Latest stock market news from Wall Street - CNNMoney.com
Monday, March 31, 2008
1. An attempt at making a quick buck often leads to losing much of that buck.
• The people who suffer the worst losses are those who over-reach.
• If the investment sounds too good to be true, it is.
• The best hot tip I've found is "there is no such thing as a hot tip."
2. Don't let a small loss become large.
• Don't keep losing money just to "prove you are right."
• Never throw good money after bad (don't buy more of a loser).
• When all you're left with is hope, get out.
3. Cut your losers; let your winners ride.
• Avoid limited-upside, unlimited-downside investments.
• Don't fall in love with your investment; it won't fall in love with you.
4. A rising tide raises all ships, and vice versa. So assess the tide, not the ships.
• Fighting the prevailing "trend" is generally a recipe for disaster.
• Stocks will fall more than you think and rise higher than you can imagine.
• In the short run, values don't matter.
5. When a stock hits a new high, it's not time to sell ... something is going right.
• When a stock hits a new low, it's not time to buy.. . something is going wrong.
6. Buy and hold doesn't ALWAYS work.
• If stocks don't seem cheap, stand aside.
7. Bear markets begin in good times. Bull markets begin in bad times.
8. If you don't understand the investment, don't buy it.
• Don't be wooed. Either make an effort to understand it or say "no thanks."
• You can't know everything, so don't stray far from what you know.
9. Buy value, and sell hysteria.
• Paying less than the underlying asset's value is a proven successful strategy.
• Buying overvalued stocks has proven to underperform the market.
• Neglected sectors often offer good values.
• The "popular" sectors are often overvalued.
10. Investing in what's popular never ends up making you any money.
• Avoid popular stocks, fad industries and new ventures.
• Buy an investment when it has few friends.
11. When it's time to act, don't hesitate.
• Once you're in, be patient and don't be rattled by fluctuations.
• Stick with your plan ... but when you make a mistake, don't hesitate.
• Learn more from your bad moves than your good ones.
12. Expert investors care about risk; novice investors shop for returns.
• If you focus on the risks, the returns will eventually come for you.
• If you focus on the returns, the risks will eventually come for you.
Dr. Sjuggerud discusses these investment truths and much, much more in his FREE, twice weekly Investment U E-Letter. If you're not currently receiving the IU E-Letter, but would like to, simply click on this link: www.investmentu.com
Dr. Steve Sjuggerud is the President and editor of Investment U. He is also the editor of his own newsletter, Steve Sjuggerud's True Wealth, and an expert global investor. He possesses more than 10-years experience in the investment world as an analyst, a broker, and an institutional trader. Steve completed his Ph.D. in developing market currencies in 2000.
Sunday, March 23, 2008
01: Sell the Losers and Let the Winners Run
02: Make Winners Win Big
03: Losers Demand Careful Strategy
04: It Is Better to Average Up Than to Average Down
05: Good Companies Buy Their Own Stock
06: Price Doubling Is Easy at Low Prices
07: Look for Insider Trading
08: Buy Low, Sell High
09: Buy High, Sell Higher
10: Buy on the Rumor, Sell on the News
11: Sell High, Buy Low
12: The Perfect Hedge Is Short against the Box
13: Never Short a Dull Market
14: Never Short the Trend
15: Never Buy a Stock Because It Has a Low Price
16: Beware the "Penny Stock"
17: Give Stop Orders Wiggle Room
18: Buy the Stock That Splits
19: Institutions Show Where the Action Is Now
20: Avoid Heavy Positions in Thinly Traded Stocks
21: There Are at Least Two Sides to a Story
22: Follow a Few Stocks Well
23: Be Wary of Stock Ideas from a Neighbor
24: Get Information before You Invest, Not After
25: Never Fight the Tape
26: Heavy Volume, the Price Rises-Light Volume, the Price Falls
27: Buy on Weakness, Sell on Strength
28: It Is Best to Trade "At the Market"
29: Understand the Types of Orders
30: Order Modifications Might Cause Delay
31: Remember That Others Might Have the Same Idea
32: Use Limit Orders as Insurance
33: Values Can Be Found Bottom Fishing
34: Heavily Margined, Heavily Watched
35: Winners Keep on Winning
36: Indicators Can Meet Overriding Factors
37: Take a Loss Quickly
38: Beware the Triple Witching Hour
39: Buy on Monday, Sell on Friday
40: Never Get Married to the Stock
41: Diversification Is the Key to Portfolio Management
42: Partial Liquidation Might Be the Answer
43: Act Quickly, Study at Leisure
44: Records Can Make Money
45: Fraud Is Unpredictable
46: Use Margin for Leverage Only
47: Avoid Overtrading
48: Buy When There's Blood in the Streets
49: Look for Divergence in Trends
50: Invest in What You Know Best
51: Buy Stock Cheaper with Dollar Cost Averaging
52: There’s Always a Santa Claus Rally
53: There's Always a Year-End Sell-off
54: The First Week Determines the Year
55: It's Always a Bull Market
56: Watch the Bellwethers
57: Buy the Dips
58: Buy the Dow Dogs
59: A Trend Remains in Force until It Changes
60: It Depends on Support and Resistance
61: The Stock Market Predicts the Economy
62: There Is a Bear Market Coming
63: There Are More Advances in a Bear Market Than There Are Declines in a Bull Market
64: Use Protective Puts in Volatile Markets
65: The Stock Market Is a "Random Walk'
66: Use the Rule of 72 to Double
67: A Stock Price Splits When It Gets Too High
68: Join the Club
69: Small Stocks Make the "January Effect?
70: Invest According to Objectives
TOP 10 RULES OF INTERNET INVESTING (by Merril Lynch)
- Allocate no more than 5 to 10 per cent of a portfolio to direct internet investing.
- Own a basket of of stocks - don’t “bet the farm" on any one stock or the sector as a whole.
- Buy sector leaders with “huge opportunities, great management, and strong sequential revenue growth"
- Focus on company and industry fundamentals: “they matter"
- Be prepared for at least 50 per cent volatility in both directions.
- Recognise that “what looks like a bubble probably is": we think valuation floor is 75 per cent below current levels.
- Recognise that stocks trade on sentiment and catalysts, so look out for shifts.
- If desired , “trade around" core positions - “sell on spikes, buy on busts"
- If can’t stand the heat, remove self from kitchen
Five Simple Steps Steps to Profit
Planning Your Investment
People invest according to their investment style, return expectation and risk appetite. Value investors buy fundamentally sound stocks that are selling below intrinsic value and hold them for years. Growth investors buy stocks with a good business model, and high sales and earnings growth. Traders on the other hand are more likely to be short-term speculators. For example, day traders tend to buy volatile stocks and sell them within a short period, from a few hours to a few days, for profit. They use simple rules such as price-volume breakout to make a quick trade. Some day traders do scalping by exploiting the bid and ask spread to make a small profit from each trade. Other day traders buy stocks based on rumors, hot tips and news like earnings announcement and contracts won. Technical traders rely on charts to guide them in buying stocks. They believe that everything is reflected in the stock price and use technical indicators to time purchase.
Whether you are a day or technical trader, value or growth investor, you need to have a 'game plan on what you intend to achieve. The plan describes your investment or trading goals and money management technique. The plan provides clear steps on how you select stocks, where to get relevant information about the stock, and when to buy or sell the stock. Exhibit 2.1 and 2.2 provide examples of a game plan.
Exhibit 2.2: Investment Plan
To earn a return that is higher than one year fixed deposit rate.
Identify a list of blue chip stocks with high dividend yield.
Where to get information?
Use NextVIEW to pick high dividend yield stocks and get fundamental information.
What to Buy?
High dividend yield stocks.
When to Buy?
Buy only if dividend yield of the stock is at least three percent higher than current fixed deposit rate.
Each stock should not take up more than 10 percent of capital available for stock
Are you an investor or a trader? Well, the choice is yours. Most importantly, be very clear about what you are. Once you have decided what you are, come out with a one-page game plan to guide you through the investment or trading process. Review the plan periodically and make the necessary changes to improve your investment profit. For the trader, remember to "Plan your trade, and trade your plan."
Exhibit 2.2: Trading Plan
To earn $500 a week.
Identify a list of stocks with strong momentum.
Where to get Information?
Use NextVIEW screening function to select stocks with strong momentum and high trading volume.
What to Buy?
Two or three stocks with strong momentum and high volume.
When to Buy?
• Study the chart of stocks identified for trading.
• Establish the price support and resistance levels of the stocks.
• Establish strict trading entry and exit price levels.
• Use technical indicators such as MACD and RSI to support your trading decision.
• Set aside $10,000 for trading.
• When trading, focus on at most 3 stocks each time.
• Sell when profit is at least 3 percent of amount invested or is equal to $500.
• Cut loss at 5 percent of purchase costs.
It is important to equip yourself with an online investment tool, such as NextVIEW, to support your trading. Use the powerful features found in NextVIEW, such as charting, time & sales statistic, queue track, and volume distribution, to help you in your trading. The time & sales statistic, queue track, and volume distribution provide a good gauge of the underlying demand and supply of a stock. For the investor, "Always invest like a business partner." Use NextVIEW to help you search for stocks, gather financial information, and do portfolio management.
Online Investment Plan — Five Easy Steps
Now you are ready to execute your plan with the help of an online investment tool, NextVIEW. The plan consists of five easy steps:
1. Identify potential stocks.
2. Select stocks with the best probability of success.
3. Study the chart of the stock to time purchase.
4. Determine demand/supply of stock to get better price.
5. Manage your portfolio to improve investment performance.
Step 1: Identify potential stocks
The first step is to identify a list of potential stocks. The stock screening feature in NextVIEW will be used to help you identify a list of potential stocks. Using NextVIEW to pick stocks takes the emotion out of investing. Stock screening using fundamental and technical criteria to pick stocks is discussed in Chapter 3. You will also learn how to create a watchlist to monitor potential stocks.
Step 2: Select stocks with the best probability of success
The second step is to pick stocks that have the best chance of making money for you. You will learn how to get financial information of stocks using NextVIEW. With this information, you can study the fundamental of each stock and pick the top three that have the best fundamental and thus, higher probability of success. This involves looking at the price earnings ratio, dividend yield, and other financial ratios. The fundamental study of stocks and financial ratios is discussed in Chapter 4. You will also learn how to get the latest news about the stock to support your investment decision.
Step 3: Study the chart of the stock to time your purchase
The third step is to study the chart to determine the current trend and use technical indicators to time your purchase. In Chapter 5, you will learn how to use NextVIEW to plot charts and use technical indicators to time your purchase.
Step 4: Determine demand/supply of stock to get a better price
The fourth step is to gauge the underlying demand/supply for the stock at time of purchase and get a better price entry. The time & sales statistic, queue track, and volume distribution are powerful features found in NextVIEW, which are used to determine the current demand/supply for a stock. In Chapter 6, you will learn how to use these features to buy a stock at a better price.
Step 5: Manage your stock portfolio to improve performance
After buying stocks, you need to track their return. Managing stock portfolio involves keeping record of trades, ensuring that you are not overexposed to a single stock, selling over-valued stocks and replacing them with under-valued stocks, balancing between holding cash and stocks, and reviewing investment performance. In Chapter 7, you will learn how to use NextVIEW portfolio management feature to manage stocks and improve investment performance. You will also learn how to set stock alert to notify you when the price reaches your profit target or cut loss level.
Your Winning Edge
When you invest in stocks you want to play a winning game of making money. To make money in stock investment, you must do four things right:
1. Avoid the mistakes of losers.
2. Develop the habits of successful investors.
3. Have an investment plan.
4. Use an online investment tool to give you the edge.
Avoid the Mistakes of Losers
Losers are highly emotional and irrational bunch of people. They buy stocks on impulse and hot tips. They do not have an investment plan or money management strategy. The end result is huge loss and broken dream. For example, retail investors chalked up contra losses of S$300 million in the first half of the 1999 bull market. Based on our experience, investors lose money because of the following reasons:
x Do not have an investment plan.
x Do not practice money management.
x Lack investment knowledge.
x Highly emotional.
X No discipline.
x Gambler attitude.
x Do not learn from mistakes and repeat them instead.
x Do not cut losses when they are wrong and allow losses to get out of hand.
x Buy on tips and rumors without checking on the reliability of information source.
x Buy and sell on impulse.
x Too lazy to do basic research.
x Want to make money fast without any effort.
Develop the Habits of Successful Investors
Successful investors are willing to put some effort in studying the fundamental of the stock. They know the intrinsic value of the stock and will not chase or pay ridiculous price to own the stock. Warren Buffett, a well-know investment guru, listed six qualities of a successful investor:
• be animated by controlled greed and fascinated by the investment
• must have patience;
• must be able to think independently;
• must have the security and self-confidence that comes from knowledge, without being rash or headstrong;
• must be able to accept it when one does not know something; and
• must be flexible to the types of business one invests, but never pay more than they are worth.
Develop the habits of successful investors by doing the following:
^ Have an investment plan.
^ Practice money management.
^ Be patient, realistic, and rational.
^ Do research before you buy the stock.
^ Buy fundamentally sound stocks at reasonable price.
^ Sell stocks when these stocks are over-valued or pushed up to exorbitant prices by speculators.
Have an Investment Plan
You must have a simple plan to guide you buy the right stocks that make money for you. In this book, you learn how to create a simple investment plan and do online stock investment in five easy steps. Now, you need to put into practice what you have learnt from the book. The five-step investment plan provides a rational, disciplined approach to investing online. If you follow the plan, you will not buy a stock based on impulse or tips. Instead, you will check out the stock first before making your investment decision. The five-step plan forces you to follow some simple money management techniques such as using stock alert and portfolio management. Start out your investment journey right. Try out the five-step investment plan on your next stock purchase. Use the portfolio management feature in NextVIEW
five-step investment plan to a "test" portfolio. Monitor the performance of the "test" portfolio to refine your investment plan.
Use an Online Investment Tool to Give You the Edge
You need to use an online investment tool for quick access to the latest financial information to check that you are on track in making the right investment decision. Having quick access to the latest financial information is critical to successful stock investment. In this book, you learn how to use an online investment tool, NextVIEW, to get the latest financial information. You were introduced to basic technical analysis and taught how to use charts for timing your purchase. You were also shown how to use many of the powerful features in NextVIEW, such as watchlist, time & sales statistic, queue track, volume distribution, and stock alert. Make use of these powerful features to give you the edge in making money from investing online. Remember that the latest financial information is just a mouse click away. Use this information to make money for you!
Words of Wisdom for Trading
Have a Game Plan for Trading
You must have a game plan for trading. The game plan must articulate your trading strategy, profit target, cut loss level, risks to avoid, and money management guidelines. Review the plan on a periodic basis and make the necessary changes to improve performance.
Make Sure You Have a Money Management System in Place
You must have a money management system in place to ensure that you do not risk all your capital on one single trading idea. For example, if you have $100,000 and you used the whole amount to buy 10,000 shares of one stock at $10. If the stock dropped to $2, you would have lost $80,000. On the other hand, if you set a limit of 20 percent of your capital for each trading idea, you can only buy 2,000 shares at $10. Using the same example, your loss would only be limited to $16,000.
Practice "Positive” and "Proactive" Mental Attitude
Very often, a trader becomes very negative when the price plummeted after he buys the stock or goes up after he sells, the stock. He starts to doubt his trading ability, feels upset, and makes negative statements about himself. This is a natural reaction to a bad trade, especially when money is lost. A more positive and proactive attitude is to learn from your trading mistakes, avoid them in future, and recognize that your trading system needs improvement. Make sure you have a positive mental attitude before you trade. Otherwise, stay out of the market until you regain your composure. Remember the market is always around and does not miss your presence.
Only Trade Stocks You Know Well
Only trade stocks that you know well. You must have a good understanding of the stock trading range, liquidity, latest news flow, and recent important announcements.
Only Trade in Liquid Stocks
Only trade in stocks that have good liquidity. Liquidity refers to the existence of a large number of buyers and sellers and large trading volume. If the trading volume of the stock is low, you may not be able to ;ell when you decide to cut loss.
Establish a "Risk/Reward" Outcome
Before entering a trade, make sure you have an idea of the expected risk/reward" outcome. Are you trading on a "risk/reward" ratio of 1:1, 1: or 1:5? For a "risk/reward" ratio of 1:1, your upside gain is equal to your ownside loss. Try to set a "risk/reward" ratio of at least 1:2. For example, uying a stock with a downside of five cents and an upside of ten cents.
Understand the Trend of the Stock Well and Trade the Trend
Experts have advised that the "the trend is your friend" and "never go gainst the tide." If the chart shows that a stock is trending down (sharp drops and weak rallies), do not buy because there are more sellers an buyers. You will lose money if you buy against the downtrend. The exception is if you are trading for a technical rebound because the stock is deeply oversold. Even then, you must have very tight loss control and get it if what you expect did not happen.
Rcognize a "Hidden" Change in Trend
Very often a stock will go through very bad periods of poor earnings and negative news flow. The stock price will drop and continue to drop to discount the current bad results and future poor earnings visibility. There comes a time when any bad news or poor results do not cause the stock drop very much. Recognize that the trend has changed as there is underlying strong support for the stock. Change your trading strategy to recognize the "hidden" change in trend. Check around for divergent views out the stock. There may be some development that is not known to the market.
Wait for the Price of a Stock to Stabilize Before Buying it
Experts have always advised never to catch a falling knife, which means never to buy a stock that is going through a major price correction as what looks cheap today will get cheaper tomorrow. For example, a stock price that is coming down very quickly (10 percent correction or a gap down in price) implies that the seller has a large quantity to sell. Usually, the selling is because of some bad news about the company such as profit warning, slowdown in earnings growth, or major bad debts. If you still like the stock because of its fundamentals, wait for its price to stabilize before buying it.
Test Out Your "Price Discovery" Ability
Do hypothetical trades to test out your "price discovery" ability. Study how you react to events and news flow in relation to your trades. Are you buying or selling too quickly in reaction to an event or news flow? Are you taking profit too early or cutting your losses too slowly? Put aside five percent of your capital to do real trade and understand your price discovery behavior. You will be surprised with the results. Some of you may be stuck at a profit range of two percent or a loss of 20 percent. In other words, you take your profit too early and losses too slowly. There is a need to improve your price discovery ability as this impairment can cause serious damage to your capital. Keep a trade journal to help you gain insight on your "price discovery" ability.
