Monthly Archives: October 2013

Trading In The Zone Book Review

Trading in the Zone Book Review

Trading in the Zone by Mark Douglas

Trading in the Zone, by Mark Douglas, explains how to “Master the Market with Confidence, Discipline and a Winning Attitude.”

Sounds pretty good, right? Well, lucky for you I just finished reading Trading in the Zone so the content is very fresh in my mind. And I’m ready to share what I learned in this book review so you can decide if Trading in the Zone is the right stock trading book for you.

And although I’ve read a ton of stock trading and investment books, Trading in the Zone is very different from almost every single one of them.

So let’s cut to the chase, here is…

Why You Should Read Trading in the Zone:

Trading in the Zone was recommended by a commenter on another blog that I read, and since I was looking for a new book, I ordered it on Amazon immediately. And I didn’t know it then, but buying Trading in the Zone turned out to be one of the better decisions of all time. Here’s why I liked the book…

The first part of Trading in the Zone is all about the most common mistake that traders make. And you might not have guessed it, but all of these mistakes are internal. You make them in your head. It’s when you psych yourself out, or sell  too early. Luckily it turns out we all have similar wiring. So the diagnosis seems to be pretty universal.  But don’t just take my word for it.

In part two of Trading in the Zone, Douglas keeps moving forward in an easy to follow way. He provides a number of metaphors and analogies. Surprisingly, they turn the complex decision-making aspects of trading into easy to understand and simple to grasp concepts. I found this to be pretty instructive and helped me see my own trading in a better light. But Douglas doesn’t leave you hanging.

In the final part of Trading in the Zone, Douglas goes much deeper into his simple analogies and applies them directly to trading. He looks at a variety of different situations and bad mental habits, and how you can overcome them in your trading. And that leads me to the next thing I want to share with you…

The Best Part of Trading in the Zone:

Trading in the Zone was a great book throughout. While reading it, I took a lot of additional notes. I actually read it kind of slowly because there was so much great knowledge to absorb. But each sentence was just so profound. And that continued throughout the book until the very last chapter.

I think the best part of Trading in the Zone is the last chapter because it’s designed as a trading exercise that is 100% practical. I really didn’t expect this when I bought the book and I found it to be a pleasant surprise. While the theories discussed were interesting and robust on their own, the trading exercise at the end of the book is a really great prescription that anyone can use.

What Trading in the Zone Omits:

Trading in the Zone is a really great book. But there is one thing that Trading in the Zone leaves out. And I want to let you know, because buying a book for the wrong reasons is always a let down. So what does Trading in the Zone gloss over?

Basically, since the focus of Trading in the Zone is all about your internal trading decisions, you won’t find that it has any in-depth mention of specific stock trading techniques. The book is entirely focused on your own decision making and assumes that you have a simple stock trading plan that you use to get your trading edge.

Near the end of the book Douglas briefly glosses over a sample trading plan for illustrative purposes, but there is no degree of detail to it. Luckily, I already have a stock picking system so this wasn’t a big drawback for me. So let’s wrap this up, shall we?

Trading in the Zone – The Final Word

Trading in the Zone is a really interesting book, and in all of my investment readings, I’ve never found another book like it. It’s the only trading book focused solely on your internal mental state and really helped round out my knowledge of trading methodology.

So if you’re looking for a new book, I really recommend you buy Trading in the Zone on Amazon It’s pretty short and very easy to understand. Why not check it out?

Trading in the Zone Details and Video Book Review:

Author: Mark Douglas
Publisher: New York Institute of Finance
Pages: 216

Other Books You Might Like:

How to Make a Simple Trading Plan

Simple Trading Plan

A Simple Trading Plan is like a blueprint…

A Simple Trading Plan can really help you improve the consistency of your trading results. And when it comes to stock trading, a higher percentage of wins makes all the difference. So what is a simple trading plan, and how do you make one?

A simple trading plan is just a methodology you use to guide your decisions when you are buying and selling stock. The benefit is, by planning your moves ahead of time you are less likely to get overcome by emotion in the moment. You’ll be able to act more quickly and execute your trades more effectively. Sounds good, right?

A simple trading plan is a very powerful tool that helps automate the decision-making across all aspects of your trading. If you want to make more money as a stock trader, a comprehensive trading plan is a must-have. It’s a great way to get serious on your methodology for stock picking and selling.

So let’s get started. Here’s what you should include in your simple trading plan…

How To Make a Simple Trading Plan (Step-By-Step):

Answer all of the questions below and you’ll have the foundation for your simple trading plan.

Research: How do you go about finding your best stock ideas? Literally, what tools do you use? What screens do you run? Is this a daily thing or something you do every other Sunday morning? Good stock research is the meat and potatoes of your simple trading system. Understand how you do it best, then commit to that by writing it down.

Analysis: Now that you have a reliable stream of stock ideas to fuel your simple trading system, how do you sort and sift them to find the most actionable intelligence? You might use momentum stock screens. Or you might be looking at balance sheets and income statements. Any method can work: How you do your analysis is one of the most proprietary parts of your simple trading system.

Execution: The final step in making a simple trading system is to create an execution plan for each of the stock ideas that get a green light from your analysis. Once again, you’ll want this part of your trading plan to be congruent with the research and analysis. If you’re a buy-and-hold investor looking for long term value, your execution plan might be as simple as buying all your favorite stocks once a month. If you’re a day-trader though, you’ll probably have a much more detailed execution methodology.

Here’s how I do it:

Typically, as a position/swing-trader I like to split up my entries and exits into 3 or 4 tranches. That way I’m not too worried about timing the exact top or bottom of any move. So I pull up the charts of my favorite stocks (per the research and analysis phase of my simple trading plan). Then I look for overbought and oversold levels using Bollinger bands and try to look for matches between those and nearby support and resistance levels.

Does that make sense to you? It’s a pretty rough description but I’m sure to write it out for each of the stocks I’m looking at.

But What  Does a Stock Trading Plan Actually Look Like?

The truth is, it doesn’t matter what your trading plan looks like. The most important thing is that you just start writing down your rules. Get granular on what you look for in your stock picks. Define your entry and exit signals ahead of time. Have a plan for locking in profits as you go.

My trading plan exists in a word document, it exists in my head, and it exists in my agenda where I’m always making notes and writing down updates. As long as your simple trading plan looks like something (e.g. you make one) then you’re on the right track. But now I want to hear from you…

What do you look for in a simple trading plan? Did I miss anything?

If you find yourself short on stock ideas, sign up for email updates below to get exclusive trading ideas available only through email.

Best High Dividend Yield Stocks

Best High Dividend Yield Stocks

Best High Dividend Yield Stocks Ahead

The Best High Dividend Yield Stocks can be the key to the perfect portfolio… especially for the passive investor. But if you’re not careful, high dividend yield stocks can leave you high and dry. So…

Read this blog post to find out what to look for in the perfect high yield stock.

And as with any type of investment, there are specific risks you can be on watch for when you’re searching for the best high dividend yield stocks, so let’s dive into it…

3 High Dividend Yield Stock Analysis Criteria:

In addition to basic fundamental value, there are a couple of specific things you can look for to feel safe in your high yield dividend. Here are 3 quick things you can look at to get an idea of how safe your yield is:

Dividend HistoryOne of the most reassuring things to come across when you’re looking for the best dividend yield stocks is a strong dividend history. Some companies pride themselves on a solid dividend track record.  Click the dividend history link to see a list of companies with the longest paying dividends. And one more thing…

You can also get quotes from about the complete dividend history of most publicly traded stocks. This is a great litmus test on how serious the company is about protecting their dividend. But let me tell you how to dig a little deeper.

Dividend Increases/Decreases: Like dividend history, past is precedent when it comes to increases or decreases in dividend yield. Depending on what happens to the company, their dividend policy (and ability to provide a high yield for you) can change drastically over time. It’s always insightful to look for any dividend increases or decreases.

A lot of companies reduced their dividends after the recent financial crisis. But at least that gives you more faith in the companies that held strong with their yield. If they consistently raise their dividend, they might be shareholder friendly in other ways too. Looking at dividend increases and decreases is a great way to add another layer of analysis when you’re looking for the best high dividend yield stocks. Finally…

Payout Ratio: You should always be conscious of the payout ratio when you’re looking for the best high dividend yield stocks. What’s the payout ratio you ask? It is simply the dividends per share divided by the net income per share (EPS works for your back of the envelope analysis). The average payout ratio is around 32%, so anything above that means you’re meandering into high-yield territory. It’s a good benchmark to know.

But I have one word of warning for you.

Really high dividend yield stocks with really high payout ratios might be appealing. But sometimes if high yield looks too good to be true, it is. So payout ratio can also be a red flag. For example: If a company is paying an 85% payout ratio and their business runs into any kind of trouble for more than a couple quarters, there is a good chance they will need to raise cash. And (watch out!) they might cut your dividend to do it.

You can head over to Morningstar and under the “key stats” section for any stock there is a 10 year history of dividend and payout ratio. This is a heat way to see how a company has acted with regards to dividends in recent history. Combining these facts with management commentary can give you good insight into the sustainability of your high yield dividend.

If you’re wondering how to get started on your hunt for the best high dividend yield stocks, I recommend you check out the short video below…

Free Stock Screener For The Best High Dividend Yield Stocks:

This short video shows how you can find high-dividend yield stocks for free on It’s a great stock screener and I highly recommend you learn how to use Finviz Stock Screeners.

I hope this helped you better understand how you can safely select the best high dividend yield stocks. But enough about my methods, how do you select high dividend yield investments? Let me know in the stock selection tips in the comments below.

And By The Way: If you find yourself short on stock ideas, sign up for email updates below to get exclusive trading ideas available only through email.

How To Find The Best Penny Stocks To Buy

How To Find Penny Stocks To Buy

Learn How To Find Penny Stocks To Buy.

In this blog post you’ll learn how to find the best penny stocks to buy. And in our analysis, we’ll be sure to focus only on the best penny stocks (and avoid the high-risk trades). So why are penny stocks so exciting?

The reason is:

Individual investors and retail traders can trade penny stocks even if they have smaller brokerage accounts. That’s because trading the best penny stocks doesn’t require a lot of capital. You can buy hundreds of shares without breaking the bank – (and these larger volume buys are what’s often required to make a meaningful profit).

Of Course: you can also rely on third-party services like The Penny Stock Egghead if you want to let somebody find the best penny stocks to buy for you. 

But in this blog post we’ll look at the do-it-yourself approach…

How To Find The Best Penny Stocks To Buy:

The best way to find penny stocks to buy right now is to start by eliminating the worst penny stocks. So what makes a risky penny stock?

Most of the time people get burned trading penny stocks because they are either illegitimate companies being fraudulently promoted, or (more common) they are small companies that don’t have a lot of trading volume. Make sense?

That means you can really limit your risk by looking for penny stocks with a lot of trading volume. A simple rule you can use is to make sure that your average trade is 1000 times less than the daily average. So if you want to buy 200 shares at a time, you should look for penny stocks with over 200K shares traded daily. If you’re buying 500 or more shares you should be looking for 500K or more in daily trading volume. Get the idea?

If you’re only 1% of the daily trading volume for a given penny stock, it’s unlikely that you will get trapped in the stock because the volume is liquid enough that you can sell your position without having to deal with a big bid/ask spread.

But daily trading volume isn’t the only thing you should worry about when you’re trying to find the best penny stocks to buy right now.

Buy Fundamentally Strong Penny Stocks

Fundamentals are another thing to keep in mind when you’re looking for the best penny stocks to buy. Even if you are strictly a technical trader you can really save yourself some pain by avoiding penny stocks without any fundamental value.

If you are going to buy penny stocks, I really encourage you to focus only on the best penny stocks available. Look for penny stocks with fundamental value, and then wait for the technical set-ups to take place. That’s how I’ve had the most luck and probably how you can too.

As a baseline for fundamental analysis of penny stocks, you just want to be sure that you’re not overpaying for a scam company. To do this best, you should use conservative valuation metrics (like P/E under 15 and P/B under 1.5). Ideally you would have a “margin of safety” but not all stock traders are that disciplined.

Best Penny Stock Screener [VIDEO]

One way that you can figure out how to find the best penny stocks to buy is by using a stock screener. The free stock screener at can really help you shave hours off your research when you’re on the hunt for which penny stocks to buy.

Watch the short video below so you can get an idea of how to find the best penny stocks efficiently.

Hopefully this gives you an idea of how you can find which penny stocks to buy right now. You can watch more free penny stock videos on my YouTube channel. Subscribe if you like what you see.

Penny stock trading can be very profitable if you do it right, you just need to know how to find penny stocks to buy that won’t end up costing you money. So let me ask you, how do you find penny stocks to buy?

I look forward to your comments!

And By The Way: If you find yourself short on penny stock ideas, sign up for email updates below to get exclusive trading ideas available only through email.

You Can Be a Stock Market Genius Book Review

You Can Be A Stock Market Genius Book Review

Find out why “You Can Be A Stock Market Genius” is a must-read

You Can Be a Stock Market Genius by Joel Greenblatt shows you how to “Uncover the Secret Hiding Places of Stock Market Profits.”

The author, Joel Greenblatt, is the founder of New York-based Gotham Capital, which started as a hedge fund in 1985 with $7 million in assets under management. Gotham racked up annualized returns of 50% for the next 10 years.

So with a performance record like that, you’re probably wondering…

Is You Can Be a Stock Market Genius worth reading? In this book review I’ll explain why I enjoyed “You Can Be A Stock Market Genius.” I truly believe the title is the worst part of the book. So let me tell you why:

Why You Should Read “You Can Be A Stock Market Genius”

You Can Be a Stock Market Genius is a one-of-a-kind book. It does a great job illuminating special circumstances that stock investors can use to improve their profits. I have not seen another stock market book that focuses so exclusively on profit-rich opportunity. Joel Greenblatt really tries to stack the deck in your favor with this book.

