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A Stock Trader’s Thanksgiving

Sat, 20 Nov 2010 22:35:00 +0000

A Stock Trader’s Thanksgiving

I am thankful that I live in the technology age, where I can use a small electronic box called a computer to analyze my stocks and trading techniques on something called a spreadsheet.

I am thankful that I live in the information age, where I can get stock quotes instantly without having to call a broker, and I can get all kinds of financial data and up-to-the-second news about stocks I am interested in.

I am thankful that I live in the communication age, where I can connect with my brokerage firm and fellow traders in numerous ways, such as instant messaging, texting, tweeting, and chat-rooming.

I am thankful that I pay less than $10 per trade for commissions, unlike the old days, when I was subject to minimums of $35 to $100, plus add-ons depending on the number of shares.

I am thankful for the bid and asked spreads narrowing to as little as one cent, unlike the old days when it used to be one quarter of a dollar, or occasionally one eighth of a dollar.

I am thankful that I can easily trade internationally, with the ability to buy most major publicly traded companies around the world, and still pay the same low commission.

I am thankful that I can now easily trade a type of mutual fund called an Exchange Traded Fund, which I can buy and sell several times in one day.

I am thankful that I can buy bearish funds through an ETF, which allows me to diversity with a short position without the unlimited risk of shorting a stock.

I am thankful that I can buy funds through an ETF that can give me double and triple leverage, without having the risk of margin calls.

I am thankful that there is so much free instantaneous adjustable charting software available, unlike the old days when we had to wait for our outdated daily and weekly chart books to arrive in the mail.

I am thankful that the commissions on options are so low, allowing me to do spreads that could only have been profitable to market makers back in the old days.

I am thankful for all the option software currently available for free through my brokerage firm that helps me analyze and choose the best collars, iron condors, and other option trading strategies.

I am thankful that I can have money transferred from my brokerage account to my bank account without a fee and quickly, sometimes in as little as 24 hours, unlike the old days, when I had to wait for a check to be sent across country and arrive in my mailbox.

I am thankful that I live in a free enterprise country that allows me to trade stocks freely.

By Fred Fuld III at Stockerblog.com

Casino Investing

Sun, 15 Aug 2010 22:03:00 +0000

From the beginning of time, people have been looking for an easy (easier) way to get rich. Im not convinced any such way exists. If it does, I certainly havent found it yet.

Would you please let me know if you have???

Until I find the investing magic bullet, Im going to follow dividend and index investing principles. To continually improve my financial acumen, I’m trying to read, educate myself, learn from others and make notes of my own experiences as much as possible. Maybe you do the same. However, many investors dont do any of these things. That could be because they have a better strategy than me, or, maybe because they have no investing strategy whatsoever. Some people treat the stock market like a casino, taking uncalculated risks with their money – rolling the proverbial dice; letting the chips fall where they may. I call them Casino Investors. There are a number of reasons for this, here’s a handful from my perspective:

Casino investors lack knowledge
Lack of knowledge is almost a sure fire way to help you fail in almost any field investing is no exception.

Casino investors lack a plan
Whether this is a bigger flaw than lack of investing knowledge, Im not sure, it’s a toss-up for me. Regardless, Im a firm believer in failing to plan is planning to fail.

Casino investors are unrealistic
People with a get-rich mentality are largely unrealistic. Casino investors are fed any number of innovative means to get rich, and believe in them.

Casino investors are inherently impatient
In our casino world of wanting it now, wanting instant gratification, the stock market is probably not the place to be if you’re impatient.

Casino investors think they can time the market
Wisdom, I believe, begins by admitting your ignorance. I argue one of the many things no investor will ever know is when exactly stocks will go up or down. Over the long term, stocks generally rise at a nice pace of 7% or so. History tells us so. Anyone saying they can time the market is kidding themselves – no one investor will ever be bigger than the market.

Casino investors are too greedy
Enough said.

What do you think of my list?
Why do you think some investors treat the stock market like a casino?

August Update – working through our 2010 financial goals

Tue, 10 Aug 2010 00:49:00 +0000

Hard to believe but theres only one more long weekend of summer left! I dont know where the time has gone. Almost depressing to think about for a second, but not any longer. That’s because our summer in Ottawa has been great, the weather has been amazing and my wife and I have taken advantage of it – biking, running and enjoying some beer on the patio as well! Winter is just far too cold and long here. Some rain has recently hit the area amongst predominantly sunny, hot humid days, which has made the grass green and lush on the golf courses – and thats good news for me – because Im hitting the links later this week.

Today, I’ve got much more positive news to share than the weather…

Just a few days ago, we completed our last transaction related to 2010 financial goal # 3: clean-up RRSP accounts!

This housekeeping exercise was a big one for us. It started in earnest in late 2009, after revisiting our RRSP mutual fund holdings and their calendar year performance over the last few years. This work also accelerated because my understanding and passion for index investing has grown in the last year or so. If you’ve been following my blog, Ive written about the benefits of ETFs before. I’ve learned their low-cost structure and strong allegiance to the indexes they follow give them advantages in the long-run over actively-managed mutual funds. “This makes ETFs a great fit for our RRSPs”, I thought, and so for the last eight months the switch has been on. We recently completed the switch of out some high-MER mutual funds into ETFs because they give us:

1. Confidence with our investments. With our ETFs, we know what we own. We couldnt say that with confidence before since our actively-managed funds buried most holdings beyond their top-10.

2. Performance transparency. We now know our long-term RRSP investment results will reflect, pretty much, index performance. For us, thats going to be:
Performance replicated by companies of the S&P/TSX 60 (60 of the biggest, most liquid (most reliable and consistent) companies in Canada),
Performance replicated by companies of the Dow Jones Canada Select Dividend Index (30 top dividend-payers in Canada), and
Performance replicated by the DEX Universe Bond Index (diversified federal, provincial, municipal and corporate bonds; for market security).
We can live with that.

3. An easy recipe to manage our asset allocation. With actively-managed funds it was a little more challenging to determine our weight in bonds or equities. Not anymore. Our ETFs make rebalancing a breeze; buy more of the index we want when its priced right. When equities move up, we buy bonds; when bonds move up, we buy equities.

4. Nowhere to hide. With our ETFs, our results are pretty much the indexes results. With actively-managed funds, our results could be (and were) worse than the indexes. This isn’t always the case, I know, since some actively-managed funds do beat their index. I think I read about (only) 5% do over a ten-year period, but I’m not taking any chances (anymore) over our next 10 years.

5. Instant risk management. The whole equity index goes up (or down) we go with it. That isn’t so bad since we’re not introducing any risk or unpredictability with actively-managed funds making bets on select stocks on our behalf.

6. More money to reinvest. Yup, our ETFs pay some healthy dividends and those dividends get reinvested (two of our ETFs reinvest frequently, every month) to buy us more units:
XIU currently yields ~2.5%,
XDV currently yields ~6%, and
XBB currently yields ~3.9%.

Earlier this year we started the process to dump all our high-MER mutual funds and instead, get into more transparent, easier to manage, risk averse ETFs in our RRSPs. As of this post, our move to ETFs is complete. Our investments are riding the market and giving us steady dividends to reinvest in the process. Our money is working harder so we don’t have to someday. One more long weekend to go; another financial goal complete. Absolutely nothing to be negative about, not even for a second.

I want to hear from you…have you taken a similar journey with ETFs from mutual funds?

BlackRock ETFs: Becoming more opaque than transparent a concern?

Tue, 20 Jul 2010 17:35:00 +0000

One of the benefits Exchange Traded Funds (ETFs) offer me, amongst many above their investment cousins, mutual funds, is their transparency. Part of this transparency is knowing what I own but also how much its costing me to own it. Its one of the reasons I started investing in ETFs a few years ago and maybe its the same reason you started investing in ETFs as well. Well, some of that transparency for BlackRock ETFs has disappeared, but is that a big deal?

Recently, BlackRock stopped publishing their management expense ratios (MERs) for ETFs on its iShares Canada website. (You can read more about this here.) Only the management fees for ETFs are shown. Example, XBB:

A management fee is part of the total fee (MER) I pay to own my ETFs.

In the case of BlackRock Canada, XBB for example, the management fee is equal to the trustee fee paid by the fund to BlackRock Canada, and does not include applicable taxes or other fees and expenses of the fund.

The formal BlackRock disclaimer goes further to state, not about XBB, but for XIU:

In the case of XIU, the indicated figure includes (1) 0.15% paid in trustee fees to BlackRock Canada, plus, (2) certain other fees and expenses which are payable directly by the fund, and which are subject to an expense ceiling of 0.02% per year, but excludes fees and expenses incurred in complying with NI 81-107, income tax, GST (and beginning on July 1, 2010, HST), withholding and other taxes.

I like transparency, always have, and you probably do too. But is this BlackRock news cause for concern? Are they becoming too opaque for me to own their ETF products? Nope…

I say that because first, the difference between the management fee and the MER isnt huge to begin with for ETFs. You can see this in the BlackRock disclaimer for XIU, a few hundredths of a percentage point. Its not much different for XBB. Even with our new HST in Ontario (not fun…) the difference isnt that much higher.

Second, and my biggest reason why I dont think this is a big deal, my alternatives arent great. Im not saying Im held captive by ETF companies like BlackRock, I can always buy individual stocks instead (I do…) but with few alternatives or amongst the alternatives available in Canada, is this news really that bad? With some of my ETFs, like XIU and XBB, Ive already got some of the lowest-possible-costing-products in my portfolio on the market today. Vanguard, arguably, the lowest MERs for ETFs on the planet (one of their products costs 0.06% and many others cost around 0.15%) while great products don’t have a shop in Canada (yet). So, Vanguard aside, the cost of my ETFs with BlackRock is highly competitive with everything else out there, except of course, mutual fund fees. Should I go back to mutual funds because of this news? Ah, no.

Even with this news, I hold ETFs because the benefits far outweigh any negatives. Those benefits are…

1.ETFs continue to disclose their exact holdings to me so I always understand precisely what I own (or am buying).
2.ETFs continue to provide me with superior flexibility; can be bought (I never sell) at any time.
3.ETFs continue to be tax efficient; they have low portfolio turnover because of the indexes they follow.
4.ETFs continue to provide me with a strong allegiance to passive income.
5.ETFs continue to provide me with great dividends and distributions.
6.ETFs continue to provide me with instant diversification.
7.ETFs continue to provide me with performance transparency, I can immediately look up how well theyre doing on the TSX.

Yes, there is a downside to ETFs and passive investing with these products (as opposed to holding only individual stocks). Management can change their fee disclosure practices; become less transparent, or raise fees at their discretion and the long term DIY investor has little choice but to pay the money or sell. I’m not selling. Im looking at the big picture here. I dont see where this small news is cause for any major concerm. Yes, BlackRock is becoming a little more opaque with their ETF products, but if nothing more they’re becoming “like everyone else”. I just don’t think this is the worst possible news to a passive income investor.

BlackRock, let me know when you make a major fee change, then maybe I will change my mind about you

What do you think out there?

Beware of Robot for Man-In-The-Middle Chat Attacks

Wed, 23 Jun 2010 16:02:00 +0000

Everyone has heard about online financial predators that try to chat people up, get their personal information, try to get them to click on a malicious link, and then steal their money. Now a group of guys in France has developed an automated tool that will do that for them automatically without human intervention. The tool, called HoneyBot, reportedly has a 76% success rate. The tool crawls through info in social networks in order to get background stuff on the victim before making the instant messaging attack.

This is something we don’t need. Why give the bad guys more ideas.

Netbook or Smartphone?

Sun, 30 May 2010 17:33:00 +0000

For months, I debated whether or not to buy a netbook or a smartphone. Both have their advantages and drawbacks. I went around and around on the issues. To put an end to the merry-go-round in my head and help me make a decision, I wrote down my considerations. Heres a brief look at what I was thinking about:

Boot-up time: The smartphone boots up in about 10 seconds or less. Netbooks take longer. Netbooks might have 6-8 hours of standby time. Smartphones can last for days. Smartphone wins.

Document creation: While many new smartphones can use and view MS Office documents theyre only good in small doses. Anything more than casual texting or emails, you need a netbook. Netbook wins.

Email: A smartphone with a QWERTY keyboard is sufficient for sending and receiving a few e-mails, but for frequent correspondence, it’s challenging to use those small smartphone keys. Toss-up.

IM: For some quick messaging, smartphones are pretty good. Netbooks are certainly more bulky but can get the job done. Toss-up.

Everyday computing: Neither a smartphone nor a netbook are really meant for this. Get a 15-inch laptop instead. If computing/typing more than a few minutes at a time, because of keyboard comfort, I think the netbook wins.

Internet browsing: As much as I like to surf and blog, I cant see myself browsing on that tiny screen for more than a few minutes at a time. Netbook wins.

Media playback and apps: Netbooks are way too large to be MP3 players! If you want apps, toys, functions and features, get a smartphone. Smartphone wins.

Phone calls: Use a netbook all the time to make calls? Smartphone wins.

In the end, I went with a netbook a Gateway at that. For what I use my current phone cell for (90% calls, 10% texting (no internet browsing)), the cell does everything I need it to do, in a good monthly plan. The netbook will be our new travelling companion – for business or pleasure – since we’ll use it for internet browsing, document creation, instant messaging or using Skype. For about $300 taxes in, well use this lil gem to connect wirelessly pretty much anywhere we go and we dont have to be on the hook for tens of dollars (or hundreds of dollars) in a monthly data plan. This last factor really tipped the scales in favour of the netbook. I like my decision…what about you?

Have you considered buying a netbook over a smartphone recently?

Vice-versa?

What were your reasons?

The Great Advantage of Wall Street

Tue, 18 May 2010 19:34:00 +0000

In the example above, investors who bought the breakout in Visa back in April 2010 could have accepted a small loss of only 4 or 5% when it was clear that the breakout had failed. Those who held on stubbornly are now sitting with a much greater and unnecessary loss.

Click on chart to enlarge

Its true that the stock market can be very risky, however, what can off-set that risk and make it a worthwhile opportunity is instant liquidity, which gives you a degree of control over the risk. You must learn to use this to your advantage.

As a speculator, your account (meaning, your cash) is your most precious asset. You worked hard to earn it and build it, so you should work even harder at protecting it, because it is much easier to lose quickly than it is to gain.

The great advantage of stock investing over virtually every other investment such as real estate, land, art, etc. is instant liquidity; the ability to always be able to sell at the current price.

Attaining a high level of performance in the stock market does not require that you bag the elephant or hit home runs on most of your trades. In fact, you can achieve huge success in the stock market without ever hitting a home run. Thats right! Whats required is that you protect your account and lose small amounts when youre wrong while consistently compounding decent gains. This is far more important than any other aspect of your trading, plain and simple.

By refusing to cut losses you give up the greatest advantage the stock market offers; the ability to sell immediately and maintain a positive reward/risk ratio.

Every 50% loss starts as a 10% loss. The only way to protect yourself is to accept a small loss before it snowballs into a big one. During my 27 years as a stock trader, I have not found a viable alternative.

Theres a fortune waiting for you in the stock market if you learn to do what most people wont do. The majority of investors DO NOT cut losses short, and in turn, give up the greatest advantage Wall Street offers.
-
Mark Minervini

Instant Loans – Instant Cash With Straightforward Loans Processing

Thu, 03 Dec 2009 10:33:39 +0000

Is the need for quick cash torturing you? Are you getting hopeless from getting quick financial help? Then the Instant Loans; is the right option for you. You can get the fast cash from this monetary aid. As the title suggests, the amount can be getting within 24 hours with these loans. And this is possible with the facility of online application which has made it instant in nature. These loans are offered by the lenders to the borrowers with the straightforward loan processing and the approval.

First you need to think of the cash requirement that is tormenting you as the amount availed to the borrowers by this financial aid ranges from $100 to $1500 which is a small amount. The repayment time is also short term as it ranges within one month. But the amount can be repaid according to the next paycheck dates. It is usually managed so to help the people financially till their paydays arrive. If you are with the adverse credit ratings then also you can take the assistance of this monetary aid as it provides its borrowers with the facility of no credit check.

The factors on which the amount is approved to the lenders without the demand of collateral are the income status of not less than $1000 within a company from past three months, a valid bank account, citizenship and the age which must be above 18 years. These factors are necessary for the lenders to calculate the repaying capability. The interest rates for the borrowers in this financial help are constructed high.

The best approaching way to the Instant loans is the online application. This mode avails the borrowers the amount very fast so you can access this mode for the fast recovery of cash to solve your urgencies. There is a great convenience in this mode as you can apply for these loans without the hassle of roaming for the best lender as you can have the loan quotes of various online lenders at the same time and within your drawing room at your desk. So after the proper analysis of this scheme you should apply for the best selected lender.

3 Month Payday Loans – Instant Available For All Your Financial Needs

Thu, 03 Dec 2009 04:27:58 +0000

3 month payday loans are the short term loans that are designed to conquer urgent money related problems. As it the very common situation that expenses toll over anyone’s income and made them cashless at the mid of the month. If anyone is in need of money instantly, then no need to get nervous any more. 3 month payday loans are easily available that get one’s out from financial mess longs before their next payday. To grasp these loans quickly, borrowers do not require submitting any collateral and even there is no credit check procedure also. This type of payday loan offers the speed and convenience of quick peripheral financial assistance. These loans provide monetary support to meet all sort of financial needs without wasting much time for approval.

The main aim of the lenders that provide this loan option is to arrange a wide range of viable monetary facilities to the one who need. With this loan services borrowers can easily avail the loan amount ranging from 500 to 2,000 with the repayment term of three months. 3 months payday loans are especially designed for the salaried people who earn fixed amount every month. These loans help to bridge the financial gap between two following paydays. Lenders that approved these loans request usually do not employ any credit checking and no faxing method for the quick approval.

The funds received through these advances cover all sorts of urgent financial crises that cannot be postponed. Individuals can use the cash amount for children’s education, home renovation, car servicing, utility bills, business trip, and so on. But, for availing payday loans borrowers need to qualify the loan approval criteria which are mentioned as below:

* They must be a permanent citizen of UK.* Borrowers must have a savings account with UK bank. * Their age should be more then 18 years.* They should a regular employed and earn at least 1000 per month.

Once the borrowers qualified the above loan approval criteria they are eligible to apply for these cash advances. Even this loan option is also available online over Internet. This method saves both time and money. Many lenders are available online that approved the borrower’s loan request instantly without any tricky formalities. So, the borrowers just need to fill up the loan application form available at lenders Website and submit it to them. The rest of the procedure will be conducted by them itself. Moreover, bad creditors can also follow the same rule to avail these payday advances.

Cash Loans – Instant Cash With Instant Processing

Wed, 02 Dec 2009 23:32:02 +0000

Due to economic crisis all over the world anyone can come under a financial critical situation anytime without any prior notice. In financial crisis most of the people find themselves in a week situation to arrange adequate funds in a short span of time. During such conditions, cash loans can be ideal option to avail instant money right at the time.

As the name implies cash loans, these loans are actually available through very simple process and basically availed for short period only. Salaried people can usually look for these loans as it always seen that expenses are higher than a normal person salary. So when the person is facing any type of financial crises at mid of the month, they can easily apply for cash advance and avail plenty amount of funds for their needs.

Lenders associated with loan facility do not bother about the purpose behind the loan. Therefore, the borrowers can utilize the loan amount as per their personal needs and requirements and is best to fight with urgent expenses such as credit card dues, paying medical bills, business telephone bills, car or house repair and so on.

Moreover, borrowers the easily apply for the loan amount raging from $500 to $5000 on their own refunding prospects. Usually, these loans are taken for short period of time, but if the borrowers want to reschedule the refunding date further, then they can do so by paying extra fee. Before availing these loans, applicant has to qualify the lenders approval criteria set by them.

Furthermore, these loans can easily be grasping by online also. There are many online loan providers, offering loans within time period of one day or within 2 to 3 hours. For instant and fast approval, one has to make search on internet. Perfect deal with perfect repayment duration can change your life. Due to high competition in the market everyone is trying to attract people, so it is quite important for a borrower to first compare different quotes and then choose.