higher chance of<br />true success.<br /><br />Investor's Business Daily provides a relative earnings ranking (based<br />on the latest five-year annual earnings record and recent quarterly earn-<br />ings reports) for all common stocks shown in the daily NYSE, AMEX,<br />and OTC stock price quotation tables.<br /><br />More than 6000 stocks are compared against each other and ranked on<br />a scale from 1 to 99. An 80 earnings per share rank means a company's<br />current and five-year historical earnings record outclassed 80% of all<br />other companies.<br /><br />The earnings record of a corporation is the most critical, fundamental<br />factor available for selecting potential winning stocks.<br /><br />Are Price-Earning Ratios <br />Important?<br /><br />Now that we've discussed the indispensable importance of a stock's cur-<br />rent quarterly earnings record and annual earnings increases in the last<br />five years, you may be wondering about a stock's price-to-earnings<br />(P/E) ratio. How important is it in selecting stocks? Prepare yourself for<br />a bubble-bursting surprise.<br /><br />P/E ratios have been used for years by analysts as their basic measure-<br />ment tool in deciding if a stock is undervalued (has a low P/E) and<br />should be bought or is overvalued (has a high P/E) and should be sold.<br />Factual analysis of each cycle's winning stocks shows that P/E ratios<br />have very little to do with whether a stock should be bought or not. A<br />stock's P/E ratio is not normally an important cause of the most suc-<br />cessful stock moves.<br /><br />Our model book studies proved the percentage increase in earnings<br />per share was substantially more crucial than the P/E ratio as a cause of<br />impressive stock performance.<br /><br />During the 33 years from 1953 through 1985 the average P/E for the<br />best performing stocks at their early emerging stage was 20 (the Dow<br />Jones Industrial's P/E at the same time averaged 15). While advancing,<br />these stocks expanded their P/Es to approximately 45 (125% expansion<br />of P/E ratio).<br /><br />..to be continued..<br /><br />(Excerpt from 'How To Make Money from Stocks')Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-8910965462862864272007-05-02T21:47:00.000+08:002007-05-02T21:53:49.858+08:00C = Current Quarterly Earnings Per Share: How Much Is Enough?M/A-Com Inc.<br />Humana Inc.<br />Kirby Exploration Co.<br /><br />What did shares of the above-mentioned microwave component man-<br />ufacturer, hospital operator, and oil Service Company have in common?<br />From 1977 to 1981, they all posted price run-ups surpassing 900%.<br />In scrutinizing these and other past stock market superstars, I've<br />found a number of other similarities as well.<br /><br />For example, tradiiig volume in these sensational winners swelled<br />substantially before their giant price moves began. The winning Stocks<br />also tended to shuffle around in price consolidation periods for a few<br />months before they broke out and soared. But one key variable stood<br />out from all the rest in importance: the profits of nearly every outstand-<br />ing stock were booming.<br /><br />The common Stocks you select for purchase should show a major per-<br />centage increase in the current quarterly earnings per share (the most<br />recently reported quarter) when compared to the prior year's same<br />quarter.<br /><br />Earnings per share are calculated by dividing a company's total after-<br />tax profits by the company's number of common shares outstanding.<br />The percentage increase in earnings per share is the single most impor-<br />tant element in stock selection today.<br /><br />The greater the percentage of increase, the better, as long as you<br />aren't misled by comparing current earnings to nearly nonexistent<br />earnings for the year earlier quarter, like 1 cent a share.<br /><br />Ten cents per share versus one cent may be a 900% increase, but it is<br />definitely distorted and not as meaningful as $1 versus $.50. The 100%<br />increase of $1 versus $.50 is not overstated by comparison to an unusu-<br />ally low number in the year ago quarter.<br /><br />I am continually amazed at how many professional pension fund<br />managers, as well as individual investors, buy common stocks with the<br />current reported quarter's earnings flat (no change), or even worse,<br />down. There is absolutely no reason for a stock to go anywhere if the<br />current earnings are poor.<br /><br />Even if the present quarter's earnings are up 5% to 10%, that is sim-<br />ply not enough of an improvement to fuel any significant upward price<br />movement in a stock. It is also easier for a corporation currently show-<br />ing a mere increase of 7% or 8% to suddenly report lower earnings the<br />next quarter.<br /><br />Seek Stocks Showing Big<br />Current Earnings Incrcascs<br /><br />In our models of the 500 best performing Stocks in the 40 years from<br />1953 through 1993, three out of four of these securities showed earn-<br />ings iricreases averaging rnore than 70% in the latest publicly reported<br />quarter before the Stocks began their major price advance. The one out<br />of four that didn't show solid current quarter increases did so in the<br />very next quarter, and those increases averaged 90%!<br /><br />If the best Stocks had profit increases of this magnitude before they<br />advanced rapidly in price, why should you settle for mediocre or down<br />earnings?<br /><br />Our study showed that among all big gainers between 1970 and 1982,<br />86% reported higher earnings in their most recently published quarter,<br />and 76% were up over 10%. The median earnings increase was 34%<br />and the rnean (average) was up 90%.<br /><br />You may find that only about 2% of all Stocks listed for trading on the<br />New York or American stock exchanges will, at any one time, show<br />increases of this proportion in current quarterly net iiicome.<br />But, remember you want to find the exceptional Stocks rather than<br />the lackluster ones, so set your sights high and Start looking for the<br />superior Stocks, the small number of real leaders. They are there.<br />Success is built on dreanis and ideas; however, it helps to know exact-<br />ly what you're looking for. Before you Start your search for tomorrow's<br />super stock market leader, let nie teil you about a few of the traps and<br />pit falls.<br /><br />Watch Out for Misleading<br />Reports of Earnings<br /><br />Have you ever read a corporation's quarterly earnings report that stated,<br />"We had a terrible first three months. Prospects for our Company are turn-<br />ing down due to inefficiencies in the home office. Our competition just<br />came out with a better product, which will adversely affect our sales.<br />Furthermore, we are losing our shirt on the new midwestern Operation,<br />which was a real blunder on management's part."<br /><br />No! Here's what you see. "Greatshakes Corporation reports record sales<br />of $7.2 million versus $6 million (+ 20%) for the quarter ended March<br />31." If you own their stock, this is wonderful news. You certainly are not<br />going to be disappointed. You think this is a fine Company (otherwise you<br />wouldn't own its stock), and the report confirms your thinking.<br />Is this record-breaking sales armouncement a good report? Let's sup-<br />pose the Company also had record earnings of $2.10 per share of stock for<br />the quarter. Is it even better now?<br /><br />What if the $2.10 was versus $2 (+ 5%) per share in the same quarter<br />the previous year? Why were sales up 20% and earnings ahead only 5%?