Stocks - How to make Money with 'em!!!

[kgoodbar]

Find a value stock then.......... 3 words: BUY and HOLD

Hello,
I am writing this in response to Chase Bannon's "Market Timing Indicator" and the amount of folks I see clamoring for this information.

It appears that Chase is a fan of day trading &/or technical analysis. Either way, he's advocating GAMBLING, not investing.

If you follow his scheme the main person getting rich will be the brokers - not you. Brokers, get paid every time there's a transaction (buy/sell), investors lose money (in the form of fees) every time there's a transaction.Take a look at his own graph and see what I mean.

He first bought for $52 on Aug. 2 '05 and the stock "ended" at $65+ Jun 31 '06. Had you bought at the very instant of a buy signal and sold on the short signals. You would have made money but that would be eaten up by a minimum of $16 in transaction fees (every transaction), not to mention a tax of 25-35% on the gains. Now this would be nothing if you were investing huge sums of money and this program was foolproof but alas nothing's foolproof and you're probably investing less than $50,000 (in reality you can't even short stocks without a certain amount down, just because they know it's so risky).

Had you bought the stock at $52 and held it you would have a gain of $13 per share (not including dividend gains that paid you cash 4x a year). Had you invested $5000 this would mean an increase of $1250. Mind you since you held this stock for one year you'd only be taxed at 15% (half of what they'd normally tax you). You'd also pay transaction fees ONCE!!!

Chase, I challenge you to prove your method with any stock or set of stocks. I'll even let you have a whole day's lag-time. NOBODY can time the market and anyone that says they can is a swindler or misguided. Can anyone name ONE person who's made a fortune off of timing the market??? No, because it can't be done. Sure it may happen once or twice, but it will not happen on a consistent basis anymore than someone can win the lottery three times in a row.

In closing,
1) Live below your means

2) Get your finances right. Pay off all debts (at least those with an interest rate above 8%) first.

3) Build up a savings account for emergencies.

4) Do some homework: find a stock (or group of stocks) with a low P/E, low P/S, good ROE, history of increasing dividends and with a business model that you understand. Sit back and watch your money grow.


Stock Market Timing Indicator

Click here for full image: http://www.imagecash.net/image.php?file=260468974

Never trust an online investor unless he charges because no info is free unless it is coming from a friend or someone trying to benefit for themselves.

http://www.ricedelman.com/planning/investing/buyandhold.asp

"Technical analysis dwells on charts of stock price movements and trading volume. Fundamental analysis, on the other hand, focuses on the value of companies, studying such things as a firm's business, earnings, and competition. While investors from the fundamental school want to understand a business from the inside out, technicians mostly remain on the outside, observing how the stock behaves in the market.

Investors who use technical analysis focus on the psychology of the market, scrutinizing investor behavior. They try to determine where the big institutional money is going so they can put their cash in the same places. It's amazing to us to think that anyone might study a stock chart, see a particular pattern, determine that the stock is "breaking resistance," and then commit actual money to that proposition.

It's a shortcut to actual analysis. We're sure that there are folks out there who have some aptitude at seeing things in the squiggles. For most people, though, it's just a way to trade more often, and umpteen scholarly studies show the same thing: The segment of individual investors who trade the most tend to do the poorest.

Simply put, leave technical analysis alone."

 

[Sango]

oh damn

 

[audio syndicate]

well put..

 

[WARRIOR-TRADER]

...

 

[kjxxxx]

I agree with you with the buy and hold but not for as long as you are saying.

There is a point when you are supposed to get out of the stock. If this happens before 1 year get the hell out.

If you have profited from the stock and it reach your price target you want to watch the stock and get out if it starts to pull back and higher price cannot be justified.

If the stock start falling and for negative reasons and the fundamentals for which you bought the stock no longer remains (for example FDA rejection). Get out.

Never let worrying about taxes cause you to lose out on profits or cause you to lose too much money. It is better to have money to be taxed than none.

So you make $2Gs and have to pay $1.5 in tax. You still have $0.5 you never had before.

If you are trading in an IRA account you don't have to worry about the taxes.

 

[kgoodbar]

I agree with you with the buy and hold but not for as long as you are saying.

There is a point when you are supposed to get out of the stock. If this happens before 1 year get the hell out.