So what specifically does “You Can Be a Stock Market Genius” cover?

The book starts off with a brief introduction about value investing and the author’s approach to investing. Then each chapter details a different kind of special situation (like mergers, recapitalizations and bankruptcy’s) that you can invest in to earn ample returns.

And another thing worth mentioning is the way the book is geared directly for the individual and retail investor.  Throughout “You Can Be a Stock Market Genius” the author explains how the individual investor can find an edge against hedge funds and smart-money by investing in these particular circumstances. It’s really quite interesting – and it’s an aspect of investing that I hadn’t ever seriously considered before reading “You Can Be a Stock Market Genius.”

But that’s not even my favorite part…

The Best Part About “You Can Be a Stock Market Genius”

You Can Be a Stock Market Genius has many great aspects (except maybe the title). But there’s one thing I like about the book more than anything else – and that is the way it’s laid out to be actionable for the average investor.

You can tell the author put a lot of thought into how the book was written, because it’s designed so that you can get a lot out of it. Specifically:

Each chapter starts with an overview of a “special situation” that you can use to earn outsized returns. Then the chapter progresses with in-depth case studies of real life investment examples the author participated in during his investment career. He goes into quite a bit of detail explaining the way he found each idea, and why he went ahead and invested. The book even talks about when to sell stocks (or when you buy and hold is your best bet). The end of each chapter also has a useful checklist that you can reference to get the core concepts out of each chapter.

So you do you see why this book is so applicable to the average investor? Well, I guess that’s why Jack Schwager recommended it. And now that I’ve read it I can recommend it to you, too.

The only negative about “You Can Be a Stock Market Genius” is that the chapters are a little long. But it’s not like they are hard to read. The examples are explained in easy-to-understand English. And the information is logically structured. So it’s actually quite easy to get through. To make the book more useful…

The end of “You Can Be a Stock Market Genius” also includes a glossary and some of the author’s favorite resources for finding special situation stock ideas. It’s helpful to get an idea of where professional hedge fund managers look for idea – and the surprising truth that they’re not much different than where you and I might look. So is You Can Be a Stock Market Genius worth reading?

You Can Be a Stock Market Genius – The Final Word

I can confidently say that I enjoyed reading this book, and if you’re eager to explore special investing opportunities on your own, this might be a good fit for you. If you’re excited to learn from an easy-to-understand stock market expert, then it’s definitely worth reading.

Buy You Can Be a Stock Market Genius on Amazon to save a couple of dollars from picking it up at your local book store.

You Can Be a Stock Market Genius Details and Video Book Review:

Author: Joel Greenblatt
Pages: 304
Publisher: Touchstone

Best Stock Trading Biographies

Best Stock Trading Biographies

Confessions of a Street Addict is one of the best stock trader biographies

The Best Stock Trading and Investor Biographies are great ways to learn. By reading the best stock trading biographies you can shave years off your learning curve as an investor or stock trader.

And no matter your trading style:

It doesn’t matter if you’re a buy-and-hold investor, a short-term day trader or you’re swinging stocks somewhere in the middle. In every case there is someone who’s come before you. So that’s why…

I encourage you to take a look at my favorite stock trading and investing biographies (so far). Some of these books are autobiographical, and others are slightly fictionalized. So click through to the ones that interest you and you can learn the specific angle each book uses to profile a stock trader or investor. Make sense?

One thing’s for sure: In all cases these books are incredibly educational and can save you a lot of lost money. So check these out:

The Best Stock Trading and Investing Biographies:

Confessions of a Street Addict by Jim Cramer – Cramer might be Wall Street’s most famous hedge fund manager. But his autobiographical account of how he rose to the top is incredibly interesting. And chances are, Cramer is still going harder than you are every single day. So wouldn’t it make sense to try and learn something from him?

How I Made $2,000,000 In The Stock Market by Nicolas Darvas – This book is an amazing autobiographical tale of a man who traveled the world in the 1950’s and made millions of dollars doing it. He goes to great lengths to describe his exact stock-trading methods and how he developed them. It’s really a compelling story that you would be wise to check out, (if you haven’t already).

The Making of a Stockbroker by Edwin Lefevre – This classic book is the story of how a Harvard man built an honorable lifelong career as a stock broker and banker. It also provides a ton of insight into the type of “character” required to make a lasting splash in finance.