<br />Something might be wrong¡Xrnaybe the company's profit margins are<br />crumbling. At any rate, if you own the stock, you should be concerned and<br />evaluate the Situation closely to see why the earnings increased only 5%.<br />Most investors are impressed with what they read, and companies love<br />to put their best foot forward. Even though this corporation may have had<br />all-time record sales, up 20%, it didn't mean much. You must be able to<br />see through slanted published presentations if you want the vital facts.<br />The key factor for the winning investor must always be how much the<br />current quarter's earnings are up in percentage terms from the same quar-<br />ter the year before!<br /><br />Let's say your Company discloses that sales climbed 10% and net income<br />advanced 12%. This sounds good, but you shouldn't be concerned with<br />the company's total net income. You don't own the whole organization.<br />You own shares of stock in the corporation. Perhaps the Company issued<br />additional shares or there was other dilution of the common stock. Just<br />because sales and total net income for the Company were up, the report<br />still may not be favorable. Maybe earnings per share of common stock<br />inched up only 2% or 3%.<br /><br />The Debate on Overemphasis<br />of Current Earnings<br /><br />Recently it has been noted that Japanese firms concentrate more on<br />longer-term profits rather than on trying to maximize current earnings<br />per share.<br /><br />This is a sound concept and one the better-managed organizations in<br />the United States (a minority of companies) also follow. That is how<br />well-managed entities create colossal quarterly earnings increases, by<br />spending several years on research, developing superior new products,<br />and cutting costs.<br /><br />But don't be confused. You as an individual Investor can afford to wait<br />until the point in time when a Company positively proves to you its<br />efforts have been successful and are starting to actually show real earn-<br />insrs increases.<br /><br />Requiring that current quarterly earnings be up a hefty amount is just<br />another smart way the intelligent Investor can reduce the risk of exces-<br />sive mistakes in stock selection.<br /><br />Many corporations have mediocre management that continually pro-<br />duces second-rate earnings results. I call them the "entrenched main-<br />tainers." These are the companies you want to avoid until someone has<br />the courage to change top management. Ironically, these are generally<br />the companies that strain to pump up their current earnings a dull 8%<br />or 10%. True growth companies with outstanding new products do not<br />have to maximize current results.<br /><br />Look for Accelerating<br />Quarterly Earnings Growth<br /><br />My studies of thousands of the most successful concerns in America<br />proved that virtually every corporate stock with an outstanding upward<br />price move showed accelerated quarterly earnings increases some time<br />in the previous ten quarters before the towering price advance began.<br />Therefore, what is crucial is not just that earnings are up or that a<br />certain price-to-earnings ratio (a stock's price divided by its last twelve<br />months' earnings per share) exists; it is the change and improvement<br />from the stock's prior percentage rate of earning increases that causes a<br />supreme price surge. Wall Street now calls these earnings surprises.<br />I once mentioned this concept of earnings acceleration to Peter<br />Vermilye, the former head of Citicorp's Trust Investment Division in<br />New York City. He liked the term and feit it was much more accurate<br />and relevant than the phrase "earnings momentum" sometimes used by<br />Investment professionals.<br /><br />If a Company's earnings are up 15% a year and suddenly begin spurt-<br />ing 40% to 50% a year, it usually creates the basic conditions for impor-<br />tant stock price improvement.<br /><br />Check Other Key Stocks in<br />the Group<br /><br />For added safety, it is wise to check the industry group of your stock.<br />You should be able to find at least one other noteworthy stock in the<br />industry also showing good current earnings. This acts as a confirming<br />factor. If you cannot find any other impressive stock in the group dis-<br />playing strong earnings, the chances are greater that you have selected<br />the wrong investment.<br /><br />Note the date when a company expects to report its next quarterly<br />earnings. One to four weeks prior to the report's release, a stock fre-<br />quently displays unusual price strength or weakness, or simply "hesitates"<br />while the market and other equities in the same group advance. This<br />could give you an early clue of an approaching good or bad report. You<br />may also want to be aware and suspicious of stocks that have gone several<br />weeks beyond estimated reporting time without the release of an earn-<br />ings announcement.<br /><br />One last point to clarify: You should always compare a stock's per-<br />centage increase in earnings for the quarter ended December, to the<br />December quarter a year earlier. Never compare the December quarter<br />to the immediately prior September quarter.<br /><br />You now have the first critical rule for improving your stock selection:<br />Current quarterly earnings per share should be up a major percentage<br />(at least 20% to 50% or more) over the same quarter last year. The best ones<br />might show earnings up 100% to 500%! A mediocre 8% or 10% isn't<br />enough! In picking winning stocks, it's the bottom line that counts.<br /><br />-Excerpt from William O'Neal's How To Make Money in Stocks.Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-30764859.post-5069774641007955202007-04-24T21:22:00.000+08:002007-04-24T21:29:40.928+08:00How To Make Money In Stocks.Introduction:<br />Learning from the Greatest<br />Winners<br /><br />In the following chapters, I will show you exactly how to pick more big<br />winners in the stock market and how to substantially reduce your losses<br />and mistakes. I will examine and discuss other Investments, as well.<br />In the past, most people who bought and sold Stocks either had<br />mediocre results or lost money because of their clear lack of knowledge.<br />But no one has to lose money.<br /><br />This book will provide you with most of the investment understand-<br />ing, skills, and methods you need to become a more successful Investor.<br />I believe that most people in this country and many others through-<br />out the free world, young and old, regardless of profession, education,<br />background, or economic position, can and defmitely should own com-<br />mon stock. This book isn't written for an elite but for the millions of lit-<br />tle guys and gals everywhere who want a chance to be better off.<br />YOU CAN If you are a typical working man or woman or a<br />START SMALL beginning Investor, it doesn't take a lot of<br />money to Start. You can begin with as little as<br />$500 to $1000 and add to it as you earn and<br />save more money. I began with the purchase<br />of just five shares of Procter & Gamble when<br />I was only 21 and fresh out of school.<br /><br />You live in a fantastic tinie of unlimited opportunity, an era of out-<br />standing new ideas, emerging industries, and new frontiers. But you<br />have to read to learn how to recognize and take advantage of these<br />extraordinary Situation<<.<br /><br />The opportunities are out there for everyone. You are now witnessing<br />a New America. We lead the world in high technology, medical<br />advancements, Computer Software, military capabilities, and innovative<br />new entrepreneurial companies. The communist socialist System was<br />finally relegated to the ash heap of history under Ronald Reagan and<br />our System of freedom and opportunity serves as a prime success model<br />for the majority of countries in the world.