Monthly Archives: February 2014

The Silver Commodity Trade in 2014

silver commodity trading 2014

Are you ready to surf the silver commodity trade in 2014?

The Silver Commodity Trade in 2014 is off to a very strong start. So is 2014 finally the year the silver commodity trade is bound to take off?

Well…

In this blog post we’ll look at the silver commodity trade in 2014 and whether or not it is too late to get in on the action. We’ll also look at some of the best silver commodity trading instruments available to individual and self-directed investors. This should help you make the most of silver trading in 2014 as well as any other precious metal opportunities that might come up.

But first let’s consider the bigger picture…

2014 Commodity Trading: Silver, Gold and Softs…

2014 has been a very different year in the stock market than 2013. So far, the indices have wobbled around, threatening to break down and then appearing to break even. But through all the noise in equities, the stocks of precious metals, miners and other commodity players have been performing very well.

I’m hardly the first person to focus on it. But the opportunities in the 2014 silver commodity trade are getting pretty hard to ignore. Just take a look at the chart below…

silver and gold commodity trading price charts

Will silver, gold and soft commodity traders continue to outperform in 2014?

As you can see, gold, silver and other commodities (like natural gas and coffee) have performed very well year to date, even while the major market averages have lagged. This is a stark change from 2013. And if this is the start or a new trend change, then commodity traders best get ready for action.

Now we’ve already covered the golden stock investing opportunities for 2014. So let’s look a little closer at trading the silver commodity this year…

Silver Commodity Trading Options For 2014:

Year to date, Silver has outperformed gold. This is nice to see for silver commodity traders as silver had been lagging into the end of 2013. Now if you’re looking to ride the silver bull a little higher, there are a couple of ways you can do it.

Here’s a list of silver commodity trading options for 2014:

Silver Metal ETFs: Of course you can buy silver coins online. But that doesn’t really appeal to the regular commodity traders. So instead let’s focus on the popular silver trading ETFs. SLV and AGQ are probably the most popular silver metal ETFs commodity traders can use to get silver exposure. They trade primarily on technical analysis though so you’ll want to be quick. And if this is truly a major bearish to bullish reversal getting a good entry will require good trade execution.

Silver Miner ETF: If you want to lever your exposure to the silver commodity, then working on the metals miners can be an even better way to play the silver commodity trade.  Usually these silver metals are levered to the physical metal and if you are counting on an increase in the price of silver this can be a great way to get trading exposure to this commodity. By focusing on the ETF, you also eliminate company specific risks (like mines collapsing or whatever). The most popular silver miner ETF is SIL. There are a few other smaller ETFs but SIL is definitely the most liquid.

Silver Miner Stocks: If you’re looking to dig deeper than just the sector, you can look through the individual silver mining stocks too. Some of the most well-known silver commodity miners are EXK and SLW. If you want to look deeper you can also compare silver stocks by looking at this silver industry stock screen. Silver miner stocks might currently be under-valued and are worth digging through if you’re hungry for commodity trading opportunities.

Hopefully these options will help you find the best way to trade the silver commodity in 2014, as well as any other precious metals that might catch your eye. So far 2014 is looking promising to silver commodity traders so let’s hope it keeps up!

And By The Way: If you’re looking for more information on how to find investment ideas and improve your approach to stock trading then please download the free e-book below. Just enter your name and email for instant access!

What Are The Best Marijuana Stocks To Invest In

best marijuana stocks to buy

Are these popular marijuana stock investments really going mainstream?

What Are The Best Marijuana Stocks to Invest In? The question of marijuana stocks keeps coming up, and for good reason too. There are lots of marijuana stocks that are flying high in capital appreciation.  But there are also marijuana stocks that are bound to collapse in price trapping undisciplined investors in the downfall.

So…

This blog post will introduce you to some of the most popular marijuana stocks to invest in for 2014. I’ll also share some other popular resources for finding marijuana stocks. By the time you’re done reading this blog post you’ll have a long list of marijuana stocks to invest in.

Just keep in mind: A lot of publicly traded marijuana stock companies have appreciated a lot in the last few weeks. I would bet the stock market is pricing in further regulation and decriminalization or legalization of marijuana in more than just Washington and Colorado.

