Best financial analysis you will get on what has actually transpired during my summer blogging hiatus or over the last two weeks. 
Investment Grin Of The Day
Investment Wisdom Of The Day
Investment Wisdom Of The Day
Investment Grin Of The Day
Just in case you were wondering whose playbook Chinese Officials are following. China Police To Investigate ‘Malicious’ Short Selling Of Stocks
It’s Hard To Be A Bear When Everyone Is Bullish. Part 6
Explanation: Being a bear while everyone else is bullish is one of the most challenging propositions in investing. For instance, ‘Short selling is an incredibly lonely proposition,’ billionaire hedge fund manager Bill Ackman says. Yet, it can pay off big time if you get your TIMING right. However, since most people, even professional investors are terrified of shorting, I will introduce a quick series about short selling, proper risk management when short selling and the best way to maximize returns. This was to be a part of my never finished book (no time to finish it)…….
Finally, before we can answer which of the investment strategies above is the best one, we have to consider an important issue. We must first define what goals most investors have. Unfortunately, the investment industry has done quite a job cutting and dicing what should be a simple classification into a million different pieces. Anything from divorced housewives on fixed alimony income investing in high tech startups to 95 year olds with advanced derivative strategies.
Luckily for us, human nature and greed never go out of style. If given a chance, 99% of all investors, no matter the age or risk profile would want the exact same thing.
- A massive capital gain.
- In the shortest possible period of time.
- While taking on very little, if any, risk.
The real question becomes, which of the strategies above can get us to the above mentioned points the closest?
As you can probably imagine, none of them. Every one of the strategies above has their own shortcomings. For instance, most value investments take a few years to play out. Blowing our “short time frame” requirement completely out of the water. Investing in growth companies is inherently more risky and trading or overtrading rarely leads to large capital gains.
So, what is the ultimate solution?
As always, the answer lies somewhere in between. If we are to bring the strategies above together, we might just be able to achieve our ultimate objective. By taking the best parts and disregarding the worst, we might be able to stitch together a strategy that will satisfy all of our high return and low risk profile requirements. Let’s see if we can get it done.
Value Investing: (Minimizing Risk)
- Let’s Take: Undervalued and out of favor companies. Cheap stocks that for one reason or another are selling well below their intrinsic values. Stocks that have collapsed over the last few months or years to the tune of 50-90%. Stocks of companies that are turning around, but their positive changes haven’t been realized by the market.
- Let’s Disregard: Uncertain holding periods and buying stocks with weak technical indicators.
Growth Investing: (Maximizing Returns)
- Let’s Take: Fast growing companies. Stocks that are appreciating at a fast pace. Stocks with strong technical indicators.
- Let’s Disregard: Highly speculative companies. High risks associated with extremely volatile industries and overvalued companies.
Trading: (Perfecting Timing)
- Let’s Take: Clearly defined rules and market timing techniques. The ability to take both sides of the trade….long and short. The willingness to study trading and make necessary adjustments. Strict risk management rules.
- Let’s Disregard: Overtrading. Trading without rules or a clearly outlined strategy. Trading on hunches and gut feelings. Laziness.
Of course, the next step is to put all of the above selections together.
Won’t we end up with some sort of a Frankenstein monster?
Not at all. A clearly defined investment strategy below is the ultimate outcome.
Buy Low, Sell High, Go Short & Cover Investment Strategy:
To be continued tomorrow…..
It’s Hard To Be A Bear When Everyone Is Bullish. Part 6 Google
Investment Grin Of The Day
Investment Grin Of The Day
An engineer dies and is sent to hell.
He’s hot and miserable, so he decides to take action. The A/C has been busted for a long time, so he fixes it. Things cool down quickly. The moving walkway motor jammed, so he un-jams it. People can get from place to place more easily. The TV was grainy and unclear, so he fixes the connection to the Satellite dish and now they get hundreds of high def channels.
One day, God decides to look down on Hell to see how his grand design is working out and notices that everyone is happy and enjoying umbrella drinks. He asks the Devil what’s up?
The Devil says, “Things are great down here since you sent us an engineer.”
“What?” says God. “An engineer? I didn’t send you one of those. That must have been a mistake. Send him upstairs immediately.”
The Devil responds, “No way. We want to keep our engineer. We like him.”
God demands, “If you don’t send him to me immediately, I’ll sue!”
The Devil laughs. “Where are YOU going to get a lawyer?”
Are Social Media Stocks/ETF About To Get Destroyed?
Let’s take a quick look at two charts. Facebook (FB) and Twitter (TWTR).This is rather simple. Fundamentaly speaking, both companies are massively overpriced. Technically, Twitter is on the verge of breaking below a massive muti-year rising wedge.
Should it do so, I wouldn’t be surprised to see Twitter below $15 a share over the next 12-18 months. Facebook is about to break below a major/important support level. The problem is, Facebook has massive gaps all the way down to $20 a share. Gaps that must be closed sooner or later. That is not a good sign.
Hmm, I wonder what happens next.
What You Should Expect From The FED Tomorrow
4/28/2015- A mixed day with the Dow Jones up 72 points (+0.40%) and the Nasdaq down 5 points (-0.10%).
So, does it matter what the FED says tomorrow? Not really and not if you value your money. Here is why.
As far as I am concerned there is only one thing, and one thing only, that is holding this market together. The FED and investors blind faith in the fact that the FED will be able to stop any and all market corrections. Either through QE, interest rates or by simply making statements to the press. So much so that every single bottom over the last couple of months can be attributed to the FED talk. El-Erian tends to agree. Danger, Danger — ‘Market Is in Love With Central Bank Trade’
Here are the 3 reasons as to why this “herd mentality trade” will blow up in investors faces. And much sooner than most people believe.
- The Fed is a Reactionary Force: If we study the past, the FED has always been late to react to any and all market developments. For instance, Bernanke was talking about the accelerating US Economy as late as Q1 of 2008. They have no clue and there is no reason to believe that this time will be any different.
- The Market Will Decline Anyway: My mathematical and timing work makes it very clear. Over the short-term the market is independent of all fundamental inputs. That is to say, the market will top out on a certain date in 2015 and initiate its decline. No matter what the FED does or say. That day is approaching fast.
- Investors Will Lose Confidence In The FED: This is unavoidable. As soon as the FED is unable to backstop the next decline, most investors will lose confidence in a millisecond. That in itself will accelerate the decline
The main take away from the points above is as follows. The FED trade will be in place until it is not. The problems is, by the time most investors realize this fact, it will already be too late. By the time the analysis above becomes a reality, the stock market will already be down 10-25%.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. April 28th, 2015 InvestWithAlex.com
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