Reminiscences of a Stock Operator by Edwin Lefevre – You know Edwin Lefevre is good if I’m recommending two books by him. This is his most famous book and it’s about the epic Jesse Livermore, portrayed in the book as Larry Livingston. But the insights Lefevre reveals about the strategies and tactics of one of the first legendary traders are educational in the extreme.

Buffett: The Making of An American Capitalist by Roger Lowenstein – Buffett is a great look at how Warren Buffett makes capital allocation and investment decisions. It’s incredibly interesting to have an experienced journalist like Lowenstein take a microscope to Warren Buffett’s playbook.

Pit Bull: Lesson’s From Wall Street’s Champion Day Trader by Martin Schwartz – This is the autobiographical account of a Wall Street Day Trader who made tens of millions of dollars trading his own account. Pit Bull is incredibly insightful, and the way the book is written it’s easy to extract actionable lessons you can use to improve your own trading routines.

So there you have it…

My Favourite Stock Trader Biography [VIDEO]:

What’s Your Favorite Stock Trading Biography?

I’ve let you know what I think are the best stock trading biographies. But now I want to hear from you. Which trader or investor have you learned the most from? I’m always looking for recommendations. Let me know in the comments below…

And By The Way: If you find yourself short on stock ideas, sign up for email updates below to get exclusive trading ideas available only through email.

The Best Trading System Book Review

The Best Trading System Book Review

The Best Trading System by Chris Beanie Book Review

The Best Trading System by Chris Beanie explains “How To Make Big Stock Market Returns in the Long Run a Trader or Investor.”

The Best Trading System is only 37 pages cover to cover, but it presents an interesting theory for prospering through any market conditions. And to give you some context, Chris Beanie used to be a doctor. But…

Now she spends her days following and trading the markets full time – so you can bet that her methods must be profitable if she gave up such a lucrative career. So…

Keep reading this book review to learn a little bit more about The Best Trading System and whether or not it is the right investing book for you.

Why I Recommend The Best Trading System:

The Best Trading System is actually a pretty simple book. After all, it’s only 37 pages so, you can basically read it in one sitting.  And surprisingly, for such a short book it presents a very interesting idea that can drastically influence your approach to stock market trading.

Chris Beanie does a good job of pulling together a number of well-known ideas and concepts from market legends, like Jim Cramer and Warren Buffett. And then she adds her own interesting twist that opens up a unique way of thinking about trading and investing that most stock market participants don’t even consider.

Although the book itself was quite simple and easy to read, it was this unique and intriguing idea leads me to recommend The Best Trading System as a book that most individual investors should read when they are just starting out. Curious yet? Let me tell you a little more…

The Best Part Of The Best Trading System:

The Best Trading System is focused on one simple idea. And while I don’t want to give the book away, it’s important that you understand what to expect before you go out and buy the book for yourself. So the main thesis of the book is this:

The Best Trading System describes a mindset to investing that blends short-term trading and long term investing. Chris Beanie calls out the pros and cons of each method, and then discusses how you can combine these methods to come up with a stock market approach that can make you money in the short term, as well as create a lasting long-term portfolio that will help you build your wealth for life. Sounds pretty, good right?

The Best Trading System explains why most short term traders fail, and why most “buy and hold” investors don’t get the returns they dream of. Then the book lays out a decision-making framework you can follow to be both a long term investor and a short term trader. The Best Trading System is “the best” because it combines the positive aspects of short term traders and long term investors. Makes sense right?

And truthfully, Chris Beanie isn’t the first person to come up with this idea. One of the more well-known investors that talks about this style is Nicholas Darvas, who outlines this “technofundamentalist approach” in his book “How I Made $2,000,000 In The Stock Market.”

But whereas Darvas’ book only dedicates one chapter to this interesting hybrid investing approach, The Best Trading System explores this idea exclusively. And as an individual or retail investor, if this isn’t something you’ve seriously sat down and thought about then I would recommend reading The Best Trading System for yourself.

But let me just warn you, while this book is pretty good (and I’ve actually re-read it many times), it’s not the holy grail of stock market investing books. So be warned…

Here’s Why You Might Want To Avoid The Best Trading System:

There’s one thing I should warn you about before you rush out to buy The Best Trading System. So let me just say: if you’re a very experienced investor or trader with 10 or 15 years of trading under your belt, you might find this book to be a little bit elementary. Plus…

If you’re looking for specific trading tactics or indicators to watch, then you are probably going to be disappointed by The Best Trading System. That’s because while the book does a great job outlining the theory of Chris Beanie’s intelligent approach to investing, there are only a few short pages dedicated to the charts she watches and the technical analysis indicators she uses on any given trading day.

So just keep in mind that this book is more focused on the theoretical approach – you’ll have to find your own tactics to implement the theory.