Now let’s get to a list of the best marijuana stocks…

Most Popular Marijuana Stocks to Invest In (By Market Cap):

I set up a stock screen to find marijuana related stocks and sorted by market caps. This index is by no means complete but it contains some of the most popular marijuana stocks to invest in. Keep in mind these stocks are all pretty highly priced based on book value (and lack of earnings). So be careful when speculating in these pot stocks…

best marijuana stocks to invest in

Here are some of the best marijuana stocks. But even these have sky high prices… (click to enlarge)

While these are some of the most popular marijuana stocks, you can see they aren’t exactly profitable. So here are some other lists of marijuana stocks that can speed up your research to find legal weed related opportunities.

Where To Find Marijuana Stocks To Invest In:

If you’re still looking to find marijuana stocks to invest in there are a couple of other resources around the web that you might want to check out…

MSN Money has an article (sourced by Benzinga) that shares 14 Cannabis Stocks to Invest in For 2014. This article shares a variety of different cannabis related companies. The list features companies that touch all different parts of the marijuana supply chain. So if you need a diverse list of marijuana stocks to invest in check out the link above.

MarijuanaStocks.com also has an in-depth list of marijuana stocks that you can peruse. I’d recommend you be careful on all of these stocks. Make sure they are liquid and that you are only using them for a quick trade.

Over at the iBankCoin blog, a lot of the traders are also talking about PHOT. I haven’t checked out this company myself (not even for a second). But that’s the word on the street. So let’s wrap this up…

Since the world of marijuana stocks is so new there is a lot of hype. And there aren’t a lot of proven companies that have demonstrated profitable revenue growth.

Now:

Hopefully this blog post has helped you find the best marijuana stocks to invest in. The industry is still quite unproven so I recommend you keep your positions small and only buy highly liquid stocks.  Finally, be sure to keep tight stop-losses so your brokerage account doesn’t go up in weed smoke.

And By The Way: If you want more information on finding stock ideas to invest in then I encourage you to sign up for my free eBook below. You’ll get weekly email updates with free resources and tools to help you improve your stock trading.

Updated: Here is a complete list of Marijuana tickers… Enjoy!

LATF ZDPY ERBB ENRT SKTO ATTBF MWIP CBGI MCIG PLPL AERO VAPE CARA HSCC RFMK MNTR CBDS FITX BRDT AEGY NTRR MDBX HEMP FULL CANN ICBU FSPM EDXC EXMT PUGE GWPH CANV MJNA NVLX EAPH CBIS AFAI TRTC CYBK GRNH AVTC RIGH REFG PHOT VTMB

Investors Never Invest Their Own Money, Right?

investors never invest their own money

Investors never invest their own money, do they?

Investors Never Invest Their Own Money” is a popular saying. So it must be true, right?

Well, as you’ll see in this blog post, the case of investors never investing their own money is more complicated than you think. And while there are some successful investors who never invest their own money it’s not as black and white as you might think. So…

In this blog post we’ll dig a little deeper into the old saying that investors never invest their own money. So let’s look at some examples…

Origination of “Investors Never Invest Their Own Money”

The exact origin of the saying “investors never invest their own money” is hard to nail down. But from the research I’ve done it seems to apply most to new technologies and unproven ideas. In this case, it might be more accurate to say “Inventors never invest their own money!”

And to be fair, that’s the kind of thing you see all the time. If you’ve ever watched an episode of Shark Tank you know what I’m talking about! In these cases, people who have invested their own time into their own ideas come looking for venture capital investors to put up some big bucks. In this case, the investors always invest their own money, but the founders looking for funding have no money left to invest. Make sense?

But do stock market investors never invest their own money? Let’s look a little closer…

 

Do Stock Traders Ever Invest Their Own Money?

Believe it or not, a lot of investors and stock traders invest their own money. it goes against the common saying that investors never invest their own money. But I can give you proof. Even Warren Buffett, the most successful investor of all time invested his own money.

To be sure, Buffett also raised money from external investors so he could make more meaningful return on investment. But as his company grew, he continued to become a larger and larger majority investor and shareholder. So this should show you that investors can and do walk the talk. It is not that uncommon for investors to invest their own money.

On the other hand, there are also investors (and especially stock traders) who never invest their own money…

Prop traders are a type of stock trader that never invests their own money. They are usually employed by a bank or a trading firm and their sole focus is on trading the money in their employers account. I guess when you have that much money you need to hire people to try and earn a return on it! So, if you’re interested in being an investor or trader but you don’t have a lot of money right now you can check out eToro, or consider working for another investment manager or trading firm.

So while it’s common wisdom that “investors never invest their own money” it should be clear to you now that this matter isn’t so black and white.  There are investors who always put their money on the table, and there are other investors who never invest with their own money. It just goes to show that in the world of investing there is something for everyone!

And By The Way: If you’re curious to learn more about investing strategies, tips and tools I encourage you to download my free mini-ebook using the form below. It’s only 12 pages and will show you exactly how I’ve refined my approach to investing.

What’s The Best Place To Buy Stocks?

best place to buy stocks

This isn’t the old days of Wall Street, so what’s the best place to buy stocks?

The Best Place to Buy Stocks is something StockIdeas.org readers are always asking about. So I thought I would take a couple of minutes and write this blog post to address this topic of the best place to buy stocks once and for all.

So…

What’s the best place to buy stocks? Well, at the risk of sounding facetious, the best place to buy stocks is online! Buying stocks online is the best place to buy shares because it is easy, cheap and fast. Most of the time you can even buy stocks online from your cell phone.

Now let’s dive a little deeper into why the best place to buy stocks for yourself is through the internet…

Discount Brokers: The Best Place To Buy Stocks Online:

Discount stock brokers have made the internet the best place to buy stocks if you are an individual or self-directed investor. That’s simply because the commissions and the account costs are so much lower than a traditional full-service brokerage account. Based on these factors alone, buying stocks online through discount brokers is the best option you have for a place to buy stocks.

And yes…

While there is definitely a place for full-service wealth advisory firms, for most individual investors that want to manage their own portfolio investing online is what makes the most sense. Besides, learning how to invest in stocks online is probably more straightforward than you think. And once you are set up to buy and sell stocks online it’s easy to keep adding money and snowballing your stock purchases.

Plus, buying stocks online is easier, faster and you don’t need a ton of money to get started. Instead of having to put up a five figure amount to open a brokerage account you can buy stocks online without a lot of money. If you’re just getting started you can also practice buying stocks online with stock simulators.

Now that you appreciate why the best place to buy stocks is online, let me share a few of the best resources to buy stocks online…

Resources To Find The Best Place To Buy Stocks:

Now that you know the best place to buy stocks is through the internet, let’s review some of the best places online to buy stocks.  Here are the best places to buy stocks online in Canada and some places to buy stocks for beginners. So…

If you’re looking for information on investment strategies and which stocks to buy online then you will definitely want to read about how other successful investors are making money being online investing. The good news is, a lot of these resources are available free online.

For example:

You can easily peruse the best value investing blogs to get personalized and unique insight into opportunities and places to buy stocks online. You can also browse more mainstream but still very high-value online investment sites. Combining all this information with your investment decision-making methodology and your simple trading plan will have you buying stocks in all the best places.

So to wrap-up: You definitely don’t need to wander down to Wall Street to find the best place to buy stocks. You can easily, quickly and affordably buy stocks online without incurring the high brokerage cost that most people associate with buying and selling stocks.

And By The Way: If you want more information, resources and insight into how you can find the best places to buy stocks online I encourage you to download my free ebook below. You’ll get an inside look in how I refined my approach to buying and selling stocks. 

Tested Stock Trading Systems

tested stock trading system

Keep your stock trading on track with these tested stock trading systems.

Tested Stock Trading Systems are more popular than ever. And that’s because tested stock trading systems are no longer reserved to institutional money managers, mutual funds and hedge  funds.

In fact…

The proliferation of the internet has made tested stock trading systems more available to self-directed and individual investors than ever before. And after you read this blog post you’ll have a clear grasp on what goes into a tested stock trading system and how you can find a stock trading system that works for you. So let’s dive into it…

Building Blocks of Tested Stock Trading Systems

Before you build or buy your tested stock trading system, there are some foundational concepts you need to keep in mind. These are the building blocks of a tested stock trading system. And without them you won’t have a reliable stock trading system that you can back-test and improve upon.

So what are these building blocks of a tested stock trading system?