Break Trade into Smaller Sizes to Hone in "Price Discovery" Ability
Divide your trade by half, one-third or one-quarter portion and wait for two conditions to happen. First, the price must be at the level that triggers a purchase. Second, you buy during each window period. If you divide your purchase into two portions and your window period is one day, then, you have only two opportunities to buy the share in the day. For example, you bought the stock in the morning. You cannot purchase additional stocks as the next window period to buy the stock is in the afternoon.
Get Your Entry Price Right
If you have got your entry price right, the stock should be making money for you almost immediately. Always be disciplined by plotting a chart of the stock you are trading. Use short-term moving averages and other indicators to help you determine the right entry price. Cut your loss immediately the moment you find that you have made a mistake. If you get the entry price correct, then the stock should not go down more than 5 percent on the day you buy the stock.
Practice Trading Discipline by Giving "Limit” Order
A "market" order is buying or selling the stock at the current market price. A "limit" order buys or sells the stock at the price you specify. For example, the buying price of SIA is $10 and selling price is $10.10. If you give a market order to buy SIA, your broker will buy SIA at $10.10 (the current selling price). Try to practice your trading discipline by buying the stock at the price you specify (i.e. "limit" order). The "limit" price is specified at a level based on some buying criteria or technical indicators.
Have a Cut Loss Strategy and Cut Your Losses Quickly
For trading, it is recommended to set the cut loss level at between three to eight percent. For example, if the stock is one dollar. At three percent, your cut loss level is 97 cents (3% of $1 is 3 cents). At eight percent, your cut loss level will be 92 cents. Make sure that you stick to your cut loss level. Otherwise, your losses will become so painful that your trade becomes a long-term investment mistake that stays in your portfolio report, reminding you year after year of your folly.
Cut Your Loss Quickly Before it Damages You Permanently
If you buy a stock at $1 and it drops in price to 50 cents because you did not cut your loss, the stock has to go up by 100 percent for you to breakeven. Assuming you trade $100,000 worth of share. The end result is that you have loss $50,000 or half your trading capital of $100,000. You need to make $50,000 profit to get back your capital of $100,000. However, if you have a tight loss control of 5 percent, you would have sold the stock when it hits 95 cents. Your loss is $5,000 (5% of $100,000) and you are still in the game.
Cut Your Loss When the Events You Bet on Did Not Materialize
You buy a stock betting on some events to happen: a technical breakout, surprise announcement, or syndicate play. The stock did not move up as expected. Cut your loss at the level you set. If what you expect to happen is actually happening, your trade should make money for you very quickly. If it does not, you have to be very discipline to stick to your loss control plan.
Keep a Trade Journal
Keeping a journal of your trade history is important as it clarifies your trading decisions and helps you understand your price discovery behavior.
the reasons for the trade, you reading of the market in relation to the trade, your profit/loss levels, frequency of trade, and returns achieved. The journal helps you to manage your emotion, improve your price discovery judgement, focus on the quantitative part of trade, and make rational adjustment on your risk level and return target. By reviewing trades done over a year, you should be able to see your performance and pattern in taking profit and cutting loss. The journal should help you answer the following questions: Are you taking profit too early? Are you cutting losses too slowly. Are you trading in a reckless manner? Are you preserving your capital? Do you follow your plan? Do you need to adjust your plan?
Use an Online Investment Tool to Give You the Edge
To be a successful trader, you must have access to real-time charts, trading statistics (e.g. time & sales statistic), and latest news to help you make profitable trade. Use an online investment tool such as NextVIEW
Advisor (www.thenextview.com) to do charting and get access to critical trading statistics real-time.
Sunday, March 16, 2008
What is Trend Following trading? A good definition from Van Tharp:
Let's break down the term Trend Following into its components. The first part is "trend". Every trader needs a trend to make money. If you think about it, no matter what the technique, if there is not a trend after you buy, then you will not be able to sell at higher prices..."Following" is the next part of the term. We use this word because trend followers always wait for the trend to shift first, then "follow" it.
Trend Following is reactive and systematic by nature. Trend Following does not forecast or predict markets or price levels. Prediction is impossible!
Trend Following demands that you have strong self-discipline to follow precise rules. It involves a risk management system that uses current market price, equity level in an account and current market volatility. Trend Followers use an initial risk rule that determines your position size at the time of entry. This means you know exactly how much to buy or sell based on how much money you have. Changes in price may lead to a gradual reduction or increase of your initial trade. On the other hand, adverse price movements may lead to an exit for your entire trade. Historically, Trend Following trader's average profit per trade is significantly higher than the average loss per trade.
Trend Following is not a Holy Grail. It is not some passing fad or hyped-up secret black box either. Beyond the mere rules, the human element is core to the strategy. It takes discipline and emotional control to stick with Trend Following through the inevitable market ups and downs. Keep in mind though, Trend Followers expect ups and downs. They are planned for in advance.
Trend Following Nuggets of Wisdom
Price: One of the first rules of Trend Following is that price is the main concern. If a market is at 60 and goes to 58, 57, 53 - the market is in a down trend. Despite what every technical indicator might predict, if the trend is down, stay with the trend. Indicators showing where price will go next or what it should be doing are useless. A trader need only be concerned with what the market is doing, not what the market might do. The price tells you what the market is doing.
Money Management: The most critical factor of Trend Following is not the timing of the trade or the indicator, but rather the determination of how much to trade over the course of the trend.
Risk Control: Trend Following is grounded in a system of risk control and money management. The math is straightforward and easy to learn. During periods of higher market volatility, your trading size is reduced. During losing periods, positions are reduced and trade size is cut back. The main objective is to preserve capital until more favorable price trends reappear. Cutting losses is the way to stay in the game.
Rules Rule: Trend Following is nearly 100% systematic. Price and time are pivotal at all times. Trend Following is not based on an analysis of fundamental supply or demand factors. Trend Following does NOT involve seasonals, point and figure, Market Profile, triangles or day trading.
Trend Following answers these critical questions:
If you want in-and-out day trading, we can't help. Good Trend Following systems (including the Turtle trading system) average five or six trades per market per year. What do you need to get started?
- An active mind, willingness to learn and passion to win.
- No knowledge of what an Italian bond is worth or what companies comprise the S&P or FTSE index. The key is the price on the chart.
- Discipline and common sense to do the right thing per all rules.
- About an hour each day at the end of the day to check trades.
- A PC and telephone line (or internet connection).
- Some Turtles Won; Some Lost. Why?
Trading is a zero-sum game. For every winner, there is a loser. What's the difference between winners and losers? Smarts and strategy. For every loser in the NASDAQ implosion there was a winner. Does this mean that there are traders with neither strategy nor smarts actively losing, effectively shifting their funds to the winners, armed with strategy and smarts? Yes, absolutely.
General Rules for Trading Systems
- Understand why you are trading in the markets. Are you seeking a gambling thrill or are you serious about making money?
- Use a system and don't deviate from it.
- Use money management at all times.
- Establish your trading plan before the markets open.
- Detail your plan for each trade.
- Establish entry and exit points and understand risk reward ratios.
- Accept small losses as part of the game if you want to win.
- Trade markets from the short side.
- Maintain a strong and honest relationship with your broker.
- Develop a business plan. Speculation is a business.
- Stay the course so you are around for the big moves.
- Don't blame the market for your losses. You are the reason for your losses.
- Develop a trading plan for each potential situation you may face.
- Do not look at quotes during the day.
- Do not concentrate on break-even levels when you are losing.
- Remember that break-even levels do not impact on the future success of a position.
- Don't liquidate a winner to keep a loser.
- Develop and maintain an exit plan. Follow this plan with rigid discipline.
- Remember that greed kills.
- Never add to a losing position. A losing position means you were wrong.
- Sustain your patience. Big movements take time to develop.
- Remind yourself there is nothing new in the markets.
- Don't predetermine your profits.
- Avoid techniques you don't understand.
- Don't be overly curious about the rationale behind a move.
- The key to wealth in trading is simplicity.
- Trade money not markets.
- Bulls and bears make money, but pigs get slaughtered.
Trend Following Guidelines:
- Trend Following is not anticipatory. Does the 60% drop in NASDAQ stocks mean the bull market has finally run its course? Who knows. Don't worry about what the markets are going to do, worry about what you are going to do in response to the markets today. You can't undo the past and you can't predict the future. No one can consistently predict anything. Prices, not investors, predict the future.
- Meticulous risk management strategies are absolutely crucial. Everyone makes money in a bull, but if you don't have a money management plan and an exit plan, you are in trouble when the bull is replaced by the bear. Trend Followers plan when they will get out before they ever get in. They are interested in one variable: price. They forget forecasts, fundamental factors, and technological break throughs.
- Successful trading systems adapt to change. Inefficiencies in a variety of financial markets around the world lead to sustained trends. Mechanical trading systems exploit these trends for profits. With global markets in various stages of expansion, retraction and equilibrium, your trading strategy adapts.
- Know every day what your portfolio is worth. Calculate what your risks are on any given day for all positions.
- Controlling risk is not the same thing as avoiding risk. If managing risk is an integral part of your philosophy, when your risk level goes up or down, you simply adjust.
- Manage your risk. Position liquidations are triggered by significant adverse price action and are never pre-determined objectives. Concentrate on managing the risk. The returns will take care of themselves.
- Large profits engender larger size ?thin profits engender cutting back. If you are flush with profits, you trade larger size. If you are thinly capitalized, you have to cut back.
- Equalize risk. Allocate a fixed dollar amount of risk to each new position. For example a corn position will have the same initial dollar risk as a T-Bond position. By trading a system with the same parameters across the board you protect yourself from curve-fitting.
- Enter and exist with rules. You can't expect to enter a market at the precise moment a bottom is hit, nor will you exit a market at the exact top. Capture the middle of the trend.
- Seek profit opportunities in trending markets whether those markets are moving up or down.
- Obtain profits from long-term volatility. View volatility as a cornerstone of your trading system. Volatility is the root of profit.
- Do not attempt to buy lows and sell highs. Buy market strength (highs) and sell market weakness (lows).
Friday, March 14, 2008
- INVEST FOR REAL RETURNS
The main objective for any long term investor is to maximise total real returns after taxes and inflation. One of the biggest mistake people make is to put too much money into fixed interest investments. If inflation averages 4% per annum, it will reduce the buying power of a US$10,000 portfolio of shares to US$6,800 in just ten years. To put it another way, the same portfolio will have to grow by 47% to US$14,700 simply to preserve its value over 10 years.
- KEEP AN OPEN MIND
Never adopt permanently any type of asset or any selection method. Try to stay flexible, open-minded and sceptical. Long term top results are achieved only by changing from popular to unpopular the types of securities you favour and your methods of selection.
- NEVER FOLLOW THE CROWD
If you buy the same securities as other people, you will have the same results as other people. It is impossible to produce a superior performance unless you do something different from the majority. To buy when others are despondently selling, and to sell when others are greedily buying requires the greatest fortitude, but it also pays the greatest rewards.
- EVERYTHING CHANGES
Bear markets have always been temporary. And so have bull markets. Share prices usually turn upward from one to 12 months before the bottom of the business cycle and vice versa. If a particular industry or type of security becomes popular with investors, that popularity will always prove temporary and, when lost, may not return for many years.
- AVOID THE POPULAR
When any method for selecting stocks becomes popular, switch to unpopular methods. Too many investors can spoil any share selection method or any market timing formula.
- LEARN FROM YOUR MISTAKES
The only way to avoid mistakes is not to invest, but that's the biggest mistake of all. Determine what went wrong and how you can avoid making the same mistake in the future. "This time is different" are among the most costly four words in market history.
- BUY DURING TIMES OF PESSIMISM
Bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.
- HUNT FOR VALUE AND BARGAINS
To many investors focus on outlook and trend. Therefore, more profit is made by focusing on value. In the stock market the only way to get a bargain is to buy what most investors are selling.
- SEARCH WORLDWIDE
To avoid having all your eggs in the wrong basket at the wrong time, every investor should diversify. If you search worldwide, you will find more bargains and better bargains than by studying only one country. You also gain the safety of diversification.
- NO ONE KNOWS EVERYTHING
An investor who has all the answers doesn't even understand the questions.
Sir John Templeton's 16 rules for investment success
(From the interview with Mark Mobius)
1. If you begin with a prayer, you can think more clearly and make fewer mistakes.
2. Outperforming the market is a difficult task.
3. Invest - don't trade or speculate.
4. Buy value, not market trends or the economic outlook.
5. When buying stocks search for quality stocks.
6. Buy low. So simple in concept, so difficult in execution.
7. There’s no free lunch. Never invest solely on a tip.
8. Do your homework, or hire wise experts to help you.
9. Diversify - by company, by industry.
10. Invest for maximum total real return.
11. Learn from your mistakes.
12. Aggressively monitor your investments. Remember, no investment is forever.
13. An investor who has all the answers doesn’t understand the questions.
14. Remain flexible and open-minded about the types of investment.
15. Don't panic.
16. Do not be fearful or negative too often.
- When in doubt, stay out
- Never trade or invest based on hope
- Act on your own judgement or else absolutely and entirely on the judgement of another
- Buy low (into weakness), sell high (into strength)
- Don't overtrade
- After a successful and profitable campaign, take a trading vacation
- Take a periodic mental inventory to see how you are doing
- Constantly analyse your mistakes
- Don't jump the gun
- Don't try to call every market turn
- Never enter into a position without first establishing a risk reward
- Cut losses, let profits run
- Place Numerous small bets on low-risk ideas
- Look down, not up
- Never trade or invest more than you can reasonably afford to lose
- Don't fight the trend
- Whenever Possible, trade liquid markets
- Never meet a margin call.
- If you are going to place a stop, put it at a logical, not convenient, place
The Ten Tips
- Don’t trade at the edge of the pendulum.
- Pring’s Law states that other things being equal, trading success is inversely related to emotional stimulation.
- Only trade with a balanced mindset.
- Patience and discipline ?required ingredients for successful trading.
- Only trade when you feel good and there is an obvious opportunity; never purely because you want to.
- If you get in for a reason get out when it’s no longer valid.
- Do not penny pinch.
- Trade smaller positions when things go wrong.
- Not sure? Don’t trade.
- Take time to learn.
Making a Plan and Sticking to It
o Setting up your personal investment objectives
o Adopting an investment or trading philosophy
o Establishing a plan to maximise objectivity and minimise emotion
2. Mental rehearsal
3. Developing a low-risk idea
7. Getting out
o Establishing a review process
- Divide your capital into ten equal parts, never risks more than 10% of your capital on any one trade.
- Use stop loss orders. Always protect your trade with a stop loss order of 3 to 5 points away.
- Never overtrade - that would be violating the first rule.
- Never let a profit run into a loss. Raise your stop loss orders.
- Do not buck the trend. Never buy or sell if you are not sure of the trend.
- When in doubt get out.
- Trade only in active stocks. Keep out of slow dead ones.
- Equal distribution of risk. Avoid tying up all your capital in one stock.
- Never limit your orders or fix a buying or selling price.
- Don't close your trades without good reason.
- Accumulate a surplus.
- Never buy just to get a dividend.
- Never average a loss.
- Never get out of the market just because you have lost patience, or get into the market because you are anxious from waiting.
- Avoid taking small profits and big losses.
- Never cancel a stop loss after you have placed it.
- Avoid getting in and out of the market too often.
- Be just as willing to sell short as you are to buy.
- Never buy just because the price is too low or sell short just because the price is high.
- Be careful about pyramiding at the wrong time. Pyramid in reducing quantity.
- Select stock with small volume of shares outstanding to pyramid on the buying side and stocks with the largest number of shares outstanding to sell short.
- Never hedge. If you are long on one stock and it starts to go down, do not sell another stock to hedge it.
- Never change your position in the market without a good reason.
- Avoid increasing your trading after a long period of success.
Thursday, March 13, 2008
The Big 3 Iron Ore Stocks, BHP Billiton, Rio Tinto and Vale Point to a Commodities Bust and Global Recession/Depression
Originally published March 13th, 2008.
The two commodities which are the principal material pillars of the world economy and vital to its functioning are iron ore and oil. Iron ore is principally used in the production of a variety of steels and unlike oil, whose price is benefiting from production arguably having peaked, iron ore resources will last well into the 22nd century. Thus, at the present time, the price for iron ore, and the prices of the major iron ore stocks, serve as the most accurate barometer of the health and direction of the world economy. A weakening in the price for iron ore and a nascent bear market in the big iron stocks serve as an early warning system that a recession/depression is looming. The purpose of this article is therefore to assess the condition of the world's "big 3" iron ore stocks from which we should be able to divine the outlook for global commodity markets as a whole, and more than that, the outlook for the global economy.
Before going any further the point should be emphasized that the Precious Metals, gold and silver, are not classified as commodities. They are money, real money, and are mistakenly relegated to the status of mere commodities in the minds of many investors because that is how they have been programmed to think by the architects of the fiat money system, which is, as more and more people are slowly and painfully beginning to realize, facing its nemesis. This being so it is perfectly reasonable for gold and silver to rise in price even as commodity prices generally are going into decline, caught up in the vortex of a global recession/depression.
The big 3 iron ore companies are gigantic corporations that are among the world's largest mining companies, and together they account for 75% of internationally ocean traded iron ore production. They are BHP Billiton, the world's largest mining company and the largest publicly traded company in Australia, whose operations include the mining of giant high grade hematite deposits in Western Australia's Pilbara, Companhia Vale do Rio Doce, mercifully now known simply as Vale, which is the world's 2nd largest mining company and the premier iron ore producer from its giant high grade hematite resources in Carajas, Brazil, and Rio Tinto, the giant Anglo - Australian mining conglomerate which also produces high grade hematite ore from its huge operations in Western Australia's Pilbara. Rio Tinto also happens to be the largest coal mining company in the world. In pursuit of our objective to assess the outlook for global commodity markets generally and the outlook for the world economy, we will now examine the charts for all 3 of these highly important companies in detail.
With all 3 of these companies being traded on the New York Stock Exchange, we will use the charts for the stocks traded on this exchange, although we will also include a look at the chart for BHP traded on the Sydney Stock Exchange on which a clear pattern has been discerned that has important forecasting implications.
