About a third of the S&P set to report earnings this week — what’s your execution plan?

July 26, 2010 - Leave a Response

For those of you who sent me comments thanking me for your fortune of trading McDonald’s after you did some DD after reading my last post — you’re welcome.

For those of you who have been frozen on the sidelines afraid to make a move and you read my last post about watching McDonald’s — I hope you watched closely, because that’s how this market has been trading.

By the time the street is buzzing about a name in this market, it’s almost too late — you have to be a step ahead of them.

Do your homework.

Know when your companies are set to report earnings.

Read every single thing on them leading up to earnings.

Size it up.

And if everything appears to be positive, make a calculated decision on how to execute your trade — before the street starts buzzing.

Leading up to last Thursday, everyone was buzzing about Amazon and Microsoft, but many of the traders already executed their trades before the actual earnings reports, so when these companies actually released their earnings — there were no grand moves in the market — the traders had already been in and out of those positions.

Meanwhile, McDonald’s had a stellar day — trading ahead of its earnings.

In this market, you better be moving with stealth-like precisions, knowing precisely what numbers you’re looking for — or you’re going to get slaughtered.

Now that you see how this market is moving, you’ll have a better idea how to trade this week, as about a third of the S&P is set to report their earnings.

Fasten those seatbelts and be prepared to act like a lion and pounce on your trades with lightning speed — and get the heck out before it’s too late.

But don’t you dare make a move if you haven’t done some solid DD on every single execution — as I can pretty much guarantee that the only thing that will get executed will be yourself.

Just remember the usual disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence, or at least enough research to pick the right professional to do it for you.

The street will be buzzing about Bernanke, unemployment rates, Amazon, Microsoft and Starbucks — but my eyes are focused on McDonald’s

July 22, 2010 - Leave a Response

Let me pop in here this early Thursday morning before the opening bell to answer some of the questions I’ve seen people trying to post over the last couple of days.

To those of you wondering what the heck happened to in Wednesday’s market, let me make this short and sweet. The market was having a good rally, moving on good earnings reports from some good companies.

Then Congress once again started asking Bernanke for a weather report, and he told them exactly what they already knew, we already knew, and most people on the street already knew — the economy doesn’t look exactly rosy, and he doesn’t have high expectations for the unemployment rate improving anytime soon.

But the traders who are moving the markets these days, don’t like any sort of bad news at all — even if its news they already knew — and they dump many positions, causing the market to take a little nosedive.

Not a big deal.

If you’ve been watching or participating in this market at all — you should be used to this.

My guess is, the traders will sleep on it, wake up this Thursday morning, wait for the opening bell, listen to some analysts calls on this big earnings day and week with Amazon and Microsoft — and if the news is rosy about the Kindle, which I believe has been doing fairly well in the marketplace since they slashed the price in June, and Microsoft — my guess is the market will will have a nice day.

As for what’s at the very top of my watch list — the very same name that’s been on my list for a long time — McDonald’s.

If you’re someone who’s sitting on the sidelines trying to watch and figure out what’s going on in the market — just watch this baby over the next day or so, as it will give you a good gauge for how to play this overall market.

But everyone must heed my usual disclaimer: Don’t base any of your investment decisions on anything you read here — do your own due diligence — or at least enough research to pick the right professional to do it for you.

Give yourself some “options” in this market

July 1, 2010 - Leave a Response

As most of you know, I haven’t been checking in on this site too frequently, because I’ve been more focused on my main site, Let’$ Talk Money, as I believe the best way to trade in the current market conditions is to do so with the protection of options, so you can put your head on the pillow every night and know your exposure to turmoil in the market is limited.

I’m no longer surprised when I stop by and read comments that some of you tried to post here while I was MIA (despite the fact I’ve mentioned numerous times on here that I block responses from being published).

This response is not directed at the majority of you who get it and ask specific questions about the best ways to go about doing your own due diligence, but rather the individuals who claim they’re frequent readers here, yet they’re still asking for “a hot tip.”

That question is so ridiculous that I have to just shake my head and laugh.

It’s a telltale sign to me that you really haven’t either read a single word I’ve written here, or you need improvement on your comprehension skills.

If you’re looking for “a hot tip” — you’ve come to the wrong place.

In fact, this is the forum where I jump atop the proverbial milk crate and preach relentlessly that there is no such thing as “a hot tip.”

