Monthly Archives: September 2013

Stock Market Analysis September 18 2013

Pre-Market Analysis: September 18 2013

Futures are up slightly. But does that even matter? With todays 2pm Fed forecast, you can expect some intra-day volatility. So I doubt the opening print will be much of a guide for the day ahead.  So what can we do to prepare?

Well, before any market moving event it makes sense to take stock of where you are now. Review your positions, check your cash balances and pull up some charts of the major indices to get grounded.

I’m sorry if this is a repeat for you. But I’m also reminding myself.

For example, IWM is threatening new highs (possibly negating a blow off top). And the Dow Jones Industrials are back at their previous highs (indicating a triple-top or head and shoulders reversal pattern to some traders). And while we are still in a major uptrend, it’s important to understand any potential headwinds so we can be nimble, if it’s needed.

Plus you don’t want to slip into complacency. Especially on a Fed day such as this.  I wish I had more to say, but the truth is you just have to expect some fireworks this afternoon.

My gut feeling is the Fed disappoints and markets pullback.

September 18 2013 Portfolio Review:

As I mentioned at the end of trade yesterday, I’ll be watching for some follow through in SNV. I might even take some profits if we see a morning gap higher. And any sustained run into the Fed meeting will be a “sell the news” event for me.  If there’s a chance to scalp some gains after yesterday’s run up, I’m willing to sell a 1/3 to 1/4 of this core position. Unfortunately (and owing to the low volume of yesterday’s move), I think the more likely play is SNV will retreat lower.

And to be honest I don’t expect much from the rest of my stocks either. BRKS and AEG had flat days yesterday. And I expect them to follow the general market trends once the Fed shows us what’s behind the curtain.

Per my analysis yesterday, TINY is in a world of it’s own. So I’m sure it will be relatively insulated (unless there is huge selling across the board).

Obviously it’s clear from the above I’m pretty uncertain about what will happen next. So to pass the time here’s what I’m researching this morning…

Good Articles For September 18 2013:

— With the Dow Industrials coming to their prior highs, and the QQQ approaching dot-com-bubble prices, it pays to learn about the applications of overhead supply.

7 Reasons Why QE Isn’t Ending.

The Ultimate Guide to today’s FOMC announcement.

Fed likely to reduce bond buying and keep ZIRP.

Taper Scenario by The Fly.

September 18 2013: Stock Market Day in Review

By now you know the news du-jour: No Taper. But can you believe it? And can you believe markets rallied on the news?

Sure it’s great in the short term. And I guess if there is no downside to QE why should we stop. COCAINE FOR ALL. Right?

But wait…

Isn’t the underlying assumption for more that QE that the economy is not ready to stand on it’s own? That’s why I like this bearish ForexKong conclusion. It makes sense to me. And it makes sense UUP got absolutely throttled.

But until equity price action says otherwise, we remain decoupled from economic data, at the whims of an over-arching (and apparently unstoppable) uptrend. So play along accordingly.

And if you’re curious to know how my portfolio help up today, allow me to fill you in:

I finally pulled the trigger on IAG and day traded the stock for about a 4% gain. But it wasn’t anything worth bragging about and could have just as easily gone against me. Plus I dilly-dallied and debated executing the trade for much longer than I should have. I guess that’s why you need more detailed trading plans. I’m really not a day trader.

As for my prior positions: AEG looked good. And BRKS, although a little late to the party, ended up moving higher. I should have took my own advice this morning with SNV and sold when it hit $3.36. But instead I held on hoping for more, and watched the stock fade hard into the close. And oh yeah, per the value trap thesis, TINY did nothing.

So I guess all we can do now is wait. Will there be follow through higher tomorrow? Or was all of this an elaborate head-fake to trap in the capitulating retail bears? Only time will tell. But if you keep a close eye on the price action (including divergences), you might be able to take advantage of the next move (whichever direction it ends up being).

How are you feeling after today’s volatile market action?

PS – if you’re looking for more commentary, check out this tape talk video by Quint Tatro.

Is TINY a Value Trap?

Is TINY a Value Trap?

Is TINY a Value Trap?

I think I made a mistake. My investment in Harris and Harris Group VC (NASDAQ:TINY) might have been a few years too early. So in this blog post I will explain to you why I think TINY is a value trap.

If you haven’t spent much time analyzing TINY before, let me quickly bring you up to speed on the positives to the investment, as well as why this small cap nanotechnology company might be a value trap.

The Bull Case for TINY: Innovation and Value

I first started looking at TINY as an investment idea in early 2013. And in that analysis I detailed the interesting opportunity TINY presented. You don’t often find such innovative companies trading at such low valuations.

And most of these fundamental measures are  true to this day. For example:

TINY is still the only public venture capital company. It is also still debt free and has even realized some gains from a portfolio company in the last few months with the sale of Xradia to Carl Weiss Group. So why is TINY a value trap?

Why TINY Might be a Value Trap:

Even though the fundamental value of TINY looks strong, it’s only a good investment if you can earn a significant return on your invested capital. And from that perspective, shares of TINY don’t look all that attractive. Let me show you what I mean…

Public companies are often hungry to meet analyst expectations each and every quarter. As  result of this, management often takes shortcuts that are detrimental in the long term. While TINY does not have this problem, it does have the exact opposite.

TINY is not concerned with analyst expectations this quarter, or for a few years in the future. Management continues to make this clear. And arguably, this is because the venture capital industry (by it’s very nature) is a little bit more long-term than most traditional operating businesses. But I think in the case of TINY, management has used this narrative a bit too much, sometimes to hide their own shortcomings.

As a result of this long term time frame and the nature of the venture capital industry, investors are starting to lose faith that TINY can ever turn a profit. And the resulting price action is turning TINY into a possible value trap.

Even if TINY does eventually become profitable, investors are unlikely to earn a return for a few years to come.

TINY Technical Analysis: The Definition of a Value Trap

When you look at the daily candlestick chart of TINY it’s pretty obvious that the stock is not performing.  It has not seen any meaningful buying in months. And the stock looks eager to explore all time lows. What’s with all the selling?

One possible reason is:

At the end of June, TINY was delisted from the Russel 2000 index. This resulted in a lot of selling that drove the stock price down (as funds that invested in Russel companies rebalanced) – leaving TINY out in the cold.

Since then, buyers have yet to regain control of the stock and any nascent jumps in the stock have been faded aggressively. On no matter which timeframe you look (monthly, daily, intra-day) TINY has yet to show relative strength or a trade-able bottom.

Is Investing in TINY Trapping Your Capital?

As always, I encourage you to do your own research. And you should also think about how an investment in TINY fits in with you own investing strategy. If you’re looking for a short term trade, TINY is decidedly not for you.

The reason for that is…

It’s pretty safe to assume that TINY is 3-5 years away from generating any significant shareholder value (through IPOs or exits in portfolio companies)… and…

Without this kind of significant catalyst on the horizon, it’s unlikely there will be a sustainable move higher in the stock price of TINY – making it a value trap. On the other hand, if there is a positive surprise, TINY could explode at least 25-30% in value.

But I think the more likely case is TINY continues to amble along slowly (trapping value). Portfolio company revenue is likely to keep growing, but I’m skeptical that will translate to shareholder value in the near future.

While TINY presents an interesting opportunity to invest in disruptive technology at a good valuation, management has not been shareholder friendly and this company is years away from a home run.

Do you think TINY is a value trap?

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Stock Market Analysis: September 17, 2013

Pre Market Briefing: September 17 2013

Futures are flat going into today’s session. CPI data was slightly lower than expected this morning. And at 10am we’ll get results from the NAHB survey. So to be honest with you…

I’m expecting more of a choppy day than a large directional move. I think most traders and institutions will be raising cash and trying to position for tomorrow’s mid-day Fed minutes. That might also explain the selling we saw throughout the session yesterday, after the morning gap higher.

One thing I will be doing is keeping an eye on the correlations between stocks, bonds, emerging markets and commodities like gold. It seems like bonds are pricing in a bit of a taper (yields have recently risen and TLT has fallen). But stocks are still near all time highs.

When there are these “shifts” in policy, it’s always illustrative to watch where the money is going. So keep an eye out for tomorrow’s winner and losers. Make sense?

Stocks I’m Watching On September 17 2013:

After an initial pop yesterday, my portfolio did little but languish about. I was disappointed to see BRKS give back huge early morning gains. And SNV limped into the bell like a sick animal.

IAG printed a very indecisive candle yesterday and it will be interesting to see how Gold (and this stock in particular) moves in front of and after the Fed. I’m looking for confirmation one way or the other, because right now the chart patterns aren’t giving me an edge.

What are you trading today?

Insightful Articles I’m Reading Today:

Will Fed Tapering tighten credit (even if they don’t want it to?)

The taper playbook (understand what you’re up against!)

The MoneySense Guide to the Perfect Portfolio (Book Review)

September 17 2013: Stock Market Day in Review

If we’re being honest with each other, I guess I should tell you: today went better than expected. This is true for both my personal accounts, as well as the markets in general. Allow me to explain why…

Coming in to today’s trading session, I expected a huge amount of vacillation and chop before tomorrow’s Fed forecast. And while the first 30 minutes of trade were rife with indecision, the indices (particularly QQQ & IWM) quickly found their footing and surged forward, the latter up almost a whole percent – possibly negating my call for a blow-off top.