The Best Trading System – The Final Word:

The Best Trading System is a pretty good book that I feel comfortable recommending to beginner and intermediate traders. And if you’ve never studied the “technofundamentalist” approach then this book is the best way to get a quick primer in this school of thinking.  Plus…

The Best Trading System book is a really quick read. So I recommend you buy The Best Trading System on Amazon today – and you’ll very quickly get exposed to a new trading idea.

The Best Trading System Details and Video Book Review:

Author: Chris Beanie
Pages: 37
Publisher: Amazon

Other Trading Books You Might Like:

How I Made $2,000,000 In The Stock Market
Real Money
A Random Walk Down Wall Street

When Stock Screens Go Wrong

When Stock Screens Go Wrong

What Happens To Your Portfolio When Stock Screens Go Wrong? Read this blog post to find out…

Stock screens are a great way to find new stock ideas. And I’ve even made quite a few videos about the best online stock screeners and how you can use the stock screener at to. But there’s something you should know: sometimes stock screens go wrong!

So in this short blog post I will tell you why, as well as what you can do to avoid these costly mistakes.

The Reason Stock Screens Go Wrong

While stock screeners are a great way to find stock ideas that meet your investing or trading criteria, they aren’t the holy grail of investing ideas. In fact, they are simply a shortcut you can use to zoom-in on ideas that are interesting to you. And while this can save you time, like any shortcut, stock screeners don’t come without a little bit of risk. You see…

Whenever you go “off the beaten path” you  end up cutting some corners. And if you blindly bid on any stock, just because it came up in your stock screen, you are eventually going to make an expensive mistake. And the reason for that is pretty easy to understand (especially in retrospect).

Because as you obviously know…

Investing in publicly traded companies is a complex undertaking. And there are tons of factors that can influence the success or failure of a company and the corresponding stock price. So even if you screen for 10 or 15 different criteria, you still are not getting the whole picture. Stock screeners can never tell you everything. And by the way…

That’s coming from someone who loves stock screeners!

So the truth is:

Stock screens go wrong because they cannot understand forward looking phrases in annual reports. And they can’t assess changing macro-economic market conditions or flawed earnings estimates. No matter how you spin it, stock screens can go wrong in very costly ways because you can never screen for everything. And I know this because I’ve suffered this fate first hand.

So let me share a personal example with you to try and save you this painful and expensive mistake…

An Example of Stock Screens Gone Wrong

A few months ago, I did an analysis of Harris and Harris Group (NASDAQ:TINY). I found this stock after doing a stock screen and it appeared to match my target investment criteria perfectly. On paper, TINY was fundamentally very sound. And I was enthusiastic about the investment case for this nanotechnology venture capital firm. But that turned out to be a mistake. It was definitely a case of stock screens gone wrong.

Here’s Why The Stock Screen Failed Me:

Even though TINY stands up well against most of the metrics I use, such as debt-to-equity ratio and net cash per share,  TINY turned out to be a “value trap.” That’s because there were some criteria influencing the company that stock screens just couldn’t predict, no matter how I spliced and diced the data.

For example…

It turns out that TINY’s management is a little less than shareholder friendly. For the last 5+ years they have used the stock as their personal ATM. To make matters worse, they have been unable to make sizable returns on any of their portfolio investments. They have sold their shares too early. And on the rare occasion they did have a win, they failed to let shareholders participate in the spoils.

As a result, shareholders are angry and a deluge of selling has hit the stock over the last 6 months. To make matters worse, TINY was then delisted from the Russell-2000 index, which resulted in more mandatory selling by funds who track this index. This rebalancing has put a serious damper on the price performance of TINY stock… even though the “value” of the company appears great on many of my most reliable stock screens, the price performance has been atrocious. But here’s the thing…

Even though stock screens can and do go wrong, there are still good reasons to pay attention to them…

Why You Should Still Use Stock Screens:

Even though stock screens aren’t the perfect solution, they are still a great way to save time. As you surely know:

There are thousands of publicly traded companies out there. And if you try to comb through all of them one at a time you will run out of years in your life before you find a great investment idea.

On the other hand…

Stock screeners, like, can really narrow down your area of focus and allow you to do thorough fundamental and technical analysis on a handful of stocks that have criteria that fit your investing style. So in conclusion:

Use stock screeners as a starting point to further research. Stock screens can provide you lots of “leads” on new and exciting stock ideas that fit your investing and trading style. But you need to do your due diligence and really put the stock tickers of interest through the analytical ringer. Otherwise you might get trapped, like I did on TINY.

So use stock screens as a starting point and you’ll cut hours off your research. But just be aware that you still need to read annual reports, understand the underlying assumptions baked into the earnings estimates and analyze what could go wrong. With this type of critical thinking you’ll be finding profitable investment ideas in no time.

And by the way…

Here’s an entire post dedicated to free stock screening videos — you can use them today to help get your stock idea research off on the right foot. Just make sure it’s not the only step you take!

If you find yourself short on stock ideas, sign up for email updates below to get exclusive trading ideas available only through email.

How to Trade in Stocks (Book Review)

How To Trade in Stocks Book Review

How To Trade in Stocks By Jesse Livermore

How to Trade In Stocks, by Jesse Livermore, is “The classic formula for understanding timing, money management and emotional control.”

So pay attention and let’s review the success secrets of a stock market legend.

And in case you didn’t know:

Jesse Livermore is the real-life Larry Livingston, featured in Reminiscences of a Stock Operator! He was often known as the “Boy Plunger” and “The Great Bear of Wall Street.”

“How to Trade in Stocks” goes beyond the biographical and reveals to you the exact techniques that the real Jesse Livermore used to build his incredible fortune.

Livermore wrote How To Trade in Stocks shortly before his death in 1940, and at the urging of his son. Prior to this book, Livermore had been very quiet about his trading methods. So this tell-all tale really made a splash.

And since the original publication, How to Trade in Stocks has stood the test of time. The updated version published in 2001 remains popular to this day. So let me tell you a little more about this book:

Why I Recommend Reading “How To Trade in Stocks”

How to Trade In Stocks is a very important book for anyone who is interested in actively trading stocks. And if you haven’t read this book, here are a couple of very good reasons you shouldn’t pass it up.


How To Trade in Stocks provides you with a best-practice framework for technical analysis (or, speculating, as it might be). I was actually surprised at how much the lessons were still applicable today, even though Livermore was using them in the 1920s. But the lessons he gives you about price action are incredibly instructive.

Livermore actually goes into quite a bit of detail about all the things you should consider when you’re buying and selling a stock. And although Livermore is primarily a speculator, one of the first things he says is that you should have a fundamental basis to guide your stock selection. After that though…

How To Trade in Stocks deals almost entirely with technical analysis and price action. Livermore shares on trick after another that he used to increase his probability of success in the stock market.

For example:

Livermore was very focused on making a profit right from the start. He goes to extraordinary length to describe what circumstances you should look for to maximize your profit from the get-go. It’s a critical lesson for any aspiring day traders.

And although Livermore was often in and out of stocks quickly, he shares how he made a lot of his money riding core positions for extended periods of time. He traded in and around the changes or price to further boost his returns. And he wasn’t afraid to get long or short depending on what the market was telling him.

I don’t want to give the whole book away, but How To Trade in Stocks is a pretty thorough guide on how you can read stock market behavior, analyze leading sectors, time market entries and exits and control your money and your emotions (easier said than done).

Each section of the book builds on the prior information. And the Top Down Trading techniques are must-read material for any aspiring traders. There is a lot of time-tested advice about trading execution and emotional resilience, both of which are equally important.  The back of the book even contains a summary of trading rules that you can easily reference each day to make sure you’re staying on track.


How to Trade In Stocks also has some cool pictures of Livermore and his family. Although he was a very rich and successful man, it seemed Livermore suffered from some mental health issues and some of the biographical information in the book is actually quite fascinating.

And on that note:

Best Thing About “How To Trade in Stocks”

One of the things I liked most about How To Trade in Stocks is the realistic approach it took. Although Jesse Livermore was quite successful, he did not have an easy climb to the top. And the book is very candid in sharing the ups and downs of life as a speculator.

How To Trade in Stocks highlights more than one occasion where Livermore loses it all and had to start over from scratch. I can’t imagine how stressful this would be, and it makes you wonder if that pressure was a factor in Livermore’s battle with depression. Regardless…

I appreciated how the book did not glamorize the life of Jesse Livermore, even though it would have been easy to do. Of course by the end of the book Livermore has a much better grasp on risk management than when he begun. But the feeling that it could all slip away serves as a subtle reminder to the reader that risk in trading is real, even for the most successful speculators.

There’s just one more thing I want to mention in this book review

What You Need To Know About The Livermore Market Key:

The Livermore Market Key is hailed as “the first and still one of the most accurate methods of tracking and recording market patterns.”

How To Trade in Stocks shares this key and professes it will help you have a better handle on the market. And while it’s definitely an interesting technique, I must say I found the rest of the book far more applicable. The truth is…

How To Trade in Stocks has tons of great information and the Market Key is just a little bit antiquated. It’s basically a methodology for watching stocks and determining when to buy and sell based on their price momentum. I think learning the market key theory was valuable, but…

Because Livermore was working in an age when charts didn’t exist yet, the table-format he uses to track stock price-action is a little confusing. Today, we have so many more tools at our disposal than Livermore could have ever fathomed. And the manual tracking that the Market Key requires, is probably a little bit unrealistic, given the other tools we have available today.

How To Trade in Stocks – The Final Word

How To Trade in Stocks is a fantastic book. And even though the market key is a little bit out of date, the rest of the book is incredibly useful and provides a time-tested approach to technical analysis in it’s purest sense.

How to Trade in Stocks is also a very quick read. So you can absorb ad apply Livermore’s secrets very quickly. Today, you can buy How to Trade In Stocks on Amazon and save 37%.

How To Trade In Stocks Book Details and Video Book Review

Author: Jesse Livermore
Publisher: McGraw-Hill
Pages: 224

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Buffett (Roger Lowenstein) Book Review

Buffett by Roger Lowenstein Book Review

Buffett by Roger Lowenstein

Buffett, By Roger Lowenstein, is the story of “The Making of an American Capitalist.”

First published in 1995, (and updated in 2008) Buffett is the first biography of Warren Buffett ever to be published. Before this book, the “Oracle of Omaha” remained largely unknown… other than being the second richest man alive.

So should you read Buffet? And why is it any different from The Snowball?

In this book review, I’ll explain what I liked about Lowenstein’s Buffett, as well as why it’s different from the other biographical stuff out there.

Why Should You Read Buffett by Roger Lowenstein?

Buffett is worth reading for a few reasons. But if you’re not an avid investment manager (or going down that career path) it might not be the best option for you. Let me tell you why.

Buffet was the first biography published about Warren Buffet. Lowenstein was the first journalist to really shed light on Warren, and did a great job portraying his run at Berkshire Hathaway in the 1990s – some especially successful years for the textile-manufacturer-turned-insurance-conglomerate. And now with hindsight…

Lowenstein’s Buffet has stood the test of time. His predictions seem accurate, and his appraisal of Berkshire seems more relevant than ever. His observations and estimations have been proven validated. It’s pretty cool stuff.

Plus if you’re interested in my objective opinion… I’ll be honest with you…

Why You Might Want To Avoid Reading Buffet

If you’re very interested in Buffett, but not obsessive, you might enjoy reading The Snowball. And to be honest with you, that book would reasonably give you most of what you needed to know about Buffett…

For example:

The Snowball (published in 2007 and written by Alice Schroeder), is a much more in-depth look at Warren Buffett’s life, and that of his immediate family. In this way not only do you see Warren up close and personal, but it also shows you who the behind the scenes influences were that shaped his decision making.

But The Snowball doesn’t just give you a personal look at Warren Buffet. You also get an in-depth look at his professional influences and his relationships. This book really features the people around Warren and their influence on him. It provides a fascinating look at how Warren Buffet makes both his business and personal decisions.

On the other hand…

I really liked reading both books. I enjoyed being able to cross-reference different things about the most successful investor of all times. But I realize I’m not the majority here.

However, since we’re on the subject, let me go into a little more detail…

Why Lowenstein’s Buffett is Different From The Snowball:

While The Snowball is a great look at Warren Buffett’s life and approach to business, it is distinctly different from Lowenstein’s Buffett. To be honest, that makes sense. I’m sure Alice Schroeder didn’t want to write an extended version of the same book, right?


For those of us who are eager to soak up all we can learn from the “Oracle of Omaha,” this book provides a really unique perspective. In many ways Lowenstein’s Buffett is a much more candid look at the business and professional decisions Warren Buffett made. The author does a very good job of elucidating lessons for the average retail investor, so you can see what Buffett looks for in his investments.

For me (because of my interest in active portfolio management) these were lessons that I felt were distinctly missing from The Snowball. I actually read that book first, and then sought out Lowenstein’s earlier book. And then it delivered exactly what I felt I was missing. Pretty cool, right?

It’s this emphasis on “take home lessons” are what really make Buffett “The Making of an American Capitalist” worth reading.

Buffett – The Final Word

Whether or not you read Buffett, The Snowball, or both, I think you can learn a lot from Warren Buffett. Of course there are some overlaps in the books. But for me, this book was an entirely different look than the one Schoreder provided. Although I’m not sure everyone will appreciate the difference.

So if you’re actively interested in learning more about Buffett’s capital allocation decision making – then I recommend you Buffett right now. Otherwise, check out my book review of The Snowball.

Buffet Book Details and Video Book Review:

Author: Roger Lowenstein
Publisher: Random House Trade Paperback
Pages: 432

Other Books By Roger Lowenstein: