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A Guide To Your Own Ezine

A Guide To Your Own Ezine

With the expansion and diversity of businesses and hobbyists into more and more specialized areas of endeavor, there is an increasing need for more information. And newsletters are the high profit way to cash in on that market for specialized information.

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In conclusion, I would say that the learning curve for this software is quite steep and lengthy to get the full benefits from it's use. But if you are prepared to put in the hours needed to learn it's full capabilities this piece of software will give you many times that back. I can recommend this software to anyone.

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Stock Newsletter Scam

The accounting scandals involving WorldCom, Enron, and others derived from the data being selected, spun, and filtered. A scam I first discussed in my book Innumeracy derives instead from the recipients of the data being selected, spun, and filtered. It goes like this. Someone claiming to be the publisher of a stock newsletter rents a mailbox in a fancy neighborhood, has expensive stationery made up, and sends out letters to Assume you are one of these recipients and for the next six weeks you receive correct predictions about a certain common stock index. Would you subscribe to the newsletter What if you received ten consecutive correct predictions Here's the scam. The newsletter publisher sends out 64,000 letters to potential subscribers. (Using email would save postage, but might appear to be a spam scam and hence be less credible.) To 32,000 of the recipients, he predicts the index in question will rise the following week and to the other 32,000, he predicts it will decline. No...

5. You Read In Business Week That A Panel Of Economists Has Estimated That The Long-run Real Growth Rate Of The U.s.

You read in Business Week that a panel of economists has estimated that the long-run real growth rate of the U.S. economy over the next five-year period will average 3 percent. In addition, a bank newsletter estimates that the average annual rate of inflation during this five-year period will be about 4 percent. What nominal rate of return would you expect on U.S. government T-bills during this period

Investment Newsletters

There are hundreds of investment newsletters that investors subscribe to for sage advice on investing. Some of these investment newsletters are centered on suggesting individual stocks for investors but some are directed towards timing the market. For a few hundred dollars, we are told, we too can be privy to private signals of market movements. Campbell and Harvey (1996) examined the market timing abilities of investment newsletters by examining the stock cash mixes recommended in 237 newsletters from 1980 to 1992. If investment newsletters are good market timers, you should expect to see the proportion allocated to stocks increase prior to the stock market going up. When the returns earned on the mixes recommended in these newsletters is compared to a buy and hold strategy, 183 or the 237 newsletters (77 ) delivered lower returns than the buy and hold strategy. One measure of the ineffectuality of the market timing recommendations of these investment newsletters lies in the fact...

HouJ This Book Is Different

They present you with some newfangled system that you never figure out how to use without the help of a mainframe computer, several mathematicians, and a Nobel Laureate as your personal consultants. Books that bewilder more than enlighten may be intentional because the author may have another agenda to get you to turn your money over to him to manage or to sell you his newsletter(s). These writers with an agenda may imply and sometimes say that you really can't invest well on your own.

Section 9 Trading Resources

I have been trading options since the option exchanges first opened in 1973 and have seen everything. As an option newsletter writer starting in 1973, I have monitored and talked to hundreds of traders. Now you can have the benefit of all this experience and information. This book provides important nuggets of knowledge about option trading that I have collected over the past thirty years strategies, tactics and methods that have worked and not worked for me and my subscribers.

Evaluating Information and Advice

I warn you about the bad ones and the dangers of blindly following gurus, and I reveal which, if any, of them really are gurus. You also discover how to use the best mutual fund information sources, how to tell the difference between good and bad newsletters, and where to turn for more information. You may want to know how to use your computer to track and even invest in mutual funds using online services and software so Part IV tells you that, too.

Stick A Toe In The Water

During the seventeen years that I wrote The Complete Option Report newsletter, I found that many of our subscribers never traded an option. Although I don't have hard statistics, my guess is that 50 to 70 read the report and left it on the cocktail table. Why They could not build up the nerve to trade.

Intuition versus Execution of a Tested Trading Concept

All of the information that comes over the tickers, from newsletters, and through the Internet is already old when we receive it. There will always be someone with faster access who can take advantage of that information. Speculating with this old information is dangerous.

We All Swim In Our Own Particular Logic

Our own personal ocean of logic started approximately 2,500 years ago, when a philosophical war was going on between two opposite camps represented on one side by Aristotle and on the other by Heraclitus. Aristotle basically seduced the world by saying that if you don't know something, you should go to people who know more than you do, and ask them. That advice sounds quite reasonable, and it has been accepted by much of the earth's population for two and a half millennia. Acceptance does not necessarily make it true. Remember that the civilized world functioned adequately for hundreds of years while believing that the world was flat. Businesses and mapmakers flourished. But then Galileo and a handful of others looked through a telescope and saw round planets in orbits in the heavens. They knew that the flat-earth paradigm was wrong, but it took close to 200 years and much suffering on their part before the reality of a round earth was accepted. The Aristotelian Heraclitian dispute...

An Intelligent Gambler

Some famous investors like betting on horses. They include Peter Lynch, of Magellan Fund fame, and Warren Buffett, who used to publish a newsletter on handicapping. My friend Lou, to whom my first book was dedicated, spent several years on the handicapping circuit and bet on horses for a living before buying an exchange seat and approaching financial markets like a cool handicapper. Some card games, such as baccarat, are based on chance alone, whereas others, such as blackjack, involve a degree of skill that attracts intelligent people.

Additional Ir Tools And Vehicles

Newsletters Conferences Road shows One-on-Ones Analyst days Ads Publicity Web sites Newsletters Periodic newsletters to employees, partners, and investors are a good way to keep stakeholders informed and capture the attention of key constituencies. Interviews with executives and key management, insights into operations, announcements of product or service initiatives, technology or research advancements, consumer trends, industry updates, marketing concepts, and any other information that helps investors and strategic partners stay informed should be included. Fact sheets and books Newsletters

Ive Found invented This Surefire System

My friend Neal Weintraub runs the Tricks of the Trader futures trading seminars in Chicago. Everyone who attends has to go through the libraries of the Board of Trade and the Mercantile Exchange. Neal loves to point out that virtually every book, system, newsletter, or seminar published about futures trading ends up on these shelves long before the public knows about them. Even those methods restricted to the first hundred who pay get passed around exchanges very quickly, thanks to our local copy machines.

Online Trader Momentum

Online traders do have the ability to move these kinds of stocks in wider ranges than they would normally trade. Primarily, online traders are attracted to fresh momentum created by one of many forms of interest. Interest can be provided by a press release by the company, a rumor of a takeover, or simple hype by an investment newsletter or stock pickers club. Whatever the reason, Market Maker participants have been increasingly aware of the new dynamic that online traders command.