The best tip you’re ever going to get from me is this — do your own due diligence.

Just as important of knowing what to buy and when to buy is knowing when to sell — and you’re not going to know that, if you don’t do your own due diligence.

I strongly encourage those of you who are prone to jump around the Web looking for hot tips to read some of my past columns explaining why you really need to do your own research on a company — and its competitors — before buying a single share of its stock.

As for those who complain that I’ve “abandoned” you in this market — you’re nuts.

I never have — and never will — hold someone’s hand as they walk up to the window to buy or sell a stock.

Let me make this crystal clear, this forum is aimed at those investors who are leery of having all their money tied up in mutual funds.

While I have some of my money in mutual funds in my retirement account — I’m not a big fan of investing in funds, as inevitably there will be one or two of its top holdings that I feel are dogs, so I’d prefer to own single stocks of companies I do want to own, rather than have to “take one for the team” of holding something I don’t want that I feel holds my fund back from performing to its full potential.

I also can’t stand the fees associated with owning mutual funds, so a word of caution is to pay close attention to whether, and how much, any loads are that you will pay for a mutual fund. Just a sidenote, is that there are certain fund managers who have a fantastic record of way out-performing the market, and it may at times be better to pay a higher load that they deserve, than to be penny-wise and pound foolish by trying to go with a no-load or low load fund where the returns are dismal.

Remember the name of this column guys – This Ain’t Your Daddy’s Market Anymore, Baby! — and that means you can no longer stick your money in some fund somewhere, pay no attention to it, and think you’re going to retire in X number of years it you’ll have all the money you put into the fund plus tons of gains waiting for you.

You have to think like a trader and know where your money is every single day.

Do you know how much money you have in your wallet, and do you pay attention to what you spend it on?

I am constantly dumbfounded by people who will go with a lower price item on the lunch menu to save themselves a buck or two — but have absolutely no idea what are the top stocks they own in a mutual fund.

They’re positively clueless.

Some think they’re actually doing good if they read their quarterly statements.

Give me a break.

I call that the “too late now” mail.

If you are monitoring your fund on a regular basis — you can switch your money into a different fund if your fund manager suddenly makes a move you don’t approve of, or if he’s not making moves when he should be.

Fire him and take your money elsewhere.

I swear that I will absolutely, positively never understand people who will drive 10 miles out of their way to pay $10 bucks less on an item closer to home — but they can’t be bothered to take two minutes while sitting in their own home and look up what their fund’s top holdings are, and make appropriate moves with hundreds of thousands of dollars in their retirement account.

I swear — it completely baffles me.

Try it sometime.

Ask a friend what the top holdings of the funds are that they have in their retirement account.

Get ready to be blown away when many times they not only don’t know what the top holdings are — but they don’t even know what funds they’re in.

If I hear one more person say to me “Oh, I just checked off that box for my age group, and the nice people who take a nice chunk of my check every week said they’ll take care of diversifying it for me.”

Ugh.

I have a zero tolerance for that type of ignorance.

And, trust me, those will be the same people who will get their quarterly fund performance notices and run around complaining that “they” (as in someone else) lost all their money.

Give me a break.

So, again, my feeling about mutual funds is they’re perfectly fine for people who just don’t know have the aptitude or patience to diversify or invest their money on their own — but owning a mutual fund is not a license to ignore what’s going on with your money — you’re still responsible for making sure the funds you select are the ones you should stick with.

Then there are the people who comment that they’ve done their research, have picked a company they want to buy, but they’re afraid to actually make the purchase because they’re absolutely terrified that the second they buy it — the whole market will take another dip and they’ll lose money.

That’s not an uncommon fair, and a legitimate one, especially in this market.

For those people I have two responses.

Are you going to be the same people who on the other side of the coin will be afraid to snap up some shares when we are in a bull market and stocks are soaring, as you’ll be afraid that you’ll be paying top dollar for a stock, and you’re afraid there will some sort of a pullback after you buy?

As my mother taught me about investing many years ago — the market is not designed to sit still — it’s always moving — sometimes higher and sometimes lower.

Would you really want to put your money into something that just sits there stagnant?

But for those who do enjoy doing their own due diligence and understandably, and legitimately, have concerns about jumping into this market buying straight stocks, I strongly advise you to start reading about other strategies for buying stocks.

A good book I’ll recommend to get you started on your learning venture is Jon Najarian’s “How I Trade Options.”

