Investment Strategies 02 (Jun 10 - Jun 13)

[lithium]

CHARTS

[winston]

TOL:-

Too many bearish articles over the past few weeks. Wolf ! Wolf !

So who's left to sell ? The inexperienced shorts ? Well, I think a very nice trap is being set up for the inexperienced shorts.

Will probably not surprized me if the market turns tonight, probably due to last minute Window Dressing.

And what about the Charts ? My bet is that they may push it below the Support level, hit the Stops and then bring it up again. Volume is low so it's not too difficult to execute this operation...

[iam802]

Volume should be light over the next few days.

Next Monday is a holiday for US .

[kennynah]

TOL:-

Too many bearish articles over the past few weeks. Wolf ! Wolf !

So who's left to sell ? The inexperienced shorts ? Well, I think a very nice trap is being set up for the inexperienced shorts.

Will probably not surprized me if the market turns tonight, probably due to last minute Window Dressing.

And what about the Charts ? My bet is that they may push it below the Support level, hit the Stops and then bring it up again. Volume is low so it's not too difficult to execute this operation...

dont worry....still got 3 hours for your prediction to come true... meanwhile, sellers a plenty to drive /es down 30 points tonight so far....

[lithium]

TOL:-

And what about the Charts ? My bet is that they may push it below the Support level, hit the Stops and then bring it up again. Volume is low so it's not too difficult to execute this operation...

Volume of S&P at 5.3B, is this consider low?

[winston]

Do More of What's Working… But What's Working? By Dr. Steve Sjuggerud
Wednesday, June 30, 2010


"Do more of what's working, and less of what's not." That's what supertrader Dennis Gartman regularly writes.

This is the right advice. As Dennis has explained over the years, you'll get half of the gain of a bull market in the last 10% of its duration (i.e. in the last year of a 10-year rally).

Whether it's dot-com stocks or commodities, you never know what is heading straight up. But if you do more of what is working – if you buy into the uptrend – you have a chance at capturing big gains.

The problem is, it seems like nothing is working right now. For example, I wrote about big drug companies on Friday. The sector is cheap and ignored – two of the things I look for. Drug giant Pfizer is trading at just six times this year's estimated earnings.

But the problem with Pfizer (and the drug companies) is there's no uptrend yet. I'm buying at record cheap prices. But I know I'm swimming upstream to start… and that's not where I really want to be. We can do better…

So where's an uptrend now? What's working today?

Gold stocks are working.

While everything else fell yesterday, gold stocks held on. The biggest names in gold stocks… Barrick (ABX), Goldcorp (GG), and Newmont (NEM), are all trading very close to new highs for 2010. The uptrend is in place here.

Also, relative to the price of gold, gold stocks are still cheap right now…

When gold rises, the profits of gold mining companies rise even more. So when gold goes up, gold stocks should soar.

But get this… Gold is up 30% in the last two years. Based on the tried-and-true rules, gold stocks should be up 60% or more. But gold stocks are only up 10% in the last year.

Gold has soared. But gold stocks haven't. They're cheap relative to the price of gold… and need to catch up.

Gold stocks are ignored too… While there's plenty of talk about gold out there, the average man on the street doesn't own a gold stock. Heck, the average investor probably doesn't own a gold stock.

We have what I like to see… Gold stocks are cheap relative to gold. Most people don't own them. And, importantly, gold stocks are working right now. Remember, you want to own more of what is working and less of what is not. Gold stocks fit that bill.

An excellent way to get exposure to a handful of the top gold mining stocks is through shares of GDX, the Market Vectors gold mining stocks fund. The three gold stocks I mentioned above make up over a third of the holdings in GDX.

True Wealth subscribers are already up nicely on this one… but gold stocks still meet our criteria… If you're not in gold stocks yet, get in now. GDX is a great place to start.


Source: Daily Wealth

[winston]

Why the "100 Minus Your Age" Rule is Wrong By Tom Dyson
Monday, July 12, 2010


The other day, a millionaire asked me to construct a retirement portfolio for her…

Unfortunately, I don't have the right government certifications for this type of work, so I had to refuse the job. But it got me thinking…

Most financial planners would have recommended some ratio of stocks to bonds. The rule of thumb is, you subtract your age from 100. That's the percentage you put in stocks. The rest you put in bonds. My friend is in her fifties. A conventional financial planner would probably have her put 45% of her money in stocks and 55% in bonds. I'm 35. They'd have me put 65% in stocks and 35% in bonds.

I can't stand this advice. For starters, it's based on the flawed economic theories they teach at business school. These theories suggest the best returns come from buying and holding a diversified basket of stocks.

Buy and hold worked last century when the Fed was able to reinflate the economy every time it looked like a recession was coming, fostering an almost unbroken 70-year bull market. Now we're paying for that party with a long, drawn-out bear market. Not only is buy and hold broken… it's about the worst possible strategy you could choose in this environment. If you bought the S&P 500 on January 1, 2000, for example, you'd have lost 27% of your money already…

Your basket of bonds won't generate any worthwhile returns, either. The Fed has declared war on your savings by putting interest rates at zero, so corporate and municipal bond rates are near all-time lows while credit risk is higher than ever.

But the thing I hate most about this advice is it suggests you should hand over 100% your wealth and savings to the Wall Street machine. It suggests you aren't capable of managing it yourself.

What strategy would I have suggested she use instead? The "barbell" strategy is my favorite.

In the barbell strategy, the two "bells" generate the returns, while the "bar" keeps most of your money safe. With this strategy, 20% of your investments generate 80% of your return… and the rest gets invested in the safest place you can find, probably cash.

Famous financial author and hedge-fund manager Nassim Taleb's hedge fund uses this strategy. He keeps 95% of his hedge fund's money in Treasury bills and invests 5% of his fund in high-risk option strategies. If the Treasuries generate 1% and the options generate 100%, the total performance of the portfolio is just under 6%.

So what barbell strategy would I recommend for you?

First, build your "bar."

Your bar should be composed of extremely safe investments held outside the financial system. Own a modest house, without any debt. This is your personal property. Keep a stash of gold and silver bullion. Keep six months worth of expenses in cash. Open an account with Treasury Direct and buy a large chunk of short-term government bills direct from the Treasury. Consider buying short-term debt of other governments, too. You're avoiding Wall Street this way… and keeping your money absolutely safe.

Don't trust your bank, broker, or mutual fund manager to keep your cash safe. If the system fails, they'll all fail together, no matter how strong they are individually.

The "bar" won't pay you any significant income, but it will keep the bulk of your wealth 100% safe. The "bells" generate the income…

One bell runs strategies that profit from a declining stock market… like short selling, covered-call strategies, and short-term technical trading.

The other bell invests in unique, safe, high-income opportunities, like the kind I've been writing about in DailyWealth. These ideas could be stocks, bonds, or preferred stocks. The key is, these investments must be able to generate income safely in an environment of falling stocks. You should own a basket of these stocks to diversify risk… and always use stop losses as a final backstop.

Let's say you invest 70% of your wealth into the "bar," which pays 1% a year; 5% into trading, which generates 50% a year; and 25% into bear market income, which generates 10% a year.

Take a $100,000 hypothetical portfolio… $70,000 in the "bar" at 1% equals $700, $5,000 in one "bell" at 50% equals $2,500, and $25,000 in the other "bell" at 10% equals $2,500. That's a total of $5,700 from a $100,000 portfolio.

This portfolio will generate a total 5.7% a year… while keeping the bulk of your assets absolutely safe and sound.

This is a fantastic return in an environment where everyone else is losing money… and the stock, commodity, and real estate markets are falling.

You'll have to build your own barbell strategy… with the right balance between trading, income, and defense. These numbers are just for demonstration, but in general, with more working years ahead of you, you can keep your "bar" shorter and make your "bells" heavier.


Source: Daily Wealth

[winston]

The Seven Rules for New Normal Markets

The push to make trading Wall Street's biggest money-making business, while narrowing spreads to reduce risk (especially for active professional traders), and simultaneously gaming the inside track by managing and trading against order flow, is the New Reality.

And for retail investors, that's what creates the "New Normal" - stock market returns that are much lower than the oft-quoted long-term averages of 10% or more.

To avoid getting whipsawed in the New Normal markets, investors need to copy the insiders who play the game they created with these seven New Golden Rules of investing:

1) Shorten hold periods for all investments, other than those "held to maturity."
2) Invest like a trader: Take profits regularly, and cut losses sooner.
3) Don't be afraid to step in front of standing orders by lowering your offer price a penny, or raising your bid price a penny, to get your orders executed.
4) Trade and invest where you can find the deepest quotes, meaning where volume is more substantial on the bid and offer side of quotes. More is always better. If your brokerage facility doesn't offer market quotes that are transparent, switch to one that does.
5) Whichever brokerage facility you use, find out what their execution policy is. They must have a "best practices" policy regarding execution. Make sure to get it in writing.
6) Ask what your brokerage's policy is regarding stop-loss orders. It is critical to know how they will handle the next "flash crash," when it comes. And believe us ... it is coming.
7) Complain about bad executions. It sounds cliché, but the squeaky wheel gets the grease. The pros squawk all the time, and sometimes they get better fills.

Understanding the New Normal is crucial. You don't want to get blindsided by what you don't know. It's critical to understand what might change with the advent of financial regulatory reform. The New Normal today may get old quickly.

But, if it does, you can be sure I'll do my best to expose any trap doors.

http://moneymorning.com/2010/07/15/new-normal/

[Chinaman]

To-nite drink kopi with my lao jiao investor friend..he told me Aiya wat strategy no use 1…teach you 1 ‘pow siak’ (sure win) method in stock market, hehe…bro it similar to money changer way of making money. The condition, u must be a fund manager, no need to bear brokerage fee and plenty of fund.

New buy and sell rule, whoever want give it to them ( playing on both side)
Example : a penny stock A of 20 cts.
Q buy at 21 cts – 1000 lots
Q sell at 18 cts – 1000 lots

The different is 3 cts, say 500 lots done, basing on money changer rule u make the different, which mean 3 cts x 500,000 = $15,000 ( less few hundred buck for SGX fee) theoretically…see wat a huge profit, hmms must ask my son to become a fund manager, liao….

In short, retailer cant beat the BB…dat is his honest advice.
Bro teo boh, dat why there is a saying big fish eat small fish.

[kennynah]

bro C ....

firstly, i think you meant :

Q sell at 21 cts – 1000 lots
Q buy at 18 cts – 1000 lots

secondly, only Pit traders can buy the bid and sell the ask, your friendly broker and fund managers are not privilege to this ... only market makers get this advantage, for which they supposedly provide liquidity....perhaps the other group are CFD houses.

these market makers do not pay commissions and more importantly, i think they do not pay exchange clearance fees(but i could be wrong here), for their trades, but they do pay for renting a seat or purchase one outright from the exchange.

fund managers engage brokers or if they are big enough, they can trade directly through the exchange again via pit traders under their employment; they are normally referred to as "paper". eg of these are MS, Solomon Smith Barney, JPM, GS, etc... of cos, i'm not referring to SGX situation...bcos, i duno how SGX offers their services.

bottomline is... i seriously think your lao jiao investor friend is probably kidding around... high on kopi-o