Mathematics of investing

Now let's go back to our S&P 500 daytrader with 10,000. Let's say his system is right on average 60 percent, but with the fluctuating winning percentages described above. This system wins 300 and loses 125 on an average trade. However, slippage due to commissions and the bid ask spread causes an extra 75 loss on both ends, raising the average loss to 200 and cutting the average winner to 225. Our one-trade-per-day daytrader makes only a few thousand more than his 9,000-a-year overhead ( 750 a month for quotes, seminars, newsletters, etc.).

Smart Money Informed Money And Dumb Money

Unexpected price spike or sell-off that would worsen the price for their clients on entry or exit. One of the better examples of how online traders can affect a stock price is shown in a stock report newsletter. Recently, an investment newsletter mentioned the stock Agilent Technologies (A) as a top focus stock (see Figure 4-6). This report had been hailed in previous weeks as something that could move stocks. Basically, traders would receive information about several stocks in this newsletter and one or two stocks would have very positive comments regarding top focus picks. Once the report is released, active traders rush to read the newsletter and find out which stock or stocks are being touted in the newsletter. Once they figure this out, they rush to their order screens and try to get in ahead of the pack. Agilent Technologies was such a stock. Within 30 minutes of the release of the newsletter, the stock had jumped over 10 a share. In these circumstances, online traders who have...

Property owner associations

After you join an association, how do you get the word out Well, you can run either a small display or classified ad in the association's newsletter. You can also stand up in meetings and announce your intentions, or just informally tell other members what you're looking for. We suggest that you do more than the average investor would that's what it takes to get the great deals.

Proportion and Harmony

A potential solution to our problem of forecasting is to use a computer to apply these above mentioned progressions to our series of hourly highs and lows to try and find where we presently are in the cycle. Once we have the progression key we will be able to accurately forecast for long periods into the future. For example, in my newsletter, Stock Cycles Forecast, I boldly predicted the final high as

Biographical Sketch

Bruce has written six commodity trading books, including The Business One Irwin Guide to Trading Systems and Trendiness in the Futures Markets. He has had numerous articles published in Futures magazine and Technical Analysis of Stocks and Commodities. In 1983 Bruce started publishing Commodity Traders Consumer Report, a bimonthly newsletter that tracks the performance of the top commodity advisory services and makes a significant impact on the industry. He also publishes Major Moves, a long-term, special situation advisory letter. Bruce has designed numerous computer software programs for traders, including

Day in the Life Analyst Investment Banking UBS

Receive a bunch of transaction announcements from all over the world, as well as some newsletter relevant to your industry group sent out by another analyst to everyone. Unless you're into the latest news on, say, regulatory decisions on telecoms or the roofing equipment industry, it's safe to delete and go on with the remainder of e-mails. E-mail might contain information requests by others in the firm, asking for case studies, connections with certain personnel at client firms, etc. As an analyst, you won't know most of this stuff anyway, so hit delete.

How to Guarantee Successful Market Timing

Suppose you want to make your fortune publishing a market newsletter. You need first to convince potential subscribers that you have talent worth paying for. But what if you have no market prediction talent The solution is simple Start eight market newsletters. In year one, let four of your newsletters predict an up market and four a down market. In year two, let half of the originally optimistic group of newsletters continue to predict an up market and the other half a down market. Do the same for the originally pessimistic group. Continue in this manner to obtain the following pattern of predictions (U prediction of an up market, D prediction of a down market). After three years, no matter what has happened to the market, one of the newsletters would have had a perfect prediction record. This is because after three years, there are 23 8 outcomes for the market, and we've covered all eight possibilities with the eight letters. Now, we simply slough off the seven unsuccessful...

Continuing the Tradition

Chris learned a great deal about his grandfather's and father's investment philosophy while he was writing the newsletters. My grandfather loved to find what he called growth stocks in disguise, Chris says, referring to stocks of a company whose earnings stream is poised to grow at a faster rate than what investors were expecting, or to find a company whose earnings are growing at a value price.

Sharing Investment Knowledge

Although this help has moved away from the full-service broker, many other avenues have opened. You can check the consensus of financial analysts on your stock by clicking on your favorite Web site. You can also subscribe to an investment newsletter. There has been a huge growth in these newsletters, as evidenced by the history of the Hulbert Financial Digest, a newsletter that reports the recommendations of the other newsletters. It began following 15 newsletters in 1980, and by the mid-1990s the number had swelled to over 90. This is big business over 2 million subscribers spend 500 million annually on newsletters.2 So, if you cannot compute the value of Amazon.com, then how do you make investment decisions People that do not use rigorous quantitative criteria in their decision making often get a feel for the stock value. This feel comes from investment socialization. What do the analysts say about the stock What does the newsletter say What does...

Market timing Versus bug and hold investing

Despite the long-term healthy returns stocks generally produce, it's disconcerting to some people to invest their money into something that can drop far and fast. Many newsletters, advisors, and the like purport to predict the future movement of the financial markets. On the basis of such predictions, these folks advocate timing the purchase and sale of securities such as stocks to maximize returns and minimize risks. Although market timing sounds good in theory, a wealth of studies and evidence show that market timing simply doesn't work in practice. (In Chapter 15,1 discuss the poor track record of investment newsletters that attempt market timing.) In fact, those who try to time the markets inevitably do worse than those simply buying and holding because they miss the right times to buy and sell.

Newspapers and Other Publications

Look Beyond the Classifieds To search for potential bargain sellers in the newspaper, go beyond the classified real estate ads. Locate names of potential sellers from public notices births, divorces, deaths, bankruptcies, foreclosures, or marriages. Each of these events can trigger the need to quickly sell real estate. If you contact these owners (or their heirs) before they have listed with a sales agent, you stand a fair chance of buying at a bargain price. (In addition, you might subscribe to the default or foreclosure lists and newsletters published in your area.)