We can now summarize this analysis by concluding with the following observations: the charts for all 3 of the world's major iron ore producers are very similar - all are completing major top areas, one a Head-and-Shoulders top, the other two Double Tops. These top areas portend a major bear market in these stocks which are now candidates for shorting. They also imply a looming bear market for commodities generally (except gold and silver, which are real money) and have grave implications for the world economy - they are warning that a recession is approaching, that given the conditions of extreme crisis in the credit markets could easily intensify into a depression. A clear break above the highs by all 3 of these stocks would invalidate the scenario set out here.
Wednesday, March 12, 2008
Robert’s rich dad used to tell him, “If you want to be a rich business owner or investor, you need to understand the story of Noah and the Ark.” First, you got to have the vision to see the flood was coming and then the faith and courage to build the Ark to ride out the storm. The author details out in Prophecy why the biggest stock market crash is yet to come and gives an 8-step plan to build your financial ‘ark’.
How to Build Your Financial Ark
Robert says to build your financial ark so that you could ride out the coming storm you need to have control over 8 aspects:
Control #1: Control over Yourself
Control #2: Control over Your Emotion
Control #3: Control over Your Excuses
Control #4: Control over Your Vision
Control #5: Control over the Rules
Control #6: Control over Your Advisors
Control #7: Control over Your Time
Control #8: Control over Your Destiny
"A Change in the Law... A Change in the Future."
"Losers cut their winners and hang on to their losers. Winners cut their losers and hang on to their winners."
"Excuses are the words coming from the loser in you."
"Cash flow determines if something is an asset or a liability."
"One of your greatest assets is time. One of the reasons most people do not become rich is because they do not make good use of their time."
"Inside each of you is a rich person, a poor person, and a middle-class person. It is up to you to decide which person you become."
"Take control of your own financial ark and buy or build assets that generate cash flow. Include real estate, business, and paper assets. as soon as your income from your assets (your money working for you) exceeds your expenses you are financially free."
"Diversification is a protection against ignorance. It makes very little sense for those that know what they're are doing."
"Wall Street is the only place that people ride to in a Rolls-Royce to get advice from those that take the subway."
"The market, like the Lord, helps those who help themselves."
Buffett likes to buy stocks "when the bears are giving them away."
"If you cannot control your emotions you cannot control your money."
Good financial education
Large real estate investments
Private equity funds
Personal money manager
High paying jobs
Small real estate investments
Government support programs
How to Get a Rich Life
- If you want to be rich, do your homework. Find out what, where, who, why and how to make the most money in the shortest possible time.
- Work to learn, not to make money.
- Make your day job what is truest to yourself.
- Have fun while you are at it, but make sure the fun is legal, ethical and does not harm anyone.
- Beware of being so busy at work that you end up being lazy about the other parts of life that matter.
- Focus on how much you keep, not how much you earn.
- Focus on acquiring more assets, not loading up on liabilities.
- Understanding that the point of money is not to make more money, but to gain you financial freedom so you are free to follow your heart.
- People, not money, are what count most in life. So, invest most of your time in good relationships.
- Invest in what you do today, not what might come tomorrow.
Financial IQ will determine one's wealth
HOW many people do you know who are successful academically or professionally, but not rich?
Very few. The reason is they do not have financial IQ. My own dad had a PhD and he was broke after he retired.
How do you take control of your financial future?
You have to take control of four things.
First, take control of your attitude. Many people have a poor person's attitude. They say: 'I'll never be rich', or 'I can't afford this or that.' To be rich, you have to reverse that attitude. Ask instead: 'How can I be rich?' and 'How can I afford it?'
Second, take control of your financial education. I consistently read, go to seminars, hang out with friends and talk about getting rich. It is 24/7. I choose to be rich.
Third, take control of a plan to get rich. Learn to be an entrepreneur, invest in real estate and stocks. People say investing is risky. It is not risky. It is they who are risky.
Fourth, control who your friends are. If you hang out with all the losers in your company, you don't have a chance.
You should talk to people who know what they are talking about. Most people are poor because they take advice from other poor people or sales people. Put together an adviser team, meet people who want to be rich and talk about money.
There are four types of people, and you can identify them by certain words they use.
Employees, whether it is the president or the janitor, say: 'I'm looking for a safe job.' Then there are self-employed people, business owners and investors.
If you want to see what your financial future is, think about who are the six people you spend the most time with. Are they employees, or self-employed people, or business owners or investors?
My friends are business owners and investors.
To be successful in investing, you need
3. Excess cash
Instead of trying to predict what will happen in the market, be prepared for three things :
Changes in the laws
Changes in the market’s momentum (sentiment)
Changes in the fundamentals of the business or real estate in which you are investing.
Investing itself is not necessarily risky, not being in control is risky.
The Ten Investor’ Controls
The control over yourself
The control over income/expense and asset/liability ratios
The control over the management of the investment
The control over taxes
The control over when you buy and when you sell
The control over brokerage transactions
The control over the E-T-C (entity, timing, characteristics)
The control over the terms and conditions of the agreements
The control over access to information
The control over giving it back, philanthropy, redistribution of wealth.
Investing is a plan, often a dull, boring and almost mechanical process of getting rich.
Why it is so hard for most people to follow a simple plan?
Because following a simple plan to become rich is boring.
Find a formula that will make you rich and follow it.
The path to achieving investment success is to study long-term results and find a strategy or a group of strategies that make sense. Then stay on the path.
History does repeat itself. Yet people want to believe that this time things will be different.
The main reasons for investing:
To be secure
To be comfortable
To be rich
Poor people measure in money and rich people measure in time.
The moment you begin to think of time as precious and that is has a price, the richer you will become. Because time is more important than money.
The basic of investing is to always know what kind of income you are working for
- Earned Income
- To convert earned income into portfolio income or passive income as efficiently as possible.
- To keep your earned income secure by purchasing a security you hope converts your earned income into passive income or portfolio income.
- The investor is the asset or liability?
- Prepared for whatever happens. Most investments that will make you rich are available for only a narrow window of time. But regardless of long the window of opportunity is open, if you are not prepared with education, experience or extra cash, the opportunity if it is good, will pass.
- If you are prepared, which means you have education and experience, and you find a good deal, the money will find you or you will find the money.
- It is the ability to evaluate risk and reward.
You invest for one reason : to acquire an asset that converts earned income into passive income or portfolio income. That conversion of one form of income into another form of income is the primary objective of a true investor.
You can become rich by being financially smart.
You can become rich by being generous. The more people I serve, the richer I become.
It Starts with a Plan
To be a rich investor you much have a plan be focused and play to win.
To be very rich, you must have 5 D’s ;
The accredited investor earns a lot of money and/or has a high net worth
The qualified investor knows fundamental and technical investing
The sophisticated investor understands investing and the law
The inside investor creates the investment
The ultimate investor becomes the selling shareholder
Market Up down
Losing investor loses loses
Average investor wins loses
Qualified investor wins wins
Rule number one in becoming an entrepreneur is to never take a job for money. Take a job only for the long-term skills you will learn.
If you cannot sell, you cannot be an entrepreneur.
Personal traits of a successful entrepreneur
The ability to withstand criticism
The ability to delay gratification
Financial Ratios of a Company
1. Gross Margin Percentage=(Sales-Cost of Goods Sold)/Sales
2. Net Operating Margin Percentage=EBIT/Sales
3. Operating Leverage=Contributions (Gross Margin-Variable Costs)/Fixed Costs
4. Financial Leverage=Total Capital Employed (Debt & Equity)/Shareholders’ Equity
5. Debt to Equity Ratio=Total Liabilities/Total Equity
6. Quick Ratio=Liquid Assets/Current Liabilities
7. Current Ratio=Current Assets/Current Liabilities
8. Return to Equity=Net Income/Average Shareholders’ Equity
Monday, March 10, 2008
"Old Rules...but Very Good Rules"
If I've learned anything in my 17 years of trading, I've learned that the simple methods work best.
- The first and most important rule is - in bull markets, one is supposed to be long. This may sound obvious, but how many of us have sold the first rally in every bull market, saying that the market has moved too far, too fast. I have before, and I suspect I'll do it again at some point in the future. Thus, we've not enjoyed the profits that should have accrued to us for our initial bullish outlook, but have actually lost money while being short. In a bull market, one can only be long or on the sidelines. Remember, not having a position is a position.
- Buy that which is showing strength - sell that which is showing weakness. The public continues to buy when prices have fallen. The professional buys because prices have rallied. This difference may not sound logical, but buying strength works. The rule of survival is not to "buy low, sell high", but to "buy higher and sell higher". Furthermore, when comparing various stocks within a group, buy only the strongest and sell the weakest.
- When putting on a trade, enter it as if it has the potential to be the biggest trade of the year. Don't enter a trade until it has been well thought out, a campaign has been devised for adding to the trade, and contingency plans set for exiting the trade.
- On minor corrections against the major trend, add to trades. In bull markets, add to the trade on minor corrections back into support levels. In bear markets, add on corrections into resistance. Use the 33-50% corrections level of the previous movement or the proper moving average as a first point in which to add.
- Be patient. If a trade is missed, wait for a correction to occur before putting the trade on.
- Be patient. Once a trade is put on, allow it time to develop and give it time to create the profits you expected.
- Be patient. The old adage that "you never go broke taking a profit" is maybe the most worthless piece of advice ever given. Taking small profits is the surest way to ultimate loss I can think of, for small profits are never allowed to develop into enormous profits. The real money in trading is made from the one, two or three large trades that develop each year. You must develop the ability to patiently stay with winning trades to allow them to develop into that sort of trade.
- Be patient. Once a trade is put on, give it time to work; give it time to insulate itself from random noise; give it time for others to see the merit of what you saw earlier than they.
- Be impatient. As always, small loses and quick losses are the best losses. It is not the loss of money that is important. Rather, it is the mental capital that is used up when you sit with a losing trade that is important.
- Never, ever under any condition, add to a losing trade, or "average" into a position. If you are buying, then each new buy price must be higher than the previous buy price. If you are selling, then each new selling price must be lower. This rule is to be adhered to without question.
- Do more of what is working for you, and less of what's not. Each day, look at the various positions you are holding, and try to add to the trade that has the most profit while subtracting from that trade that is either unprofitable or is showing the smallest profit. This is the basis of the old adage, "let your profits run."
- Don't trade until the technicals and the fundamentals both agree. This rule makes pure technicians cringe. I don't care! I will not trade until I am sure that the simple technical rules I follow, and my fundamental analyses, are running in tandem. Then I can act with authority, and with certainty, and patiently sit tight.
- When sharp losses in equity are experienced, take time off. Close all trades and stop trading for several days. The mind can play games with itself following sharp, quick losses. The urge "to get the money back" is extreme, and should not be given in to.
- When trading well, trade somewhat larger. We all experience those incredible periods of time when all of our trades are profitable. When that happens, trade aggressively and trade larger. We must make our proverbial "hay" when the sun does shine.
- When adding to a trade, add only 1/4 to 1/2 as much as currently held. That is, if you are holding 400 shares of a stock, at the next point at which to add, add no more than 100 or 200 shares. That moves the average price of your holdings less than half of the distance moved, thus allowing you to sit through 50% corrections
without touching your average price.
- Think like a guerrilla warrior. We wish to fight on the side of the market that is winning, not wasting our time and capital on futile efforts to gain fame by buying the lows or selling the highs of some market movement. Our duty is to earn profits by fighting alongside the winning forces. If neither side is winning, then we
don't need to fight at all.
- Markets form their tops in violence; markets form their lows in quiet conditions.
- The final 10% of the time of a bull run will usually encompass 50% or more of the price movement. Thus, the first 50% of the price movement will take 90% of the time and will require the most backing and filling and will be far more difficult to trade than the last 50%.
There is no "genius" in these rules. They are common sense and nothing else, but as Voltaire said, "Common sense is uncommon." Trading is a common-sense business. When we trade contrary to common sense, we will lose. Perhaps not always, but enormously and eventually. Trade simply. Apply simple system and clear methods and rules of analysis, avoiding complex methodologies concerning obscure technical systems and trade according to the major trends only.
(NaturalNews) Western medicine treats the body as a collection of parts instead of as a synergistic organism. When it comes to treating broken bones and injured body parts, mainstream Western medicine is unequaled. When this same approach is used to treat illness and disease - fixing or repairing the parts where the symptoms of underlying illnesses manifest themselves - modern medicine fails miserably
In the instance of cancer, instead of addressing the causes of cancer - toxins and a weakened immune system - we see instead treatments that either slash, burn or poison away the tumors and cancer cells, which further weakens an immune system cancer has already defeated and only worsens the conditions that led to cancer to begin with.
As a result, the way is paved for the return of the cancer or the introduction of another cancer or serious condition. Even worse, the road to further illness is often made easier due to the damage to the immune system and major organs caused by the treatment of the symptom.
Nature, on the other hand, gives us an array of tools to beat cancer and the underlying causes that lead to cancer, including foods, vitamins, minerals, supplements and lifestyle choices. Here is a suggested protocol based on what we know about cancer and its causes and what nature and lifestyle choices have to offer:
As soon as possible, cleanse your body to get rid of built-up toxins like heavy metals and pesticides, as well as the undigested food, fecal matter and gallstones that build up in the body by cleansing your colon and liver and by chelation to rid the body of heavy metals. Such contaminants are breeding grounds for, and causes of, disease and illness. A toxic and unclean body weakens the body's immune system that should be your first line of defense. Plus, once cleansed, the body is much more receptive to the good measures you take to rebuild your immune system and fight disease.
Cleanse your environment to the greatest extent possible and eliminate bad habits. In an ideal world, you would move to the country where there was plenty of fresh air and sunshine and less stress. In the real world you may not find that possible, so eliminate common toxins in your household, workplace and other places you spend time.
If you have mercury amalgam fillings in your teeth, have them replaced. In many instances, this step alone has led to the elimination of cancer.
Immediately eliminate bad habits and begin building good ones so that you will make sure that you no longer have habits that weaken your immune system and that you will be able to build your body to fight and conquer illness. A sedentary lifestyle with a poor diet, lack of pure water, sunshine and fresh air, and constant exposure to toxins will in time lead to bad health conditions. Remember, bad health habits are open invitations for illness and disease to enter your body.
Begin and maintain a healthy immune-boosting and cancer fighting diet. A good balanced diet, pure water, fresh air, sunshine and exercise are some of the essentials. You will find that a good diet does not have to be a bad tasting diet – far from it! However, it should be noted that the very best and most healthy diet is one that is close to the diet our ancestors evolved to utilize: lots of fresh and uncooked vegetables, fruits, nuts, roots and tubers, and fish and meat uncontaminated by growth hormones, artificial fertilizers or pesticides – and little or no grain or dairy products. It should be noted that of all the foods, essentially only raw vegetables and fruits contribute to an alkaline pH.
Rebuild and strengthen the body's natural immune system. It is very likely that a weakened immune system contributed to your illness in the first place. It is absolutely certain that a rebuilt and strengthened immune system will help you beat your illness and keep it at bay. Again, good diet, nutrition and habits are all important – they lay the foundation for a strong and healthy immune system. However, they are not enough by themselves. You should build a good foundation and then make your body a healthy fortress against disease and illness. Quite simply, disease and illness hate healthy hosts.
The stronger your immune system is, the harder it is for disease to survive and grow. And, to be the very strongest you can be, you need extra measures in the form of supplements as well as the healthiest foods. An oleander extract, very much like you get when you make oleander soup, was tested in Europe in 1986-1987 and found to have six times the immune stimulating activity of the most powerful immune stimulators known to man.
Cleanse, restore and protect the liver before, during and after your anti-cancer and disease battle. Cancer cannot develop unless the liver is impaired to begin with. Plus, an effective cancer fighting regimen will result in the release of a cascade of toxins that are released when cancer cells die. Such a release can overwhelm an already impaired liver and can even be fatal if measures are not taken to protect and regenerate the liver. Some of the very best antioxidants used to protect and regenerate the liver are the ones used in the Berkson Clinical Study: Milk Thistle (silymarin), alpha lipoic acid and selenium.
Maintain an alkaline pH and get plenty of oxygen at the cellular level. Cancer cannot survive in the presence of an alkaline cellular pH level, nor can it survive in the presence of highly oxygenated cells. Dr. Johanna Budwig of Germany has shown that for proper cellular utilization of oxygen to take place, our diets must contain adequate amounts of unsaturated fatty acids.
Make sure you have plenty of iodine, potassium and Vitamin D. All have been proven to be essential in beating and avoiding cancer. As mentioned above, cancer cells have lost the ability to be shut off by the body in what is called cellular apoptosis. These cancerous cells simply become abnormal and outlive the other cells in their normal cell life/replacement cycle and end up crowding out a territory over time. Iodine goes in and both does away with the surrounding cyst where cancer has set up residence and then also goes in and allows the specific shut down of the individual cells that are abnormal, diseased, or beset with pathogens to make room for new cells.
Drink plenty of pure water and get plenty of fresh air and sunshine. Water is essential for all healthy life; however, regular tap water contains trace amounts of hundreds to thousands of pesticides, carcinogens and other industrial pollutants. For that reason, the author recommends only the purest drinking water, such as reverse osmosis filtered water. Don't overdo the sunshine, but sunshine is essential to the production of vitamin D, and strange as it may sound, has been found to be essential in warding off melanoma as well as other cancers.
Exercise in moderation. Regular exercise does not have to be grueling, but it is essential. Exercise stimulates the immune system, stimulates the production of natural human growth hormone, stimulates the production of hormones and pheromones that make us happier and healthier, and simply leads to a longer and happier life period. Innumerable studies have demonstrated the overall health benefits of exercise and the negative effects of a sedentary lifestyle lacking in exercise. It is not a coincidence that studies have shown that those who exercise only a few hours each week have up to 50% less chance of developing many different kinds of cancer.
Trace minerals are essential in beating cancer and are in fact essential to virtually all of the body's important processes when it comes to utilizing vitamins, minerals and enzymes for good health. Two hundred years ago, the top layer of our soil contained up to 80 or more different minerals. Today, farming has stripped soils the world over of all but a handful of minerals, and even those remaining minerals are at levels that are only fractions of what were in the soil 100 years ago and continuing to decline. Man was designed to utilize at least 60 trace minerals on a daily basis, and did so for thousands of years by eating the plants that processed such minerals (and the animals that ate the plants with processed minerals). The only way to get an adequate supply now is to supplement, and the very best supplementation is from plant derived minerals, such as those that come from the famous prehistoric vegetable plant deposits in Utah and contain 75 trace minerals. Those who take them regularly report remarkable improvements in their health (and the author himself takes them religiously each and every day).
The next element of beating your disease and keeping it at bay is to go on the attack. As a matter of fact, all of the elements of this anti-cancer and disease protocol are elements of attack, because they make the body strong and inhospitable to disease. What I am talking about here is more than just making the body inhospitable to your disease – I am talking about going on the attack and wiping it out! In the case of cancer, there are many very potent anti-cancer supplements. such as the ones listed above and several others.
One such supplement, named Sutherlandia OPC (not to be confused with the European antioxidant of the same name), based on a remedy I have researched and written about, has been used for the past three plus years in South Africa to treat HIV and cancer. Of well over 400 HIV patients, all are still alive and well with their symptoms either reversed or stabilized. Of over 100 cancer patients, only 8 did not survive (5 were in their very final days and could not hold down the supplement and another three succumbed to organ failure as a likely result of prior traditional Western treatment via chemo). All the rest, save two who stopped taking the supplement once the tumors were gone and returned to their old lifestyles (and had the cancer return), are now alive and cancer free or else have their cancers in remission and tumors continuing to shrink. Compare that with the results of any mainstream medicine or treatment!
Perhaps the supreme cancer destroyer I have found is Inositol/IP6, such as is found in the product Cell Forte. A one to two month intensive regimen is best. According to several users I have spoken with, it seems to just melt away tumors in a very short time period, and works well to normalize the PSA readings in prostate cancer sufferers. One caution - Inositol/IP6 may deplete minerals and/or interfere with mineral absorption, especially calcium and magnesium. Be sure to get plenty of Calcium and Magnesium (a good thing to do anyway) and take a good mineral supplement, preferably plant derived minerals (a second good thing to do anyway). Also, I believe that it is good to only take a maintenance dose most of the time and to take occasional breaks from the maintenance dose of up to one month. No more than one or two yearly intensive regimens is recommended.
Colloidal Silver is another must in my opinion - it has been shown to be deadly to single cell organisms and pathogens. The caution with Colloidal Silver is that it is not specific and you need to supplement with probiotics (yet another good thing to do anyway - especially after cleanses). Many recommend that colloidal silver be taken with colloidal gold because gold appears to enhance the silver's actions when cancer is present.
The Beck type electrical zappers have a proven history of eliminating cancer and illness from the body. Also effective are the genuine Rife type machines, although they are hard to find and many inferior machines parading as Rife machines are out there. There is also the Zappers of Hulda Clark, although they are not my favorite. A CureZone (www.curezone.com) member known as ParaZapper has a very good machine whom many, including myself, recommend.
Remember, what you avoid can be just as important as what you consume: Avoid sugar to the greatest extent possible. Sugar feeds cancer and other illnesses and causes a myriad of other health problems. Refined sugar is also the number one single cause of health problems in the entire world! Likewise avoid bread and other items containing bleached white flour, which is essentially empty and harmful calories that convert to sugar once ingested. Other items to avoid include non-fermented soy, pork, MSG, ALL charred foods and foods cooked at high temperature, aluminum and coated cookware, micro-waved food, food in plastic containers and styrofoam.
The final key to winning your battle is your mental attitude. Remove as much stress from your life as you can and believe that you are going to win. Stress and worry accomplish nothing – worse, they are actually allies of illness and disease. You have surely heard the term "stress, the silent killer"? It's true! So you must do whatever it takes to remove stress from your life and make your mental attitude your ally. Practice EFT (Emotional Freedom Technique), meditate, take yoga, change jobs, retire, go fishing, find a pleasant hobby – do whatever you must to remove stress and have a positive mental outlook. Just remember, anyone who introduces or keeps worry and stress in your life is neither a friend nor an ally during this fight.
And make no mistake, it is a fight - likely the most important one of your life. But it is a fight you can and will win. Think it, believe it and live it!
Some in the field of natural health will tell you that you can beat cancer through diet alone, or through diet and detoxing. In many instances that is true, and some of the most effective and popular natural anti-cancer protocols, such as the Budwig Diet, are based on such a premise.
However, in my opinion, the more weapons you have in your natural arsenal, the greater your chances of success will be. That is why I advocate including one or more of the powerful natural supplements that have been proven to beat cancer and boost the immune system, and which address what we know about cancer.
Our depleted soils and the introduction of modern industrial toxins and contaminants makes it hard to build a strong enough immune system through diet alone. Our immune systems were not designed to handle the multitude of modern toxins we now face, which is why cancer is largely a modern disease.
As a final note: for those of you who continue to believe the big lie that the harsh and ineffective options offered by mainstream medicine (and its half century record of broken promises to deliver a cure or significant breakthrough) are superior to nature, I ask: When did God become a quack?
Live long, live healthy, live happy!
Note: To better understand why the above elements are included in the All Natural Anti-Cancer Protocol, please refer to the Natural News article:
Modern Medicine versus Nature in Treating Cancer
Sunday, March 9, 2008
"You don't need to know everything about day trading to succeed as a day trader. You need only to find a few solid strategies that work for YOU - then master them." - Jens Clever
The following are a list of nine things you want to avoid at all costs. Anyone of them can literally destroy your financial dreams and goals!
1. Trading with money you can't afford to lose.
One of the greatest obstacles to successful trading is using money that you really can't afford to lose. Examples of this would be money that is supposed to be used to pay the mortgage, bills or your child's college tuition. This is sometimes referred to as "trading with scared money" and there is a very good reason for that. Ultimately what happens is that when someone knows in the back of their mind that they are risking the rent money, they trade out of fear and emotion versus logic and no emotion. If you are in this situation I highly recommend that you stop trading until you earn enough to put into an account that you truly can afford to lose without causing major financial setbacks. You can start with as little as $2000 and trade stocks under $30.
2. The need to be "certain".
We all have the need to make sure that the trade we want to make is going to be a good one. Therefore we look for signs that will give us a confirmation to enter. This can come in several forms, for example... Tuning into CNBC or the Wall Street Journal to give us news that our stock is on the move or waiting for a couple of extra days to make sure that the stock is really flying and just not on a false breakout. Other traders will get opinions from friends, family or broker. Others will wait for ten technical indicators to line up and give the "green light".
All of these are okay to a point, however the big mistake to avoid is taking so much time that you let the trade take off without you. Interestingly, what ends up happening as a result of waiting
too long is that you actually increase your risk. This is because as a stock moves higher and higher there are fewer buyers left in the market and it can come tumbling down until more buyers step in. It is like a game of musical chairs; eventually someone gets caught without a chair.
Traders who wait and wait and wait to make extra sure are usually the ones buying the top tick just before the stocks sells off. They then beat themselves up thinking they picked the wrong stock. Odds are it had nothing to do with their selection, just bad timing.
The thing to keep in mind is that there can be no absolute certainty in any given trade. All we ever can do is take a very educated risk along with a leap of faith!
3. Spending profits before you make them.
Nothing is more exciting then getting into a trade that blasts off and puts you into a highly profitable situation. This can cause major problems however, because this type of trade puts you in a highly euphoric state and leads to daydreaming about the huge profits still to come. You say "Wow I'm already up 15% in two days; I'll be up 50% in a week and probably double my money in no time!" Then the next thing that happens is you are deciding on the great new car you are going to buy or perhaps telling your boss that he can stick it... Well you get the idea!
The real problem occurs as you get caught up in the daydream and expectations. This causes you to not be prepared to get out as the market sells off and eats up your profits because you have convinced yourself of the eventual outcome and will deny the reality of the situation.
The simple remedy for this is to know where and how you will take profits once you enter the trade. Also, realize that the market will only go up as long as it wants and not how high you think it should go.
4. Forming an opinion.
I'm here to tell you that the market does not give a damn about you or your opinions. Even if they are based on painstaking research or from a "Wall Street Guru", it doesn't matter!
5. Three 4-letter words that will kill you!
If you ever find yourself doing one or more of the above while in a trade then you are in big trouble! As I have already said, the market doesn't give a damn. All the hoping, wishing and praying in the world is not going to turn a losing trade into a winning one.
When you are wrong just use a simple 4-letter word to correct the situation-SELL!
6. Not sticking to your plan
A big source of trouble arises when a trader starts to deviate from their strategy. Maybe for a week they will trade according to one set of rules and the next use something entirely different.
This flying by the seat of the pants always ends up backfiring. This is because the trader can never be certain what is working and what is not.
You must never deviate from your methodology once you start. As long as it is a good one statistically there is absolutely no reason to change it. The way to make money from it is to trade it over and over again to exploit the edge it gives you.
One thing to also be aware of is that a trader is most vulnerable to switching approaches after a few loses. So, pay special attention at these times.
7. Not knowing how to get out of a losing trade.
It's amazing how many people I have talked to who don't have any clear escape plan for getting out of a bad trade. Once again they hope, pray wish and rationalize their position. As I keep saying the market does not care what you think. It does what it does and when you are wrong you are wrong!
The easiest way to keep a bad trade from going really bad is to determine before you get in, where you will get out. You can use a dollar amount or at some target point such as the low of the previous 15-minute bar.
***Make sure you don't get the "stunned deer in the headlights syndrome". This is where you see the stock fall to your stop loss point, but you are unable to take action. Maybe this is due
to fear or disbelief that you are wrong, but unless you get out ASAP you could end up with a major financial trouble!
8. Having an ego.
I have seen a number of individuals enter the trading game that were extremely successful in other business ventures. Because of this they had a fairly big ego and thought they couldn't fail.
Their egos became their downfall because they couldn't except that they were wrong and refused to bail out of bad trades.
Once again, whoever or wherever you came from does not concern the markets. All the charm, powers of persuasion, number of diplomas on the wall or business savvy will not budge the market when you are wrong.
9. Falling in love with a stock or trade.
Let me give you an example of what I mean. Back in the spring of 1999 EFAX was a really hot stock. I waited to buy it on a dip and did so at $19/share. It started to move up strongly and life was great! After a while though, it started to come back to my entry point and then below it. Here's the problem. For some reason I really liked EFAX and sort of became attached to it. Ultimately I couldn't let go of it even though I knew I should. I justified and rationalized why my dear friend should bounce back, but it never did. I finally had to break off my love affair when the stock hit $9. (Ouch!)
The moral of this story is never fall in love, let alone get married to any stock. It can cost you dearly!
WHAT JOHN NEFF AVOIDS
John Neff was in charge of the Windsor Fund for 31 years. It beat the market for 25 of those 31 years. He took control in 1964, and retired in 1995. Windsor was the largest equity mutual fund in the United States when it closed its doors to new investors in 1985. Each dollar invested in 1964 had returned $56 by 1995, compared with $22 for the S&P 500. The total return for Windsor, at 5,547% outpaced the S&P 500 by more than two-to-one. In this article, instead of focusing on what stocks Neff purchased, let us focus on what he avoided, most of which relate to bull-markets.
1. High Transaction Costs
Few mutual funds can claim to have such low expenses as the Windsor had-- a mere 0.35% per year. The portfolio's turnover was kept to unusually low levels. This saving on dealing costs is complemented by the low level of operating expenses for activities such as information gathering and analysis. One of Neff's guiding rules is to keep things simple. The most important element determining stock value can be understood without the need for expensive sophisticated equipment or people. By holding for the medium term and not going for short-term profits he reduced both transaction costs and taxes.
2. Excessive Diversification
While all would agree that 'some' degree of diversification is necessary, if this is taken too far investment performance is hobbled. Neff said: 'Why own, for instance, forest products companies if the market has embraced them and you can reap exceptional returns by selling them?' He generally ignored market weightings and bought in areas of the market where under valuation was evident. Some sectors would be unrepresented in the portfolio, whereas others would be 'over-represented' (according to conventional logic). Normally the vast majority of the S&P 500 were not held, at any one time, by Windsor. Generally a mere four or five of these well known stocks fulfilled his requirements for inclusion. When the fund was valued at US$11 billion it still only had 60 stocks. Furthermore, the largest ten accounted for almost 40% of the fund. Windsor would often have 8 or 9% of the outstanding shares of companies. 'By playing it safe, you can make a portfolio so pablum-like that you don't get any sizzle. You can diversify yourself into mediocrity', he said.
3. Technology Stocks
These were generally avoided for three reasons: (1) they are too risky; (2) they do not pass the total return to PE ratio test employed by Neff; (3) Neff admitted that he had no 'discernable edge' versus other people in the market place (Buffett's circle of competence lesson). Neff believed it is essential to have some informational and analytical advantage.
4. Forgetting the Lessons of the Past
The memory of stock market participants is notoriously short. Markets are continually foolish, being condemned to invite catastrophe by forgetting the past. A knowledge of history is essential to give the required perspective. Neff, writing in 1999, believed that speculators in 1998 and 1999 were merely the latest in a long line of amnesiacs. In the late 1990s anything ending in a .com generated great excitement. In the 1950s firms merely had to put 'tronics' on the end of their name to attract attention and to drive their share prices higher. In the 1960s it was the go-go stocks. In the late 1960s and early 1970s to be labelled one of the Nifty Fifty was to see your stock prices soar. In the 1980s oil companies were in vogue. Before these bubbles you had the new era stocks of the 1920s, and so on.
Each generation believes that a few magical companies have an almost infinite capacity to grow, that the rules of economics have been rewritten and that you have to jump aboard before it is too late. The 1990s fervour was more dangerous than most because many, if not the majority, of the companies which lured the speculative dollar had no profits. They could not be called growth stocks in the traditional sense of the term. Speculators were premature in conferring growth status on companies that had good prospects only if you made massive assumptions regarding the likelihood of the entry of competitors, or the prospect for another change in technology, and, the willingness of consumers to join the revolution rather than continue to do things without the new technology. 'Windsor's critical edge was nothing more mysterious than remembering the lessons of the past and how they tend to repeat themselves,' said Neff.
5. Getting carried away with Bull Market Hype
Markets go through cycles over time. There are occasions when investors are very risk averse. There is a phase when the emphasis is on quality. Later as confidence grows, investors look for stocks with a more speculative taint. After a period of growth the speculators fall over each other in their buying panic as the market runs well ahead of its fundamentals. 'The capacity of investors to believe in something too good to be true seems almost infinitive at times,' quips Neff. As the fad gathers pace, people who have little familiarity with stocks get swept along with the drumbeat of the prevailing wisdom. People find the urge to 'hop on the line that moves fastest' as they try to take short cuts to riches. The siren song of positive beliefs in the future drowns out the argument for a rational investment strategy based on a fundamental evaluation of stocks. Traders buy and sell on the basis of tips and superficial knowledge. The visions of overnight fortunes blind them to the logicality of investing without sound information and calm reflective thought.
People come to believe that there is gold enough for all in the same streams that earlier adventurers panned. Most of these followers go home empty handed as the wild expectations of the individual members of the mob one by one receive a slap in the face with a dose of reality. Eventually, it dawns on the masses that some players have already taken their money, as they figured things had already gone too far. Group panic begins, as everyone tries to exit at once. Predicting when these inflection points will occur is impossible so the best advice is to stay clear of stocks and markets that have lost touch with fundamentals. Don't try to play the greater-fool game -- you might just end up being the biggest fool.
6. The Technical or Momentum Game
Neff considered it ill-advised to try and predict market movements. His approach: 'amounts to hitting behind the ball instead of anticipating market climaxes six to eighteen months ahead of the investment crowd. Poor performance often occurred as a consequence of a technical orientation that tried to predict peaks and troughs in stock charts. It assumed that where a stock has been implies where its going.'
7. Growth Stocks with High PE Ratios
The problem with stocks showing fast earnings growth is that their potential is likely to be well recognized. Indeed, on too many occasions, stocks that have attracted a market buzz have their price driven up to unrealistic heights as investors get carried away. This was clearly evident in the mania for business-to-consumer internet stocks in the late 1990s. A combination of over excitement, small free-float and the obligation of index tracker funds to purchase high capitalization stocks drove prices to ridiculous levels, especially for those with an untested business model, no profits and without enough time having passed to be able to analyze the possibility of market entry, competition and the introduction of substitute products.
Even well established growth companies such as General Electric, Gillette, Coca-Cola and Procter and Gamble can be poor investments. Yes, they are good companies with excellent financial performances based on strong competitive positions and good management. Yes, their businesses are broadly-based, sound and global. Yes, they are safe and, almost inevitably, will be around in 20 years' time. But, no, they will not produce good returns to the stock buyer if they are purchased at a time when everyone knows these are great companies and the price is bid up to reflect this common belief. The slightest hiccup in growth or expectation of growth for these companies will see the stock sent reeling as the crowd becomes disillusioned. The lesson is that even great companies have a price ceiling. Neff says, 'You can't up the ante forever. Eventually, even great stocks run out of gas.' Believing that Coca-Cola is a buy at a PE of 55, because it might go to 70 times earnings is battling against the odds. Value investors always keep the odds in their favor.
8. Being a Simple Contrarian
Neff is an individual who makes up his own mind about a situation or a stock. His willingness to argue with a signpost has paid off handsomely when it comes to going against the whims and fancies of the stock market. And yet, he was never obstinate, ego-driven or simple minded in his opposition. He did not assume that the market was always wrong. He was prepared to listen to the views of others. Most importantly he did not unthinkingly and automatically take a contrarian line.
Neff says, 'Do not bask in the warmth of just being different. There is a thin line between being contrarian, and being just plain stubborn. I revel in opportunities to buy stocks, but I will also concede that at times the crowd is right. Eventually you have to be right on fundamentals to be rewarded... Stubborn, knee-jerk contrarians follow a recipe for catastrophe. Savvy contrarians keep their minds open, leavened by a sense of history and a sense of humor. Almost anything in the investment field can go too far, including a contrarian theme.'
Credits: This article is modified from a summary of Neff's investing style provided by Glen Arnold in Valuegrowth Investing, 2002.