Basically, when you’re building a tested stock trading system you need to have a simple trading plan. But don’t worry, this step is actually very easy. The main point to keep in mind is you need some basic rules to help you with your stock trading decision making. You need simple guidelines to determine when you buy and when you sell. You see…

You can’t build or buy a tested stock trading system to automate your trading if you don’t have conviction int he simple guidelines that dictate when your system buys and sells. Make sense?

Now if you haven’t thought about making a trading plan before, here’s what you can do…

Research Other Tested Stock Trading Systems:

An easy way to get acquainted with a tested stock trading system is to read about the trading systems that other people have built. While most tested trading systems are based on proprietary stock market models, there are still lots of information sources you can use to read about the tested stock trading systems others have built.

One book that I found particularly helpful in acquiring a “trading system” mindset is The Best Trading System by Chris Beanie. This book is very simple and easy to read. But it helps you start to think like a “system trader.” Until you have a mental framework to guide your decision making and help you have conviction in your trading system you won’t be profitable. Reading books like the one above really helped open my eyes to this type of thinking. And…

It prepared me for the final step in getting the perfect tested stock trading system.

How To Make Your Own Tested Stock System:

The final step to getting a tested stock trading system is to make one! Of course you can buy someone else’s stock trading system. But you might as well subscribe to a penny stock service if that’s your approach. I think building your own tested stock trading system is the best way to get a trading system that works for you. Plus it’s easy and fun!

Let me show you what I mean…

Tested stock trading systems can be built online.And it’s faster than you think. One of the coolest websites to help you build your own tested stock trading system is Quantopian. The great thing about this stock system building website is you can back-test all of your ideas against their 11 years of data. Plus, you can also steal, tweak and modify the tested trading systems that others have built! Finally, you can integrate your Quantopian system with your online brokerage account. It’s really amazing…

Even only a few years ago you would not have been able to build and test your own stock trading system. But nowadays with all of these free online trading services and communities it’s easier than ever to find and customize the perfect tested stock trading system for you. What more can you ask for?

So, now that you know the basic knowledge required, and the exact tools you can use to implement your stock trading strategies why don’t you try building your own tested stock trading system? It’s easier than you think and can help put your capital gains on autopilot (assuming everything doesn’t go wrong!)

And By The Way: If you’re looking for more information on how to develop a profitable approach to the stock market I encourage you to sign up using the email form below. You’ll get free tools and resources I’ve used to help build a consistently profitable approach to the stock market.

 

Socially Responsible Investment Funds

socially responsible investment funds

Read this blog post to learn about the opportunities to invest in a sustainable future…

Socially Responsible Investment Funds are gaining interest with consumers. So in this blog post I’ll share some of the more common socially responsible investment fund options that individual investors can pursue. While responsible investment funds is a relatively new investing niche it is rapidly gaining steam. And for good reason…

In case you’re new to the topic, socially responsible investment funds seek to allocate investor capital into socially responsible investments. So what makes a socially responsible investment?

Well it’s a good question. And in the case of each fund it usually differs a little bit. But the gist of the concept is…

These funds only invest in companies that are tackling social or environmental challenges. A lot of the companies in these socially responsible funds might be related to clean energy, low-cost water purification, micro-finance, renewable fuels and fats… and that’s just the tip of the iceberg. If you’re curious to learn a little more about socially responsible investing check out the US Forum for Sustainable and Responsible Investing to get up to speed on the basics.

And to be clear, socially responsible investing is not some sort of charity case. Most of these socially responsible investing funds are run by major capital market players. This is all about funding sustainability that is already showing shareholder (and stakeholder) returns. Now, let’s take a lot the most popular socially responsible investment funds…

List of Popular Socially Responsible Investment Funds:

These socially responsible investment funds are some of the most popular I could find online. Keep in mind I don’t have personal experience with these products but they seem to be the ones that are top of mind to investors. If you want to invest directly in ethically-run companies, then read this list of the top 50 socially responsible companies. Most of these companies are Canadian but a lot of them have American traded stock equivalents.  You can also check out the companies at the top of the Dow Jones Sustainability Index.

So there you have it! If you’re looking for socially responsible investment funds hopefully the list above will shave some time off your research. If you do go ahead and investment in these socially responsible funds I encourage you to leave a note in the comments section below – we’d love to hear your experience!