Turtle Trader comment This appears to be an admission of fundamentals not connecting directly to share prices

Now, as a result of the Enron collapse, the Beautiful Line has become suspect. In a fascinating article, Dodging Bullets, in a newsletter for clients, T. Rowe Price Associates Inc. described why, unlike many large mutual firms, it resisted investing in Enron stock. Charles Ober, Price's veteran energy analyst, who followed Enron for 20 years, did not like what he was seeing the line was too newsletter. beautiful. One of the things that always strikes me when I look at a company is if there is a 'too good to be true' aspect to it, he said. And there were a lot of red flags with Enron. Earnings just grew and grew -- a strange phenomenon in the energy industry, where supply and demand imbalances are common. Email Newsletter Subscribe to our FREE

Turtle Trader comment Bill Gates is arrogant but does quite well We dont follow how arrogant management means the

Some investors worry that, because profits now seem more difficult to earn, the days of the Beautiful Line may be over. It's true that many such lines have lately been interrupted, including those of Emerson Electric Co., Genuine Parts Co. and Tootsie Roll Industries Inc. In a recent issue, Dow Theory Forecasts admitted that growth stocks in short supply. Still, about 600 of the 1,500 largest U.S. companies boosted their profits by more than 10 percent in the most recent quarter, and the newsletter lists nine stocks that have increased earnings at double-digit rates for each of the past three years and are expected to continue that pace for 2002. Among them Anheuser-Busch Cos., beer Lincare Holdings Inc., respiratory therapy Biomet Orthopedics Inc. Electronic Data Systems Corp., tech services and Cardinal Health Inc., pharmaceutical distribution. Free Email Newsletter

Compiling Your Own Research Department

You don't need to spend an excessive amount of time or money, but you should maintain your own library of resources. You may only need one shelf (or a small amount of memory on your computer's hard drive). But why not have a few investment facts and resources at your fingertips I maintain my own library loaded with books, magazines, newsletters, and tons of great stuff downloaded on my computer for easy search and reference. When you start your own collection, keep the following in mind

Earching for the best plays

Even though scanning for opportunities looks like an easy process, there is work to be done. Once you get a list of the most undervalued or overvalued plays, the work begins. In my newsletter, over 17 years I would run scans before every issue, but that was the easy part. Sorting through the list of best plays took a lot of time.

On Financial advisors

Financial advisors have their expenses, too. It is still very much a cottage industry. The high personal contact required by customers has meant that efforts to gain efficiencies through scale, computers, and telecommunications in advising have been a little slower than in other parts of the financial services. Advisors must still dispense their advice one-on-one and send out their monthly newsletters to clients as they have always done. They must market in person. Rick Ferri estimates that it takes at least 1000 in revenue to break even on a client with basic service, and that assumes an outfit with low overhead. Like any happy arrangement, it has to work for both parties.

Simple Business Model

The very first issue of our Exclusive Outlook newsletter sang the praises of simple companies. We refuse to invest in something we do not understand, and observe that over the years Wall Street has also tended to reward simple, focused companies. Simple companies are easy to understand for customers, coworkers, management, and investors, easing alignment of interests. When considering a company, expect to quickly understand how it makes money, and how it makes money for you. In that first issue of Exclusive Outlook, we could not explain what JDS Uniphase sells, and we still cannot. Wal-Mart, on the other hand, makes instant sense to us. Wal-Mart offers everyday goods at steep discounts and manages its supply chain to maintain profits.

Types of customer service positions and typical duties

Client or investor relations Whether called Client Relations or Investor Relations, is responsible overall for all investor communications including investor queries and investor updates liaison with marketing meetings and conference calls with key stakeholders customized reporting for clients and the preparation of hedge fund and general market summaries and investor letters. Writes newsletters, which includes gathering market data and meeting with internal managers to format content. Identify speaking engagement possibilities at relevant conferences. Prepare and dispatch requests for proposals, or as they are known in the industry, RFPs.

Affording the Good Life

A recent article reinforces my rich dad's point of view. The article, Affording the Good Life in an Age of Change, was in the Strategic Investment Newsletter, published by James Dale Davidson and Lord William Rees-Mogg. These two men have also co-authored several best-selling books Blood in the Streets, The Great Reckoning, and The Sovereign Individual. These books have dramatically affected My rich dad would say, There are two ways to become rich. One way is to earn more. The other way is to desire less. The problem is that most people are not good with either way. The article and this book are about how you can earn more so you can desire more. Here are excerpts from the article Affording the Good Life in an Age of Change as published in the Strategic Investment Newsletter.

Getting the Interview

CFA exam, offers continuing education courses and hosts social events. AIMR chapters in larger cities, such as New York and Boston, meet frequently, often once a week. Chapters in smaller cities meet less often. Students can attend AIMR meetings, which require a 30 entrance fee, to network and learn more about the industry. For more information on AIMR, including its newsletters and various publications such as Financial Analyst Journal, check out the association's website, www.aimr.com.

A typical trading day and pre market preparation

In the beginning of the day I already have a list of stocks (a watch list) that I want to watch and potentially trade. This list is usually created after the market close. Please see how to find trade candidates for more details more on how to find potential candidates. My original watch list mostly has stocks in it, that I am interested in based on technical analysis. I will add additional stocks to the list that are gapping in the morning for potential momentum trades as well as stocks that are mentioned by other traders in newsletters I receive every day. I will only consider stocks that fit my style of trading and my risk tolerance.

How to Find subtenants for singleFamily Homes

However, you don't have to live in the property you buy on a lease option basis. We've bought many properties as investors and then rented them out, but we're careful to whom we rent. For example, in Lisa's case, if Lisa hadn't wanted to live in the Fort Collins house, it would not have been a problem for her to find a great tenant in that community because it is a desirable residential area. She could have simply contacted Hewlett-Packard, which is just one of the companies located there, and asked if she could put up a flyer on their bulletin board or run an ad in the company newsletter saying, We have a property for rent in a beautiful area in an exclusive neighborhood. The house has three

The Psychology of Successful Trading

There are numerous trading systems on the market that are profitable. There are numerous trading advisors and newsletters that have had longprofitable track records. Yet the average speculator is a losing trader. The average speculator, when handed sound advice, will still lose money.

Currency Conquistador Nelson Freeburg

At this point, ace researcher Nelson Freeburg enters the story. Nelson publishes an amazing newsletter called Formula Research (see Appendix Suggested Reading for more information). Nelson develops trading methods and systems for trading most markets. He has a clever mind and has come up with some great systems. I highly recommend his publication.

