Investors

[Jimmy K]

For all you investors out there, let us know if your a bull or a bear and what you trade (ie: equities, bonds, commodities, mutual funds, etf's, etc.)

I myself am a bull, trade pure equities, looking to get into some etf's, but haven't yet. My belief is that the only way to make real money is to trade small and micro cap stocks as they have the best room for growth. i'll buy and sell blue chips if i see a big pullback that i can take advantage of or just channel trade. For example, I bought MRK after the vioxx bs and have made it pay off and it will get even better as these suits are dumped.

Anyway, that is a basic synopsis of my trading strategy. As for my financial background, I was an advisor for 4 years before buying a restaurant.

[Romanowski]

Jimmy

Im doing a lot of reading before jumping into currency trading. Im finding it fascinating. Let you know my progress. Jerome of Southeast is the resident expert.

Background, very math/analytical orientated...BS electrical engineering

[Jimmy K]

I've never looked into currency trading, I know people can make a lot of money doing it though. One thing that I would look into doing currency wise is shorting the shit out of the euro, it is horribly over-valued to the dollar and will pullback big time in the next year or two.

[Romanowski]

^strictly technical analysis..all candlestick for the most part.

What I was taught is, and this can be applied to any type of trading, and also keep in mind their are many different "ways" to trade...but technical analysis measures emotions. It tells us what is, not what some think "is"

my 2 cents

[Master of Disaster]

What moves stocks? Let me count the ways
Q: What is the final, ultimate and actual driver that determines the price of any stock?

A: That's a big question. Thousands of investment books, decades of speculation and stacks of academic research have tried to answer it. And even with all that effort, most people can't agree.

But the gyrations of stocks don't have to be so mysterious if you think about them as economists think about the economy. Specifically, divide your question into two parts: What moves the stock market in the short run, and what moves it in the long run?

Let's tackle those questions:

In the short run, stock prices are volatile, erratic and unpredictable. What moves stocks? Everything.

Millions of traders, investors and other market players digest any information about a company to try to gain an advantage. And when I say anything can move a company's stock in the short term, I mean anything.

A stock might rally after a company releases earnings showing robust growth in the latest quarter. But it might also rally if the company reports a huge loss, if the loss is smaller than expected.

Sometimes stocks react to news that a company officer or director is buying or selling stock. A stock can move in the short term after being mentioned on a TV show or in a newspaper. And sometimes, stocks just have "momentum," meaning they keep rising because they have been rising.

And don't forget about endless economic reports, takeover rumors and other speculation.

In a nutshell, short-term stock moves are random. They are based on incremental news about a company and the reactions of investors big and small. That why it's largely a bad idea to try to profit from stocks in the short term. Just as blackjack players might win once, twice, three times or even a hundred times, in the long term, most will lose. The same goes for short-term traders in stocks.

What moves the stock market over the long run? This is much easier to answer. At its core, a stock's price reflects the present value of its future cash flows. In other words, a stock price will eventually be equal to the amount of cash the stock generates for its owners in the form of dividends and growth. This isn't exclusive to stocks. It's the same for any financial asset, including bonds. You can read about how to value a company using this methodology, called the dividend discount model, by clicking here.

Already, though, you will find a few problems. First, It can be difficult to accurately measure a company's value using the dividend discount model. Not only do you need to estimate the company's growth (something even analysts struggle to do accurately), but you also need to estimate the expected return on the stock.

And there's another problem: Just because a company is worth a certain amount based on the dividend discount model doesn't mean it will trade for that in the short run, or ever. That's because, as mentioned above, a limitless number of things can cause a stock price to drift from its measurable value.

But before you throw up your hands in frustration, realize that there are intelligent ways to put the market's mysteries to work for you. First, buy a large basket of stocks that represents the entire market. Doing that will ensure that you capture the market's total return and reduce your risks because you will be diversified.

Buying a basket of stocks is more feasible now, given the proliferation of low-cost stock index mutual funds and exchange-traded funds.

And if you own a broad market portfolio, hold it as long as you can. You'll avoid the market's short-term insanity and reduce the costs you would incur if you were constantly buying and selling.

This approach will let you maximize your return and reduce your risk so you won't even care what the market is thinking in the short term.

[amhlilhaus]

I follow three investment strategies:

I fullly fund my work's 401(k) plan, we have a 100% company match up to 5% of our salary which is contributed IMMEDIATELY, that's freaking insane, it used to be at the end of the year, which isn't bad either. I call this my 'retirement' insurance, in case my other two avenues to wealth don't pan out. I am in my early thirties so I am very aggressive with my mutual fund allocation, using 50% small caps, 25% growth and 25% international. as I age I will gradually lessen my exposure by moving some of the small cap and international into a growth and income fund, but that's decades away.

I also trade individual stocks, I follow the CANSLIM method espoused by willliam j. o'neil and investors business daily. check out the book at the library, it seems very technical, but in essence it's very close to the trading method of the great speculator jesse livermore. it takes the historical record of stocks making major price advances and distills the seven major characteristics of those stocks, using both fundamental and technical analysis indicators. the biggest thing about it that I like is it tells you common sense things, like in rising markets, your chance of gain is much higher but also to keep a close eye on your purchases, and if the stock moves against you to sell, keep your losses limited and let your profits run. I've done fairly well so far with it, as I save more I add more money to this account. on a side note,

quote:That why it's largely a bad idea to try to profit from stocks in the short term. Just as blackjack players might win once, twice, three times or even a hundred times, in the long term, most will lose. The same goes for short-term traders in stocks.

I believe this statement is incorrect. with blackjack your 'capital' ie your bet is 'all in' if you lose you lose everything. whereas with stocks you can have a 'losing bet' ie the stock starts going down and salvage a portion, sometimes a large portion of it. and with the stock market, a 'winning bet might be +100-1000%. if you had several +1000% winning 'bets' you'd be able to retire comfortably.

my last investment is my sports account. It's obviously not thought of as a legitimate investment vehicle by most people, but I focus on one sport I know well, manage myself (mostly) and don't really intend to shoot the lights out. I aim for a 100% return on my account, and once I build it to a certain level, I can take out so much per year to defray living expenses until my stock account can perform the same function. my first year I returned only 20% due to some execution issues, money management etc. so far in my second year I'm at 31% halfway through the year. even if I fall short, it's still a positive return.

[PigSkinTerror13]

i'm pretty conservative, but I spread my money around because I'm young enough to do it.... most trade equities (established companies like Sears and McDonalds)

been involved with some currency (fx) trades, bond market, and option market

really look forward to talking more about this with you guys... nothing like making money the old-fashioned way

[Jimmy K]

Originally Posted by PigSkinTerror13

i'm pretty conservative, but I spread my money around because I'm young enough to do it.... most trade equities (established companies like Sears and McDonalds)

been involved with some currency (fx) trades, bond market, and option market

really look forward to talking more about this with you guys... nothing like making money the old-fashioned way

pigskin, how old r u? just curious, because you might want to look at spreading out more in the small cap sector to promote growth.

[jaypasco]

interesting

[NY Mane]

My wife and I have maxed out our 401(k) every year since '00. It's our only tax break besides the mortgage interest. The IRS screws D.I.N.K'S (double income no kids). I'd love to day trade but I think I'd make more wagering on sports.

[JeromeFromSoutheast]

Originally Posted by Master of Disaster

What moves stocks? Let me count the ways
Q: What is the final, ultimate and actual driver that determines the price of any stock?

A: That's a big question. Thousands of investment books, decades of speculation and stacks of academic research have tried to answer it. And even with all that effort, most people can't agree.

But the gyrations of stocks don't have to be so mysterious if you think about them as economists think about the economy. Specifically, divide your question into two parts: What moves the stock market in the short run, and what moves it in the long run?

Let's tackle those questions:

In the short run, stock prices are volatile, erratic and unpredictable. What moves stocks? Everything.

Millions of traders, investors and other market players digest any information about a company to try to gain an advantage. And when I say anything can move a company's stock in the short term, I mean anything.

A stock might rally after a company releases earnings showing robust growth in the latest quarter. But it might also rally if the company reports a huge loss, if the loss is smaller than expected.

Sometimes stocks react to news that a company officer or director is buying or selling stock. A stock can move in the short term after being mentioned on a TV show or in a newspaper. And sometimes, stocks just have "momentum," meaning they keep rising because they have been rising.

And don't forget about endless economic reports, takeover rumors and other speculation.

In a nutshell, short-term stock moves are random. They are based on incremental news about a company and the reactions of investors big and small. That why it's largely a bad idea to try to profit from stocks in the short term. Just as blackjack players might win once, twice, three times or even a hundred times, in the long term, most will lose. The same goes for short-term traders in stocks.

What moves the stock market over the long run? This is much easier to answer. At its core, a stock's price reflects the present value of its future cash flows. In other words, a stock price will eventually be equal to the amount of cash the stock generates for its owners in the form of dividends and growth. This isn't exclusive to stocks. It's the same for any financial asset, including bonds. You can read about how to value a company using this methodology, called the dividend discount model, by clicking here.

Already, though, you will find a few problems. First, It can be difficult to accurately measure a company's value using the dividend discount model. Not only do you need to estimate the company's growth (something even analysts struggle to do accurately), but you also need to estimate the expected return on the stock.

And there's another problem: Just because a company is worth a certain amount based on the dividend discount model doesn't mean it will trade for that in the short run, or ever. That's because, as mentioned above, a limitless number of things can cause a stock price to drift from its measurable value.

But before you throw up your hands in frustration, realize that there are intelligent ways to put the market's mysteries to work for you. First, buy a large basket of stocks that represents the entire market. Doing that will ensure that you capture the market's total return and reduce your risks because you will be diversified.

Buying a basket of stocks is more feasible now, given the proliferation of low-cost stock index mutual funds and exchange-traded funds.

And if you own a broad market portfolio, hold it as long as you can. You'll avoid the market's short-term insanity and reduce the costs you would incur if you were constantly buying and selling.

This approach will let you maximize your return and reduce your risk so you won't even care what the market is thinking in the short term.

No offsense to you sir... but in reality this is all crap. One thing and one thing only makes any given market go up: aggresiveness of buyers. One thing and one thing only makes any given market go down: aggressiveness of sellers.

[JeromeFromSoutheast]

Originally Posted by Romanowski

^strictly technical analysis..all candlestick for the most part.

What I was taught is, and this can be applied to any type of trading, and also keep in mind their are many different "ways" to trade...but technical analysis measures emotions. It tells us what is, not what some think "is"

my 2 cents

You're a smart guy

[JeromeFromSoutheast]

I trade currencies and futures (index futures: e-mini S&P, emini Russell 2000, and the mini Dow). I am daytrader and have been for several years. Nothing in the world beats my job. I'm self-employed, and I usually only work from 8am-11am.

Personally, I am slightly bullish on the US equities market. My bias is pretty much based on a "fading the public" type of logic. A lot of the "Experts" (i.e. CNBC talking heads, etc) are trying to pick the top to the latest up move in the markets. I have been hearing for the past several months the markets are going to pull back. This, in and of itself, tells me the markets should push higher. It's hard for most people to grasp this, but it is real simple. Markets go higher when people are bearish, and markets go lower when everyone is bullish. Think of it this way.... If EVERYONE is bullish... and everyone thinks its going to go up.... that means they are buyers... or more accurately, have already bought anticipating the up move. Well, if everyone has bought.... who is left to buy? No one. The market stalls, starts to reverse, then everyone stampedes for the exit doors.... driving the market down.

I know alot of people think Technical Analysis is crap... but in reality, it's the only reliable thing going. Technical analysis predicts future movement.... everything else (news, earnings, etc) is generally used as an "explanation" by CNBC and analysts (who make a living by "explaining" things). Bottom line is, chartists (i.e. those who use technical analasys) knew the market was about to drop BEFORE it collapsed in 1987. And I, personally, knew the nasdaq was going to crap itself several months before it actually did in 2000. Of course, I couldn't time it to a day, but I knew it was inevitable. Most people lost a fortune when the dot com bubble bursted. I made money all the way down.

As far as investing goes... I'm not a big fan of it.... Personally, I can't sleep very well at night if I have a position on. My average trade is about 30 minutes long. Then again, I understand that most people can't do what I do. And it's not because it's hard.... in fact, it's real easy technically. The problem is most people fail in my business because they can't control their emotions.

If you are an investor, I highly recommend at least learning some technical analysis. It will help you with your timing a great deal. Also, don't buy into media hype. TRUST ME, when news hits, YOU are the last one to know. Also, beware of recommendations of trading advisors. Their advice might be sound (from a fundamental aspect)... but by the time it's given to you, all the "big boys" are already in, and are most likely using the added volume from the recommendation as an opportunity to sell it to the average joe.

[JeromeFromSoutheast]

Originally Posted by jimmyk

I've never looked into currency trading, I know people can make a lot of money doing it though. One thing that I would look into doing currency wise is shorting the shit out of the euro, it is horribly over-valued to the dollar and will pullback big time in the next year or two.

This is not true, imo. There is really no such thing as undervalued/overvalued.... in any market. YOU may think it is, and I might think it is as well.... but the truth is PRICE. Price is king. The best hedgers and arbers in the world trade the currency markets. If the euro was truly overvalued compared to the dollar, there are people way smarter than you or I ( with a hell of a lot more money) that would take advantage of it... and in doing so, they would move the price in such a way that it would correct the imbalance.

The currency markets are very "future" oriented. They don't care so much whats happening NOW. They want to know what will be happening next year. In general, currencies move based on future interest rate differentials.... The USA has steadily been rasing interest rates over the last couple of years. Consequently, the US dollar has been appreciating against major currencies. The US dollar is up on the Euro about 15% over the last year. This is due to the steady rise of interest rates. In essence, owning US dollars is a better investment now than it was a year ago. That being said, the US dollar, lately, has stopped improving against the Euro because it has become widely assumed that the FED is almost done raising rates.

One reason I think that shorting the Euro against the dollar is a bad idea is because of China. The US is pressuring China to deregulated their currency. In the past, China has kept its currency value pegged to the US dollar. To make this work, China has been buying an enormous amount of our debt (treasury bills etc). Well, if China decides to let their currency freely trade, they will start selling all of these US debt instruments, which will (according to some of my colleagues, who are alot smarter than me) basically kill the dollar. Another thing to consider, is that for the first time in a LONG time, the EURO member economies are starting to improve, especially Germany. It might not be too far into the future when the EURO central bank starts raising rates.

[amhlilhaus]

Originally Posted by JeromeFromSoutheast

I trade currencies and futures (index futures: e-mini S&P, emini Russell 2000, and the mini Dow). I am daytrader and have been for several years. Nothing in the world beats my job. I'm self-employed, and I usually only work from 8am-11am.

that's the kind of thing I'm striving for, working for myself, 3 hours a day. do you use a trading program? or is there other ways to day trade, most of what I've looked into is all program driven.