<br /><br />It is not enough today to just work and earn a salary. To do the things<br />you want to do, to go the places you want to go, to have the things you<br />want to have in your life, you absolutely must save and invest intelligent-<br />ly. The second income from your Investments and the net profits you<br />can make will help you reach your goals and provide real security.<br />SECRET TIP #1 The first Step in learning to pick stock market<br />winners is for you to examine leading winners<br />of the past to learn all the characteristics of the<br />most successful Stocks. You will learn from this<br />observation what type of price patterns these<br />Stocks developed just before their spectacular<br />price advances.<br /><br />Other key factors you will uncover include what kind of Company<br />quarterly-earnings reports were publicly known at the time, what the<br />annual earnings histories of these organizations had been in the prior<br />five years, what amount of stock trading volume was present, what<br />degree of relative price strength occurred in the price of the Stocks<br />before their enormous success, how many shares of common stock were<br />outstanding in the capitalization of each Company, how many of the<br />greatest winners had significant new products or new management, and<br />how many were tied to strong industry group moves caused by impor-<br />tant changes occurring in an entire industry.<br /><br />It is easy to conduct this type of practical, commonsense analysis of<br />past successful leaders. I have already completed such a comprehensive<br />study. In our historical analysis, we selected the greatest winning Stocks<br />in the stock market each year (in terms of percentage increase for the<br />year), spanning more than 40 years.<br /><br />We call the study The Record Book of Greatest Stock Market Winners.<br />It covers the period from 1953 through 1993 and analyzes in detail over<br />500 of the biggest winning companies in recent stock market history:<br />super Stocks such as Texas Instruments, whose price soared from $25 to<br />$250 from January 1958 through May 1960; Xerox, which escalated<br />from $160 to the equivalent of $1340 from March 1963 to June 1966;<br /><br />Syntex, which leaped from $100 to $570 in only six rnonths during the<br />last half of 1963; Dome Petroleum and Prime Computer, which respec-<br />tively advanced 1000% and 1595% in the 1978-1980 stock market;<br />Limited Stores, which wildly excited lucky shareowners with a 3500%<br />increase between 1982 and 1987; and Cisco Systems, which advanced<br />from a split-adjusted $1.88 to $40.75 between October 1990 and March<br />1994. Home Depot and Microsoft both increased more than 20 times<br />during the 1980s and early '90s. Home Depot was one of the all-time<br />great performers jumping twentyfold in less than 2 years from its initial<br />public offering in September of 1981 and then again climbing another<br />10 times from 1988 to 1992. All of these companies offered exciting<br />new products and concepts.<br /><br />Would you like to know the common characteristics and secret rules<br />of success we discovered from this intensive study of all past glamorous<br />stock market leaders?<br /><br />It's all in the next few chapters and in a simple easy-to-remember for-<br />mula we have named C-A-N S-L-I-M. Write the formula down, and<br />repeat it several times so you won't forget it.<br /><br />Each letter in the words C-A-N S-L-I-M Stands for one of the seven<br />chief characteristics of these great winning Stocks at their early develop-<br />ing stages, just before they made huge profits for their shareholders.<br />You can learn how to pick winners in the stock market, and you can<br />become part owner in the best companies in the world. So, let's get<br />started right now. Here's a sneak preview of C-A-N S-L-I-M.<br /><br />C = Current Quarterly Earnings Per Share: How Much Is Enough?<br />A = Aimual Earnings Increases: Look for Meaiiingful Growth.<br />N = New Products, New Management, New Highs: Buying at the Right Time.<br />S = Supply and Demand: Small Capitalization Plus Volume Demand.<br />L = Leader or Laggard: Which Is Your Stock?<br />I = Institutional Sponsorship: A Little Goes a Long Way.<br />M = Market Direction: How to Determine It?<br /><br />(Excerpt from William O'Neal's How to make money in stocks.)Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-2198077065414527802007-04-17T21:29:00.000+08:002007-04-17T21:48:03.342+08:00The Principles of Successful TradingOver many years of trading, I've found certain principles to be true. Understanding and using basic principles provides an anchor of sanity when trading in a crazy world. Whenever I find myself under stress, questioning my judgement or my ability to trade successfully, I pull out these basic trading principles and review them.<br /><br />Don't Try to Predict the Future<br /><br />I used to think that there were experts and geniuses out there who knew what was going to happen in the markets. I thought that these traders and market gurus were successful because they had figured out how to predict the markets. Of course, the obvious question is that if they were such good traders, and if they knew where the market was going, why were they teaching trading techniques, selling systems and indicators, and writing newsletters? Why weren't they rich? Why weren't they flying to the seminars on their Lear Jets?<br /><br />NO ONE KNOWS WHERE THE MARKET IS GOING<br /><br />It took me a long rime to figure out that no one really understands why the market does what it does or where it's going. It's a delusion to think that you or any one else can know where the market is going. I have sat through hundreds of hours of seminars in which the presenter made it seem as if he or she had some secret method of divining where the markets were going. Either they were deluded or they were putting us on. I have seen many complex Fibonacci measuring methods for determining how high or low the market would move, how much a market would retrace its latest big move, and when to buy or sell based on this analysis. None has ever made<br />consistent money for me.<br /><br />NO ONE KNOWS WHEN THE MARKET WILL MOVE<br /><br />It also has taken me a long time to understand that no one knows when the market will move.There are many individuals who write newsletters and/or books, or teach seminars, who will tell you that they know when the market will move.Most Elliot Wave practitioners, cycle experts, or Fibonacci time traders will try to predict when<br />the market will move, presumably in the direction they have also predicted. I personally have not been able to figure out how to know when the market is going to move. And you know what? When I tried to predict, I was usually wrong, and I invariably missed the big move I was anticipating, because "it wasn't time."<br />It was when I finally concluded that I would never be able to predict when the market will move that I started to be more successful in my trading. My frustration level declined dramatically, and I was at peace knowing that it was OK not to be able to predict or understand the markets.<br /><br />Know that Market Experts aren't Magicians<br /><br />Some of the experts that try to predict the markets actually make money trading the markets; however, they don't make money because they have predicted the market correctly, they make money because they have traded the market correctly.