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Tuesday, September 30, 2008

Recipe for Disaster

"Defer no time, delays have dangerous ends" - William Shakespeare, Henry VI, Part I


My father and mother were born towards the end of the Great Depression. They lived in rural West Virginia, and it was a very different time. Of course, they didn't have a lot of money. My mother had 14 other siblings. That's right, a family of 16. In poor, rural West West Virginia. My father remembers times that he was so hungry, that if it had not been for the generosity of others, he was sure he would have starved to death. Literally.

The world is a different place now. Not because of our standard of living. That's not what I'm referring to. You see, back then ... there was more of a sense of community. My mother tells me that when she was a little girl, everyone in town knew that her parents, my grandparents, would offer anyone a place to stay that was traveling through. Drifters. My grandparents would keep the back door unlocked. The person could come through the back door, lay down on the cot. My mother recalls that when she was a little girl, many times she would wake up to find a stranger at the breakfast table. My grandparents would feed them, and they would be on their way.

There was a sense of community. And having a sense of community engenders trust amongst the people who inhabit that community.

I continue with this portion of the "Recipe" as well as the next two problems in this "Recipe", in the following video (Video Included) ...



This isn't rocket-science. This isn't predicting the future. This is recognizing the problems are real, and the root cause of the problems have not been addressed. This is not the time to buy because there is 'blood in the streets' as the old expression goes. I'm saying: The blood hasn't even started yet.

It'll be time to buy stocks again, when the root problems have been addressed, and people are still freaked out. That's generally when it's time to follow that old addage.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Monday, September 29, 2008

Why is the Economy Faultering? A Simplified Explanation of What Led Up To the $700 Billion Bailout

"Nothing is true, but that which is simple" - Johann Wolfgang von Goethe

I still run into folks, from time to time, who do not understand why it is, that the United States economy is faltering. What's liquidity? What's the housing market got to do with it? What is a CSO? What's a CDO? Is the sub-prime mess over with? Is this a credit crisis? Is it a solvency crisis? Will the bailout help? Is a Depression looming? Is it a bailout for the rich? Where will that money go? Is hyper-inflation looming? Is hyper-deflation looming?

Well, I put something together here, in which I try to explain the overall problem, as succinctly, and easily as possible. There are many facets that I have tried to simplify. I do not discuss bonds. I don't get into treasuries. I simplify the concept of leverage quite a bit. I don't even discuss the problem that the value of the debt obligations isn't understood by anyone. But for an macro-economic view? The following illustrates what is going on ... (Video Included)



So after viewing that video, will someone mind telling me how this $700,000,000,000.00 is going to help lower inflation? Lower unemployment? Lower credit card bills? Encourage folks to save money so that they can purchase a house? The term "Main Street" is being used like a 'flavor-of-the-month' buzzword to engender sympathy. But the facts are, that your average citizen is not only suffering, but also indirectly causing the problem.

That $700,000,000,000.00? It's simply going to disappear into the black hole of what is in essence? A bad trade. And folks, I do mean, it will disappear. The market is going to eat that capital infusion like a mid-afternoon snack. Although the taxpayer will still have to foot the bill for that $700,000,000,000. It will accomplish? Nothing.

Imagine you're in a losing trade. What have I taught folks for the last 10 months? Control and manage your risk! Control and manage your risk! But that's not what is going on here. We have, in essence, a bad trade. And instead of controlling and managing the risk? Instead of companies being forced to lower their leverage? Instead of moving CDO's to an exchange where they can be tracked and properly valued as stocks are? They're crossing their fingers and assuming that "It'll turn around! It'll turn around!". Haven't I said, for the last 10 months - that this is the worst possible thing that any trader can do?

It can't turn around until your average citizen is no longer over-consuming. It can't turn around when it's harder and harder for your average citizen to make a living. It can't turn around when your average citizen isn't saving their money. It can't turn around when your average citizen is exacerbating the problem, by living off their credit cards.

In essence, many of the 'powers that be' are trying to manipulate the market, in the belief that they can 'control it'. They are trying to manipulate and instigate a massive short squeeze? In the thought that they can turn a profit of trillions of dollars down the road.

But it's as if we are staring at a bad trader who refuses to give up on a losing trade. They think that if they just throw enough money into the 'account'? The trade will turn around. The fault with this line of thinking? Is that this is in essence a 'leveraged trade'. The problem with the line of thinking is that the trader does not realize they are in a vicious circle, that is feeding off of itself.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Saturday, September 27, 2008

Week in Review: I'm on a Voluntary Layoff ...

"Trade recovery now complete President told. Business survey conference reports industry has progressed by own power. No Stimulants Needed! Progress in all lines by the early spring forecast." - New York Herald Tribune. January 24, 1930

* * *

Challenge Accounts:

Investing Account Balance:
$465.32
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Investing and Trading Thoughts: As I discuss in the following video? Sometimes the wisest thing to do is to know when to stand aside.


Welcome to the week in review ... where I basically twiddle my thumbs ... (Video Included)



Have a safe weekend.