Great-great book — but, again, I don’t want you to just read that one book and think you’re ready to go primetime and start trading options on your own.

You won’t be by a far shot.

But it will hopefully give you some basic information and set you on your quest to want to learn more about this means of trading, which I think is the best way of trading in this market.

As for me, I have many of the same names on my due diligence list that I’ve mentioned before, and I’ve added a lot of tech stocks and Hewlett Packard and DuPont to the list. Again, this just means they are all on my DD list — this is not a recommendation to buy or sell any of these names.

And whatever you do, please heed the usual disclaimer: Do not base any of your investment decisions on anything you read here. Do your own due diligence, or at least do enough research to pick the right professional to do it for you.

I love this market!

March 12, 2010 - One Response

It’s been a few weeks since I’ve been here, so it’s time to check in.

If you’ve been doing your due diligence, it’s almost impossible for you not to be making a profit in this market with the S&P hitting it’s highest point in many months and the Dow, Nasdaq and Russell 2000 all up YTD.

I’ll never tell you to put your hands over your eyes and randomly point to a ticker symbol in the paper and buy some of that stock, just as I’d never tell you to spend hours, days, weeks and months researching a stock to then buy it and then forget about it.

But if you’ve done your DD and picked up some good names and continued to do your diligence on it — then I know you’re doing great.

Personally — I love this market!

Same names as usual on my due diligence list, with a recent addition of Caterpillar (CAT).

Just remember the ususal disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence — or at least enough research to pick the right professional to do it for you.

How are you trading Toyota?

February 19, 2010 - 2 Responses

Oh boy, every time I read all the responses some of you have tried to post here, I feel guilty that I haven’t had the time to get back here more often, especially for those who missed getting into my Let’s Talk Money forum on EnterActive Media before we capped membership there in 2009.

But, I’m here now, so let’s get down to business.

How are you trading the news surrounding Toyota?

I know people on both sides of this trade — with some literally on both sides of this trade — with options puts and calls on it.

But for straight-traders, some are of the thinking that this is just a momentary bump in the road for Toyota, and they feel it’s an opportune time to snatch some up and sit on it for awhile.

While others have bells and whistles chiming in their heads, where as soon as they heard about a large recall, they immediately reached for research reports telling them what cars Toyota loyalists would likely be reaching for if the recalls soured them on their loyalty to T for the time-being.

I know some have been eyeing Honda and Hyundai with this idea in their mind.

As you know, my role is never to take you by the hand and tell you what you should, or shouldn’t, buy.

My goal it to simply inspire you to roll-up your sleeves, do some research of your own, and decide what play is best for you — even if it means you don’t want to play the Toyota news at all.

Same names as usual on my due diligence list.

Just remember the usual disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence, or at least enough research to pick the right professional to do it for you.

If you’re freaking out — calm down

February 5, 2010 - Leave a Response

If you’re freaking out about now with the market taking a plunge today, while nervously anticipating what the market is going to do next with the jobs reports about to be released, I have two words for you — calm down.

Try this experiment:

Close your eyes and breath easily.

Relax.

Now pretend the year is 2012.

Now imagine that the market has been in full bull-run mode for months.

You can’t catch a break to get in on a dip — and fear that you’ll end up buying at a peak and your stock will suddenly plunge has only led to being left on the sidelines as names you’ve been dying to own have kept going up-up-up in value.

Man, if only the market would pull-back and give you a buying opportunity.

If only you had a chance to start loading up on some names at good prices.

You’ve got a couple of annoying good friends who boast about the stocks they bought way back in the uncertain market in 2010 for dirt cheap prices that have since doubled, if not tripled, in value.

And you think “Oh man, if only I knew then what I know now.”

Okay, open your eyes.

Today is your future.

But before you mis-read my message to mean you should take your life-savings and randomly toss it all into the market — STOP!

I’m not saying that at all.

What I am saying is that there is quite possibly a good chance to buy some names in these full-market pullbacks for companies that are going to weather the storm and be standing strong whenever the market does start to have that steady bull-run once again.

Although I refuse to ever tell anyone what names I think they should be buying, as I’m a firm believer that everyone must do their own due diligence and not only pick a name to buy — but insure they buy it on the correct day for the right price — I realize there are a group of you who are absolutely paralyzed on the sidelines and the wet finger you’re sticking in the air looking for direction is just leaving you doing 360s in the wind.