Stop orders also known as stoploss orders

I have a stack of several years' worth of investment newsletters in which investment experts made all sorts of calls regarding the prospects of a company, industry, or the economy in general. Some made forecasts that were spectacularly on target, but you should see the ones that were spectacularly wrong ouch However, even some of the winners suffered because of a lack of discipline. Those spectacular gains disappeared like football fans at a chess match. One of the biggest recommendations by newsletter experts in 2000 was Cisco Systems (CSCO). In March 2000, it was at 885 and its market value (stock price times total shares outstanding) was a whopping 8600 billion. Some stock gurus even said that it would become the first trillion-dollar stock. Other gurus said that CSCO's earnings would grow 30-40 percent per year, indefinitely. Right about now you know that

Rule 12 Cut Losses Let Profits

Letting profits run really involves the same principle as cutting losses. When the market exceeds your downside cutoff point, it is a warning that you have made a mistake. On the other hand, as long as the general trend moves in your favor, the market is giving you a vote of confidence, so you should stay with the position and let your profits run. There is a famous saying that the trend is your friend. In effect, this is another way of telling us to let our profits run. Trends, once in force have a habit of perpetuating but no one on earth can forecast their magnitude or duration, despite what you may read in newsletters and the media. As long as your analysis or methodology indicates that the trend continues to move in your favor, you have few grounds for selling unless it is to lock in some partial profits. Markets spend enough time waffling back and forth in confusing, frustrating, and unprofitable trading ranges to allow the trader the luxury of prematurely getting out of a good...

Programming the System

The prevailing philosophy about software development is to try to use as much third-party software as possible. If you need to see the results of a TradeStation optimization, save the results to a spreadsheet, then sort, organize, analyze, and graph the results using your favorite spreadsheet. You can compare one set of tests with another if you save them all in the same format. For the more popular platforms, such as TradeStation and Meta-Stock, there are a number of user's groups, support groups, and newsletters that can be of great help. Some companies provide alternate statistical measurements for your tests, while others have an add-in portfolio program. It is a good idea to check to see if these services satisfy your needs before attacking the programming yourself.

Brief History Of Managed Futures

He developed a technical trading system, called trend following, which presupposed that commodity prices would move in long sweeps like bull and bear markets. He did not concentrate on market fundamentals, and would rather use a mathematical system based on moving averages of commodity prices. He authored many articles on futures trading. From 1960 to 1993, he was an associate with Hayden Stone Inc., as Director of Commodity Research and Senior Vice President. In 1960 he started writing a successful weekly newsletter entitled Commodity Trend Timing, which he continued to author for another 19 years.

Other Anomalies The Value Line Anomaly

In an attempt to match the returns of the top rated stocks, Value line established a mutual fund. The results of the Value Line Centurion fund (which invested in 100 Group 1 stocks and the top 100 of 300 Group 2 stocks) may serve as an important lesson for investors. Not only did the real-money fund not keep pace with the paper returns from the top rated stocks (which continued to outperform on paper), it did not even outperform the market. On the other hand, Value Line continues to be one of the highest ranked newsletters which does account for costs.

The Apartment Owners Association

Why is an apartment owners association so important to join These organizations are usually run by experienced apartment owners and professional property managers. Their purpose is to help other owners and managers. Most provide monthly newsletters, which will keep you up-to-date on current events, local laws and relevant ordinances, rental rates, and any changes taking place in your market. They also carry advertisements for plumbers, roofers, electricians, and others who can help you when you need it. In addition, many associations will supply you with various forms you might need, including the types of rental agreements mentioned earlier. Some even are able to run credit checks on any potential new tenants you may have.

Market Timing based upon Normal Ranges Mean Reversion

8 See Investor sentiment and Stock Returns' by Fisher and Statman, Financial Analysts Journal, March april 2000. They examined three sentiment indicators - the views of Wall Street strategists, investment newsletters and individual investors - and concluded that there is indeed evidence supporting a contrarian investment strategy Buy if the PE drops below 12 and sell if it rises above 18. You will see variations of this advice in many market timing newsletters. A more academic version of this argument was made by Campbell and Shiller who looked at PE ratios from 1871 to recent years and concluded that stocks revert back to a PE ratio of about 16 times normalized earnings. They defined normalized earnings as the average earnings over the previous 10 years. The implicit belief here is that there is a normal range for PE ratio and that if the PE rises above the top end of the range, stocks are likely to be overvalued, whereas if they fall below the bottom of the range, they are likely to...

Tracking Advisory Opinion

Market Vane rates about 70 newsletters covering 32 markets. It rates each writer's degree of bullishness in each market on a 9-point scale. It multiplies these ratings by an estimated number of subscribers to each service (most advisors wildly inflate those numbers to appear more popular). A consensus report on a scale from 0 (most bearish) to 100 (most bullish) is created by adding the ratings of all advisors. When bullish consensus approaches 70 percent to 80 percent, it is time to look for a downside reversal, and when it nears 20 percent to 30 percent, it is time to look to buy.

Commitments of Traders

The modern approach to analyzing commitments of traders has been developed by Curtis Arnold and popularized by Stephen Briese, publisher of the Bullish Review newsletter. These analysts measure deviations of current commitments from their historical norms. Bullish Review uses the following formula

The Fourth Estate Crowd

There is no question that news coverage of the stock market helps sell newspapers and get the attention of television and radio viewers, as Shiller implies. But news also tends to foster what Robert Shiller terms an attention cascade among investors, leading them to behave in a herdlike manner, which can lead to common misjudgments. If this is true, then a quantification of bearish and bullish news flow might provide another profitable technique to gauge crowd psychology, much like put call volume ratios, option volatility, short sales, and newsletter opinion.

The Core of the Story

Finally there are those that anoint themselves as experts in aspects of investing with nothing specific to back them up and because of their sales prowess, pull it off they write books about successful investing and offer newsletters you can subscribe to. Why are novice investors so attracted to expert advice There are a number of beliefs that underlie this attraction

HI Investment Advisors and other Experts

Insiders and analysts are but two players in a very crowded market place of ideas for investors. There are investment advisory newsletters that purport to pick the best stocks in the market, investment advisory services such as Value Line and Morningstar that offer their own proprietary stock picking advice (for a modest cause) and the ubiquitous talking heads on television, who claim to have found an inside track to investment success. Rather than revisit all of the research ever done of the success (or lack thereof) of this expert advice, you can summarize the evidence as follows There are few examples of long term and consistent stock picking success among investment advisors and experts. Investment newsletters that claim to use proprietary stock selection models to pick stocks often have little to back up their claim that they pick better stocks. An analysis of more than 153 active newsletters tracked by the Hulbert Financial Digest finds little evidence of stock picking skill,...

Christmas Doesnt Come in December

That's one reason why I have written books and published a newsletter, I wanted a sense of some steady income in my life, plus it is profitable I may make money hand over fist for 12 months running or make nothing, in fact lose money, for the first 6 or 7 months of the year then hit the jackpot. One never knows in this world of roller coasters what will happen. To my way of thinking, most of you should not quit your jobs and become traders. Your job, as bad as it might be, is your security, your source of income, the guaranteed Christmas. Yes, I know you don't like your job, but you know what I don't like mine every day either. It is no piece of cake getting beat up in the markets for 2 to 3 months. It is no joy to have a series of bad market calls in a newsletter where everyone can see the errors of my way-errors my enemies love to magnify and my best friends chuckle over.

The Media The Best Trading indicator

Before the opening or when trading was dull, he used to chit-chat with all the filling brokers who executed trades for the major stock houses and discount firms. His patter would go something like this Hi, Ira. How's the wife and kids Did you have a good weekend How many to sell at 95 The last sentence was a request for the number of December silver contract sell-stop orders at 6.95 Ira had in his deck. Of course this is supposed to be illegal and maybe floor traders now aren't as blatant as Stan used to be. But floor traders have other ways of finding out where the stops are. They've got the same indicators and charts. All the major newsletters and hotlines are upstairs at the exchange library. They can send their clerks to read every one of them and tell them where the stops are. I've even seen one of Richard Dennis' famous turtles discuss media trading in his newsletter Dennis is a technical trading legend who decided to teach a select group (the turtles) some of his methods. If...

Motley Fool ish The Motley Foolers are cute marketers of themselves They sell lots of books and they wear funny hats

Can Motley Fool make a difference in your trading decisions It can't. There is no substance to Motley Fool, no matter how the Fool packages its information. Motley Fool's web site, books, live appearances, and newsletters all have one thing in common. There's no there there. The public perception was that the Fool provided useful information about how to make money in the stock market. Motley Fool allows anyone to post messages to chat boards. The theory being (we assume) that people might gain insight on whether to buy or sell a stock from other people's tips. Here is where the real nonsense begins. Stock tips don't work. Anyone who promotes stock tips (and Motley Fool would have a hard time saying they don't promote tips) is misleading their audience. Why Because all a tip tells you is that you should buy something. Period. It's a tip not a fact not even an insight. Ultimately the Foolers missed their IPO opportunity and now, since the party is over, they are laying off employees...

Extreme Price Movements Power Laws and the

To relatively objective economic considerations, but also in varying degrees to the pronouncements of national and world leaders (not least of those Mr. Greenspan), consumer confidence, analysts' ratings (bah), general and business media reports and their associated spin, investment newsletters, the behavior of funds and large institutions, the sentiments of friends, colleagues, and of course the much-derided brother-in-law.

Remember That Talk Is Cheap Until You Talk to an Expert

A fertile area for misleading investors is in the world of independent, third-party information sources. As the bull market reached its zenith in late 1999, some people were selling expensive stock-investing seminars and newsletters that promised get-rich-quick results. One promoter sold basic information (some of which was inaccurate) in a 5,000 seminar program. After many complaints, the authorities investigated and found out that the presenters made a lot of money from their seminars, but they actually lost money on their investment strategies (It figures.) Another information marketer published an expensive newsletter that promised lucrative stock picks. It was discovered that he wasn't recommending stocks found through diligent and honest research he recommended the stocks because the companies paid him to tout their stocks. Seminars and newsletters are excellent sources of information and expertise on a given topic, but you should stay away from marketers that use hard-sell...

Gannsoft Publishing Co License Agreement

The user shall have the right to use the chart output of the program in any newsletter, book or other publication without explicate permission from Gannsoft Publishing Company provided that a statement 'Chart by Ganntrader 3.0 Copyright 1999 by Peter Pich 509-684-7637' appears on the chart.

Market Timing Indicators and Success

So why do great market gurus stumble The very same factors that contribute to their success seem to underlie their failures. The absolute conviction they have in their market timing abilities and their success at timing markets seems to feed into more outrageous calls that ultimately destroy their reputations. Joe Granville, one of the market gurus of the late 1970s, for instance, spent all of the eighties recommending that people sell stocks and buy gold and his newsletter was ranked the worst, in terms of performance, for the decade.

The Internet Investments Online

It uses Sharpe's techniques of performance analysis and attribution. Pages offer visitors the chance to learn about StyleADVISOR and to view sample reports. Visitors can view past newsletters, which give analysis and insights into portfolio performance attribution issues.

Notice and Disclosures

A list of companies recently reviewed in our audio recordings, presentations, newsletters, and other publications is available on request. Prospective investors should always remember that past performance is no guarantee of future results. Subscribe to the West Coast Asset Management newsletter at www.wcam.com.

Morningstar Resources

In addition to this book, Morningstar publishes a number of products for stock enthusiasts. There's something for everyone, from newsletters to sourcebooks. Most can be found at your local library, or you can call Morningstar to start your own subscriptions (866-608-9570). Monthly newsletter offers 32 pages of stock investing help including two Morningstar stock portfolios for different investment styles, comprehensive analysis of selected portfolio stocks, as well as the best thinking of Morningstar's 30 stock analysts on additional stock prospects, including what to buy or sell. Morningstar's new eight-page newsletter tells readers which stocks to buy and which ones to sell and most importantly, why. In addition, each month the editors recap their previous picks and any changes in their opinions or our analyses that investors need to know about.

Valuation Fundamentals Or Sentiment

One of the most consistent indicators of investment sentiment has been published by Investor's Intelligence, a firm based in New Rochelle, New York. Over the past 35 years, president Michael Burke and his associates have evaluated scores of market newsletters, determining whether each letter is bullish, bearish, or neutral about the future direction of stocks. From Investor Intelligence data, I computed an index of investor sentiment by finding the ratio of bullish newsletters to bullish plus bearish newsletters (omitting the neutral category). Then the returns on stocks subsequent to these sentiment readings are measured. This index shows strong predictive power in each decade. In the 1990s, largely due to an increase in the number of newsletters, the sentiment index has given few very high or very low readings and has

Rated 1 by the Hulbert Financial Digest

Mark Hulbert started a useful business in the 1980s. Almost every investment newsletter was making outrageous claims about the success of its previous predictions. But how could you, the potential new subscriber, know if a newsletter was telling the truth or blowing smoke Answer You couldn't. Not until Mark Hulbert came along, that is. He tracks the actual performance of the newsletters' investment picks. For each newsletter, he creates a portfolio based exactly on the newsletter's recommendations. So, over time, Hulbert knows exactly how the newsletters' picks have done. Has the Hulbert Financial Digest stopped the outrageous claims of the investment newsletters No, but they seem to be slowly getting better, thanks to Hulbert's influence. The problem is that people still believe the marketing hype of the newsletters and never bother to check with Hulbert's service. Hulbert's service has created another problem, however. Many newsletters can claim to be 1 by selecting short time...

Financial Intermediation

Economies of scale also explain the proliferation of analytic services available to investors. Newsletters, databases, and brokerage house research services all exploit the fact that the expense of collecting information is best borne by having a few agents engage in research to be sold to a large client base. This setup arises naturally. Investors clearly want information, but, with only small portfolios to manage, they do not find it economical to incur the expense of collecting it. Hence a profit opportunity emerges A firm can perform this service for many clients and charge for it.

Market Efficiency and Anomalies

When constructing samples, researchers must be careful not to include just surviving companies, mutual funds, or investment newsletters. Since survivors tend to be those that have done well (by skill or chance), samples of mutual funds that have 10-year track records, for example, will exhibit performance histories with upward bias. Mutual fund companies regularly discontinue funds with poor performance histories or roll their assets into better-performing funds.

Summary 306

Tharp presents in this book, in his Market Mastery newsletter, in his home-study courses, and in his seminars will change your life if you are open to them. I urge you to take the first step today and open yourself up to the material found in this book. Enjoy the journey It's a great one Chuck Branscomb has been a great model for me of how to adopt these principles. When he first came to my seminars, he thought he had a great system-when he really had no system at all, just some entry signals. He's attended all my system seminars (except for one held in London) and most of the other seminars. I've watched him evolve into a very knowledgeable systems trader. He's also a great example of how solid intuition about the market evolves out of solid systems trading. Chuck is the editor of our newsletter, Market Mastery, and several excerpts from Chuck's work were put into this book. In addition, Chuck helped tremendously in generating some of the graphics in this book.

Stock Market Profits

Jenkins moved to New York City to become a professional trader for a number of specialist firms on the NYSE. In 1985 he founded the investment newsletter Stock Cycles Forecast. Because of the widespread notoriety this letter received in precisely predicting the final stock market high in August 1987 and specifically calling for a 500 point drop in the Dow that would end by October 19th of that year, Mr. Jenkins has become a frequent commentator on television and often the subject of numerous popular financial magazine and newspaper articles. Nearly every major high and low of significance in the past several years has been successfully forecasted in the Stock Cycles Forecast newsletter, many down to the exact day and in a few cases the exact hour on those dates Mr. Jenkins is considered an authority on cycles in the financial markets and often lectures on this subject as well as providing investment seminars where his proprietary trading methods are taught. This book is an...

Taking Stock

Soaring prices. Has Japan's stock market returned to the roaring '80s U.S. investors apparently think so. The Buy Japan cry from fUnds and stockpicking newsletters is downright deafening. Foreigners have spent more than 78 billion on Japanese stocks this year, a wave of capital not seen since 1999. The Nikkei 225 index hit a five-year high of15,778 on Dec. 13, up 37 year-to-date.

Special Charts

Doing your research into trading, there may be times when you will want to leave off part of the printed portions of a chart. For example, Overlay on Blank Paper and Overlay with Dates would print a square or planet plot only with no prices, grids or labels. You could then reproduce these on clear plastic to produce your own overlays. The next three Blank Chart options are in the Ganntrader program and are a handy way to make some blank chart paper for hand charting purposes. Load any file that covers the time span desired and leave off any elements you don't need. The last selection, Chart, No Background Grids works well when you want to FAX a copy of a chart or reproduce it in a book or newsletter. The background grids often produce too much clutter when reproduced.

Newspapers

Another example of a strong newspaper showing weak financial reporting was The New York Times' use of Mark Hulbert as regular commentator on mutual fund performance. Hulbert's dubious specialty is to track the (typically poor) performance of stock-picking and market-timing newsletters, probably the most amateurish and derided source of financial information and advice available. His unsurprising conclusions are that newsletters on average are a poor tool to time the markets, and indeed that no newsletter has shown sustained predictive powers. This is like a columnist whose specialty was reviewing the National Enquirer and other scandal sheet tabloids for accuracy. We are happy to know that someone is chasing this information down, we're just glad we don't have to do it

Money Management

Up until that point in my life, I had been fairly conservative in my personal finances and was lucky enough to have accumulated a comfortable amount of money. After my guru made his pronouncement via a newsletter, I immediately took a piece of paper and began plotting my course to riches. I divided 800 points (the expected grand-supercycle move) by 8 (the approximate amount of Dow points needed to move the OEX index up or down one point) and came up with the number 100. I then quickly multiplied 100 times 100 (the amount of money one OEX option increases in value on a per point move) and came up with 10,000.

Theme Momentum

New market momentum continues to be fueled by the theme of the day as well. Over the past 3 years, we have seen some incredible moves in stocks because they were simply a part of a hot theme at the time. For example, 3 years ago, all a company had to do was announce that they were going to build a Web site and the stock would rise fast as active traders nailed it. Eventually, we moved through themes of Pokemon stocks, China stocks, and Fuel Cell stocks. Active traders watched each theme closely during these times of interest. These traders, for quick profits, jumped on any stock that was tied to the latest theme. However, eventually these themes and newsletter plays will begin to fade as the increased amount of traders entering the same stock tends to destroy the play. Remember that market momentum includes basically three facets of traders institutional, online, and daytraders. Institutional traders try to fill clients' orders at specific price levels. When stocks begin to spike up...

SEC Insider Forms

At the end of the fiscal year, an insider or former insider must file Form 5 within 45 days. Its intent is to prevent people from moving in and out of insider status. Obviously, Form 4 gives the most useful information to investors. It answers the question of what the insiders are doing, whether buying or selling, as well as their current holdings in the company. Information on insider trades, available on the Internet and through several newsletters, is usually based on this SEC form.

Methodology

The major source of names was developed from ICR's proprietary database of investors built over the previous 15 years. We used a range of techniques to attract investors to the database and, consequently, got them involved in the network. The techniques used included investors who had invested into client ventures, direct mailings to high-net-worth investor lists radio interview shows followed up with audio tape sales on angel investing, newspaper advertising, and investment seminars referrals from investors in the network solicited with incentive programs, business periodical advertising, publishing and distributing an angel investment newsletter, investment conference promotion and speaking engagements, publishing and promoting a book on angel investing, and creating a high-traffic web site (www.icrnet.com). Obviously, this is not a statistically valid sample. But these techniques provided a cross-sampling of investors from across the United States.