<br /><br />THEY DON'T PROFIT FROM THEIR PREDICTIONS<br /><br />There is a huge difference between trading correctly and making an accurate market prediction. In the final analysis, predicting the market is not what's important. What is important is using sound trading practices. And if sound trading habits is all that is important, there is no reason to try to predict the markets in the first place. This is the reason system trading makes so much sense.<br /><br />THEY HAVE LEARNED TRADING DISCIPLINE<br /><br />I have watched many market gurus continually make incorrect market predictions and still break even or make a little money because they have followed a disciplined approach to trading. More importantly, they used the exact same principles that I will show you how to use in creating your system. It is these principles that make the money, not the prediction. To be a disciplined trader, you have to know how and why to enter the market, when to exit the market, and where to place your money management stops. You need to manage your risk and maximize your cash flow. A sound trading system includes entries, exits, and stops as well as sound cash management strategies.Even the market gurus and famous traders don't make money from their predictions, they make it from proper trading discipline. Over the years, they have learned the discipline to control their risk through money management. They have learned to take the trades as they come, and not forgo a trade because they are second-guessing their system or the market. These are the same practices that you will learn to include in your trading system.<br /><br />THEY PROFIT FROM SOUND CASH MANAGEMENT & RISK CONTROL<br /><br />Sound money management and risk control are the keys to being a profitable trader. I will say over and over again, it is not the prediction or the latest and greatest indicator that makes the profit in trading, it is how you apply sound trading discipline with superior cash management and risk control that makes the difference between success and failure. I often tell the story of the great fish restaurant that opened up just down the street from my office. It opened with great fanfare and was ranked in the top five restaurants in the city. The food was outstanding. But it only took a little more than a year and this great restaurant was out of business. Why? Because the key to running a good restaurant is not the food. It is cash management and risk control. It is making sure your business is run efficiently, keeping your costs (risk) in control, and managing your staff effectively. If you believe that the taste of the food is what makes a great restaurant, think of how great the food is at your favorite fast food restaurant. But, someday, watch how well that restaurant is run. Just as in the restaurant business, the key to profits in trading is not in the prediction or the indicator, but how well the trading system is designed and executed. The ability to achieve risk control and cash management will make the difference between a successful trader and an unsuccessful trader. If you ever have the opportunity to watch a successful trader, you will see<br />that they don't worry about where the market is going or about predicting when the next big move will take place. They aren't looking to tweak their indicator. They are worried about their risk on each trade. Is the trade being executed correctly? How much of their total account is at risk? Are the stops in the right place? And so on.<br /><br />THEY DON'T HAVE SUPERIOR PERFORMANCE NUMBERS<br /><br />If you want to have some fun, look at the performance of a successful market expert, one who is known for his or her market predictions and trading expertise. You will find that their performance numbers really aren't any better than an average trading system. The percentage of profitable trades, the return on the account, average profit to average loss, number of losing trades in a row.. .all of these trading parameters are within the average trading system performance parameters.Why is this? Because you can't predict where the market will go and when it will move. But if<br />you use correct system trading disciplines, you will make money whether you try to predict the market or just trade a good system. You might as well save yourself a lot of time, energy, and mental anguish and trade a good system.<br /><br />-Excerpt from 'Trading as a Business' , next post 'Be In Harmony with the Market'Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-85209481834092102502007-04-10T21:51:00.000+08:002007-04-10T22:14:18.625+08:00Trading as a BusinessPrologue: Where to Begin<br /><br />Let's begin with the markets themselves, and with fear and greed. We have all heard the cliches about fear and greed. They rule the markets. In fact, that's all the markets are-- reflection of these emotions. In order to make money trading, you must learn to control your fear and greed.<br /><br />Overcoming Fear and Greed<br /><br />We all have to deal with our runaway emotions at various times in life, and these emotions really begin to run away when we trade. Bill Williams' used to say in his seminars that trading was the clearest window into your own personal psychology, clearer than any other endeavor. I think he was right.<br /><br />UNDERSTANDING THE MARKETS<br /><br />We give in to our fear when we don't take the next trade because we've just been through a string of losers and fear losing again. We give in to our fear when we put our stop loss too close and get stopped out of a trade without giving the trade enough room to develop. We give in to our fear when we freeze as a trade starts to lose money, and we don't take the exit signal because we're afraid of losing money.<br />We give in to our greed when we take a profit early, before the regular signal, because we don't want to give back any of the profits. We give in to our greed when we trade more contracts or shares than we normally would because we feel good about this trade.<br /><br />So we start with the question, "How can we understand the markets?" If we understand how they work, we can get a better understanding of ourselves, and in turn be better traders.<br /><br />Controlling greed takes discipline. As far as fear, Peter Steidlmayer explained in his work with Market Profile that markets exist for one purpose and one purpose only--they exist to facilitate trade. Facilitating trade means that the markets will do anything they can to get individuals to participate in the market. How they do this is through movement. Markets move up and down searching for buyers and sellers.<br />The crucial point here is that markets must move for their survival. Understanding this literally changed the way I thought about the markets. Think about it. Markets have to move! This concept is major for anyone who has had to sit through a trend-following system trading in a sideways market. The knowledge that the market has to move eventually changes the way you look at trading. It gives you confidence that the string of losses can't continue indefinitely. It eliminates the fear!<br /><br />You see, Steidlmayer explained that if a market does not facilitate trade, it will die. If it does not continue to bring traders in, to lure the buyers and sellers, the market will cease to exist. And the prime directive of a market is survival. To keep traders interested, the market has to move. It cannot remain in a small trading range or traders will lose money, become disinterested and leave. Eventually there will be less and less liquidity, traders will stop trading, and the market<br />will die.<br /><br />Knowing that a market must facilitate trade and move, or else die, has given me great confidence in trading. When I am forced to trade through quiet markets, I remember this principle. This principle has reduced my fear and increased my confidence immeasurably.<br /><br />SYSTEM TRADING: MAKING GOOD BUSINESS SENSE<br /><br />For me, system trading is the only answer to the problem of fear and greed, and it is the only logical way to take advantage of the concept of Market Facilitation.<br />First, trading a system provides the discipline necessary to begin overcoming fear and greed.<br /><br />Trading a system that has been back tested on historical, quantifiable data is a major way to inject discipline into your trading and to begin to control your fear and greed. If we think of a trading system as a small business, we can design our business to make money based on historical simulations. Then, our job becomes the implementation of the system rather than the interpretation of the market. If the system loses money and busts, we change the system. It's a matter of good business sense.<br /><br />Second, if we know that a market must facilitate trade to stay alive, we can devise systems that guarantee that we will always be in for that inevitable big move. If we know that the big move will eventually come, and devise the system accordingly, our task becomes to minimize the drawdown (investment) while we wait. I have never been able to predict when the market was going to facilitate trade and get in for the big move. Instead, I have devised systems to ensure that I will be in for the big ride and my losses will be minimized while I wait. It's just a matter of good business sense.<br /><br />As a businessman, I have concluded that the only rational way to trade the markets is to trade a system. All of the hocus-pocus about predicting when this market will move, and how far, is just that--Xhocus-pocus. The people that make the big money are the ones who don't try to predict tops and bottoms but who consistently take a little out of the middle. The only logical way to do this consistently is through a well thought-out, well-designed system. It's a matter of good business sense.<br /><br />THE ADVANTAGE OF TECHNOLOGY<br /><br />Anyone serious about finding a profitable system should use the latest technology and the best software available. This means learning how to use a computer.<br />When I started trading, all historical testing had to be done by hand. This was labor intensive and very time consuming. It was necessary to peruse charts visually and record the simulated entries and exits by hand.<br /><br />For intra-day charts, this process was even more time consuming--the charts had to be printed with the indicators on them and for a significant length of time (several months). If these indicators didn't prove to be profitable, the process had to be repeated for the next month with revised indicators. This process continued month after month. It would sometimes take me three to six months to find a system that would work under current market conditions.<br /><br />System Writer, followed of course by TradeStation, was the first computer program to help eliminate this labor intensive historical testing. Using TradeStation to do your testing has three distinct benefits.<br /><br />The first is the amount of time saved. With TradeStation on a fast PC, it's possible to test in 5 to 30 minutes systems that literally used to take hours or days to test by hand. If you place any value on your time, this cost savings alone is impressive.<br />Second, you can avoid mental mistakes. I have, in both myself and in talking to other researchers, found a propensity for making mistakes when performing manual historical testing.<br /><br />On many occasions I have found myself changing the system midstream. I have sometimes made the assumption that of course I wouldn't have taken that particular trade, when the reality is I probably would have, or of course I would have moved my stop up, when in reality I probably wouldn't have, and so on.<br /><br />I can recall many situations where, when testing manually, I got different results on different days with the same data and the same system. I was either in a different frame of mind or in a different emotional state and actually made different decisions on the same data!<br /><br />A computer, however, cannot trade a system differently tomorrow using the same parameters and data as it is using today. Its logic is consistent and can't play tricks on it. For historical testing, you can avoid this very real problem by using a computer.<br /><br />Third, you can be more creative. Rather than spend all of your time doing the testing, you can have the computer do the testing and you can spend your time researching new trading ideas.<br /><br />System development is like any other business. It's very unusual to find a successful business where only one individual has designed the product, does the marketing, is engaged in product development, and runs the machine to produce, package, and ship the product.<br /><br />It is much easier and less stressful to hire a staff to handle the paperwork and production employees to make the product. The entrepreneur can then spend his or her valuable time in product development and planning the future of the company rather than running day-to-day operations.<br /><br />As the futures and securities industry continues to grow, more and more traders will enter this business. The competition for profits will continue to increase. For example, in the early '80s it was very easy to make a lot of money day-trading the S&P. I used a simple dual moving average crossover system on 5-minute bar charts. There were proportionately very few intra-day traders with computers that were competing for profits. But since then, with the increase in the number of traders using intra-day charts, these very rudimentary indicators have stopped working. When everyone started using them, the profits dried up. It is much more difficult in today's markets to make the money that was there in the early years. The standard indicators just aren't that effective anymore.<br /><br />Don't Believe What I Say<br /><br />The final thing I want to tell you before you delve into this book is not to believe anything I say. Check it out for yourself. It would be a mistake for you to accept anything I say without a complete personal investigation, testing it for yourself and either proving or disproving the principles and techniques that I discuss. Just because I say it doesn't mean that it's true. It's what I believe to be true and has stood the test of time for me. But I urge you to be a skeptic, to think everything through and make sure it makes sense to you. Accept the things that work for you and<br />reject those that don't. The idea behind this book is to give you enough information so you can be self-sufficient. You shouldn't have to depend on anyone for your trading profits. You can do this yourself.<br /><br />So we begin with three principles. First, the market must facilitate trade to survive; it must eventually make the big move. Second, you must be state of the art to compete, which means using the latest PC technology and TradeStation. Third, you can do this yourself, and you should not take what anyone says for granted.<br />You have the tools to be independent--to do this yourself.<br /><br />Do not believe in anything simply because YOU have heard it.<br />Do not believe in traditions because they have been handed down for many generations.<br />Do not believe in anything because it is spoken and rumored by many.<br />Do not believe in anything simply because it is found written in your books.<br />Do not believe in anything merely on the authority of your teachers and elders.<br />But after observation and analysis, when you find that anything agrees with reason... then accept it<br />and live up to it.<br />-The Buddha<br /><br />-Excerpt from Trading as a Business, next post: The Principles of Successful Trading.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-55538307953651476132007-04-03T21:13:00.000+08:002007-04-03T21:23:11.507+08:00Keep trading as Part of a Balanced life<strong>7. Keep trading as Part of a Balanced life:<br /></strong><br />Trading be it successfully or not, is a very stressful career. When<br />one is dealing with making and losing money based on your perceptions<br />the stresses can be enormous. <em>You must do everything in your power to<br />eliminate the stresses.<br /></em><br />I have never met or heard of a successful, highly stressed trader.<br />In fact it's quite the opposite. <em>Most of the successful traders I have talked<br />to seem very relaxed and confident. I suppose this is what has made them<br />such success in the first place.<br /></em><br />Reading Market Wizards' (Jack Swager) one common factor picked up on<br />all the best traders was <em>their ability to disassociate them-selves with<br />the market action.</em> It was almost as if they were unconcerned with their<br />positions. Considering some of these guys (and girls) traded with<br />hundreds of millions of dollars at a time this is a remarkable feat.<br /><em>Most of the traders I know get excited when they have a couple of<br />hundred dollars at stake.<br /></em><br />I know my own trading results went through the roof when I actually<br />spent less time "trying to control the market." By this I mean staring<br />at the quote machine and end of day graphs all the time. <em>I took up tennis<br />lessons, jogging, reading, writing, even other business ventures just so I<br />could take my total focus away from the markets.</em> <em>Not only did my results<br />improve dramatically but so did my quality of life.<br /></em><br />How can the top traders keep it so cool when the risks are so high?<br />Go through this book again:<br /><br />1) They decided a long time ago to take <strong>responsibility</strong> and find out<br />what works<br /><br />2) They have a <strong>system</strong> that fits them.<br /><br />3) They <strong>plan </strong>every trade down to the finest detail ( wouldn't you if<br />you had $50 million at stake? more importantly they know when push<br />comes to shove they will <strong>follow</strong> the rules.<br /><br />4) They have put the ground <strong>work </strong>into this system and continue to<br />do so.<br /><br />5) They have complete <strong>confidence</strong> in both the system they follow<br />and in their own skill to flawlessly <strong>execute</strong> it.<br /><br />6) They definitely view trading as a game in<strong> points</strong> and stopped<br />counting the money a long time ago. Most of the top traders are<br />very wealthy so if they aren't trading for enjoyment ( and winning)<br />they'd simply retire.<br /><br />7) Finally they learned a long time ago that they alone can not control<br />the markets. Watching a quote machine and hanging on to "guru" advice<br />all day is a losing system. Most of the top traders have a life<br />out-side of trading. Realizing the importance of keeping it all in<br /><strong>balance</strong>.<br /><br /><em>Trading is no different from any other aspect of life.</em> If your total<br />focus is on one point then every little dip and peak becomes exaggerated.<br />This kind of peak and valley <em>emotional trading will not only ruin your<br />trading results but it could destroy you as a person as well.<br /></em><br />Even if you was to make millions from the markets is it worth it at all<br />costs? <em>Surely it's the journey that is important and not the arriving at<br />the destination.<br /></em><br />In order to trade successfully you <em>need to take time off.</em> Re-charge the<br />batteries and gain some perspective. I remember my first few years as a<br />stock market player. I would spend all day, night, weekends reading,<br />studying, staring at the charts, trying different systems, etc....<br />Frankly I wouldn't wish it on any-one. Yes, I learned so much, without<br />the intensity of study I wouldn't have become so successful, so quickly<br />( 5 years) but if I had to do it again, or if I was giving advice to a new<br />trader, I would have <em>kept my life much more balanced.</em> "Work hard, play hard."<br />"Not work and work some more."<br /><br />The stresses are big enough without making it the only focus in your life.<br /><em>Take a ten year view on your performance</em>. Realize that if you can gain just<br />a 30% return in the stock market year after year you are doing better than most.<br />Treat trading like any other business. <em>Work hard from 9-5 and then be disciplined<br />to switch off and live your life.<br /></em><br />Some of my very best trades have come from placing a buy order in the market<br />and setting a stop loss order with my broker. Going away for a months vacation<br />without looking at a share price. Coming back home and finding my share has jumped<br />by 40%. It never stops to amaze me how simple successful trading is.<br /><br /><em>Trading can be frustrating if you feel you can control the markets.</em> There's this<br />feeling that by checking on the prices four times a day you will perform better. But<br />this is a complete waste of time and it leads you in to doing something stupid.<br /><em>as long as you plan your system and follow those rules why would you ever need to<br />check on the prices during the day.</em> Use the time intelligently and in so doing<br />it will give you more free time. <em>Wasn't that the whole attraction of getting into<br />the stock originally?<br /></em><br /><br />Stock trading is a weird way to make a lot of money. We are brought up to<br />believe that to earn a honest days pay you must do an honest days work. But<br />if you buy $50,000 worth of stock at $50 and sell 1 year later at $200,<br />you have made $150,000 profit. Amazingly it only took 30 minutes to do this<br />as long as you checked the prices for 1 minute daily and followed your rules.<br />What elses is there to do? Yet, most people will have a problem making this<br />kind of money from the work put in. I am sure when the share hits $70 most<br />traders will snatch at the profits in order to take the sure profit and then<br />lose those profits chasing other trades. <em>Yet it will be the balanced trader<br />who spends his time wisely and follows his rules who will always make the<br />big money.<br /></em><br /><em>So keep it in perspective.</em> Realize you have no way of controlling the prices.<br />If you find your-self "itching" for more action then take up some interest AWAY<br />from the markets. NEVER try to make your trading more interesting or exciting.<br />If you do this you are forcing the markets into something that simply does not<br />exist.<br /><br />If you spend more than 15 minutes per day managing your trades it's too long.<br />ask our-self whether you are trying to see something that doesn't exist.<br /><br />Successful, profitable trading is:<br />* Boring<br />* Effortless<br />* Easy<br />* Stress free<br /><br />AFTER you have MASTERED the "7 Habits of a Highly Successful Trader"<br />Are you going to spend the necessary time mastering these principles until<br />they become habits? A habit is something you do without thought. It takes a lot<br />of time and effort but the end results are worth it.<br /><br />-Excerpt from the 7 Habits of Highly Successful Traders.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-61621330185427593632007-03-28T18:07:00.000+08:002007-03-28T18:17:38.910+08:00View Trading as a Score in Points and Not In Money<strong>6) View Trading as a Score in Points and Not In Money:</strong><br /><br />Really what I am saying is <em>"follow your time tested rules which you<br />have complete belief in and forget about everything else"<br /><br /></em>How can you do that when it's money we are trading with? Use some<br />imagination. Pretend it's not money but simply a game your playing<br />and your account represents points scored. <em>Stop counting dollars every<br />time the market moves and start concentrating on following your rules<br />flawlessly.</em> When you can operate on this level not only do your profits<br />soar over the long run but it takes away all the stress of trading.<br /><br />Think about it. No more are you watching the quotes intra-day thinking<br />"wow! I have just made enough to buy a new car," or<br />"uhhh.. I've just lost my holiday money" <em>This kind of trading is emotionally<br />draining. No-one can succeed like this.</em> This was me in my early days.I would<br />be so down when I checked my quotes during the day only to find I had lost<br />$500. And the next day when I found I was up by $500 I was the life and<br />sole of the party. <em>Even if I could have made a success by trading this way<br />I wouldn't have enjoyed it and I would have given up.</em><br /><br />Nowadays with my low risk/ high reward trading system I check the charts<br />at the end of day in 5 minutes and that's it. I simply ask my-self:<br /><em>" Should I buy, sell or hold according to my rules?"</em> I give my-self ten<br />seconds to answer and do what has to be done. I am not a trader any more<br />but a <em>rule follower.</em> That's how I feel. ( why do you think I have so much<br />time to write?)<br /><br />Reading Market Wizards I and II it was a prominent feature I noticed<br />with all top traders. <em>They never saw the markets as a cash box but simply<br />as a way of operating a business. the name of the business was to follow<br />their rules and score the points.</em> It's not possible to become a top trader<br />if you view every tick in the market as money lost and gained.<br /><br />If making and losing money leads to emotional distress and joy and<br />emotions are one of the most potent destroyers of successful trading then<br />common sense dictates that in order to be a Highly Successful Trader you<br />must eliminate all emotion from trading. How is this done?<em> Easy, follow<br />the rules. How do you follow your rules? Make it THE most important<br />element in your trading. </em>Forget about the money that will take care<br />of it-self it's all about those rules and how well you can follow them.<br /><br />If you ever just read one book on the stock market then please let it be:<br />" How I Made $2 million" by Nicolas Darvas<br /><br />I love this book so much because when you have read it as many times as<br />I have (50+) you begin to realize how well this guy turned his trading around<br />from an emotional losing trader into a robotice, disciplined, money, generating,<br />machine. What made his success possible? <em>Apart from the usual accepting<br />complete responsibility, developing a system that fitted him, planning his<br />trades and lots of initial groundwork. </em>The real reason he made so much money<br />was because he never counted the money in the general sense. He had a set of<br />rules and when it flashed a buy he placed on a percentage of his capital.<br />It made no difference <em>whether it was $5,000 or $500,000, it was all the same<br />to him. He stopped counting money and flawlessly followed his rules.<br /></em><br />If I could just describe a section that had profound effect on my trading.<br />In one trade Darvas bought $350,000 of a share at $53 1/2. The share then<br />climbed to over $100 and his broker telegrammed him with the message:<br /><br />"profits now $250,000" Darvas now realized that whilst he had been so busy<br />concentrating on folowing his rules he has forgotten all about the paper<br />profits building up. When he received the telegramme he now knew if he sold<br />out he would be rich for life ( this was the 1950's) Every fiber in his body<br />was saying "sell. abandon your rules and take the profit."<br /><br />So he walked around Paris trying to work out what to do. Questions and<br />thoughts such as will the share fall back? Should I sell and take the sure<br />profit? Shall I just break my rules this one time? Kept repeating them-selves<br />time and time again.<br /><br />Finally he decided not to sell and to stick with his rules. It was<br />anything but easy to do. But he was proved right. In the weeks ahead<br />the share continued to rise and making that decision to stick to his<br />rules he was able to hold on and make much more profit.<br /><br /><em>Had he have constantly been calculating his trades on a day to day basis<br />in money terms I doubt he would have had the nerve to stay in so long.<br /></em>Amazing story and one definitely worth reading.<br /><br />You see how theory is all very well. Every trader worth his salt knows<br />the Wall Street sayings :<br /><br />"cut your losses"<br />"let your profits run"<br />"trade with the trend" blah,blah,blah<br /><br /><em>But it is another ball game to do this in the heat of battle</em>.<br />Time and time again when I enter a trade I want to bend the rules,<br />"just this one time." But I have gathered enough experience to realize<br />I can NEVER break my rules. Not one trade can be the exception. I<br />have learned to do this by counting in terms of points scored and not<br />money.<br /><br /><em>What separates the winners from the losers? It's certainly not<br />knowledge? I believe what really separates winners from losers is<br />the ability to follow your rules without exception, regardless of the<br />circumstances. </em>Very few traders have the discipline to do this.<br /><br />-Excerpt from 7 Habits of Highly Successful Traders.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-19270388487703218412007-03-23T16:03:00.000+08:002007-03-23T16:11:43.841+08:00123 System<div><br /><br /><div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjp-vOzEye26cqkSDVx9zqG3HoxspzPmpDcGLJoJN-il6lz8MX_rtKK2tTGWOP3dbfuaaJdWaJFk9pPmf4fXAyLfKt5HdG0RyO2IKhDS6hDpmCYfHKhx0JS4bZJFlEmWpVBIfvF/s1600-h/1231.JPG"><img id="BLOGGER_PHOTO_ID_5045027954249751250" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjp-vOzEye26cqkSDVx9zqG3HoxspzPmpDcGLJoJN-il6lz8MX_rtKK2tTGWOP3dbfuaaJdWaJFk9pPmf4fXAyLfKt5HdG0RyO2IKhDS6hDpmCYfHKhx0JS4bZJFlEmWpVBIfvF/s400/1231.JPG" border="0" /></a> <img id="BLOGGER_PHOTO_ID_5045029191200332514" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixpggvzmMZ5ByeUta84pfrg_2l_lWDXDRgzVe8P4W8puS2QqiBs8xXn9Ay4a0DI8SbUJXxeegjIyXXpG836YaTD_UxJLxSygwSIEN-7MginFwE2WneHdS4Pycq1Qwd-sv99XFB/s400/1232.JPG" border="0" /><br /><br /><img id="BLOGGER_PHOTO_ID_5045029461783272178" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9TWq25oB86-oElJ8KKvMFehYkRP7zZiYtANsMm_fUq_aYOVI3jEPquqYGH1JFMp_orVyamzrXndBPKDrgGC1lhLDA87uLw2vVrvjRAXN9y0zg-zfD8DQfVDqryYlej4ZfK1Hw/s400/1233.JPG" border="0" /><br /><div></div></div></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-30764859.post-22318581597997689102007-03-16T21:12:00.000+08:002007-03-18T11:52:14.792+08:00Rotary<div align="justify"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjv6lIQzD2uUZ_-sP7rGSZI46eglZ3XnEjBWWHGmR8ImDodi7J4jUZP7nLUpyDhyphenhypheniwHx59RAINlorY0UwWj4uCeG0-1jOw6L_WkxGaQ7oxx_fCP180cOtsw6mzLzbJ8b4ePazJm/s1600-h/2007Mar-Rotary-800x419.png"><img id="BLOGGER_PHOTO_ID_5042510714413577474" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjv6lIQzD2uUZ_-sP7rGSZI46eglZ3XnEjBWWHGmR8ImDodi7J4jUZP7nLUpyDhyphenhypheniwHx59RAINlorY0UwWj4uCeG0-1jOw6L_WkxGaQ7oxx_fCP180cOtsw6mzLzbJ8b4ePazJm/s400/2007Mar-Rotary-800x419.png" border="0" /></a> As requested. Rotary's recent price movement has corresponded nicely with its short-term support at the <strong>50MA</strong> line. Coupled with declining volume, it looks to be consolidating well. Support is along the 50 moving average line (blue) and<strong> .82</strong> , res at <strong>.945</strong> region. Interesting volume to take note of along with price increase is in excess of <strong>8 mil</strong> shares. RSI reading is on the verge of turning up from over-sold region whilst MACD is showing price momentum about to turn positive.<br /></div>Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-30764859.post-15319201612235888522007-03-13T21:47:00.000+08:002007-03-13T22:05:29.780+08:00Positive Self-Belief5. Positive Self- Belief:<br /><br /><strong>" All truly wise thoughts have been thought already thousands of times;<br />but to truly make them ours we must think them over again honestly,<br />till they take root in our personal experience."<br />- Goethe<br /></strong><br /><em>Iron clad belief not only in the system you are trading but also in<br />your discipline to execute both entry and exits flawlessly are essential<br />to your success in trading.</em><br /><br />The top traders know it is the discipline displayed in following their<br />rules that is the important thing in trading and the money rewards are<br />secondary. <strong>For if you can not execute your signals, on both entry and exit,<br />without question it takes just one mistake to give all those hard earned<br />profits back to the market.<br /><br />Positive self-belief is built from repetition after repetition of<br />following your rules.</strong> Extensive back-testing of your system and<br />constant self analysis.<br /><br />You'll never be able to follow a system if you have a doubt in your<br />mind. <em><strong>That's why so many people who buy other peoples systems fail.</strong></em><br />When that system goes through a losing period the person who purchased it<br />will throw it away and search for the next system. Yet the trader who<br />has rock solid belief will be aware that the system does display periods of<br />losses. He's seen it all before and sits it out waiting for the conditions<br />to become more favourable. When they do he gets back in and makes a ton<br />more cash. The person who purchased the system in the meanwhile is now<br />losing more money with the new system because that too has just come into<br />a losing streak.<br /><br />Only by doing the groundwork in section four will a trader have confidence<br />in a system. You must strive to work through as much market data as is<br />possible with any system so as to know what is normal and what isn't.<br /><strong>This is why even the top famous traders have losing streaks and they never<br />batter an eyelid.</strong> Every-one seems to be aware that George soros is the<br />greatest trader alive. The guy made billions in the 1980's and 1990's,<br />yet he as also had some amazing losing periods. His fund has also lost<br />billions and posted big negative returns. Did it bother him? He knew<br />that his style of trading will go through losing periods. Just as dawn<br />follows dusk, a losing period is usually followed by a winning period<br />and vise -versa. Yet too many traders throw in the towel after taking a<br />couple of successive losers. They are never around when the system kicks<br />into a big winning period.<br /><br /><strong>What you believe is what you get.</strong> If you look at your problem areas you'll<br />find they are rooted in faulty and limited beliefs. So if you are having<br />problems with your trading results examine your beliefs about trading. If<br />deep down you have negative feelings about trading, or making money or you<br />lack complete confidence in either the system you are following or your-self<br />then you have to stop trading and go back and find out why.<br /><br /><strong>A person who is a compulsive gambler will never make it trading the markets.<br /></strong>I'm sure when they lose a substantial amount of their capital then every-one<br />else will be to blame, but deep down if they analyzed their beliefs about trading<br />they would probably admit they see it as a big casino. If your beliefs about<br />making money are negative then how can you expect to make money in stocks?<br />I have heard of traders running accounts up to a ceiling figure, say $1 million<br />and then losing it all. They have repeated this several times before seeking help.<br />Usually, it is found that some deep seated, negative belief about making a lot<br />of money has caused them to push the self-destruct button. <strong>As Ed Seykota ( very<br />successful professional trader) says, every-one gets what they want from life.<br />You'll find in trading you'll get what you want.<br /></strong><br />You have to ask your-self what are your beliefs about trading? Are you told<br />continuously that trading is a no win game? It's a gamble? You can't win?<br />Trend following doesn't work? etc... Do you believe any of it? Write down<br />what you believe about trading. What kind of returns do you think are possible?<br /><strong>How much time and effort do you believe you must put into a day's work to obtain<br />a day's pay?</strong> When I first started trading I felt I needed to work hour after hour<br />every day. I checked on the quotes continuously, phoned my broker, read reports,<br />listened to the news, etc.. Why? Because I believed I had to put in hard work to<br />receive pay. It took a long time to shake that belief out.<br /><br />If you believe it's relatively simple to make 50% p.a from the stock market<br />year in and year out, with very low risk and with just ten minutes work per<br />day then good, because it's possible. <strong>Then this is what you'll work towards<br /></strong>( I know many people will disagree but first ask whether these people are in<br />a position to pass comment).<br /><br />On the other hand, if you believe just working ten minutes per day for a wage<br />is a lazy way to success and you feel uncomfortable with this then you will<br />have to resolve this conflict before you can obtain these results.<br /><br />Choose your beliefs wisely. <strong>In all problems with your trading you are both<br />the problem and solution.</strong> The top traders know this. If they go through an<br />extensive period of losers they'll start analyzing their beliefs. Looking<br />inside and not out-side for the answers.<br /><br />How do you develop poitive self-belief?<br /><br />Foremost it has to be said it takes a lot of work (refer to the previous chapter.)<br /><strong>You will have to start with accepting total responsibility for your trading ,be<br />willing to put a lot of work into finding and testing a trading system.<br />The rest is built from experience.</strong> It takes years of experience for you to<br />develop the belief. A bit of a catch 22 but how do you gain experience in<br />trading? By staying in the game. Trade with such a small risk in the early<br />years that it hardly seems worth your while. <strong>View trading as a 20 year venture<br />and not a "get rich quick scheme."</strong><br /><br /><strong>It is only when you have total confidence will you be able to view your trading in<br />terms of points rather than money.</strong> Once you are on this level the rewards can be<br />staggering. Which brings me on to the next chapter.<br /><br />(Excerpt from 7 Habits of Highly Profitable Traders.)Unknownnoreply@blogger.com0