So here’s about as far as I’m willing to go to at least give you a starting point with some names you might want to start rolling up your sleeves and deciding if you’d like to own any of these names. If so — choose for yourself what price level it is worth buying at. That could mean that right now is the perfect buying opportunity; it could mean that you think the stock had a little more room to drop and you’re willing to sit back and wait for that drop to occur — or it could mean that it’s already treading higher, and you need to set a limit price on what’s the most you’re willing to pay for it.

Sometimes — actually, more often than not — I’ll begin with a list of names I want to do research on — and end up not wanting to buy any of them — but the research might lead me to a competitor or a different supplier for one of the names that I have more of an interest in owning.

That’s the beauty of doing your own homework.

Before you buy a single share, you know precisely why you are buying a company, and you know what price you want it at.

Never-ever-ever buy a single share of a company just because you heard someone else is planning to buy it — or owns it.

You need to know precisely what it is about the company that makes them want to buy it, whether they’re buying it with options expecting to make a gain when the stock actually plummets in price, and what price they are buying it at.

And there’s a darn good chance they’re not going to call you first to tell you when they sell it, either, which could lead you holding the short end of the stick.

So let me get down to it. I still like my longtime names on my list, such as McDonald’s and Walmart.

Were you paying attention back in August when I told you that I viewed pullbacks in McDonald’s as a great buying opportunity? 

If so, then you had the opportunity just a few weeks later to snatch some up at $54 — and just over four months later, you would now be looking at a $10 profit per share.

I still like the name — but with the company having been on a somewhat steady climb lately — I wouldn’t necessarily be looking to add to a position right now.

How about Walmart? Did you pay attention to my column last June when I said it was a long name on my due diligence? Did you roll up your sleeves and find a reason to like the name as well, and then jump on the opportunity to scoop some up a few weeks later with a little pullback around $47? 

If so — good for you — as you just had an opportunity to take a little profit on this name that’s been treading around the $55 mark since last November. That’s a nice little $8 a share profit you just made.

And last April I told you I had added Wells Fargo, which was then trading around $15 to my due diligence list. If you did your own homework, liked it as well, and bought some shares — congratulations — you’ve just about doubled your money on that name in less than a year, as it is currently trading around $27.

By listing these examples, that doesn’t mean that I believe I’m some golden child and whatever names I choose go straight up and keep on climbing.

Of course not.

These names have pullbacks, as well.

The only difference is you must learn to recognize when a stock is having a pullback based on the overall market — and not because that individual company’s fundamentals have changed.

If a name you like has a pullback not related to its fundamentals — consider jumping at the chance to buy some more.

If the actual company is getting beaten up — then take emotion out of it — don’t fret over having made a bad decision to buy a company — it’s just business — so get out of it as quickly as you can and put your money to work in a better name.

For so long I’ve just listed the longstay names on my due diligence list — so it’s only fair that I now give you some new names that I’m looking at. These names include Hershey, Proctor & Gamble, CVS, Campbell’s, Unilever and Allergan.

Now don’t rush out and buy any of these names just because I have it on my DD list to do homework on.

How about rolling up your sleeves and doing your own homework — and see where it leads you?

You might like one of the names — you might not like any — or your research may lead you to an entirely different name.

The list is just your starting point — so get going.

Just remember the usual disclaimer: Don’t base any of your investment decisions on anything your read here. Do your own due diligence, or at least enough research to pick the right professional to do it for you.

Do you have what it takes to be a trader?

January 15, 2010 - Leave a Response

Here’s a pop quiz to figure out if you’re cut out to be a trader:

For all those people who have followed me to this forum or EAM since my former days a year back at Cathleen’s Corner, who consistently tell me all the time that you really-really want to be a trader — here’s a quick pop quiz you can take to see if you’ve got what it takes.

When you heard about the earthquake in Haiti, what were the first three things that popped into your head?

I’m hoping the first thing was to say a prayer for all those affected by this disaster.

Followed by a decision to make a donation.

Followed by an urgency to figure out which publicly traded companies stand to make the biggest profit as a result of the disaster.

It’s not crass — it’s just business.

Donations are coming in.

They’re talking about raising hundreds of millions of dollars for the cause.

So what are they — and will they be — buying?

Construction supplies to raze the area?

Infrastructure building materials?

Transportation to transport the goods?

Medical supplies?

Water?

The list of possibilities is infinite — now do your due diligence.

Read the papers and watch the news for specifics.

Do research on what companies soared as the result of similar disasters.

Do your homework, and then answer the million dollar question…

Are you cut out to be a trader?

The usual disclaimer: Do not base any of your investment decisions on anything you read here. Do your own due diligence — or at least enough research to pick the right professional to do it for you.

Newbies need to learn when to hold ‘em & fold ‘em — & when to take half off the table

January 12, 2010 - One Response

 

The two most important decisions every investor makes is deciding when to buy and when to sell.

A lot of times it’s the latter question that most newbie investors mess-up on the most.

In some ways, it’s easy to make to the decision when to buy. You simply do your due diligence and make an informed decision about an investment you like — and buy it.

But selling…. that’s a whole new animal unto itself.

It doesn’t matter whether the stock is up or down — newbies wrestle with the inability to make a decision and stick to it.

If they made a decision to buy a company, and the fundamentals change, and the stock starts to plunge — they can’t stand to bite the bullet and take a loss.

Which often leads to even greater losses.

Yet, they know in their core that it’s not just a momentary blip in the stock profile causing a pull-back — so they recognize it’s not a great buying opportunity, either.

Bottom line: If you own a stock, and it pulls back, and you’re not rushing to buy more because you know the fundamental reasons you bought it have changed — bite the bullet, take the loss, stand-up, and put your money into a company whose fundamentals you currently love.

On the other hand, I see just as much indecisiveness from newbie investors when they buy a stock, and it soars.

Let’s take Ford, for example.

If you read my column last May when I went against the grain where many on Wall Street were hinting that GM was going to be a great stock to snatch up because the government was talking about bailing out the auto giant — I told you that I preferred Ford.

If you liked Ford, too, and snatched some up for the $5.69 it was trading at and held on to it — you’ve doubled your investment.

Good for you.

But what are you going to do now?

Are you getting lazy and thinking about just leaving it there with a grand illusion that you just need to sit back and it will continue to soar?

I hope not.

Even if your due diligence tells you that this baby still has room to fly — you need to adhere to the golden rule “Buy low & sell high.”

It doesn’t mean “sell at its very highest.”

The very best traders on the Street know it’s a fool who tries to sell at a peak.

In other words, doubling your investment is good — don’t get greedy.

I’m not saying you should sell your full position — but what some of the best investors will do is to take half off the table.

In other words, let’s say they invested $10K in Ford back in May, and it’s now worth $20K. They’ll sell half it’s current worth — taking back their full out-of-pocket expense — and the $10K they’re still trading is “free” money that’s all profit.

But that’s just my personal choice — each investor has to find their own comfort zone.

As a sidenote to those asking why their posts don’t show up — I do not allow responses to be posted, because I don’t want anyone using this forum to hype or diss stocks. This forum is to encourage everyone to do their own due diligence.

Just remember the usual disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence, or at least enough research to pick the right professional to do it for you.

Happy New Year!

January 2, 2010 - Leave a Response

Happy New Year everyone!

As most of you know, I’ve been spending most of my time on EAM, but I still check in here from time-to-time.

But let’s just cut to the chase, and talk about this market.

I refuse to get caught up in guesstimating.

While nothing is ever guaranteed in the market — I am sticking to my guns that the best way to play this market is to take advantage of solid companies when they are at their lows.

It’s the same old buy-low & sell-high philosophy I find my comfort zone in.

The companies I keep on my due diligence list are Google, Apple, Verizon, T, WMT, Intel, MCD and KO.

Just remember the usual disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence — or at least enough research to pick the right professional to do it for you.

Waddle your tootsies carefully.

October 19, 2009 - Leave a Response

Okay, so for all those who decided to play it safe during the last couple of weeks of earnings reports by pulling their money out and tucking it under their mattresses while we figured out which way the wind was blowing on Wall Street, you have my blessing to waddle your tootsies back in the wading pool once again.

Just do so wisely.

Remember, the jobs reports keep getting worse, and earnings reports need to be scrutinized now moreso than ever before.

Personally, I plan to continue doing my due diligence on names I’ve liked for a long time, the McDonald’s, Walmarts, Pepsi’s, AT&T’s and Verizons of the world.

Just remember the usual disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence, or at least enough research to pick the right professional to do it for you.

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