And By The Way: If you’re looking for more information and resources on how to develop a profitable approach to stock market trading I encourage you to download my free e-book below. It’s an easy read. And you’ll sos get free information and tools to help you improve your trading.

Strategy For Buying Short Squeeze Stocks

strategy to buy short squeeze stocks

Read this blog post to see how you can trap unsuspecting bears in a short squeeze…

A Strategy for Buying Short Squeeze Stocks can be a a profitable area of opportunity for investors and traders alike. And since I recently got a question about a strategy for trading short squeeze stock ideas I wanted to write a quick blog post about it.

So…

In this short blog post I’ll share some proven strategies of buying short squeeze stocks. You’ll learn what to look for in the perfect short squeeze.

I’ll also share one of my favourite short squeeze stock screens to help you find profitable short squeeze trading opportunities.

Why Is it a Good Strategy To Buy Short Squeeze Stocks?

Buying short squeeze stocks is often a good strategy during market rallies. This is because if a stock has 10, 20 or 30% of shares sold short, then you know a large percentage of shares in the float are being held up by short sellers. This reduce the available supply for would-be buyers. Since there is less supply it can be more reactive to demand.

So what does a short squeeze look like in practice?

Well to dig deeper: When shorts are getting squeezed it means that the reduced public float is being bid up by sellers. Additionally, to cash out of a short position you have to buy back the shares you were selling short. This means that short squeezes can defy logic and oversold conditions because shorts who have been squeezed will eventually capitulate and re-buy their stock (which further pushes up demand for the stock on an already reduced float).

Since short sellers can get squeezed by a bear market rally or strong change of trend it can be a profitable trading strategy to look for short squeezes. Even if you are a long term investor, being aware of the percentage of float sold short can help you find fast-moving profit opportunities.

So what should you look for in the actual strategy for buying short squeeze stocks?

List of Strategy Tips For Buying Short Squeeze Stocks:

Buying short squeeze stocks is a bit opportunistic, so it’s difficult to make hard and fast rules about exactly what to look for. But here are some things I always keep in mind…

  • High Short %: This one goes without saying. But your short squeeze strategy should focus on stocks that have over 15% of the public float sold short. This makes a meaningful reduction on the available supply.
  • Fundamental Tailwinds: Short sellers are often right when they sniff out news about companies with fraudulent accounting or faulty products. And while it’s hard to protect yourself from devious management you can at least do a little fundamental due diligence. Check the stock isn’t wildly overvalued and put in some work to understand the growth narrative. If you’re looking for a quick trade this isn’t as important as if you’re a longer-term investor but either way it’s important to be aware of the fundamental backdrop.
  • Price Momentum and Trend: Picking exact tops and bottoms is always difficult. Look for stocks that are already trending upwards or are at least trading above their moving averages. There is plenty of opportunity to apply your short squeeze strategy to buying stocks, you don’t have to be the first one to rush in and prove the shorts wrong. Wait until price momentum is on your side (more on this in the video below).
  • Insider and Institutional Ownership: If a stock has strong institutional or insider ownership (especially when combined with fundamental headwinds) there is a good chance that your short squeeze could be a long term one. Institutions with large positions will support the stock price at key moments. This all ties up extra supply and further puts short sellers in the vice. Look for stocks with over 30% institutional ownership to reap this benefit.
  • Small Public Float: I don’t have any hard and fast rules about the exact number of shares you want to see in the public float, but the fewer the better. If there are less shares in the float then the pool of supply is smaller, which is great for squeezing stocks higher. When stocks have a low float, high percentage of the float sold short and strong institutional ownership you can usually bet that short sellers are about to get squeezed by strategic dip-buyers.
  • News Catalysts: Since short squeezing is opportunistic, often-times there will be catalysts that really cause the short sellers to feel squeezed. For example a company could have a drug approved by the FDA,  a lawsuit might have a favourable outcome or the SEC might give a company the all clear after a long investigation. It’s hard to say what the exact catalyst will be (since it’s always different) but if you incorporate a fundamental news catalyst into your short selling strategy you can really improve your odds of short squeeze success. The FinViz signal stock screen is an easy way to do this.
  • Strong Market Breadth: Short squeezes don’t exist in a vacuum. So it shouldn’t surprise you that the most potent short squeezes come on days when the broad market indices are going up. If every stock is going green short sellers tend to lose conviction and start to buy back their shares (further boosting the price higher). By strategically short squeezing on days when the S&P-500 is strong you can get the maximum outcome with the least risk.

As you can see there are a lot of different factors that go into a strategy for buying short squeeze stocks. While all of these factors help, you don’t necessarily need all of them to line up. Just be careful to manage your risks appropriately. While trading short squeezes can be fun and profitable, there is also usually a reason the stock has such a large short position so be ready to cut your losses quickly if the squeeze goes against you.

Now if you’re still a little confused, here’s a video on how you can create a stock screen to help you find ideas of short squeeze stocks to buy.

Example Strategy for Buying Short Squeeze Stocks: [VIDEO]

And by The Way: If you’re curious to learn a little bit more about how I’ve refined my stock trading methodology over the years to take advantage of short squeezes and many other special situations then just sign up for the email below. You’ll get my free ebook and other resources you can use to improve your stock trading, sound good?

How to Make Money in Stocks (Book Review)

how to make money in stocks book review

Read this book review of “How To Make Money in Stocks” to see if it’s for you…

How to Make Money in Stocks, by William O’Neil provides you “A Winning System in Good Times and Bad.”

If you’re feeling a little skeptical about this investing book then you should know, “How to Make Money in Stocks” has sold over 2,000,000 copies. And the author William O’Neil is the found of Investors Business Daily. His CAN-SLIM investing methodology was also featured in Market Wizards. So…

With all that credibility, you can be assured “How To Make Money in Stocks” is a reliable investing manual. The book provides a relatively easy to follow methodology that can help you find big growth stocks. Let me tell you a little more about why I liked How to Make Money in Stocks…

What How To Make Money in Stocks is All About:

How to Make Money in Stocks by William O’Neil is a classic investment book that outlines a relatively straightforward methodology you can follow to find stock ideas on your own. The interesting thing about O’Neil’s approach is that he combines some technical and fundamental factors in his analysis. For example…

How to Make Money in Stocks really focuses on stock charts. The first 100 pages of the book are simply annotated long-term stock charts. How to Make Money in Stocks does a great job explaining why the featured stock patterns telegraphed huge stock price gains in the companies they represent. While the analysis would have been more convincing in real time, How to Make Money in Stocks does isolate a number of important chart patterns that you should be aware of even if you’re a long term investor.

But then… “How to Make Money in Stocks” goes a step further…

That’s because the investing methodology described in How to Make Money in Stocks also has a strong fundamental component. But O’Neil is not a value investor either. Since I always look for a margin of safety in my investments I had a bit of dissonance with O’Neil’s method at first. For example…

How to Make Money in Stocks does not encourage looking at metrics like Price to Earnings or Price to Book ratio. The book argues these companies are cheap for a reason, and instead, you should follow the CAN-SLIM methodology of investing. Find companies with current and annual earnings growth that are offering innovative new products. Make sure the companies don’t have too big a stock float, that they’re leaders in their industry with institutional support and management that is shareholder friendly. That’s a lot to ask for right?

How to Make Money in Stocks keeps things simple and encourages you to look for companies that are offering new products that improve consumer standard of living. Instead of worrying too much about the value you are paying for, use the long term chart patterns to guide your buying and selling.

While this approach wasn’t totally compatible with my value investor methodology, there are definitely aspects I could appreciate and integrate into my investing style. But that’s not even the best part of How to Make Money in Stocks.

My Favorite Part of How To Make Money in Stocks:

How to Make Money in Stocks is a great growth investing book. In a lot of ways, the book reminded me of Philip Fisher’s Common Stocks and Uncommon Profits. That’s saying a lot, since Fisher’s book has stood the test of time and is even credited with influencing Warren Buffett’s investment philosophy.

So it should be no surprise: the thing I liked most about How To Make Money in Stocks was that it took Fisher’s philosophy a bit further. This book made the growth investing strategies Fisher talked about much easier to apply. O’Neil really breaks down the growth investing into specific CAN-SLIM criteria that you can look for.

This more-quantifiable backdrop that How To Make Money in Stocks provided really helped me understand the nuances of growth and momentum investing. I liked knowing the specific things O’Neil has used to have such a successful career over the last 30 years. So I appreciated how actionable this book was.

But there was one thing that kind of annoyed me about How To Make Money in Stocks…

What I Didn’t Love About How To Make Money In Stocks:

Don’t get me wrong, How to Make Money in Stocks is a great book for growth investors. And every individual investor can learn something from it (even if you are primarily value-focused like me). But there’s one part of How to Make Money in Stocks that kind of rubbed me the wrong way…

While the beginning of the book is packed with useful information, I felt that towards the end of the book, How to Make Money in Stocks increasingly became “How to Make Money with Investors Business Daily.” And while I don’t doubt IBD is of great value, the end of the book just felt like a little too much of a sales-pitch for O’Neil’s services.

Of course, I still learned a ton from How to Make Money in Stocks. I just thought you should know that at times it is a little bit promotional. Now let’s wrap this book review up…

How To Make Money in Stocks – The Final World:

How to Make Money in Stocks is a great book that does an excellent job quantifying some of the growth investing methodologies outlined by Phil Fisher. For that reason alone I would recommend you buy How to Make Money in Stocks on Amazon.

This book will go a long way in helping you integrate fundamental and technical analysis, whether you’re a long term investor or a shorter-term swing trader. And if you’re looking for more information on How To Make Money in Stocks, feel free to check out the video boo review below…

How To Make Money in Stocks Video Book Review:

Other Books by William O’Neil You Might Like

Semi Conductor Investing in 2014

semi conductor investing 2014

Are semi conductor stocks worth an investment in 2014?

Semi Conductor Investing in 2014: Is this finally the year Semiconductor investors strike it rich? While I’m hesitant to be too alarmist in my introductions, semiconductors might be worth a look if you are in the market for investing opportunities. So…

In this blog post we’ll look at why semiconductor companies might make a good investment in 2014, as well as a couple actionable ideas you can pursue on your own if you think semi-conductor investing is the right fit for you. Sound good?

Semi Conductor Industry Long Term Technical Analysis

The Semi Conductor industry had been dead money for investors for over 10 years. And semi conductor investors have been unable to see any capital appreciation in the period. Just take a look at the semi conductor industry ETF (SMH) below…

semi conductor long term chart

Look at this decade long consolidation in the semi-conductor industry. Could it finally be moving higher?

As you can see in the chart above, the semi conductor industry is up against decade long resistance. And while volume has been low running into this resistance, SMH might finally be poking it’s head up against this impenetrable trend line.

Of course investing in the sector ETF is an easy way to get semiconductor exposure in 2014. But if you want to dig deeper into specific companies, here are some of my favourite ways to invest in semiconductors this year…

Under-Valued Semi Conductor Company for Investing in 2014

One under-valued semi conductor company that may be of interest to investors is United Microelectonics Corp (UMC). This semi conductor company is trading at a 30% discount to book value, and the P/E ratio is just above 11. The company also has a relatively light debt burden and should return more free cash flow to shareholders in 2014 after a large year of capital expenditures.

Unfortunately, UMC might be nothing better than a cigar-butt investment scenario. While this semi conductor company is trading below book value, a lot of the company’s assets are in plant and equipment. Unfortunately despite the recent upgrades UMC still lags competitors in terms of competitive advantage and UMC continues to lose market share. So although it appears UMC is undervalued and we might see a bounce higher, it’s not an extremely compelling stock investment idea if the company is struggling to make money going forward.

So are there any other semi conductor investing ideas you can pursue in 2014?

Is This The Best Semi Conductor Company for Investing in 2014?

The leading semi conductor manufacturer in 2014 continues to be Taiwan Semi Conductor (NYSE:TSM). TSM is not exactly a value investor’s dream. But it’s not crazy expensive either.

Hear me out…

TSM is trading at about 3 times book value, which makes it expensive in the eyes of most value investors. On the other hand, the company has a P/E under 15 and last year generated almost $12B of operating income (vs an enterprise value of about $88B). While semiconductor manufacturing is still a capital intensive business, there is lots of free cash flow leftover for management to work with (and hopefully direct towards shareholders).

From a technical analysis perspective, I also like the way $TSM is basing out. Take a look at the monthly chart below…

taiwan semi 10 year long term

As you can see from the chart above, TSM is not too extended on the monthly time frame, and if the SMH sector finally moves higher in 2014, TSM could be the main beneficiary. Further, it’s hard to see how TSM could lose market share since it already commands over 50% of the market. So in this case, I might start a position if the stock breaks out of the triangle pattern above and then be a bit more disciplined with my stop loss (since the Graham Number value for the stock is closer to $13). Make sense?

Another best in class play on semiconductor investing in 2014 would be Intel (NASDAQ:INTC). I don’t love the technical pattern as much but it stacks up very well against TSM on the valuation metrics above (like free cash flow yield).

And By The Way: If you’re looking for more information on investing decision making I encourage you to download my free ebook below. You’ll get a ton of valuable perspective on how I’ve refined my approach to stock markets over the years, and that should help you improve your trading too!

Do You Hold or Sell a Losing Position?

do you hold or sell losing position

Read this blog post to learn when to hold and when to sell losing stock positions…

When Do You Hold or Sell a Losing Position? It’s a common question from readers here at StockIdeas.org. And while there are no one-size-fits-all rules for when to hold or sell a losing position, there are definitely some best practice guidelines that can help you determine what you should do when you’re holding a losing position.

So in this blog post we’ll first review the risks with holding a losing position and different courses of action you can take to try and get yourself out of the position. Sound good?

Two Types of Losing Positions:

When you are dealing with stocks you need to be careful to discern if you are investing or trading. If you’re a long term investor, you might have a bit more leeway dealing with losing positions whereas if  you are a technical trader you will want to cash out and put your money to work somewhere else. Make sense?

So: If you’re in a losing stock position you need to know why you bought the stock in the first place. If it was just a short-term trade based on a technical set up then you need to sell your losing position. Admit your set-up didn’t work and move on. I usually look for a 7-8% stop loss at the absolute maximum. Taking bigger losses than that is just too painful and can destroy far too much capital. For example…

If you lose 25% on one trade you need 50% to earn it back. You simple must admit your thesis went wrong and move on when you having a losing position based on technical trades. Got it?

On the other hand:

If you’re a long term investor you might not even know what technical analysis is. And that’s okay too. In that case, it’s best to dollar-cost-average and slowly and build your position over a couple of months. In this case you don’t need to worry about whether you are winning or losing on the position right after you buy it. Of course…

If your long term fundamental thesis (aka reason for investing) changes then you will want to cut your position. And if the stock price crashes this might be a warning that not everything was as you perceived so best to revisit your thesis.

But otherwise as long as the position isn’t too big a percentage of your portfolio you shouldn’t worry too much about the short term fluctuations in price.

Two Risks of Holding a Losing Position:

There are two main risks of holding a losing position. The first and obvious risk of holding a losing position is that you will have to realize a capital loss. This sucks in a few ways. Not only do you have less money than when you started but you also have to admit you are wrong. This admission of error can often be the most difficult think about selling a losing position. But you need to realize everyone makes mistakes and as long as you keep the loss small it isn’t a huge deal.

Because otherwise…

If you don’t give in and lose a little bit of money, you have to deal with the second risk of holding a losing position. And the second risk of holding a losing position is that you will not make your money back and you will waste a lot of time. You see…

The losing stock you are holding doesn’t have to crash, but even if it just oscillates at 10-15% below your cost basis you will agonize over the position. And you won’t be able to use that money for anything else. It will be trapped! Having your capital tied up for long periods without a return is a real risk! Even if the stock eventually breaks even you will have had to wait months at a time and been unable to use the money for other investing opportunities in the interim. Do you see the risk?

Now that you understand the different reasons for buying a stock and the difference between holding losing trades and losing investments let’s take a look at a prudent approach to managing losing positions in the future…

How to Always Avoid Getting Stuck Holding a Losing Stock Position:

The easiest way to avoid holding or selling a losing position is to come up with a simple trading plan. Your trading plan doesn’t have to be anything groundbreaking. But when you commit to buy targets, sell targets and stop losses then you know each and every day what to do.

If your stock quickly drops 10% you know in a heartbeat if it was a quick trade you should stop out of, or a small starter position of a long-term investment you can average down it. Does that make sense? When you’re prepared for a stock to drop you won’t be held wondering if you should hold or sell a losing stock position.

And By The Way: If you’re looking for more advice and insight on how to manage stock trading or investment positions, then you should sign up below. You’ll get best practice tips and in-depth resources to help you improve and refine your own trading style.