Secure F

This is a method that I have been asked about in more recent days. It is simply a variation of the Fixed Fractional method that tries to take advantage of the optimal f method by using something other than the largest loss as a starting point, In 1995, I worked on a similar method and published the results in the November 1995 issue of the KamiKaze Trading Newsletter. That work and publication extended the optimal f theory from using the largest potential loss to the largest expected drawdown. For example, if the largest loss was 1,500 and the optimal f had been calculated at 19 percent, then I would trade one contract for every 7,895 in the account. Starting with 100,000 in the account, I would be trading 12 contracts. Once again, I would also be risking 19 percent on one trade. With the new way of calculating optimal f based on drawdown instead of the largest loss, 19 percent would be the maximum the account could lose based on the largest expected drawdown. If the largest expected...

Family Values

On Saturdays Chris wrote two-page newsletters on investing in insurance companies for his grandfather's research company, which sent them out to investors. After writing the newsletters and stuffing them in en velopes for several months, Chris noticed that many of the recipients no longer lived at the listed address, and many weren't even alive. Additionally, he realized there was no financial benefit to the company they weren't receiving fees for writing the newsletter or for providing research. His grandfather summed it up We do it for ourselves discipline, he told Chris. Chris continued to write the newsletters, and that is one reason why he takes great care in writing the commentaries himself in his mutual fund's annual reports.

The Stakeholders

For stakeholders such as vendors and customers, IR should work with the appropriate internal manager to comb through internal or external communications to obtain their opinions as well as initiate relationships with specific point people willing to extend honest feedback. Employees can be reached through newsletters, presentations, and other internal communications, but employees must also be encouraged and motivated to upstream opinions to management, rather than leak them to the public. Frequent management employee question-and-answer sessions can be arranged and monitored by IR in the same way that IR executes these presentations for investors.

Level Three Research

When we returned to Arizona, we not only vividly remembered what green trees looked like, we knew Portland was an investment opportunity. But we still needed a bit more information to feel good about making a move there. That's where Level Three Research came into play. We first called every team referral and asked them all the same questions we asked of our initial contacts in Portland. Not only did they give us their opinion and insights, they pointed us in the direction of numerous Web sites, analyst newsletters, economic development offices, city government contacts, and other Portland businesspeople who could add the finishing touches to our picture of Portland and could keep us on top of happenings in the area for as long as necessary. Through this exercise we started to discover who should be on our team. We signed up for free online newsletters, got on the mailing lists and e-mail lists of real estate agents, commercial brokers, loan offi

Patterns To Avoid

Meanwhile, those who have entered the stock at low levels are again selling to the late buyers who are caught up in the hype. I have read many stories of sharp spikes and fast drops on this kind of stock manipulation either by fake newsletters or bulletin board and chat room leaders.

Current Conditions

In order to gather information on the industry in which the company competes, IR should collect information from a variety of sources. These include SEC filings analyst research reports conference call transcripts the industry trade papers company communications, such as employee newsletters and conference and convention minutes and conversations with consumers, customers, and vendors.

Continuing Education

There are thousands of economic forecasters who make a living selling economic newsletters, primarily to individual and institutional investors. In addition, there are the media, which inundate us monthly, weekly, or daily with economic predictions, sometimes as front-page news, which may also make it into television news programmes. All major business magazines routinely publish their own economic forecasts.

Sentiment Indicators

Investor's Intelligence, * founded by the late Abe Cohen, pioneered the approach of gauging how many of the numerous newsletters he read were bullish or bearish on the market. These data have been available on a continuous basis since the early 1960s. The results for more recent years have been plotted in Figure 8-2 and compared with the market's performance. The concept is quite simple. When the majority of market letter writers are bullish, it represents a danger signal so it is time to think about selling, and vice versa. The chart shows that this is easier said than done, because there are many periods such as mid-1985 and mid-1986 when people were bullish and yet the market did not decline, and those such as early 1990 when most investors were bearish yet the market did not rally. The indicator, then, is far from perfect. Sometimes it is right on the mark and sometimes very early. It

Trend Analysis

In the mid-1990s I had the opportunity to interview Peter Brandt. Peter was running a futures newsletter called The Factor, which was using strict Magee Edwards chart analysis. He was a purist in using classical chart analysis. One of the things he said to me was that there are only about eight to twelve mega markets in the futures world each year. By mega market, he meant a market that created at least 5,000 in profit and usually much more. That 5,000 in profit was the amount of money that would be made by holding a position for the length of the total move. I looked at futures charts going back many years and he was basically right.

Overview

The arrangement of this reading material is so that it can be read from start to finish or by just going directly to the chapter topics that are of interest. More information can also be found by searching these topics titles on line or by subscribing to the free e-mail newsletter, HQ's Financial Views, to be found at www.hqsearch.com.

Prospect Theory

The anomaly surfaces when the same types of people are given the choice between using the standard inoculation that will kill 400 people, or the experimental treatment that has a one-third probability of killing no one and a two-thirds probability of killing everyone. Very few people will take the risk of killing the entire population. But if we compare the choices to the previous scenario, they are identical. The only difference is that the wording has changed from being in terms of saving lives to in terms of killing. Changes in wording should not affect the rational investor, but people are affected by emotion. This is how marketing can exist. No matter how much we wish it wasn't true, people are influenced by the color of the box, by the quality of paper of the company newsletter, or by who is dating the CEO.

Iend in His Time

I first met Larry Williams in the early 1970s. At the time I had just started my weekly commodity newsletter and noticed that Larry YVilliams's ad in Commodities magazine (now called Futures) purported to answer the question Which commodity advisory service is best I found the intent of the ad most intriguing since Larry was putting himself in the position of judging his competitors. 1 ordered the report. In spite of the fact that we were competitors in the advisory business, Larry evaluated my weekly newsletter very favorably.

Trader

Once you reach Level Three, you are a self-sufficierit professional trader. You are acquainted with the always underlying and usually unseen structure of the markets. You no longer need or desire outside opinions. You do not need to read the Wall Street Journal, listen to market-centered TV, subscribe to newsletters, or waste money on hotlines. However, this is only half the equation. The other half is the trader as a person.

Full Service

When you call a full- service broker, you usually pay more in commissions. With the higher commission, you also get more services including newsletters, updates, web site access, etc. You can also call your broker anytime and ask him or her questions, ask for price updates, formation questions, and other related info. Using a full-service broker will also greatly reduce the potential for trading errors. They will find bad or incorrect orders before they are entered on the exchange floors. Full-service brokers can also be a big help when you want to trade options or do option spreads. Brokers can usually figure out the best strike prices to get for the lowest cost. Brokers are also great at order placement, and helping you place the right trade.