If you have profited from the stock and it reach your price target you want to watch the stock and get out if it starts to pull back and higher price cannot be justified.

If the stock start falling and for negative reasons and the fundamentals for which you bought the stock no longer remains (for example FDA rejection). Get out.

Never let worrying about taxes cause you to lose out on profits or cause you to lose too much money. It is better to have money to be taxed than none.

So you make $2Gs and have to pay $1.5 in tax. You still have $0.5 you never had before.

If you are trading in an IRA account you don't have to worry about the taxes.

True indeed! I just assumed that was a given!

 

[Chase Bannon]

I agree with you with the buy and hold but not for as long as you are saying.

There is a point when you are supposed to get out of the stock. If this happens before 1 year get the hell out.

If you have profited from the stock and it reach your price target you want to watch the stock and get out if it starts to pull back and higher price cannot be justified.

If the stock start falling and for negative reasons and the fundamentals for which you bought the stock no longer remains (for example FDA rejection). Get out.

Never let worrying about taxes cause you to lose out on profits or cause you to lose too much money. It is better to have money to be taxed than none.

So you make $2Gs and have to pay $1.5 in tax. You still have $0.5 you never had before.

If you are trading in an IRA account you don't have to worry about the taxes.

So well put my man!!! Sit and wait, sit and wait. I hear people preaching this all the time. You always hear the market gets an overall average of 11% return per year on your investment.

I will give you an example on how I bet the market's return average 2 weeks ago. I bought a penny stock that cost $.009 per share. I bought 100,000 of them which cost me $900. The stock in 9 days time went to $.031. You look at that and say that is only a $.022 increase. Remember I bought 100,000 shares. Multiply 100,000 times $.022(which is my increase) and I made a total of $2200. Tax may hit me at 35% which brings my total profit to $1430. Now tell me what percent increase on my money did I make? Remember I invest $900. Oh I forgot I paid $6 to buy and $6 to sell the stock. So overall I invest $900 to get $1430. Is that a 11% increase???? Hell no!!!! I made an 158.89% increase!!!!!!!! Of course this came with speculation, careful investing and research.

I'm beating the market because I because less greedy and decided to take short profits!!!!!!!! I don't sit on stocks waiting years and years for big profits. This is my strategy and will stay my strategy for beating the market. Forget all the analyst that say you need to sit and wait like Warren Buffet. Remember Warren Buffett started out with a hell of a lot more cash from inheritance than you and I ever have. I got stuff to do, forget waiting. I don't play by the big wig rules of getting returns on stock by waiting. I do use their strategy for my IRA account because if I go broke I can rely on my IRA for income coming in when I retire. I can do this because I'm single and don't have any kids to raise. So if I fall doing this, I fall by myself. No one else falls with me. Plus I can always get up. I do it MY WAY, which is the BANNON WAY!!!

Also don't let my method discourage you if you have kids and a family. You can do it to. You just have to follow my strategy of having an IRA account and a trading account where you can use extra income you don't use for budgeting!!!! Never let the tax man scare you unless you are doing something illegal. If a lot of taxes are being taken away from you on your returns, GOOD because you must be making a hell of a lot of money!!!

 

[dscrilla01]

Good thread I agree we need to invest in stocks wisely but do not forget to diversify your portfolio (and I dont mean different stocks ). I think you should invest atleast %20 of your investments in precious metals, in particular gold. Pay attention to the prices of gold and research why the prices are shooting up (hint: Central Bank, Real Money).

 

[Awilli1055]

I personally don't buy and hold anything. I use charts, but this is what Mark Cuban says about investing:

The Stock Market is for suckers….

I wanted to respond to Tom Hawks comments. Someone i respect a lot, but who i disagree vehemently on this topic.

Tom I stand by what I said. You can have as long a term horizon as you want, but like most other long term plans we have, most peoples lives dont match up to their “horizons”. Its amazing how life intervenes. Kids, whatever. its a fortunate few that can just shell it away and never touch it. Your “horizon” hits a dead end when you have to put money into a checking account. I have never seen any investing research that deals with random withdrawls that represents real world. And boy oh boy, if life hits you hard when the market is down, you make a withdrawl and you wont ever catch up.

But thats just the start of the problem. Lets say you buy into what the brokerages and funds are selling. Buy and hold, or whatever. How do you pick from the 17k funds ? By reading some websites ? By talking to some friends ? By watching the commercials ? By selecting among the options your company gives you in their plan ? Which of course was the result of a salespitch that the fund company put together to the person offering the plan to your company. Everyone is getting paid on the gravy train, except for the guy putting in the money at the end.

Wall Street has done an AMAZING job of creating conventional wisdom . “Buy and Hold ” is the 2nd most misleading marketing slogan ever, after the brilliant “rinse and repeat” message on every shampoo bottle. We as a country have fallen for it. Every message from every marketer of stocks tell us. Young or old, if you can hold for the long term, things will work out for you.

That is total bullshit. Its for suckers.

Ive traded stocks for almost twenty years now. IM good at it. When i work at it. And it takes a lot of work. Not just reading all the 10K/Qs and corporate websites and product managers, or talking to people at the outskirts of the company where management doesnt reach. It takes often knowing the market for a company’s product better than the company does. After all just because a company is public doesnt mean a thing other than someone has , and continues to make money buying and selling the stock as their own product.

If you are going to trade stocks, you just have to follow one rule and remember one thing. That rule is always have a definite knowledge advantage about the company you are trading, and always remember that every stock transaction has a sucker, and you have to know whether its you or the person on the other side of the trade. No one buys a stock from your, or sells one to you knowing they are leaving money on the table.

The bottom line is that unless you plan on making it a full time job to do your research and put yourself in a position to have an advantage, you are going to get your ass kicked at some point by someone who does. You just have to hope that it doesnt put a big financial hurt on you when it happens

The same logic applies to funds. Funds are in the business of making money for themselves first. You 2nd.

First check what the heads of some public mutual funds are making. Someone help me out, I cant find the link right now .Was it Mario Gabelli who not only paid himself more than his fund earned for its shareholders in a year (forget the people with money in his funds), but he was paying himself from like 3 companies at the same time ? Get me the links and I will update them here.

Then you should check the turnover of fund managers some day. You know where the good ones go ? To start or manage their own funds.

Then there is the portfolio turnover. How often they completely turn over the stocks in their fund. last numbers I saw was that on average funds turnover their portfolios 85pct every year. Thats not investing. Its fund managers doing whatever they can to beat their peers, knowing that if they dont, they are out of a job. Their bosses know that if they dont beat their peers, the money flows out, and that is a HUGE problem for any fund. So many funds take chances they shouldnt, with your money . We never see any headlines for funds that close. Why is that ? We never see any headlines for fund managers who get fired. Why ?

But even if performance sucks, rather than saying how bad it is, they pick the short stint when it wasnt so bad. Forbes did a nice job reviewing this little marketing habit of funds and referencing some manager turnover issues at Fidelity.

As far as ETFs. Which one ? Remember, the Dow and S&P are marketing tools. They change the indexes. Look at the stocks in there today, vs what was in there in years past. You are not buying a passive investment that tracks the economy. You are buying the stock pickers at those respective indexes. Last time I looked, both Dow Jones and McGraw Hill are for profit companies. They want people to think their DJ 30 & S&P 500 indexes are powerful indexes that can be reported daily as a reflection of market action. So they change the stocks when they think they need to. To help them with their product.

Ive said a lot of this before. The stock market is by definition a ponzi scheme. As long as money keeps on coming in, then there is someone to take the stocks from the sellers. If the amount of money coming in is reduced, the stocks, indexes, et al go down. What if, for who knows whatever reason, the amount of money going into stocks declined significantly ? Who would buy stock from the sellers. I mean goodness gracious, you could see something disastrous happen. Like the Nasdaq dropping from 5000, to under 2000 in just a few years. Its happened before, it can happen again.

Which is exactly why we get all these nonsensical commercials from brokerages. To keep the money coming in . I wish someone would index the amount of money spent on marketing by mutual funds and brokerages to the Nasdaq and Dow and see if it correlates.

Money inflows drives the business. We can get all the economic data we ever dreamed of getting, but if money inflows declined significantly for an extended period of time, then every rule of thumb would go out the window until money started flowing in. Yes it would flow in eventually as prices dropped. From big investors like me who wouldnt have gotten hurt by a huge market decline and could come in and buy huge chunks, or companies outright.

You ? You probably would be like Charles Ponzi’s customers. You wouldnt be able to get your money out of the fund when it went down, and by the time you did, it would be too late. You would have been crushed.

Ive said it before, a stock that doesnt pay dividends is valued like a baseball card. Just whatever you can sell it for. The concept that you own “your share” of the company is a joke. You are completely at the whim of the CEO and board who will dilute you on a daily basis with stock options, then try to buy back stock to cover it up and push up the price, rewarding the shareholders who get out, rather than those that continue to hold the shares. Meaning you.

Have you ever seen Warren Buffet talk about buying 100 shares of anything ?1k shares ? or does he take control of , or purchase a material percentage of a company ?

If you have enough money to have influence , take control or buy it outright, then the stock market can work for you. Thats why I buy stock in public companies that relate to my other business entities. When i pick up the phone and call the CEO of a company i own shares in, they call me back very quickly. When I ask if there are business opportunities that make sense for the company and another company of mine to work together, I wont always get the business, but I will always get a meeting. If Im smart about the investments I make, the more important returns come from the relationships with the companies than the action of the stock.

If the best you can do is buy shares that are going to be continuously diluted, then you are merely a sucker. There is a good chance that the shares you bought came from shares an insider who got stock options. You just helped dilute yourself with your first share purchase.

The wealthy can make the stockmarket work for them. Individuals buying shares of stock in non dividend paying stocks… they work for the stockmarket.

I know Ive painted a pretty bleak picture.

The stockmarket isnt going away. Would it shock me if the whole thing collapsed ? yes. it would. Its just too engrained in our way of life in the USA. What would change my mind is if a better investment vehicle came along.

The stockmarket used to be about investing capital in companies that came public or did secondary offerings. That money was used to create amazing businesses and return dividends back to people who truly were investors. There once was a day where most companies paid dividends higher than the interest rates on their bonds. Why ? Because stocks are inherently more risky. If a company goes belly up, bondholders collect first, shareholders usually last. People could buy and hold stocks, and get paid real cash money for being a shareholder in the company at rates far higher than the divident yields we see today. If the company did well, the dividends went up. Investors who held, actually got all their money back in dividends at some point and the rest was gravy. The good ole days.

But that changed when mutual funds came along and started marketing the concept of growth as a way to attract investors.

Its not inconceivable that the old mindset could comeback. That a new market of stocks could be created where companies didnt continuously dilute shareholders by issuing stock and options to themselves. Where earnings were earned for the same reason they are in private companies, to not only fund growth, but also provide cash back to investors. Now if that market existed today. Where I could buy 100 shares of stock, and even if it represented just 1/100000 of ownership in the company, I could have confidence that year after year, I would still own 1/100000th of that company, and if that company generated earnings , I would have at least some of that money returned to me. Well then, that wouldnt be a ponzi scheme. That would be a true market of stocks, and I would be happy to recommend to anyone to be careful, but buying stocks in that market could be something worth considering if your appetite for risk canhandle it.

Sorry for the long winded response Tom, but thanks for getting me going

If you put your money in safe bets like i mentioned in the last post, then you can spend that time you would otherwise have to spend researching funds and or stocks, either with people you love, things you love to do, or in yourself. Using those hours to be the best at whatever you love to do. Thats an investment you never have to pay a commission on. You never get a margin call. And the returns can be astronomical.

 

[Awilli1055]

Mark's Picks for 2006:


My Investment advice for 2006
Posted Jan 2, 2006, 11:12 AM ET

Every year at this time, everyone and anyone who has a vested interest in selling stocks comes out and talks about how great a year its going to be in the stockmarket. Of course its all nonsense and bullshit. NO ONE knows what the market is going to do.



Not timers. Not technical charts. Not economists, Not brokerage Heads of Research, Not stock pickers. No one. If you watch CNBC, over the last few months they have taken to putting “experts” who disagree up against each other on stocks and topics. Instead of having carte blance to come across as an expert, they have to offer some support and take some criticism. Its a blast to watch because there rarely is a winner. Its so rare that they get questioned that they have lost the ability to support their own positions. So much for experts.

If its hard to find an expert who can support their investmen choices, what about mutual funds ?

According to an ad for one family of mutual funds, there are 17,000 mutual funds on the market for purchase. How amazing is that ? How in the world can there be 17,000 fund managers that are worth a damn ? There cant be. How many are good ? How many suck ? How many of the funds will close every year taking your money with them ? Are you completely confident in the fund that is taking money from your paycheck every 2 weeks ?