So what does it all mean?

In the last week or so we’ve seen the DOW outperform IWM, so maybe it’s just a little rebalancing… Big cap Dow stocks seem to have consolidated yesterdays gains while the small caps are playing catch-up, right?… Or… could the move up in “risk currencies” be a real thing?

The common perception seems to be the Fed will taper a bit ($10B/month) – which means the economy is doing okay (but not great). And maybe that’s what was being priced-in these last few days. But has a forecast for the Fed fund rate been priced in? Well…

No matter how you slice the pie, it’s hard not to do anything but speculate into tomorrow’s Fed news. And that lack of clear risk vs. reward is what is paralyzed me today.

Luckily one of my biggest long positions (SNV) performed quite well this afternoon. It was a low volume move, so I’m sure it will fade when the fireworks get cracking tomorrow. But for now it’s encouraging to see a strong close in a stock that has been relatively weak for the last month or so. Maybe I’ll even take some profits tomorrow morning if there is a follow-through gap up.

On the other hand:

I missed the move in IAG. But the rest of the miners (GDX) were weak so I held off buying –  at least we saw some confirmation higher. I may join the party tomorrow, but for now I’m sitting on the sidelines with IAG.

And in case you were wondering…

TINY continues to languish to the point I’m thinking about writing up a post about it being a “value trap.” BRKS and AEG also had ho-hum days. Tomorrow afternoon will be the real test though. So I would encourage you to reduce risk and stay patient until we see how the market reacts to the news.

What are you trading ahead of the Fed?

MoneySense Guide to the Perfect Portfolio (Book Review)

The MoneySense Guide to The Perfect Portfolio Book Review

The MoneySense Guide to The Perfect Portfolio by Don Bortolotti

The MoneySense Guide to the Perfect Portfolio, by Don Bortolotti, is designed to help Canadians boost returns and grow your wealth, with a few simple adjustments to what you’re probably already doing.

So how does the Guide to the Perfect Portfolio stand up? And what can this book do for you?

Well, that’s what I hope to show you in this book review. Keep in mind I’ll be looking at the 2012 edition, but it’s still highly relevant and the 2013 version looks very similar. Now, let’s get on with this book review…

Why You Should Read The MoneySense Guide to The Perfect Portfolio:

To put it simply, The MoneySense Guide to the Perfect Portfolio is a fantastically practical primer for the average Canadian who is starting to accumulate some wealth. And whether you’re just getting started, or have built up a nice little nest egg, The MoneySense Guide to The Perfect Portfolio can help you understand your options.

And it doesn’t matter if you are actively interested in your personal finances or not. For example…

If you want to grab your trading by the horns, The MoneySense Guide to The Perfect Portfolio gives you the basic industry knowledge to get oriented. And even more critically… this book highlights the best way that the average retail investor can generate significant returns. So if you’re looking to actively manage a portfolio of money this book will give you a clear picture of how to benchmark.

And do you know what else?

Even if you have zero interest in actively keeping tabs on your assets, you can read The MoneySense Guide to The Perfect Portfolio in one afternoon and be knowledgeable for the rest of your life. Simply put…

This is the easiest way I know of, to learn how you can grow your net worth. You might be struggling in student loans or even credit card debt. And this book will set you straight. If you’re trying to decide between TFSA and RRSPs, this book can help you figure it out.

By the way, if you already have a financial adviser, then you REALLY need to read The Guide to The Perfect Portfolio. And I don’t mean to offend you. I’m sure your financial adviser is a fantastic individual. But here’s the thing…

Your savings are your capital base. And it’s your responsibility to learn how the financial services industry is scheming to make it theirs. I know this might sound a little crazy.

But seriously:

The MoneySense Guide to The Perfect Portfolio is a best-practice primer that will arm you with the knowledge you need to make sound financial decisions for the rest of your life. Even if you only take one of the suggestions in this book, it will immediately pay for itself. You can even buy a digital copy on Amazon for $5 – it’s the smartest decision you’ll make today. And I haven’t even told you my favorite part yet!

So check this out:

What I Loved Most About The MoneySense Guide to The Perfect Portfolio:

Unlike a lot of investing and personal finance books, The MoneySense Guide to The Perfect Portfolio is incredibly applicable for the everyday Canadian. I’m very lucky my Grandmother thought to buy me this book for Christmas a few years ago. So I can definitely recommend it as a holiday gift. Here’s how the book works:

The MoneySense Guide to the Perfect Portfolio is basically a step-by-step guide to reducing the fees you pay when you’re investing, and how you can boost your returns. If you’re not interested in finance this might sound complex. But it’s easy! The book assumes no prior knowledge and gives you all the background info you need.

The chapters pan out as follows in a very easy-to-follow approach:

  1. Change the Way You Think: The trouble with mutual funds, stock picking and a new way to think about investing. (Stop being average!)
  2. Set Your Targets: How to get serious about saving – and defining your financial goals.
  3. Understand Your Risk Profile: Why time is on your side, targeting your rate of return and understanding what you can stomach.
  4. Choose Your Asset Classes: Where to put your money, and how to handle it with care.
  5. Select Your Funds: Indexing, fees and currencies – all you need to know.
  6. Opening Your Account: Learn which broker is for you.
  7. Build Your Portfolio: How to buy your very own funds (for almost no fees!)
  8. Keep It In Balance: The easiest way to boost your long term returns.
  9. Stay The Course: Patience etc.
  10. Sample Portfolios: Your financial success is as easy as copy and paste!

To make it even better, at the end of each chapter there is a real life example from another Canadian that makes it very easy to see how these tips could apply in your life as well. It shows you the exact accounts and products you can use.

But let me make one thing clear:

The MoneySense Guide to The Perfect Portfolio Is Not a Get Rich Quick Guide:

The good folks at Moneysense are pragmatic and practical in their advice. And this is the right approach. This book doesn’t have any fancy technical indicators to help you time your stock purchases. It just has time tested tactics and sage advice you can use easily… to regularly achieve consistent returns and minimize fees.

This book contains a ton of information you can use to increase your net worth. But it’s “get rich slowly kind of advice.” Now I know you might be looking for some financial razzle-dazzle. But this book is just the bear bones advice on how you can responsibly, conservatively and predictably grow your fortune for the rest of your life..

That’s why I encourage you to check out The MoneySense Guide to The Perfect Portfolio for yourself. But just know it is decidedly not a get rich quick scheme. It really just shows you how to make a few quick adjustments to what you’re already doing. And the advantages will accumulate in your accounts for the rest of your life.

Sounds like a good read, right?

It is.

So one last thing:

The MoneySense Guide to The Perfect Portfolio – A Final Word…

I don’t usually endorse a book so fervently. But The MoneySense Guide to The Perfect Portfolio is super easy to read, it’s only $5, and you can literally benefit from it for the rest of your lives. A lot of my friends have now been working for a few years now and are starting to accumulate some cash. This book is the first one I would recommend to all of them to get oriented on their personal finance options. Seriously!

So do yourself a favor and at least read the reviews for The MoneySense Guide to The Perfect Portfolio on Amazon! Unless you have a really in-depth knowledge of your financial options and how to avoid feeds, you won’t regret it. Plus there are tons of illustrative pictures, personal examples and you can read it in about 3 hours. So what are you waiting for?

The MoneySense Guide to The Perfect Portfolio Book Details and Video Book Review:


Author: Don Bortolotti
Publisher: MoneySense
Pages: 127 (with lots of infographics and pictures)

Stock Market Analysis: September 16 2013

Pre Market Thoughts For September 16 2013:

It’s Monday morning and futures are soaring! By now you probably know that Larry Summers withdrew his name from the running for Federal Reserve Chairman (or did he?). Now Janet Yellen is the leading contender and it looks like markets expert her to be far less hawkish than Summers would have been. Make sense?

Remember though that news is secondary and the real show will be to see how these macro-economic events are reflected in price action once the market opens. For now, life remains painful for short sellers. My intuition is that this rally will be faded. But I’ll let the market be my guide once things get moving and shaking.

Stay attuned to the action in IWM, UUP, EEM and TLT. It’ll be interesting to see how these different markets react to the news. So far it looks bullish for EEM and bearish for UUP. But keep in mind…

The real news event this week might come Wednesday, which is when the Fed will talk about tapering and what the path forward will be. ForexKong has a great post on how FED tapering might play out. And it’s a decidedly “risk off” tone.

But only time will tell how all this goes down. So stay tuned as it’s bound to be an exciting week.

Stocks I’m Watching on September 16 2013:

Obviously my fingers are crossed. And I’m hoping my stocks will participate in the “End of Summer” rally. If I get a quick pop in any of my names I might defensively take profits. This is a technique I use to lock in unexpected and fast overnight gains. It doesn’t always work, but I’m happy to sell 1/4 to 1/3 of a core position when there is a 7-10% gain I wasn’t expecting.

Plus, in this case extra cash ahead of the Wednesday Fed meeting wouldn’t be a bad thing. And if there’s a pullback then I can reinvest at a lower price, further compounding my victory. The only risk of course is that the DOW soars straight to 20,000. But I don’t know if that’s a high probability trade.

So I’ll be primarily focusing on BRKS and SNV to see if they can run into the opening bell. It will also be neat to see if IAG pulls back at all – in which case I might start a small position front-running the Fed (don’t try this at home).

Good Articles and Trading Resources For September 16 2013:

— Quint is back with another Tape Talk: watch this free video to get oriented on how markets are poised going into this week. These videos are a must-watch.

ForexKong says to raise cash ahead of the Fed. Play it safe friends.

Stock Market Day in Review: September 13 2013

It was a great day for the DOW and EEM. But everything else (including the contents of my portfolio) faded hard off the opening prints.Talk about frustrating.

And actually…

It was a little strange to see such broad big cap strength, while the technology components that have led us higher the last month took a pause. On a personal note, despite XLF moving higher my SNV position lagged in a big way. But that wasn’t the only oddity that caught my eye.

The reversal in treasuries (see: TLT) off the opening highs was pretty stark. It’s hard to say if the party in bonds is over… or… people are “just” reducing exposure ahead of the tapering news to be released Wednesday afternoon.

On that note, ForexKong has a good post on the possible implications of different degrees of tapering.

I am closer than ever to buying shares of IAG, but the ferocity of today’s selling (in terms of volume), has me on the sidelines once again. It looks like support held at $5.10, but I believe it could ride the bottom Bollinger band a little lower before bumping into some trend line support. Maybe I’m trying to hard to pick a higher low and will get burned. But for now there still looks to be some downside (technically speaking).

How are you preparing for this intra-week volatility that’s lurking just around the corner?

Update: Chessnwine’s technical analysis market recap shows a potential head and shoulders top in the Dow. Check it out!

Stock Market Analysis September 13 2013

Pre-Market Thoughts for September 13 2013:

Happy Friday! Futures are down and it’s almost time for another opening bell. We’ll be watching at the open to see if the pause in SPY and IWM continue, or confirm either higher or lower. But really…

Who cares! This Twitter IPO is all I can think about. Too bad I sold my GSVC a year too early. Of course the valuation will end up being silly. But it’s fun to speculate.  As for the market at large?

Per Chessnwine’s video recap, the question today will be how the market deals with overhead supply from the previous July/August highs. XLF is lagging but IWM And SPY are coming into resistance. So do we roll over, or melt up slowly? My money is on the latter, but not immediately. Today, I expect selling and a choppy session, especially with today’s retail sales miss (the last pre-taper data point).

Stocks I’m Watching For September 13 2013:

IAG continues to look interesting and oversold. I’m hesitant about catching knives though. So I’m not exactly sure how to play this. I might start out with a “pilot buy” if we some stabilization this morning.

If the BRKS pullback continues on low volume I might add to my exposure. It’s had an overwhelmingly constructive week and I’m curious to see if it can continue to grind higher. On the other hand, as long as SNV doesn’t move backwards, I’m feeling good.

What are you trading today?

Good Articles I’m Reading Today:

Interesting interpretation of Putin’s piece.

— Looking for a job? What about being a flight-nanny?

How to find cheap momentum stocks on Finviz.com

— Update: BRKS got a new CFO...

Free Video: How to Find Stock Ideas with the Finviz.com Signal Screener:


Thanks for watching!

Stock Market Day In Review: September 13, 2013

I’ll keep this short, because I have a weekend to get to. Which reminds me: What’s the point in working so hard, if there isn’t any opportunity to have fun right?

Besides…

Although today’s session was stronger (and with more breadth) than I expected, I’m still slow to make any big moves ahead of the Fed’s tapering decision coming out next week. In fact, I spent most of the afternoon looking at IAG, humming and hawing. But I was unable to make anything happen.

BRKS and SNV were just about as productive as me – flat on the day. So let’s just enjoy the weekend and see what the market brings us next week. I’ll try to post another book review or two for your weekend reading. In the meantime, check out these stock trading books reviews.

Peace.

Stock Market Analysis September 12 2013

Pre-Market Thoughts September 12, 2013:

Happy Thursday to you! Futures are basically flat this morning and we are all waiting eagerly to see where the money flows once the opening bell rings. Can the Dow-30 hold on to yesterdays gains?

As I said yesterday evening, I think there is a possibility institutional money managers will be selling into POMO over the next two days. Just look at the run up we’ve had. And the US dollar also looks set to bounce which might present a headwind for equities (although that correlation has been dicey as of late).

US Jobless claims are the lowest since 2007. Of course, nobody is really sure what this means. And in this “good news is bad news” world of market logic, the only thing that really matters is how the indices react to this news. Accordingly, I will watch the open closely but refrain from any action for the first 30-45 minutes.

Make sense?

My Portfolio On September 12, 2013:

I’ll be mainly watching for follow through today. I’ll be asking if BRKS can continue to consolidate higher, or if I’ll get a chance to dip buy it. And if SNV can hold on to yesterday’s late afternoon gains I will be the very picture of content. AEG has also shown strong performance lately and I will keep a close eye on it. The action in BP is also encouraging to me.