* * *

Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$465.32
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Friday, September 26, 2008

Dan has some "Righteous Indignation"

"Now I became very angry as soon as I heard their outcry and these words. So my heart took consideration within me, and I began finding fault with the nobles and the deputy rulers, and went on to say to them: 'Usury is what you are exacting, each one from his own brother.'" - Nehemiah 5:6,7


I tend to view anger as improper. When a human expresses anger? It can lead to a loss of self-control. And self-control leads to wrath. To explosive outbursts and screaming. Which can lead one down a far darker path.

Yet I do not view all anger as "bad". I do not view all anger as a loss of self-control. Anger that arises because of injustice? When anger becomes evident due to people who mislead others? That's what I call "Righteous Indignation".

I read an article this morning that, in essence stated: "We have nothing to worry about. A Depression cannot happen at this point. We need to get the credit markets flowing again."

And by god, I now have some righteous indignation. I discuss why in the following video ... (Video Included)



Here's the article I was referencing.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Thursday, September 25, 2008

Airelon's Thoughts on the Bailout? It is the Ultimate Catch 22

"Shrewd is the one that has seen the calamity and proceeds to conceal himself, but the inexperienced have passed along and must suffer the penalty" - Proverbs 22:3


Yesterday, I openly discussed my thoughts on the current economic environment we find ourselves in.

What truly surprises me? Is again, and again and again, and again ... I hear statements like:

"It's a bailout for the Bankers"

"It's a bailout for Wall Street"

"Bernake and Paulson are trying to bail out their friends"

"We're bailing out the rich and their excesses"

"They're helping out the rich, and stealing from the poor"


Do people truly have that little understanding of what this economy is facing? Do they have that little understanding of what caused this mess? It's not that difficult to grasp. I mean, I know they don't teach economics in schools today, but look throughout history. I'm assuming they still teach history. What follows any period of fantastically easy credit? An initial wave of inflation, followed by a period of marked economic depression that accompanies marked deflation. That inflated value has to go somewhere.

How many of us, for how many years ... received those flyers in the mail. It began in the 1990's, and continued through to 2007. "Zero down for this Television set". "Free Credit!" "You're pre-approved! Move into the house of your dreams!". And people didn't want to understand the history of easy credit, and what comes afterward. They didn't want to know what was being done with the agreements they signed. They didn't want to know about leverage that those agreements were packaged into. Because they had immediate gratification.

I was hopeful for a time. Why? I fought folks that said this was going to happen. Why? Because of the marked increase in the value of the US Dollar, with lower interest rates. That led me to some hope. Maybe common sense would prevail. I hoped there would be enough time. If it would just continue ...

Will paying higher taxes suck? Absolutely. But it's sort of sweet poetic justice. The taxes will be visited upon the people of the economy that caused the problem. What do I mean? What is this "Catch 22" that I speak of?

I discuss that in the following video ... (Video Included)



I'm reminded of the act from the movie "Independence Day". Jeff Goldblum's character discovers the aliens are using a 'countdown clock'. The clock is running down towards zero. I said it in the video. When more and more companies start saying things like: "Oh, sorry, we didn't get you your paycheck? Yeah, payroll must have had a problem processing the paperwork". The moment of "Checkmate" is approaching.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Wednesday, September 24, 2008

Traders Thoughts On the Current Economic Environment. (Trading Our Way Out of this Mess)

"Shrewd is the one that has seen the calamity and proceeds to conceal himself, but the inexperienced have passed along and must suffer the penalty" - Proverbs 22:3


On March 18, 2008, I had a "Trader Thoughts" video, as well as a blog entry. In it, I discussed the fact that we would see the high 10,000's again on the DOW Jones Index. On March 18th, I stated that we'd see a weaker US Dollar, which we did for the months that followed. On March 18, I stated that the housing market would not rebound. And it hasn't. On March 18th, I said we would see much higher oil prices in the next few months. Do I even need to talk about how accurate I was on that call? I talked about the problem the investment banks were in. Today? There is no such thing as an investment bank. They're all gone. Goldman Sachs and Morgan Stanley? They were the last two standing, and they have now applied for bank status. There's no such thing as an investment bank on Wall Street.

Was I trying to predict the future? After all, I always stress: We're not God, don't try to predict the future. So is that what I was trying to do? No. I wasn't. I was looking to cause and effect. When you see the cause? I knew what the effect was going to be.

But in that video? I did make one statement that was way off, but at the same time? May yet happen. I said: " ... They're going have to bring somebody in that has the guts to take interest rates to 14, 15, 13 percent. And then the real pain begins ...".

I want to revise that statement a bit, because of what has transpired in the last 6 months.

In the last 6 months, thankfully, the US Dollar has strengthened. This is key. Every human being on this planet should want that USD to strengthen. I don't care who you are. Because as goes the USD, so goes the world. The USD is the Fed's "bottom line". It values their own balance sheet. In the last 6 months, the Fed has taken this unbelievable garbage onto their own books. And in the last 6 months the housing market, as I said, has continued to deteriorate.

What is the significance of that?

That is what the real estate derivatives, or as Richard Suttmeier calls "the alphabet soup" is tied to. That is what this leverage is all about. That garbage, the garbage of the "alphabet soup" of CDO's and the like, is leveraged into the real estate market. As long as the housing market continues to deteriorate? The garbage created by this credit bubble? Then those derivatives will continue to deteriorate in value.

What is the significance of that?

The Fed has to protect their own balance sheet. And now they've entangled themselves with this junk. Which leads us back to the US Dollar.

I'm at the same place 'mentally', that I was on March 18, 2008. I'm having to change my entire strategy. I was sort of getting 'antsy' for buying up a lot of stocks in November, December. Now? I'm taking much more of a 'wait and see' attitude. Why? Because as I said Sunday? Traders deal with what "is". Not what they "want". I have to trade my way out of this mess. I have to survive. I can't fall in love with my bias. That's what being a trader is all about. Being able to change your bias, make a decision, and for the love of all that's holy ... control your risk

So how does this all come together? What is my strategy moving forward as someone with a 'traders mindset'?

Well, I'll talk about that in the following video (Video Included) ...



* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Tuesday, September 23, 2008

Should You Keep Some "Under the Mattress" Money At Home?

"Shrewd is the one that has seen the calamity and proceeds to conceal himself, but the inexperienced have passed along and must suffer the penalty" - Proverbs 22:3


Yes, this is a question that I have been asked, as of late.

"Should I be keeping some money at home? Just in case ... you know ..."

It seems that people do not want to speak the words out loud. That ...

" ... yes, my financial institution could some how be connected in this intricate weave and web of financial troubles. That I may not be able to access my funds."

They just can't seem to finish the question. They trail off their words. But we understand what they mean. In the back of their mind? They are thinking it.

What ... if ... ?

Is there a risk your financial institution could go under? Yes. Then if there is a risk, then you need to give this area some thought. Banks and other financial systems are going under. I'm not sure if the United States has ever seen the financial upheaval as it has in the last 120 hours. First of all, remember that your cash is insured to $100,000.00. And if the government has proven anything in the last 120 hours? It's that they will print as much money as possible to insure financial institutions such as the FDIC (But that's an entirely different discussion).

But we return to the question posed in the title of this blog entry. Should you have some money around the house due to a financial collapse?

In a word? No. For any course of action, you need a plan, and a strategy. So, ... let's look to the basic risk / reward situation here. If everyone pulls their money out of the bank? We have financial armageddon. Period. That's what we call a "nationwide bank run" ladies and gentlemen, and the results are beyond catastrophic. So it would be the height of foolishness to keep all of your money at home. That's risk number one. Destruction of the economy. Literally.

In addition, it's foolish because their is a risk of security. A thief has a much easier time robbing you of your money in your home, than he does at the bank. As we said earlier, at the bank? Your money is insured. At home? It's gone.

The greatest financial risk with keeping your money at home? Is that you earn nothing on your money. There is no interest, absolutely no possibility of a reward. Zero. In fact, as the Federal Reserve prints off money faster and at a speed never before seen? It's a losing proposition. Inflation is what? 5.37%? You are literally becoming more poor, by just holding your money at home.

Now. That being said? Should you keep some money at home?

In a word? Yes. It is extremely wise to keep a couple of stacks of $20's at home, for entirely different reasons. What reasons are those? Well, I'll talk about those reasons in the following video ...



* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Monday, September 22, 2008

Investing: Understand the Business - Learn the Books

"Accounting consequences do not influence our operating or capital-allocation decisions. When acquisition costs are similar, we much prefer to purchase $2 of earnings that is not reportable by us under standard accounting principles than to purchase $1 of earnings that is reportable." - Warren Buffett


Ok. Believe it or not ladies and gentleman, I've calmed down enough, to discuss learning the books, when it comes to investing. A few days back, I discussed the importance of 'learning the business'. When we are investors, we have to ask questions, and understand the business that the company engages in. How they earn profits. Where does the earnings come from?

The next thing you have to look at? Is "the books". The balance sheet. This isn't too difficult to find. Google Finance has a lot of information on each company, well organized. On each companies main page, you will find the summary. But you can click on the link for each company that reads "Financials", and find more detailed information.

For instance, if you go to Google's webpage on Frontline Ltd. (FRO)? You will find the section called "Financials".

In this Financials area, you have the section on their Income, a section on their Balance Sheet, and a section on their Cash Flow. Each of those sections has a link, that takes you to more detailed information.

When you are taking all of this information in? Look to their debt / equity ratio. Now as I mention in the video below? The debt / equity ratio of companies in different sectors are going to be very different. Learn to understand why that is. But look to their debt / equity ratio, and then find the reasons. Find the explanations. Listen to what management is saying, and then look to the Financial Section, to see what the numbers say.

What is the main thing you are looking for? Earnings potential in the future. I discuss that in the following video ... (Video included)



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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Sunday, September 21, 2008

A Series of Videos Discussing my "Trading" Reaction to the Ban on Short Sales

"A creative man is motivated by the desire to achieve, not by the desire to beat others." - Ayn Rand

I have three videos today, in which I discuss what I see as the most serious blow to the markets, throughout this crisis.

This is part 1 ...



This is part 2 ...



And this is the final part, part 3 ...



Summation? I have to make decisions. As I said, it's an "Atlas Shrugged", or "King Rat" scenario. Until the short sellers are back? Here are the decisions ...

1) I'm out of the market. I won't sell my DRIP / Investment stocks at all. Those I hold. No matter what. But I won't accumulate more shares.

2) I'm going to stop trading until the short selling ban is over.

3) I'm going to build my cash reserves for the next 6 months. This means any purchase I do make 6 months from now? I'm going to be contributing even more cash ...

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Saturday, September 20, 2008

Week In Review: Welcome to the "New" Week In Review

"When you see that trading is done, not by consent, but by compulsion - when you see that in order to produce, you need to obtain permission from men who produce nothing - when you see that money is flowing to those who deal, not in goods, but in favors - when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you - when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed." - Ayn Rand

* * *

Challenge Accounts:

Investing Account Balance:
$461.52
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Investing and Trading Thoughts: I will either have a video on Sunday, that will discuss this very thing, or I may even do a Blog TV on this topic. Guys. It's time ... to be concerned. It wasn't the credit crisis that did it. It was one thing. The ban on short selling of 799 stocks.


I've talked about the short selling ban a lot lately folks. I'll talk about it a little more today. And yes ... it is that serious. It really, really is. That ban? Has concerned me much more than the credit crisis ever could have. (Video Included)



Have a safe weekend.

* * *

Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$461.52
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Friday, September 19, 2008

I Apologize. No Video Today on "Investing: Looking at the books". I'm Too Stunned.


"One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What's there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced or objectively interpreted – and you create a nation of law-breakers – and then you cash in on guilt. Now that's the system, Mr. Reardon, that's the game, and once you understand it, you'll be

much easier to deal with"
- From Ayn Rand's "Atlas Shrugged"



I tried to honestly start this video guys. But as you'll see? I didn't get far.



And my god, look at my CRBC trade. I'm out of it. That was the quickest $14,000.00 ever to be made.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Banning All Short Selling? An Investor Calls that Just Plain Stupid ...

"The truth is not for all men, but only for those who seek it." - Ayn Rand

Ok. I'm posting this, while the thoughts, outrage and sheer shock are still fresh in my mind. And yes. Even the fear. Because this is beyond anything I could have expected. I want to share something with you, that I just read:

"The U.S. Securities and Exchange Commission intends to temporarily ban short-selling, The Wall Street Journal reported Thursday night. It's unclear if the commission has approved the move, the Journal reported. SEC Chairman Christopher Cox, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson were briefing congressional leaders Thursday night. The U.S. move would follow a similar action by U.K. regulators on Thursday"

I'm a political neutral. I do not wish to sound as if I am "for", or "against" any political party. I'm not. I am a Biblical Christian. But to be honest? The politicians on both sides are absolutely scaring me to death. One of them is calling it "corruption", when there has been absolutely no evidence of corruption. It's not about "corruption". It was about absolutely stupid mistakes. This was caused by over-leveraging. But corruption? Not at all. And the other is suggesting ideas that have been tried again and again and again and again; and failed each time they were attempted. That's just my emotional reaction. Not a political one. I am not betraying my politically neutral beliefs or principles. It's just an emotional reaction. They are absolutely frightening.

So believe me when I say that I have no political bias as I say the following: The decision to ban all short selling of any kind demonstrates incompetence and misunderstanding of basic economic principles at the highest level. This is the sort of maneuvers that got us into this problem in the first place. Addressing the effect, rather than the cause.

Now? Banning short selling? After our first few days of 'drug-like induced rally mania'? The first bit of bad news to hit? Then? Then we're in real trouble ... (Video included)



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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Thursday, September 18, 2008

410 Points? Whaaa?

I'm speechless. Are we going to really chalk this up to naked short selling? Or has Warren Buffett decided that now is the time to start buying? Paulson's 'debt pool'?

I leave you with this link guys. It's as good an explanation as any

Investing: Understand The Business. Ask Questions

"Never invest in a business you cannot understand." - Warren Buffett


To be quite honest, to this point? I have only discussed the ways to reap the fruitages of investing. Dividends. DRIP plans. I have, to some degree, discussed what I look for. How long has the company been paying dividends? How often are those dividends paid? Does the company have a DRIP program for their dividends? What time of the year do you plan on investing in the company?

But I haven't dedicated much attention towards the selection process. So let's talk about that now.

First question you need answered; is pretty basic. What is it - that this company produces to make a profit? How do they generate income? This is pretty basic. If you are going to invest your money in a business, you want to know how they are going to make profits so that you can earn a return on your money. Let's take Frontline Ltd (FRO). as an example. Google Finance has this summary, when discussing Frontline Ltd.