Then of course there are the brokerages. I swear that there are few things that turn my stomach on TV more than watching commercials for brokerages. The guy who gives the toast at the wedding, Paul McCartney, the guy from Law & Order, all trying to con people into thinking that any of their stockbrokers can take you to a financial promised land.

Well guess what, they cant. Yes there are good stockbrokers that are worth the commissions you pay them, but guess what ? Most of the good ones work with people who already have money, not ones with very little hoping to build a nest egg.

One fun little thing I like to do is to look at “The Favorites”. The list of the stocks held by he largest number of accounts at Merrill Lynch. These are the stocks that the largest brokerage, with the largest number of consumer clients is being enticed , convinced or directed to invest in. These are the stocks that Merrill Lynch stockbrokers have had the most success selling. They are their favorite products.

Its interesting how well the names are performing, but also how the names have changed , or in some cases, not changed over the years. A look at the last list of 2005 doesnt inspire overwhelming confidence in the ability of Merrill to pick stocks. 7 winners. 13 losers. Biggest winner was Exxon at 9.7pct. On the losing side, there were 7 stocks that lost 10 pct or more and 3 that lost 20pct or more. And these are the stocks that many would classify as todays “widows and orphans” stocks.

Of coure they are completely different from the widows and orphans stocks of yesteryear. GM, Ford, Utilities….Just put them away and dont think about them. Now that was good advice wasnt it. And here is the list from Jan of 2002. You havent done so well if you took Merrills advice then, or now. To be fair , Merrill is not better or worse than any other full service brokerage. They just happen to publish their list of widely held stocks.

So what to do if you want to invest your money ? What to do if you want to end this year with more than you started with ?

Simple, avoid risk.

Risk is what Wall Street lies about every day. Risk is what they try to sweep under the covers knowing that we all are addicted to the dream of financial freedom. Risk is the poison that is masked by the commercials.

When you see a commercial for a brokerage, they are telling you in a very subtle way that they remove risk. Invest with them and the risks regarding investing that you have heard about will be reduced or eliminated because they are so smart. All of which they say before they rush through all the disclaimers that confirm that everything they just said is nonsense, that they cant really avoid risk.

You can however make the personal decision to avoid risk. Avoiding risk allows you to sleep at night. Avoiding risk allows you to have more at the end of the year than when you started.

Lots of people spent a lot of money on commissions this year. If you put your money in the bank, in a CD or in treasuries, you not only slept better than them, there is a very, very good chance you kicked their ass in total return. Your interest compounded, they probably paid interest on their investments.

I get emails every day asking me where people should invest. I tell them all the same thing, and I will say it here. Put your money in interest earning investments.

For every stock you buy, there is someone selling you that stock. What is it that you know that they dont ? What is it that they know, that you dont ? Who has the edge ? If its not you. Chances are you are going to lose money on the deal.

If you want more info on how i feel about the stock market, here is another blog entry on the topic.

So here is my investment advice for anyone who doesn’t have enough saved to walk away from their job and retire…

1. If interest rates stay where they are or go higher, look at 5 year or shorter maturity vehicles. It doesnt matter if its a bank CD, a money market fund, a tax free fund, treasuries or combinations there of. Bottom line is this, 4plus percent taxed, or up to 6 plus percent tax free equivalent (depending on your tax bracket), is not a bad way to go. If rates go down, do the same thing, evenif you earn a lower rate. At the end of the year, you are guaranteed to have more than you started with.

2. Evaluate your lifestyle. People forget that sometimes the best investment they can make is in wisely buying things they know they will use. If you track what you use and consume, whether its gas vs bus fare, buying bulk quantities or other discretionary spending, you can save more and earn a far greater return than you could in the stock market. If you can save 10pct per month on a hundred dollar per month budget, thats 120 bucks you can put in the bank. Thats the equivalent of earning 12 pct on a 1k dollar investment. If you can cut 100 bucks per month off 1k dollar monthly budget, thats like earning 12 pct on 10k dollars. Thats pretty darn good. Spend smart, put your savings in risk averse, interest earning offerings.

3. Invest in yourself. Do the things that can get you closer to your goals and dreams. It wont come from a brokerage commercial. It will come from preparing yourself , working hard and standing apart from your competition. You Inc is the best stock you can ever buy…if you are willing to do the work.

 

[MisterT]

Find a value stock then.......... 3 words: BUY and HOLD

Hello,
I am writing this in response to Chase Bannon's "Market Timing Indicator" and the amount of folks I see clamoring for this information.

It appears that Chase is a fan of day trading &/or technical analysis. Either way, he's advocating GAMBLING, not investing.

If you follow his scheme the main person getting rich will be the brokers - not you. Brokers, get paid every time there's a transaction (buy/sell), investors lose money (in the form of fees) every time there's a transaction.Take a look at his own graph and see what I mean.

He first bought for $52 on Aug. 2 '05 and the stock "ended" at $65+ Jun 31 '06. Had you bought at the very instant of a buy signal and sold on the short signals. You would have made money but that would be eaten up by a minimum of $16 in transaction fees (every transaction), not to mention a tax of 25-35% on the gains. Now this would be nothing if you were investing huge sums of money and this program was foolproof but alas nothing's foolproof and you're probably investing less than $50,000 (in reality you can't even short stocks without a certain amount down, just because they know it's so risky).

Had you bought the stock at $52 and held it you would have a gain of $13 per share (not including dividend gains that paid you cash 4x a year). Had you invested $5000 this would mean an increase of $1250. Mind you since you held this stock for one year you'd only be taxed at 15% (half of what they'd normally tax you). You'd also pay transaction fees ONCE!!!

Chase, I challenge you to prove your method with any stock or set of stocks. I'll even let you have a whole day's lag-time. NOBODY can time the market and anyone that says they can is a swindler or misguided. Can anyone name ONE person who's made a fortune off of timing the market??? No, because it can't be done. Sure it may happen once or twice, but it will not happen on a consistent basis anymore than someone can win the lottery three times in a row.

In closing,
1) Live below your means

2) Get your finances right. Pay off all debts (at least those with an interest rate above 8%) first.

3) Build up a savings account for emergencies.

4) Do some homework: find a stock (or group of stocks) with a low P/E, low P/S, good ROE, history of increasing dividends and with a business model that you understand. Sit back and watch your money grow.


Stock Market Timing Indicator

Click here for full image: http://www.imagecash.net/image.php?file=260468974




http://www.ricedelman.com/planning/investing/buyandhold.asp

"Technical analysis dwells on charts of stock price movements and trading volume. Fundamental analysis, on the other hand, focuses on the value of companies, studying such things as a firm's business, earnings, and competition. While investors from the fundamental school want to understand a business from the inside out, technicians mostly remain on the outside, observing how the stock behaves in the market.

Investors who use technical analysis focus on the psychology of the market, scrutinizing investor behavior. They try to determine where the big institutional money is going so they can put their cash in the same places. It's amazing to us to think that anyone might study a stock chart, see a particular pattern, determine that the stock is "breaking resistance," and then commit actual money to that proposition.

It's a shortcut to actual analysis. We're sure that there are folks out there who have some aptitude at seeing things in the squiggles. For most people, though, it's just a way to trade more often, and umpteen scholarly studies show the same thing: The segment of individual investors who trade the most tend to do the poorest.

Simply put, leave technical analysis alone."

Too bad you're not around anymore. You're the first person I've come across around these parts who seems to have a fucking clue. You posted this a few years ago and left. Enjoy your yacht or airplane man. I know you scored big!

 

[MisterT]

If the stock start falling and for negative reasons and the fundamentals for which you bought the stock no longer remains (for example FDA rejection). Get out.

Never let worrying about taxes cause you to lose out on profits or cause you to lose too much money. It is better to have money to be taxed than none.

So you make $2Gs and have to pay $1.5 in tax. You still have $0.5 you never had before.

If you are trading in an IRA account you don't have to worry about the taxes.

BULLSHIT!!! "If the stock start falling and for negative reasons ....." Ever seen a stock fall for POSITIVE reasons? "If you are trading in an IRA account you don't have to worry about the taxes" Bullshit! Who TF told you that? Unless you're 59.5 you pay taxes om both principal AND gains PLUS 10%! The fuck are you talking about? Glad you're gone if you're spreading bullshit. Too much of that here already.