Trading Techniques

That its future price cannot be predicted by analyzing past prices. This is because many market participants have access to past price information, and hence any free lunches would have been consumed. The second form of informational efficiency, semi-strong form efficiency, states that security prices fully reflect all relevant publicly available information. Information available to the public includes past prices, trading volumes, economic reports, brokerage recommendations, advisory newsletters, and other news articles. Finally, the strong form of informational efficiency takes the information set a step further and includes all public and private information. This version implies that even insiders who have access to nonpublic material information cannot make abnormal profits. Most studies support the notion of the semi-strong form of market efficiency, but do not support the strong form version of efficient market hypothesis. In other words, insiders can trade profitable on their...

Databases

The securities industry has numerous providers of data, but several specialize in providing information about the venture capital and private equity industry. Venture Economics, a division of Securities Data Co., is perhaps the foremost provider of data to the industry. It partners with the National Association of Venture Capital to produce an annual yearbook as well as computerized industry databases. Asset Alternatives Inc. is another provider of data, newsletters, directories, and research reports. Frank Russell Company also publishes data on alternative investments.

Analysis paralysis

Having written an option advisory newsletter as early as 1973, I have found the secrets of how to use and not use such services. Many investors who use such services think the services are a magic bullet, the guru that will lead them to the promised land. They quickly become severely disappointed. There is no magic bullet or road to quick fortunes out there. Only you can lead yourself to high profits. Option advisory newsletters go out to hundreds and sometimes thousands of subscribers. Options have very limited liquidity, and when an option is recommended in an advisory newsletter, its price is highly impacted. You may have to pay more than you should for that option play. Or you may only get trades off when the underlying instrument moves in the wrong direction, and you will be stuck with a bunch of losing positions. The key to success in option trading is to stay away from the crowd, and when you use advisory recommendations, you are following a large crowd. Option advisory...

R N Elliott

After testing his theory over four years, Elliott organized his research into an essay that he titled, The Wave Principle. This essay was published in book form on August 31, 1938, with the assistance of Charles Collins, a respected newsletter publisher who helped popularize Elliott wave analysis in its early years.

Recent Feedback

Thanks for the informative newsletters - when I was first looking into trading I subscribed to just about every damn letter on the web purporting to offer wisdom on the market - the Fool, Microsoft investor to name but a few. Your site is the only one whose subscription database I'm still on didn't take long to sort the wheat from the chaff. Free Email Newsletter

Sabbeis

J he following is a system for day trading the NYSE Composite Index (commonly referred to by traders as the Knife, because it trades on the New York Futures Exchange). It is brought to us by our old friend and mentor of 25 years ago, Jim Sibbet, who is probably best known for his Demand Index and his newsletters on silver and gold. Jim says he prefers to trade the NYFE, instead of the S&P, because on a per dollar of margin basis he can make more money using the NYFE. He also believes it is a more orderly market with less risk. Here is his explanation of the strategy

Killer Instinct

For those traders who can implement this strategy, this is clearly the best way to trade. Dennis Gartman (the famous investment newsletter writer), an old pit trader himself, calls this method doing more of what is working and less of what is not. It is no doubt deceptively simple and seductive. In fact, here is a description taken from Elite Trader bulletin board of another famous pit trader, Richard Dennis, employing just such a strategy in the bonds.

A legend in His Time

I first met Larry Williams in the early 1970s. At the time I had just started my weekly commodity newsletter and noriced that Larry YVilliams's ad in Commodities magazine (now called Futures) purported to answer the question Which commodity advisory service is best I found the intent of the ad most intriguing since Larry was pu ting himself in the position of judging his competitors. I ordered the report. In spite of the fact that we were competitors in the advisory business, Larry evaluated my weekly newsletter very favorably.

In Search of a Guru

There are investors who seem to know more than others and claim to do much better on their investments than the rest of the market. If you could follow these expert investors and copy their investment decision, you may be able to piggyback on their successes. It is this belief that leads investors to read investment newsletters and to watch television shows on the stock market. It is also this belief that allows investment experts -equity research analysts, investment advisors and portfolio managers - to have as much influence as they do in financial markets. In this chapter, you will examine whether these experts do better on their investments than the rest of the market, and whether following the advice they provide pays off in higher returns.

Market Strategists

12 A good market timing newsletter is likely to repeat its success about 50 of the time. A poor market timing newsletter has a 70 chance of repeating its poor performance. So why do great market gurus stumble The very same factors that contribute to their success seem to underlie their failures. Their absolute conviction in their market timing abilities and their past successes seems to feed into more outrageous calls that ultimately destroy their reputations. Joe Granville, one of the market gurus of the late 1970s, for instance, spent all of the eighties recommending that people sell stocks and buy gold and his newsletter was ranked the worst, in terms of performance, for the decade.

Expand The Portfolio

Peter Bernstein is a long-standing advocate of CAPM, the policy portfolio, and efficient markets. As reported in Chapter 4, Bernstein's advocacy of these positions wavered in the teeth of the 2000-2002 bear market. In a 2003 speech and a follow up newsletter to clients he stated that the fixed policy portfolio should be abandoned.

Asset Allocation

The simplest way of incorporating market timing into investment strategies is to alter the mix of assets - stocks, cash, bonds and other assets - in your portfolio. In fact, we judged the capacity of mutual fund managers and investment newsletters to time the market by looking at whether changes that they recommended in the asset allocation mix were useful predictors or future market movements. The limitation of this strategy is that you will shift part or all of your funds out of equity markets if you believe that they are over valued and can pay a significant price if the stock market goes up. If you adopt an all or nothing strategy, shifting 100 into equity if you believe that the market is under valued and 100 into cash if you believe that it is overvalued, you increase the cost of being wrong.

How to find trades

The second step in my scanning process are newsletters. Newsletters and other publications can actually be a tremendous help in order to find the perfect trade. Think about how difficult it is to sort thru the endless lists of stocks every day by yourself. Chances are that you miss some great opportunities. By looking at other tips you can vastly expand your horizon and it also takes away some of the work from you. It is extremely important though to only consider those trading tips that you completely understand and that match your personal criteria. You must know exactly why you are entering a trade, what to expect and most importantly what your risk is.

Segment Method

The next way is the one I have traded the longest. It's the one I was originally taught. I traded with this method for three years at the beginning of my career, and have never abandoned it. I'll show it here just as it was shown in the sixth issue of my newsletter Traders Notebook. If you've read Trading Is a Business, it's in there too. I apologize for repeating it, but it is important.