What stocks are you watching today?

Depending how things go, the moment might be right for an IAG trade, too. Perhaps the selling seen in the last two days could continue but since I don’t yet have a position a “pilot buy” might be in order – drawdowns be damned. Gold is getting slammed pre-market so I will watch the open and be sure to let you know if I dip in a toe should things stabilize.

But that’s not it. There’s lots more to share with you this morning…

Market Articles Worth Reading Today:

Free FinViz Stock Screen for Fundamental Value (Video) – how do you find safe stocks to invest in?
Pit Bull: Lessons from Wall Street’s Champion Day Trader
Putin pleas for caution (presumably you’ve seen this by now, but just in case).
Michael Dell Wins! Dell is going private for $25 Billion.

Update: Barry Ritzholt has a great piece called “Is the Market Rallying on Syria or Summers?” I particularly like the introduction where he dismantles the idea that each minute-to-minute move in the market can be described by macro-economic events or news headlines. Smart.

Free Video: How To Find Cheap Momentum Stocks with FinViz.com:


Thanks for watching!

Stock Market Day in Review: September 12 2013

Sorry for the late update. I was running some errands this evening and am only now getting back to today’s market action.

For me, it was a mixed bag. After my early declarations of relative strength, BRKS faded into the close. On the other hand SNV held up like a beauty.

All in all not a bad day. And that’s kind of what we were expecting. Whenever I hear traders talk about POMO on a given day, like today and tomorrow, their seems to be an assumption the market will go up. But wouldn’t it make more sense to run up price in advance, if you know someone else is footing the bill?

From here I think it’s important to judge the nature of the pause in equities rallying. Maybe there will be more trepidation tomorrow. But as long as things don’t deteriorate too much I think you have to respect the ongoing uptrend (it’s what markets do after all, right?)

I don’t have 100% exposure (about 20% cash) but I’m feeling okay being long in stocks with conservative valuations (relative to earnings and assets).

How are you playing this?

Pit Bull (Book Review)

Pit Bull Book Review

Pit Bull By Martin Schwartz: Lessons from Wall Street’s Champion Day Trader

Pit Bull, by Martin “Buzzy” Schwartz is a great book containing, “Lessons from Wall Street’s Champion Day Trader.”

But even that title doesn’t do Pit Bull justice. So let me quickly show you why this book is worth a read… you see…

Pit Bull is the biographical account of how Martin Schwartz became an insanely successful day trader. But this book is not your typical biography. Why’s that?

Well:

Throughout the story, Schwartz continually reflects on his accomplishments and challenges. Then he highlights specific lessons, rules of thumb and specific strategies he uses to achieve success. You can take this advice to the bank.

Accordingly…

Pit Bull is not only entertaining, but it’s also incredibly instructive (much more so than most biographies). I really enjoyed reading Pit Bull and found Schwartz’s story to be inspiring and educational.

So let me tell you a little bit more about this classic trading biography.

Why You Should Read Pit Bull:

Pit Bull is a great read for a number of reasons. As I already mentioned, the book is incredibly educational. In addition to the fact you get lessons and rules of thumb highlighted throughout the book, there are also some very useful appendices designed to make the book more applicable for the average trader.

For example:

The end of the book contains one section called “The Pit Bull’s Guide to Successful Trading” which is packed with applicable tactics and ideas you can use to improve your trading. But that’s not it.

Another really eye-opening aspect of the book is the “Typical Day” section, where you see the average day in the life of our Champion day trader, (broken down into 15 minute increments). Needless to say…

It’s very cool to see exactly how Schwartz finds his groove each and every trading day. It’s also instructive that someone as successful as him is so focused on how he uses his time. That’s not an accident.

So what else should you know about Pit Bull?

Beyond the educational nature of the book, another reason Pit Bull is worth reading is because it shows how Marty Schwartz started out, as well as how he succeeded. I always find it more interesting when biographies start at the very beginning.

In this case…

You get to see what Martin studied in school, what his first job was, the role of family in his success and then eventually how he went out on his own as a day trader and rose to the top. For anyone looking to emulate this career path (or even just learn more about it) this comprehensive start-to-finish view is incredibly interesting.

But that’s not even my favourite part.

What I Liked Best About Pit Bull:

There is one thing about Pit Bull that really makes it stand out from a lot of the other trading and finance books out there. Mainly, Pit Bull is not self-aggrendizing at all. It is amazing to me how objective Schwartz is when he looks back and reflects on both the good and the bad.

It is this objective and realistic focus that makes Pit Bull so interesting to anyone interested in investing. By being modest for most of the book, Schwartz’s success are credible, believable and (more than anything) inspiring. At the same time, you are understanding of his failures and shortcomings because he is so quick to help you learn from them.

Specifically:

There are a few chapters of the book that really focus on the time in Schwartz’s life when he was managing money for other investors. These chapters are incredibly educational for anyone thinking about starting a fund or taking on any related fiduciary responsibility. Schwartz is quick to admit where he made mistakes in managing other people’s money (OPM, as he calls it). And you would be well served to review these passages, if you’re ever thinking of entering the money management game.

Pit Bull: What More Could You Want?

This is usually the part of the book where I write about what a given book doesn’t cover. But Pit Bull is pretty comprehensive. And there’s only one more thing I can think to put here…

If you are searching for reasons not to buy Pit Bull, the only thing I can tell you is that the book is a first person account, so it’s not exactly academic. All of the tactics and ideas are based on personal experience. Schwartz has a very successful track record though, so I think for me the proof was in the performance.

But beyond that little factor, Pit Bull is a very in-depth guide to life as a successful Wall Street day trader. It also gives a very clear view of what’s required to become a day trader, and Schwartz gives incredibly actionable suggestions as to how you can accomplish this in your day to day life.

Sounds pretty good right?

Pit Bull: The Final Word

Pit Bull is an incredibly interesting book. It’s easy to read, but long enough to present a comprehensive view of life as a successful day trader. I have yet to find another book that so aptly describes how to make it as a modern day trader. Beyond the discussion of career path and character traits, the book also has useful apendices that makes the lessons all that much more applicable.

So:

Even if you’re only a little bit curious, I really encourage you to buy Pit Bull on Amazon. What do you have to lose? And if you’re looking for a little more information, you can watch the video book review below.

Pit Bull Details and Video Book Review


Author: Martin Schwartz
Pages: 320
Publisher: Harper Business

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Stock Market Analysis, September 11 2013

Pre-Market Brief: September 11 2013

Futures are flat this morning. So it will be interesting to see if the market can digest recent gains with a tight consolidation. I expect to see some profit taking today or tomorrow. But it’s the “nature” of that price action that will be interesting to me. Bulls don’t want to see things get too sloppy.

Today’s action in GS might give a clue as to how concrete this push higher it. The stock was threatening to break down but has since snapped back (not unlike ITB). Bears should be encouraged though if GS gives back much of yesterday’s move.

My Portfolio On September 11 2013:

I was lucky to see some follow-through in BKS yesterday. And AEG had a strong showing as well. I may take some profits in the former, and then look to reinvest them on any pullback to the $9 range.

SNV’s Kessel Sterling laid down a convincing presentation at the 2013 Barclays Financial Services Conference

The whole thing struck me as shareholder friendly and gave the impression that the company is still focused on sustainable improvements (including both cost-cutting and disciplined, profitable revenue growth). I think SNV goes higher by the end of the year, but I’m happy to add to my position on a pullback should the opportunity arise first.

Other Good Articles This Morning:

— Econ professors endorse Yellen (but isn’t Summers the one hanging out on campus?

— The last Goldman Sachs guide you’ll ever need to read: GSElevator Guide to Being a Man

— New Book Review: The Making of a Stockbroker

Back with more later!

September 11 2013: Stock Market Day In Review

That was more bullish than I expected. I guess all that late August price action got me skeptical. So let me just share a few of my surprises with you:

I was surprised to see CAT go higher. I was surprised to see IBM crush shorts. I was even a little surprised to see ITB perform as well as it did. And to cap everything off, XOM didn’t totally cave. Yup, it felt like large cap stocks (finally) did great. And everything else kinda just hung in there.

Well…

Not a bad day. Not a bad day at all. And hey, for once in this quarter I was pleased with my own book as well. AEG and BRKS showed that overbought stocks can stay up (although BRKS is coming up into a pocket of supply). And perhaps most surprising of all…

Just when I was getting ready to dip-buy SNV, it bucked higher into the afternoon trade. It was encouraging to see buyers regain some control in that name.

I also like the action in BP lately. And I think the valuation is pretty conservative (lawsuits excluded?)The only real loser today was AAPL, and I hope it loses more (so I can eventually buy some, and win). Finally the pullback in IAG is looking even more ripe for the picking.

All that bull-cheering aside…

IWM did threaten to go lower before spiking into the close. And I’m sure at least some market participants are starting to reduce their leverage and cash in some chips after the solid performance these last few days. Traders on Twitter are saying there are two big POMO days coming up. And while it’s fun to think uncle Ben cajoles us higher. The more likely play might be for institutions to sell into the open market operations.

