Shotgun Investor

Apocalypse Now!

2008-04-03T17:58:00.000-07:00

So just imagine, you have done pretty well for yourself, inherited a bunch of money, and was able to put your hands on millions of dollars. Then, out of nowhere, the world start to fall apart. It really doesn't matter what you do, the country gets sucked into a major war, catastrophe, or has a massive civil war. What are you going to do with all that cash, not to mention art works, gold bullion, a fancy house, jewelry, etc?

That is the subject of this book. Barton Biggs discusses what happened to wealth during the two world wars, how the market reacted, and also seemed to predict, the outcome. He also discussed what to do with your own millions.

Amazingly, prior to major turning points in the war, the markets in multiple different countries seem to rally if they were connected to the Allies. Conversely, The Axis powers had initial rallies during the first two years of the war, but then, a couple of months prior to the Allies gaining the upper hand, they fell apart. There probably was some component of a consensus in the market that sensed which way the war was going. Good stuff.

The best wealth protector for the ultra-rich? Foreign farm land. Beat everything else down the line, except for jewelry, which was needed in those short-term starvation cases where the food supply was also destroyed, and you could trade family heirlooms for stale bread.

Happy Investing!

Turn my back for one second!

2008-03-12T18:40:00.001-07:00

Well, well, well. I have been a bit indisposed recently and have not been watching the market with my usual obsessive, portfolio watching zeal. So I was shocked to see the recent gyrations (yes, I did type the word"gyration," (now twice)). The market was flapping around like a fish out of water. Lets see how I held up.

Since the end of october, the S&P index has lost 250 points, or about 16.1% of its value. My portfolio, on the other hand has dropped only 5.8%, excluding dividends and taxes, but including commisions. What is the reason? Basically, the Sam Adams buy, a la How to Make Money in Stocks, was a big winner. Also, the ultrashort QQQ ETF which rises when the S&P drops, bought after reading Hedgehogging, went up.

All the others went nowhere other than down to varying degrees. The biggest loser so far has been TBSI international limited, a la The Little Book That Makes You Rich. I guess the title is a bit of a misnomer.

Here's the rundown:

Symbol	Name	Type	Date	Shares	Price	Notes
WAG	Walgreen Company	Buy	Oct 30, 2007	10.00	39.45	Rule #1
SAM	The Boston Beer Company, Inc.	Buy	Nov 16, 2007	15.00	34.44	How to Make money in Stocks
ASR	Grupo Aeroportuario del Sureste...	Buy	Nov 26, 2007	10.00	54.89	Random Walk
WBC	WABCO Holdings Inc.	Buy	Dec 3, 2007	12.00	46.36	Buffettology
IOO	iShares S&P Global 100 Index...	Buy	Nov 5, 2007	6.00	82.92	Future of Investors
ICFI	ICF International, Inc.	Buy	Dec 10, 2007	20.00	26.00	Little Book that Beats the Market
WFR	MEMC Electronic Materials, Inc.	Buy	Jan 3, 2008	6.00	88.00	Invest Like a Shark
WFR	MEMC Electronic Materials, Inc.	Sell	Jan 7, 2008	6.00	80.20	Invest Like a Shark
STMP	Stamps.com Inc.	Buy	Jan 23, 2008	50.00	10.80	Dhandho Investor
QID	UltraShort QQQ ProShares (ETF)	Buy	Jan 31, 2008	10.00	51.30	Hedgehogging
TBSI	TBS International Limited	Buy	Feb 19, 2008	10.00	38.17	The Little Book that Makes You Rich

Hot Stock Tip!

2008-03-04T12:01:00.000-08:00

OK, so this is a bit off the usual post for this blog. One of my side projects while learning about the market is to focus on the "neurosciences" and the stock market. Now, a warning. I have no experience making investment recommendations etc, and I lost money recently (but not as much as the overall market). So, follow at your own risk.

A uncommon disease called myasthenia gravis affects less than 100,000 people per year in the US. It is caused by the inability of proper muscle contraction by antibodies to the muscle end-plate acetylcholine receptors. Learn more about it here. A common treatment is to give medications that inhibit the breakdown of neurotransmitters that act on the receptors, but it has numerous side effects, has to be taken multiople times per day, and so on.

However, there is a new drug that has great promise. This drug has the ability to inhibit the production of acetylcholinesterase which decreases the breakdown of the acetylcholine neurotransmitters using antisense oligonucleotide technology, which is really cool. Essentially these snippits of DNA can inhibit the gene transcription, or production, of acetylcholinesterase.

A U.K. company called Amarin, AMRN, which has been having some problems lately (delisting, turnover of management, and failed drug for huntington's disease, amongst others), has bought the rights to this drug from a Israeli company called Ester Pharmaceuticals. So what is the big deal? Well, hold on to your pants. The same acetylcholine neurotransmitter and receptor interaction is seen in the brain. And of two treatments for Alzheimer's currently being used (anticholinergic and antiglutaminergic), there is a wealth of information that supports increasing acetylcholine activity delays the progression of Alzheimer's disease. Yeah, that's right. This drug that is currently being used and is approved by the FDA for myasthenia gravis could potentially treat Alzheimer's disease, which affects millions. The numbers boggle the mind.

So far, I don't see much evidence that anyone has thought this through to the logical conclusion. Again, I cannot stress enough that this blog post is all about speculation. The drug may not work due to lots of factors, but once the idea has spread though to the market, I think it will take off. I will pick up a few shares, and see if it pans out.

Turtle Soup.

2008-02-29T23:37:00.000-08:00

Spending the day idly trading stocks and pulling in millions of dollars really is the way to go. That is the main reason books like this are compelling. Unfortunately, as you read through this book, you come away with a sense that either this guy is a genius, or just really lucky. There is no way that an average shotgun investor who only places trades after hours and can look at his selections for just minutes a day could pull this off. Interesting stuff nonetheless.

Covel begins with a saying from Benjamin Graham, a guru of value investing, that analysts and fund managers cannot beat the market because they are the market. Essentially, when people trade frequently in the market it is a zero-sum game, or nearly so. For every winner, there is a loser. The person who makes the money, in general takes it away from people who lose money. For long term investors this is not the case, but the explanation is a bit to in depth for this post.

This is the story of how Richard Dennis, a wealthy commodities trader, placed an ad in a newspaper and recruited "normal" individuals and taught them how to make millions by trading in methodical ways. Very similar to the movie Trading Places, he began this experiment as a bet to see if anyone could be a trader. The old nature versus nurture.

He educated the turtles, and gave them his own money to trade with. They did well as a group, and made millions. They were is essence momentum traders, which is the subject of book also by Covel. I don't believe this books leads to a particular stock, so there won't be a purchase with this one. Very good story though. Top notch. And Dan Aykroyd and Eddie Murphy were great in Trading Places. If you like early 80's comedies, this one is for you.

Small book, big results (hopefully)!

2008-02-17T05:56:00.000-08:00

The Little Book that Makes You Rich is a another of the "Little Book" series that supposes an easy way to make a killing in the market. It does not get any easier. Navellier makes investing seem like a spectator sport. All you do is go to his handy web site where he has constructed a grading scale for stocks.

In the book, he describes his ranking of stocks on eight different measures, all of them growth related. I'll list them so you do not have to read the book.

Positive earnings revisions
Positive earnings surprises
Increased sales growth
Expanding operating margins
Strong cash flow
Earnings growth
Eearnings momentum
High retun on equity

They are tabulated to come up with an overall fundamental and quantitative weighted grade. If the stock is an A, then you buy it. If it is an F, you sell. It is that easy. So, how do my stocks rate thus far? Let's go to the site. Of course, they don't rank the ETFs that I purchased, but of all the others, ASR, ICFI, and WFR are graded as "A," SAM is a "B," STMP is a "C," and WAG is a dog graded at a "D."

There is not a lot of other material in the book, so I don't recommend it overall. He states how he originally came up with the formula and gives some theoretical reasons why it should work. He does have a good discussion of Beta, the volatility of a stock compared to the overall market, and Alpha, the return of a particular stock above or below the overall market. Not to much info that is new. One would want to diversify holdings to keep beta low, and pick stocks that have a high alpha to increase returns. Unfortunately, alpha is how a stock has done in the past, so may not hold true in the future.

Now, which to buy? Very easy, he rates each stock on his site, so I will pick the recommended Marine company TBSI, which has a overall grade of A on both the fundamental and quantitative scales.

Ugh.

2008-02-09T21:43:00.000-08:00

Well, this has been a bad week for the shotgun investor. However, it was much worse for the stock market as a whole. My recent purchase of the QID ETF even eeked out a gain. Unfortunately, the rest of my picks matched the overall market, and I essentially have been riding the market down. I will regroup and finish a new book with a new investment choice as soon as time permits.

I have decided to hold on to each stock for three months, then to cut losses or lock in gains.

My first hedge fund!!!!!

2008-01-30T20:15:00.000-08:00

Barton Biggs has inspired me to open and run a hedge fund. He was a big player at Morgan Stanley, and this book chronicles his thoughts on Wall street and the rise and fall of hedge fund traders, and other greedy folks on Wall Street.

My favorite parts of the book include his meeting with Margaret Thatcher (Hillary is no comparison), the ins and outs of losing hundreds of millions of dollars in short order, and the short-essay length biography of John Maynard Keynes (the gayest economist in history, called his love of boys "Higher Sodomy").

Also, he explains ideas such as the rise of gold in fairly simple terms, in which he gives an insight into some of his thinking. The Institutional Investors have about half of the $60 trillion market in tradable securities. There is only $200 billion in investment gold available in the world at the "true" price of about 500/ounce. So, if the Instituional Investors get nervous, and move some of their usual 3% of money in Gold to 5% of assets, the price jumps by quite a bit. Two percent jump of about $30 trillion dollars is an additional $600 billion invested in gold. So, if the price gets to a total of four times its "true" price, then he would short it big time.

So what to trade? I'll be purchasing five hundred smackers of Proshares relatively new Ultrashort ETF for the Nasdaq called QID. It is designed to increase twice the amount the Nasdaq drops. What fun! If you think China is in a bubble, they have an ETF for that.

Waltz

2008-01-22T18:45:00.000-08:00

The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons From Financial Cycles and Trends

This is one fine book. A compilation of charts with running commentary by Kenneth Fisher, from Fisher Investments and Forbes. It covers about two hundreds years of history of the stock market, in this and other foreign governments, all in pictures.

Say you were curious about the bond market's prices during the US civil war? It is in there.

Interested in if the comparison of South African gold to world gold production from 1950? It is in there.

Say you wanted to know if a large deficit is bad for the economy? Yep, included. Fascinating that a large deficit is actually very good for the economy. When following Andrew Jackson's ideas in the early 1800s, the federal government repaid our deficit with disastrous results. there is a great graph of this that covers public finance from 1790.

What about the Iraq war? Good or bad for the economy? Not important, and he presents information to back it up.

A good read and coffee table book, but no specific investment advice on this go around, so I will sit on the sidelines.

Dhandho Ho!

2008-01-17T01:37:00.000-08:00

Mohnish Pabrai is a managing partner of Pabrai funds, which is modeled (copied) from Warren Buffet's partnership. In this book, he explains the theory that he had used to have annualized 28% returns. All right, so what is it?

Buy stuff really, really cheap. Less than intrinsic value.

The catchy title of Dhandho is simply Hindi (Indian?) for business. He stresses that one should only buy business that are on a fire sale. The goal is to recoup all your invested capital in about five years or less, when the market recognizes the intrinsic value of the stock.

Also, he describes the Kelly formula, which is used to compute the amount of one's bankroll that one should bet based on the outcome, edge, and odds of the wager.

So what to buy? Looking at his filing with the SEC, his most recent position is in STMP. This is the company stamp.com, which is exactly what it sounds like. I will place an order for 500 bucks worth, and see where it goes.

Risk Risk Risk.

2008-01-13T14:02:00.000-08:00

The history of mathematics as it applies to the probabilities and the stock market is of course one of the most fascinating subjects around. The book "Against the Gods: The Remarkable Story of Risk" covers it in great detail. A fascinating read, Peter L. Bernstein reviews the beginning of recorded history of "possible outcomes," to how the idea "evolved" into the current system of statistics and probability theory.

One of my favorite topics is the middle ages when insurance companies started to issue life insurance. Originally, companies would charge the same amount for a life insurance policy no matter the age or health of the individual, as the concept of "likelihood of death" was an evolving concept. They had no term for evaluating risk of death!!!!

Even more cool is the the way that he explains the history of the Gaussian (Bell) curve that we so admire. I was amazed to learn how much of the mathematics of probability was NOT invented by mathematicians, or even physicist or astronomy types. It was evolutionary biologists! Imagine that! I was shocked to say the least. I never realized how much mathematics was developed by the likes of Galton, Darwin, Mendel and his peas, and other tree huggers.

The last part covers modern game theory and other "recent" developments, such as efficient market theory and the Sharpe Ratio. Absolutely fascinating. A must read if you are into the history of statistics.

Unfortunately, no part of the book identifies any particular strategy for investing. No bets today.

Whales 1, Shark 0

2008-01-09T22:10:00.000-08:00

So, the shark has lost. Per the last review, I dutifully bought their recommended stock, and placed a stop loss order on it. Not one week later, the stock tanked. Well, at least the stop loss kept me from losing more cash.

WFR just cost me 50 bucks!!!!!

Poor me.

Well, throw that book into the trash.

Otherwise, lets see where I stand. Since starting on October 29th, 2007, the S&P had a loss of 9%, while my scheme gave me a loss of 1.4%. This includes all commissions, but not taxes, as I am currently losing money (about forty bucks total). If it wasn't for the shark strategy, I would be up ten dollars.

Jaws Attacks!!!!!

2008-01-02T19:25:00.000-08:00

"RevShark" as he is called, started a investing career after he went deaf, got divorced, and lost his job. He then traded up to millions of dollars and started a website for self promotion that reminds me a lot of Jimmy Buffet's.

He then wrote Invest Like a Shark which is a clear advertisement for his website, which can cost thousands to subscribe for a year! Don't worry, I will sum up his entire philosophy and strategy in a few short sentences.

First, his philosophy. Little investors can act like sharks. Fast, aggressive, following trends of the whales (big Wall Street types), and quickly moving on to the next opportunity.

Second, his strategy. Follow a low-cap stock, wait until it "makes a move" which is essentially crossing the fifty day moving average. Then, take a few "bites" by buying some shares. Finally, dump the stock very quickly if you lose money. If you do not lose money, hold onto it. Then, sell it once it stops performing for you, preferably with a 8-10% stop-loss.

What to buy? Well, that is easy. You can sign up for the "stock of the week" which conveniently fills all the requirements. This week, WFR is the one to buy. I will buy 500 smackers worth at the open, and place a trailing stop-loss that will automatically dump it if there is a drop of 10% from its high point.

Don't worry about the RevShark. He is making millions, got remarried, and now has a cochlear implant and can hear everything just fine.

Blow them away!

2007-12-27T06:26:00.000-08:00

In preparing for the new year, I have many books on the list that will be evaluated, and gobs of money will be spent trying to beat the market. This will be the year of the Shotgun Investor!!!!!

Oh the Possibilities!

2007-12-17T01:00:00.000-08:00

In Fooled by Randomness, Nassim Nicholas Taleb (real name, not an anagram) discusses how randomness affects almost every daily event and how most do not make sense of it.

The most prominent people in the book are market traders who ignore the random component of their job. He gives multiple funny examples of peole making millions per year, thinking that they are the bomb, and then losing it all by not recognizing that a large component of their success was based on the fact that the trading system they were using was good, unless something "unlucky" happened.

Good stuff. A very entertaining read. He does not pull punches for the likes of George Will, and other media pundits. One point for the nerdy statistician!

My favorite section is when he compares winning ten million dollars playing Russian roulette versus earning the same through dentistry, explains the importance of "multiple probable outcomes," and relates how our brains are thought to interpret such different risks for the same reward. Neat.

The book is written like a blog or journal, and is entertaining and quite a easy read if you pass over all the philosophical name dropping. he also wrote a book called "The Black Swan" which will definitely be on my future reading list.

What to buy? This does not easily lend to a specific trading scheme, so I will sit this one out. Also, I spent my money buying gifts.

Abracadabara!

2007-12-08T22:00:00.000-08:00

In looking for investment ideas, it seems as though the world is all too ready to give advice on stock market picks. Everyone wants a simple "magic formula" to investing. Ideally, one would go to a website, click on a button, and have an instantaneous result of a list of stocks to buy that could only go up.

Thankfully, Joel Greenblatt has already done it. Nothing could be more simple for the little guy. In "The Little Book that Beats the Market" a straightforward formula is given that bested the S&P for 30 years.

Basically, he uses the Return on Assets(ROA), and ranks the stocks. Then, he takes the earnings yield, and ranks the stocks. Combining the two lists of rankings, he comes up with a rank of stocks. For example, if Joe Blow company ranked #2 in ROA, and #376 on earnings yield, then overall the stock would gain a rating of #378. From this list, he then eliminates foreign companies, financial companies, and utilities. One should buy 20-30 of these stocks, and hold them for a year minus one day if the they are a loser, and for a full year if they are winners (for tax purposes).

More simply, he has a website that does all this for you, giving you your list.

A good book, only takes a day or two to read. Get it from your local library.

So for my "magic" selection, I have simply visited the site and obtained the stock ICF International, (ICFI) which is a companey that.... well, never mind. You see, you don't even have to know what the company does. See how easy? I'll buy twenty shares on Monday.

Buff-a-what-a-gee?

2007-12-02T20:57:00.000-08:00

Buffettology looks at investing from the view point of the big man, Warren Buffet, legendary investor and 2nd richest man in the USA. The author, Mary Buffet, is the ex-wife of Buffet's son. But I guess she kept the name.

Whatever.

She describes his basic investing strategy as "business investing." That means not trading stocks with wild abandon, but rather looking at the entire business and deciding to invest on the merits of holding stock for years, or forever. For example, if you had the money, would you purchase ALL of the company for yourself? In this way, you know that you are dedicated to holding it for the long-term, certain that it will continue to bring in good earnings, and give you a great return on your investment.

He views stocks from the point of view of bond investing. Essentially, a bond gives a fixed rate of return. A stock is reviewed concerning the earnings per share and growth rate. If they are assumed to remain fairly constant, then the earnings of the stock (how much it appreciates over say, ten years) can be equated to a percentage return annually. This can be compared to the annual return on a fixed investment such as bonds. There are numerous examples in the book for you to investigate.

The trick is assuming earnings and growth will continue. this is where the idea of a margin of safety and consumer monopoly comes in. Coca-cola can charge much more than other companies for the same product because of name recognition, and it does not need to invest money in research and development or other capital expenditures in other companies.

What to buy? I looked at some ideas from the buffet letters to shareholders, the buffetwatch blog, and did some searches. I came up with a company Wabco (WBC), that makes vehicle control and stabilization systems.

If it is good enough for Warren, then it is good enough for me!

Where am I now?

2007-11-30T19:45:00.000-08:00

O.K., time for an update to see how the old shotgun investor is doing.

So, what with the stock market going to hell, lets see where I stand. Going from the initial account value of $5,000, I bought four investments.

I spent $2,013.52 for IOO, SAM, ASR, and WAG. Now they are worth $1,962.23

This takes into account a $7 commission per trade, but not taxes, because I lost money.

I started this whole shebang on October 29th, 2007.

In that same time, the S&P had a loss of 3.3%, while my scheme gave me a loss of 2.5%.

Whoopee!

This is so easy a monkey could do it.

2007-11-24T13:07:00.000-08:00

Watch out Mr. Market! I just re-read the book "A Random Walk Down Wall Street" by Burton G Malkiel. I would have to say that this is an excellent all-around guide to the market. It begins with a history of pretty spectacular market bubbles of the past, including the tulip craze and South Sea Company debacle. A short course in technical analysis and fundamental analysis follows.

The meat of the book is in the in depth coverage of how different investment vehicles work. I thought it was excellent in how much detail was presented. It includes everything from derivatives to zero coupon bonds. He covers many different theories on how the market works, and in essence gives the advice that a random selection of stocks will outperform professionals.

The writing seems to be balanced, whereas most books I tend to pick one idea as the best and only present information to back up their theory.

For anyone that doesn't already have this book, I believe it is a must.

So, for my selection. The actual suggestion in the book is that you buy a global index fund of all the stocks and just hold it indefinitely. But, since I just did that on a previous post, that would be boring and redundant. Therefore, I will pick a stock at random. I used a random number and letter sequencer that I found on the internet, and obtained the result of ASR, completely at random. I have no idea what the stock is all about, but it appears to be some sort of foreign operation that manages airports in southern Mexico. At about fifty bucks per share, I should be able to pick up about ten shares. This being a holiday weekend, I hope there are no surprises for Monday.

I'll Drink to That!!!!!

2007-11-15T18:46:00.000-08:00

How to Make Money in Stocks by William J. O'Neil.

This guy talks like he knows the biz, and he has the history to prove it. He started out with a few grand and ended up with enough cash to buy a seat on the NYSE. He lays it all out in front of you, with an eloquence that seems to say, ”this is so easy, anyone can do it, as long as you follow my system.” The only problem is that his instructions are open to great interpretation and are at times, contradictory.

For example, he proposes that stocks that are “market leaders” are the best stocks to buy because they will remain strong in a bear market but goes on to say that these same market leaders will “turn on their heels first.”

But, besides the overall wishy-washy advice, there is some meat in the book. On pages 103-106. Here he gives information on when to sell. Not cut and dry though. 36 separate reasons to dump a stock. You better have them memorized as well, so you don’t make a crucial error and see a head and shoulder pattern when you should have seen a cup with handle pattern.

Overall, I would have to say this is a good book to buy, study, read over and over again, then buy other similar like-minded books, and trade (uh, invest) in some stocks. That is, if you don’t already have a job and are rich enough to not be hurt with all of the commissions etc…

I can’t devote that kind of time, and frankly, I am busy all day. What’s more, how can I be constantly trading and doing all this research into stock patterns and charts and whatnot. It is not for me.

Then, a few chapters in the middle of the book are nothing except an add for Investors Business Daily.

I know this rambles a bit, forgive me, it is late. The overall message is cut your losses early, buy market leaders with good solid earnings, and let your winners ride. Oh, and there are a few pages in the back that say if you don’t want to invest the trememdous amount of time it takes to use his system, then buy some mutual funds, hold them long term, and you will be rich anyway.

So what to buy with my own $500 cash-money based on this book? This is easy. He helpfully compiles a IBD 100 index of great stock buys. So, looking down the list….ah, here we go, SAM. Boston Brewing company. They make Sam Adams beer. Sounds good to me. Buy it and forget it. Case closed. Sorry about the pun.

The Battle for Investment Survival

2007-11-08T17:55:00.000-08:00

The Battle for Investment Survival by Gerald M. Loeb is the book that triggered the shotgun investor blog. It is a great book that was originally written in 1935. This person seems to have begun the whole "investing for the common man" idea. He was a legendary stock broker, whose history you can read about in the introduction of the latest printing by Ken Fisher. the style is very similar to a blog-format, with very short one to three page chapters. Each one with down-home friendly how-to tidbits on the stock market. He gives away his philosophy piecemeal, with examples.

One big theme through the book is discussing the issue of when to sell stocks. Buying them is one thing, but he states that the real decision is when to get out. This is especially difficult for me with losers (United Airlines anyone?). His advice for novice investors is to shed any stocks that drop ten to twenty percent and think about why you invested in the stock in the first place, and try to learn from it.

Other interesting points he makes are following trends, letting profits run, the difference in perspective that young versus old investors have, fallacious wall street proverbs, speculation versus investing, and public psychology. In fact, much of what he discusses are things that seem to be "new" ideas in neuroeconomic circles, technical analysis, and other current market strategies.

The book is also very interesting from a historical viewpoint. In the midst of describing the process of living the Wall Street career, he describes the proper way to create an Ice-Cream Soda. He gives insight into the old-fashion ticker tape watchers, and the other speculators of the day. Truly a must read for anyone interested in the history of Wall Street.

But enough of that. Buy the book (or visit your friendly library and let your neighbors foot the bill). As the most consistent theme in the book that applies to my position is selling losing stocks, that is what I will do. I will sell any losers from my positions that I have held which have dropped more than fifteen percent. These were purchased prior to the official start of this blog. So long!

The Future for Investors

2007-11-02T15:18:00.000-07:00

The Future for Investors by Jeremy J. Siegel (look at the size of his head, you know he is smart) is a solid book. It is divided into essentially five parts. First, he discusses some history of investments, and explains that there is a confusion about growth stocks, and why they are good stories, but not necessarily good investments. Through a good number of pictures and whatnot, he explains that the return on investment is a different entity from the growth of any particular company.

The second part of the book can be summed up in two words: Bubble trap. You buy some stuff that has gone up astronomically in price recently and you will get burned. Pages 71 through 124. You can skip it.

Part three is the meat. Here he explains what works in the market from his perspective, and gives good evidence for it. Essentially, he explains that the source of all investment returns is from earnings, and these are reflected most transparently into good stock returns by purchasing reasonable valuations on dividend paying stocks, as they produce good returns. This is true even if the market as a whole is dropping, because then you simply obtain the shares at a cheaper cost.

Part four is a bore. Again, skip it. People are going to be old in the USA and young in other parts of the world. Why should you care? Because a large portion of the market's return will be from the international market. End of story.

Finally, he ends the book with investment recommendations that are fairly specific. If one cannot buy a sufficient quantity of individual stocks, then she/he may buy a ETF or exchange traded fund, that represents all of the available stocks within a particular sector/region/niche. Also, he describes individual sectors and strategies, such as oil, health care, and the "Dogs of the Dow," that one can use to enhance a standard well balanced international portfolio.

So now I will put my money where my mouth is. Of course, it is 1:00 AM on a Saturday, so I will need to put in a order for the coming week. He recommends ETFs of large multinational companies. In order to follow his advice, I will purchase five hundred dollars worth of the shares of IOO ETF, traded by iShares, which represents the largest global 100 multinational companies on the planet earth. Take that WAG!!!!!

We shall see.......

Rule #1 Investing by Phil Town

2007-10-29T20:20:00.000-07:00

Rule #1 Investing by Phil Town

I picked this book to write about as the initial reviewed book only due to its title (#1 - get it?). I already regret it. Why? Simple. The book is horrible. I mean the whole damn book is nothing but a big waste of time. I am so glad that I did not buy this book but borrowed it from the library.

O.K. enough ranting and raving. Most of the book tells you how great this guy is and how he was so lucky to obtain "stock market trading guru status" when he helped some rich guy take a raft down a river. Then he proceeds to inform you that the best way to become rich is by trading in and out of a stock using "signals." How do you pick the stock? By looking at the traditional moat idea of Buffet, and only buying stocks with great growth. Here is the rub. He has no proof. Zippo. All simple opinion and no facts. Garbage.

He pretends to know the answer by combining value ideas with trading ideas, such as MACD to time in and out of a great company, ignoring facts of costs due to trading.

But, I will put my money where my mouth is and invest in one of his ideas. Man, I feel like I can already kiss that money goodbye.

His latest advice is on Walgreens (WAG), stating that you should buy it at $38. Ignoring the BS, I will buy 10 shares at the open, and see what happens.

shoot at the stock market

2007-10-29T12:14:00.000-07:00

I will now begin to analyze exactly how to make millions and millions of dollars utilizing combinations of neuroeconomics, sound market strategy, and technical analysis bulls**t to pull in dough above and beyond the benchmark of the S&P. Additionally, I will do it using only my brains, current trashy stock market books, and spare free time. To make things even more interesting, I will assume people do not have time or the ability to trade stocks at work, given firewalls etc. Therefore, all trading, investing, and research will be done only in the wee hours when the brain is digesting the news fromthe day.

Let me assure you, I have ABSOLUTELY NO EXPERIENCE, CREDENTIALS, OR KNOWLEDGE of the market, so follow this at you own risk. But, if I can do it, anyone can. Things will be a bit chaotic to begin, but I hope to find a path to riches. Hopefully, anyone who joins me in this quest can do the same (or at least not fall into the "trading trap" as I like to call it).

The first step, start with a few books, analyze them in turn, put in some opionions etc..., and perhaps use their advice.

The second step will be to start with $5,000, and begin to invest. I plan to report on how I am doing, and each step of the way will post the current amount of my holdings. That way, you can see if I make money, or lose it all. :(

The third step is of course, early retirement.

-The Shotgun Investor