"Frontline Ltd. (Frontline) is engaged primarily in the ownership and operation of oil tankers, including oil/bulk/ore (OBO) carriers. The Company operates tankers of two sizes: very large crude carriers (VLCCs), which are between 200,000 and 320,000 deadweight tons (dwt), and Suezmaxes, which are vessels between 120,000 and 170,000 dwt. As of February 29, 2008, the Company operated a tanker fleet consisting of 76 vessels. The fleet consists of 42 VLCCs, which are either owned or chartered in, 20 Suezmax tankers, which are either owned or chartered in, eight Suezmax OBOs, which are chartered in, and five VLCCs, and one Aframax tanker under its commercial management. In January 2008, the Company established Independent Tankers Corporation Limited (ITCL), as a wholly owned subsidiary for the purpose of holding, by way of contribution, its interests in Independent Tankers Corporation (ITC). In March 2008, Frontline spun off 20% of ITCL to its shareholders."

So that tells us a few things about this business.

1) They own and operate tankers for oil, bulk, and ore. They do this by a few

2) Some of these vessels are chartered, or contracted for a specific period of time.

3) It created a subsidiary company to hold it's interests. It shared ownership of this company with shareholders.

This should raise a few questions. We'll talk about those questions in the videos.



Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Wednesday, September 17, 2008

It's all about Over-leveraging. AIG and Morgan Stanley (MS) ...

"As a small businessperson, you have no greater leverage than the truth." - Paul Keating.

So.

AIG.

Yeah, that's right, AIG is being bailed out to the tune of $85 billion dollars. Just think about that. Just stop ... and think about that number. I mean, most of the articles that I've read? They are writing the number in that manner.

"AIG is being bailed out to the tune of $85 billion dollars".

They are not saying:

"AIG is being bailed out to the tune of $85,000,000,000.00" Quite frankly, I think we should start putting all the zeros back when we write that number.

I keep hearing this question. All of the business news anchors keep asking this question: "How did this happen? How did a financial institution like Lehman Brothers that survived the Great Depression go out of business?". The fact that they are asking you this question, really shows how little they understand about economics. I said it yesterday, and I'll say it again. It's very simple. It's called: over-leveraging. What Richard Suttmeier calls the "alphabet soup" of special, complex packages that did nothing more than over-leverage these institutions into a rising real estate market; such as CDO's.

I could talk about how these packages were designed and packaged. I could draw models. But that would take about 4 pages. Instead. Let's keep this simple. What is leverage? It's risking more than what you have. It's laying $2.00 on the table? To risk $6.00 for profit. So if you it turns out well? Then fantastic. You have $8.00. If not? You're not $4.00 in the hole. That's as simple as I know how to make it.

It's not really that difficult. Honestly. It's not. Over-leveraging was what triggered the stock market crash of 1929. It's what destroyed so many banks and financial institutions at that time. But wait? Weren't there safeguards put in place after the Great Depression, to make sure that institutions couldn't over-leverage themselves?

Of course there were.

And no laws were technically broken this time around. They didn't leverage themselves into the financials as they did in 1929. They leveraged themselves into the real estate market this time. Because by leveraging themselves to the real estate market with completely new investment packages? They by-passed all of the rules on the books.

But leverage, is still leverage. It's still exceedingly dangerous, no matter what venture it is applied to. Especially when the num-nuts that are engaged in the leveraging process were making asinine comments such as: "The real estate market always goes up"

It's time to go back to conservative banking. The question at this point, is do financial institutions even know how to engage in conservative banking? Can they resist the fast buck, for the prudent return? Because at this point? That "crack of the whip" that you are hearing mentally? Is the Federal Reserve telling all taxpayers to get back to work.

Daddy needs a new pair of shoes.

I wrap up my thoughts on Morgan Stanley (MS) in the following video. One that is much shorter than what I've been producing as of late. I also will talk about the new layout for the daily blog (Video Included) ...

Tuesday, September 16, 2008

Fed Doesn't Cut the Rate ... Tomorrow is all about Morgan Stanley

I feel like death warmed over ...

This one is coming at ya Jefferson Krull ...



And yeah, I know. The 15% rate comment was just a weeee bit of hyperbole. :)

Bank of America (BAC) and Merrill Lynch (MER). Thain Knew He Was Going to Sell

"Opportunities multiply as they are seized." - Sun Tzu, The Art of War

* * *

Side Challenge Project Accounts:

Investing Account Balance: $385.01
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Trading Thoughts: As I said the other day ... I don't try to trade this mess. I stand aside and wait for some normalacy. Did you guys even see those moves in the US Dollar yesterday? Wow. Everything is down, around, and all over the place. Gold. Oil. Stocks. I will wait.

Personal Investing Thoughts: DRIP remains on. Just remember: Patience. As I was saying in the week in review? Just wait! Patience is an investors best friend. September and October are seasonally very weak months. Just wait, and look to 'buy on the cheap'.


Sometimes? I'm amazed at how short some folks memory actually is. In the current economic environment? You have to be observant. You have to think your way through. Don't forget about details and news events that occurred six weeks previously. Whatever you do? Do not react emotionally ... (video included)



We will see what the future will bring, and act accordingly at the proper time. The next big news, will be on Wednesday. Then? It's all about Morgan Stanley (MS).

* * *


Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$385.01
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Monday, September 15, 2008

Merrill Lynch (MER), Bank of America (BAC), Lehman Brothers (LEH) - What Does it All MEAN?

Quotations of the Day:

"Those who have knowledge, don't predict. Those who predict, don't have knowledge." - Lao Tsu

* * *

Side Challenge Project Accounts:

Investing Account Balance: $407.55
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Trading Thoughts: As I said the other day ... I don't try to trade this mess. I stand aside and wait for some normalacy.

Personal Investing Thoughts: DRIP remains on (Received a few more shares today as a matter of fact, at bargain prices). Just remember: Patience. As I was saying in the week in review? Just wait! Patience is an investors best friend. September and October are seasonally very weak months. Just wait, and look to 'buy on the cheap'.


I'm listening to Bloomberg this morning. Lehman Brothers (LEH). Merril Lynch (MER). Bank of America (BAC). And the question everyone seems to be asking, again and again? "What does it all mean?" I discuss my thoughts, in the following video ... (video included)



We will see what the future will bring. But this is what I talk about when I urge: Patience.

* * *


Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$407.55
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Saturday, September 13, 2008

Week in Review for September 13, 2008: Lehman Brothers (LEH), The Fed, and September! Oh My!

Quotations of the Day:

"There are many methods for predicting the future. For example, you can read horoscopes, tea leaves, tarot cards, or crystal balls. Collectively, these methods are known as "nutty methods." Or you can put well-researched facts into sophisticated computer models, more commonly referred to as "a complete waste of time." - Scott Adams


* * *

Challenge Accounts:

Investing Account Balance:
$435.34
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Trading Thoughts: Still within the CRBC trade in my personal accounts, and it's now nearing my total profit goal. Tightened up my profit stop, so profits are locked in.

Personal Investing Thoughts: Ok. We take out the lower lows on the DOW? I'll be looking to be a buyer of another investing DRIP dividend stock when enough time passes (about two months from today), and we get 50% past the lower low. My DRIP remains on for all of the stocks that I continue to hold.

Lehman Brothers (LEH) has folks spooked right now, and it's at times like these, that I just stand on the sidelines.



Lehman, The Fed, and September! Oh my! ... (Video Included)



Have a safe weekend. On Monday, I'm going to talk about being "Patience: The Investor and Traders Ally"...

* * *

Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$435.34
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Friday, September 12, 2008

Practical Goal Construction

Quotations of the Day:

"The reason most people never reach their goals is that they don't define them, or ever seriously consider them as believable or achievable. Winners can tell you where they are going, what they plan to do along the way, and who will be sharing the adventure with them." - Denis Watley

* * *

Challenge Accounts:

Investing Account Balance: $434.78
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Trading Thoughts: I am still within the CRBC trade where I entered at $3.09, and tightened my profit stop up to lock in profits; and we're moving higher today. I'd like to take profits around $5.09. We'll see how it shapes up.

Personal Investing Thoughts: We remain in the channel that we've been stuck in for a month. Just waiting for a breakout. I wonder if the market will remain this way until the election. DRIP remains on for every dividend investment stock I continue to hold.


You've heard it said: "You need to have goals". That's about as helpful as "Buy low, sell high" How? How do you construct goals and work towards them? Well, this is what's worked for me ... ... (video included)



Tomorrow is the "Week in Review".

* * *


Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$434.78
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Thursday, September 11, 2008

What Would I Have Done Differently?

Quotations of the Day:

"The follies which a man regrets most, in his life, are those which he didn't commit when he had the opportunity." - Helen Rowland

* * *

Challenge Accounts:

Investing Account Balance: $425.96
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Trading Thoughts: As I was saying yesterday? This chop is nearly untradeable. At least for my own personal trading style. However, I am still within the CRBC trade where I entered at $3.09, and tightened my profit stop up to lock in profits.

I did decide to take some advice when it comes to starting out with Forex trading. So with the Forex demo account that I have? I decided to stop playing around with the 30 minute charts. I received some advice, that beginners in Forex trading should stick to the daily time frames; especially if you are coming from stock or futures trading. So I sold short EUR against the USD, and picked up a small $120.00 for that demo account.

Guess you can always learn something new.

Personal Investing Thoughts: We remain in the channel that we've been stuck in for a month. Just waiting for a breakout. I wonder if the market will remain this way until the election. DRIP remains on for every dividend investment stock I continue to hold.


When you start having a little success? You start wondering what you would have done differently, if you had it all to do over again. Perhaps there is something here that those who are new can learn from ... (video included)



Tomorrow we're going to talk about having goals.

* * *


Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$425.96
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Wednesday, September 10, 2008

How to Screw Up an Investing Account

Quotations of the Day:

"The most powerful force in the universe is compound interest" - Albert Einstein

* * *

Challenge Accounts:

Investing Account Balance: $423.23
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Trading Thoughts: Holy smokes. What chop !! We sunk 200 and some points yesterday, from the previous days gains of 200 and some points. This volatility is absolutely and positively nuts! I'm not trading this stuff, even on a day trade.

Personal Investing Thoughts: We remain in the channel that we've been stuck in for a month. Just waiting for a breakout. I wonder if the market will remain this way until the election. DRIP remains on for every dividend investment stock I continue to hold.


First of all, remember this. I often tell folks there is a severe difference between investing and trading. And this difference includes much more than just your time frame. It involves how the wealth is accumulated.

Now most of what I have discussed, is how to screw up when it comes to trading. How to apply money management principles when it comes to trading.

But how do you screw up when it comes to investing? I discuss the ways to screw up an investing account in the following video:

1) Ignore Blue Chip Stocks
2) Ignore Dividends
3) Ignore DRIP
4) Ignore Proper Diversification.

I discuss those four 'no-no's' in more depth in the following video ... (video included)



It's not hard. Investing is much easier than trading. But you must adhere to those four principles to be a successful dividend investor.

* * *


Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$423.23
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Tuesday, September 9, 2008

This is a Challenge to ANYONE who Wishes to Blame Oil Specualtors

Quotations of the Day:

"Every man is guilty of the good that he did not do." - Voltaire

* * *

Challenge Accounts:

Investing Account Balance: $442.27
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Trading Thoughts: You know, for all of this grand rise on the DOW is great? But we're still stuck in this channel. The chop, chop, chop we're experiencing is insane. I can't play in this stuff, as I don't day trade, I swing trade.

And yes, believe it or not, I'm STILL within the CRBC trade. I'm up to $4.41 from $3.09 as my entry, and I've tightened my profit stop. But good lord. The low volatility on this trade is taking forever. I can't remember the last time that a swing trade took so long. This is slowly turning into a position trade, rather than a swing trade. I'm looking to the $5.00 region to take my profits. But I'd be willing to tighten up my profit stop so that I take the profits I have sooner.

Personal Investing Thoughts: Well, as I said. The garganteoun rise on the DOW we had was nice? But we remain in the channel that we've been stuck in for a month. Just waiting for a breakout. I wonder if the market will remain this way until the election. DRIP remains on for every dividend investment stock I continue to hold.


I'm going to ask that if you listen, and agree with this video? Send it to every person that you ever hear blame oil speculation as the cause of high oil prices. I've had it. Here's how you do that.

1) Click on the Title of this Blog Entry
2) Copy the URL that you find in your address bar.
3) Paste the link to whomever you wish to send this entry to.

I've had it with this stupid, ignorant myth that oil speculators are the reason for high oil prices. It's stupid. It's wrong. It's ignorant. And worse yet, it's an attack on my livelihood. The cash market determines the prices. NOT the speculator. The speculator is the effect. The cash market is the effect. The economic fundamentals is the cause that affects the cash spot market, which in turn, affects the futures market afterwards ... (video included)



I leave you with a couple of quotes, that I received watching Shawn's YouTube videos:

"A government which blames speculators for the consequences of its unsound monetary policy is like a rancher who, having slaughtered his cows on the open plains, blames the vultures for descending on their carcasses." - Imad-ad-Dean Ahmad

And another, that Shawn actually had ...

"It is not easy to determine whether there are any who still adhere in good faith to the doctrine that traces back the depreciation of money to the activity of speculators. The doctrine is an indispensable instrument of the lowest form of demagogy; it is the resource of governments in search of a scapegoat. There are scarcely any independent writers nowadays who defend it; those who support it are paid to do so. Nevertheless, a-few words must be devoted to it, for the monetary policy of the present day is based largely upon it.

Speculation does not determine prices; it has to accept the prices that are determined in the market. Its efforts are directed to correctly estimating future price situations, and to acting accordingly. The influence of speculation cannot alter the average level of prices over a given period; what it can do is to diminish the gap between the highest and the lowest prices. Price fluctuations are reduced by speculation, not aggravated, as the popular legend has it." - Ludwig Von Mises

* * *


Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$442.27
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Monday, September 8, 2008

None of Us Can Predict The Future ... Fannie Mae and Freddie Mac

I need people to understand that I'm not singling anyone out with the following video. I had just watched one of Jefferson Krull's videos, and was sort of 'fired up'. :) If I am singling anyone out? It's the num-nuts that came out to my blog, pulled the 33% number, and then tried to insinuate on SIX trades that I am a sloppy trader; although I'm up 5% on $950.00 ... (Video included)



Regardless, it is an important point.

We can't predict the future. Just find a good risk / reward ratio. Find an edge, and keep playing with that.

The "Don't Save Your Money" Fallacy. Please! Save Your Money!

Quotations of the Day:

"Work hard, live cheap, and save your money." - Edward C. Moroney, Jr.

* * *

Challenge Accounts:

Investing Account Balance: $424.77
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Trading Thoughts: It's Monday, brand new week. I hate to play this side of double bottoms. When we get this close. But Futures have the DOW up about 260 points (YMZ8 is the code). This sucks for pure stock traders, as it means a huge gap up. Many day traders may be looking to play the fade on the gap up, however I don't like to get near the market when this much news that is this monumental in nature take hold. With the Fannie / Freddie news? This market's volatility is increasing. Just last week we were more than 300 points down on one day. Now we're gapping up 260 points. As I said, for day traders? That's perfect. Remember this however, for longer term swing trades? The bad news remains. Employment stands at 6.1%. Core CPI inflation is 5.6%.

Personal Investing Thoughts: The Investment plan? Well, IF we take out the lower lows on the DOW? I'll be looking to be a buyer of another investing DRIP dividend stock when enough time passes (about two months from today), and we get 50% past the lower low. But as of the time of this writing? DOW Futures (YMZ8) is up about 260 points. So I don't see us taking out that lower low today. My DRIP remains on for all of the stocks that I continue to hold.


Welcome to another week. I've heard this a few times: "Whatever you do, don't save your money", that's not the way to accumulate wealth.

That's bologna. Absolute, and utter bologna. ... (video included)



Look at the Challenge Project numbers. Of all the money in the Challenge Project? The savings represents ... what? Three percent? (And no, that's not an accident) But my god, I want to stress - HAVE SOME SAVINGS!

* * *

Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$424.77
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Saturday, September 6, 2008

The Week in Review: Dan Beats His Drum Yet Again with the Recession and the USD

Quotations of the Day:

"I rarely think the market is right. I believe non dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it" - Mark Cuban


* * *

Challenge Accounts:

Investing Account Balance:
$424.77
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Trading Thoughts: On Friday, I didn't see any good signs of continuation, so I stepped aside. It'll be an interesting time. We have the lowest low on the DOW just ahead of us. There's firm support there. That gets taken out with the September doldrums? Then I'll be looking for another short-term short play. But it'd need to be pretty substantial.

Personal Investing Thoughts: Ok. We take out the lower lows on the DOW? I'll be looking to be a buyer of another investing DRIP dividend stock when enough time passes (about two months from today), and we get 50% past the lower low. My DRIP remains on for all of the stocks that I continue to hold.

Frontline (FRO) look like it might be a great play to accumulate more shares. I'm watching the spot rate at the moment, as it's showing signs of firming up. But it'll take some time. No need to rush it. I can afford to wait, seeing as I'm so far ahead already with that stock ....



Welcome to the week in Review. I saw this Bloomberg article the other day - about another possibility that we "might" be moving towards a recession. What? Are they serious? Listen folks - WE ARE IN a recession. It's that simple. Ford is trading at a price with the penny stocks; as are many regional banks. CPI core inflation is 5.6%, and you can only get 3.5% out of a bank on your money. The government is so out of touch, that they think that printing more money and sending it in the mail won't hurt the inflation problem. Unemployment is 6.1%. People are talking about one of the big three going under. The housing situation was the worst since the Great Depression. There's a credit crisis. WHAT MORE DO YOU NEED? THE GDP DEFINITION ISN'T RELEVANT! We are IN a recession ... (video included)



On Monday, we discuss something I recently heard bandied about as a bit of wisdom. It's not the first time I heard it. I've heard this fallacy being spread about that it is a "bad idea to save your money". The first time I heard it, I laughed, because of how insane it was. The second time I heard it, I started to get angry. But that's my rant on Monday. Have a great weekend ...

* * *

Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$424.77
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Friday, September 5, 2008

The Emotional Rationale for the 2% Principle

Quotations of the Day:

"The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading." - Victor Sperandeo


* * *

Challenge Accounts:

Investing Account Balance:
$413.36
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Trading Thoughts: What a day yesterday was. Made some money on that short move we were expecting. Today is about waiting for follow through, or consolidation. First sign of follow through, I'll find some more short plays - just on a day trades if possible. First sign of consolidation, I'm out until Monday.

Personal Investing Thoughts:
My DRIP remains on for all of my stocks. Well, I had been saying for a while, that seasonals only point to a tendency. It seems as if the tendency has begun. So with this break in the relief rally, I will not add further capital to any investments until further consolidation of the overall market.


We're always told "Never risk more than 2% of your account". Of course, for position reasons, this makes mathematical sense.

But what is the 'emotional rationale' of the 2% principle?
... (video included)



Tomorrow, is the 'Week in Review' ...

* * *

Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$413.36
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Thursday, September 4, 2008

Self Confidence, Ego and Bias

Quotations of the Day:

"Self-confidence is the first requisite to great undertakings." - Samuel Johnson


* * *

Challenge Accounts:

Investing Account Balance:
$429.88
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Trading Thoughts: Waiting and watching on the LHV8 - Lean Hogs, October contract. Waiting for the setup.

Personal Investing Thoughts:
My DRIP remains on for all of my stocks. As I've been saying: I have in mind that there are signs of weakness in the midst of this relief rally. In addition, September is a month of extreme seasonal weakness. Therefore, I will wait. Sometimes, the best thing you can do with investing, is know when to just wait.

But let's be clear. Seasonals only point to a tendency. Not an absolute rule. Last September, we rallied through the whole month. We'll see.



Yesterday, we discussed the emotional "Battle Scars" of the market.

Now let's discuss a way to avoid those battle scars. Let's talk about self-confidence, ego and bias. Because without self-confidence? You will sabotage your money management strategy ... (video included)



Tomorrow, we discuss that pesky 2% risk rule ...

* * *
Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
$429.88
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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