Intermediate term, I don’t think it’s unreasonable that we finish the year higher. With the indices doing so well this it’s conceivable that money managers are chasing. Alright, let’s wrap this up with an end of day video...

Free Finviz Stock Screen For Fundamental Value:

PS – If you’re looking for a serious market recap, check out chessnwine’s daily technical analysis.

 

The Making of a Stockbroker (Book Review)

The Making of a Stockbroker (Book Review)

The Making of a Stockbroker by Edwin Lefevre

The Making of a Stockbroker, by Edwin Lefevre, was first published in 1925. And it’s the story of John Wing… who said (in his own words)… “I hate to talk of myself, but I want you to get the broker’s business as it really is.”

And that pretty much sums it up! The Making of a Stockbroker, is John Wing’s step-by-step rise to the top of a prominent Wall Street investment bank. It sounds simple. But it’s a book I really enjoyed. And I think you will too. So…

In this book review I will explain to you the best parts of The Making of a Stockbroker. I’ll also try to cover what the book doesn’t cover. Finally I’ll shed some light on why the truisms in this book are still relevant today (almost 100 years after publishing)! So without further ado…

Here’s Why You Should Read “The Making of a Stockbroker:”

The Making of a Stockbroker is a time-tested tale of Wall Street success. Just the very fact that it was published over 90 years ago by Edwin Lefevre means it should be on your book shelf. This is classic Wall Street literature. But you probably already knew that. So let me tell you a little more about The Making of a Stockbroker:

The story begins with the early years of John Wing’s life,  follows him through his education at Harvard until he eventually becomes the senior partner at Bronson & Barnes – a most prestigious investment brokerage. Of course there are trying hardships and inspiring successes along Mr. Wing’s rise to the top. But I don’t want to give the whole story away for you. Because in this book, the beauty is truly in the details. Really…

Lefevre goes into a healthy (but not boring) amount of description in all the most exciting deals that are outlined in The Making of a Stockbroker… especially those responsible for catapulting John Wing upwards on his career path. One more thing I liked about The Making of a Stockbroker is… While the whole book is incredibly well-written (since Edwin Lefevre was an adept financial journalist in his time), the way the story flows is surprising. At first glance, the career of an investment banker might not sound that interesting to you. But…

For those readers who are interested in learning how they too can climb the corporate ladder of Wall Street, this is a “do it yourself” read like no other. And that reminds me, there is one thing Making of a Stockbroker really does well. Do you want me to share it with you?

What “The Making of a Stockbroker” Teaches Best:

As you can probably tell, there are a lot of things I like about The Making of a Stockbroker. But there is one aspect of the book that strikes me most of all. And it’s especially relevant when you think about Edwin Lefevre’s other book (Reminiscences of a Stock Operator)…

You see while the character portrayed in Reminiscences (Larry Livingston) ends up being successful, his methods seem a little more speculative. In fact, Larry admits that he must be disciplined because his trading in stocks is only slightly removed from gambling. On the other hand… The thing I like best about The Making of a Stockbroker is how it lays out common sense things that you can easily do to succeed in your career. This book really helps you re-create Mr. Wing’s success in your own life (and in whatever career path you end up taking).

Where Larry Livingston lost all his money a number of times because of trades gone wrong, John Wing continued to build wealth through his entire life. And while you can learn a lot from both books, the latter scenario resonates more with me as one I would want to replicate. But before you think I’m too biased about this book, let me tell you what The Making of a Stockbroker leaves out.

Here’s What “The Making of a Stockbroker” Doesn’t Cover:

Although The Making of a Stockbroker is an incredible book that accurately describes how ambitious young people have thrived on Wall Street, it doesn’t give you everything on a silver platter. I want to make it clear that this book doesn’t give you exact scripts you can use to get customers as a stockbroker. It’s far more valuable.

Instead of tactics you can use (and which would probably be obsolete by now), this book gives you the time-tested fundamentals of business success. You can use the contents of this book to help you form the right habits. And that’s what will serve you for a lifetime. Mr. Wing seems to live by principals akin to those Napoleon Hill advocates. And so that should tell you…

This book is not going to automatically provide you with a thriving brokerage firm on a silver platter. But The Making of a Stockbroker will go a long way in educating you how to earn success on Wall Street.  And really, could you ask for anything more?

“The Making of a Stockbroker” – The Final Word:

I  hope this book review has given you a good idea of what you can expect when reading The Making of a Stockbroker. But you should definitely check out the Amazon reviews for yourself and see if this is a book for you.

Personally, I can wholeheartedly recommend this book as an excellent read for anyone actively interested in a career in investing. What do you really have to lose?

The Making of a Stockbroker Details and Video Book Review

Author: Edwin Lefevre Pages: 341 Publisher: Fraser Pub Co

Other Books By Edwin Lefevre: