This interview was originally published on December 17, 2010 at thekirkreport.com

Charles Kirk: It is with tremendous pleasure that I offer my last interview of 2010 with Mark Minervini.

As with many traders I interview, Mark requires no introduction as he is one of the most highly-respected independent traders of our generation. His blog in recent years has instantly become one of the must reads out there as he often shares market commentary and analysis which shows why the respect so many have for Mark is so well-deserved.

Moreover, his experience and past history of savvy market calls is legendary. It is with little doubt that we can all learn a lot from him! We hope you enjoy and find this focus interview helpful in your own journey toward more success in the markets.

Kirk: Hi, Mark. First of all, thank you for taking the time to answer our questions. I speak for many members who have a great deal of respect for you and we sincerely welcome you to this interview series.

Mark Minervini: You do a great job, Charles, and Im honored to be a part of it.

Kirk: Please tell us a little bit about how you got interested and started in trading.

Mark Minervini: I dropped out of school in the eighth grade in pursuit of a career as a drummer. From the money I made working as musician, I bought my first stock in 1983, which was a few hundred shares of Allis Chalmer. Shortly after, I read Richard Loves book, Superperformance Stocks: An Investment Strategy for the Individual Investor Based on the 4-Year Political Cycle. Everything Ive created with regard to my trading approach since stems from Loves initial impression on me, specifically from his writings in chapter 7.

Kirk: What was one of the most important lessons you learned early on?

Mark Minervini: That no one was going to do it for me; no one was going to make me rich except me. I learned that you must take responsibility for your results in the market and in life if you want to be exceptional. Secondly, I learned that in order to do well in the market you must be consistent; consistency is what separates the pro form the amateur. In order to have consistent success, risk must be managed in relation to potential reward as standard operating procedure. Youre not going to make just one trade, rather hundreds or even thousands of trades; its all about how much you make on average versus how much you lose on average over time. Lastly, I realized that I simply had to get to the bottom of what actually worked in the marketplace and ignore all the opinions and theories.

Kirk: Was there anyone out there who helped you greatly during your initial learning curve? If so, what did you learn most from them?

Mark Minervini: My Mother and my Father. I learned it was ok to do what I love; to go after my dream. I also learned it was ok to be unconventional. I was given the room to be creative. My parents trusted me. I always knew I was supported emotionally. Financially, we were poor but my parents supported my dreams.

Kirk: Indeed, it is so important to have a strong support structure in place. In a nutshell how do you currently approach the market and what is your primary trading strategy?

Mark Minervini: I approach the market from a risk first approach. My trading strategy is called Specific Entry Point Analysis or SEPA. We look to enter trades at low risk entry points relative to potential reward. Primary focus is not to lose money. Secondary focus is not to lose money. And, the final focus is to make more on average than I lose.

Kirk: You remind me of Buffett who said he had only two rules: 1) Never lose money and 2) see rule number 1! What do you see as the primary benefits from employing a strategy that focuses on both fundamentals and technicals?

Mark Minervini: The benefits are having all the pertinent information that is consistent with big winning stocks. We know what to look for both fundamentally and technically. I have seen stocks bought on pure technicals and the guy buying the stock doesnt even know that there was a cash offer or a proposed merger right at the price he paid. Refusing to look at fundamentals or any information that gives you an edge is usually because the individual just doesnt know how to use the info, or has some bias based on personal opinion or tradition.

Kirk: Why is this kind of trading best for you and, more importantly, why do you think it works so well?

Mark Minervini: My strategy works well because its my strategy. I know the strengths and, more importantly, the weaknesses of what it is I do. It also works well because I allow it to work and stick with it even when it runs into difficult times. Nothing works well if you keep changing your approach. To be a master you must be a specialist, not a jack of all trades.

Kirk: What do you trade mostly? Equities, options, futures, ETFs, currencies, etc.?

Mark Minervini: Only equities.

Kirk: In an average week how many trades do you make? What is your average hold time and how many positions do you have open at any given time?

Mark Minervini: During an average year I may make 400-500 trades. About half of that turnover is a result of taking small losses, which Im out of pretty quickly.

Kirk: What would you say are your primary strengths and weaknesses as a trader?

Mark Minervini: Discipline is my primary strength. And the willingness to admit when Im wrong and move on. My weakness is I usually sell early and often leave money on the table. But I dont really view that as a weakness, just something that could be improved upon. When you move in size you have to get out when the getting is good.

Kirk: In my experience it is often better to sell too early than too late Mark! How have you learned to mitigate your weaknesses and focus more on your strengths?

Mark Minervini: By not focusing too much on my strengths. If youre good at buying and bad at selling I would focus on selling; if you improve your selling you will have a complete game. Focus on making your weaknesses strengths and then you will have no weaknesses. Exploit your strengths and improve your weaknesses.

Kirk: What have been some of the most challenging lessons you have learned?

Mark Minervini: That you cant be everything. You must commit to a strategy and sacrifice other strategies. The problem with the market is its like playing poker however; you always get to see the next cards even though the hand is over. You always see what would have happened. This is very difficult to deal with for many people. To be successful, you have to understand that trading is NOT about picking highs and lows, its about making money.

Kirk: Very good. What are some of the key rules that you consider before selecting any potential trading opportunity?

Mark Minervini: How much am I risking is the very first concern. Also, does the stock meet all the necessary criteria? If the risk is acceptable and all the entry criteria are met, I enter the trade.

Kirk: What would you say is your average win: loss ratio for your trades?

Mark Minervini: I average 2 to 1.

Kirk: How has your overall performance been recently, as well as over the past few years?

Mark Minervini: Its been about the same as always. Im a consistent 2:1 trader.

Kirk: What would you say are your favorite kinds of technical and fundamental set-ups?

Mark Minervini: The ideal set-up is a stock emerging from a constructive consolidation with strong accelerating earnings and sales.

Kirk: Can you give us a recent example of a set-up you found to be very attractive and worked well in this market?

Mark Minervini: CML. Bought it on 11/24. Sold it on 12/7 for a quick profit.

Kirk: Have you noticed any trading set-ups more prone to failure than they have been in the past?

Mark Minervini: No. Not much has changed. Contrary to what many believe, its not different this time. LOL

Kirk: To help us understand your trading approach, can you talk about a recent successful trade from start to finish?

Mark Minervini: LULU. Supported by excellent fundamentals, the stock emerged from a double bottom pattern that formed from 4/15 11/04. I bought the stock on 11/05 the day the market topped just before a pullback of about 5% in the major averages. The stock was held through that market pullback because it acted normal and held above our stop. This gave me the conviction to add to the position as it emerged through its next buy point in November. I sold the stock (most likely too early) on 12/09 when they reported earnings up about +50% from the initial purchase from about a month earlier.

Kirk: Now please tell us about a recent unsuccessful trade.

Mark Minervini: Shorted GMCR; shorted the rally in October and November after the big break on SEC news. Stock rallied and stopped us out

Kirk: One of the things I most appreciate about you is how much you stress proper risk management. If we can, lets talk a little bit about position sizing. Can you provide an example of a recent trade and explain your method for determining the size relative to your own trading portfolio?

Mark Minervini: I want to own as much as I can but generally no more than 25% of my portfolio (as liquidity permits). You are not going to make huge returns being too diversified. However, I only risk what I can get out of safely based on liquidity.

Kirk: Thats interesting. I think many would be surprised at the idea of having any position anywhere near 25% of an entire portfolio. Besides over diversification and liquidity concerns, what common mistakes do you think many traders make concerning position sizing?

Mark Minervini: They dont know what an optimal position size should be based on their own risk/reward and risk tolerance. For instance, if youre a 2:1 trader, your optimal position size is 25%.

Kirk: Ok. I think I understand what you mean, but please explain this position sizing formula more in detail so others can perhaps apply it in their own trading. Can you offer another example?

Mark Minervini: Ok. First, its important to understand that you are not going to achieve huge returns consistently being overly diversified or by relying on diversification for protection. You will only get a smoothing effect. When you own a bunch of stocks you end up with two problems: the first being that you just cant watch and know all you need to know about each of them. The second problem is that you will have a difficult time getting fully invested quickly when opportunity presents itself and more importantly, getting liquid if you need to raise cash in a hurry. In addition, the math just doesnt support it. Depending on the size and risk tolerance of your portfolio you should typically have between 4 or 8 stocks and for large portfolios maybe up to as many as 10 or 12 stocks. This would provide sufficient diversification but not too much. The Optimal-f formula can act as a starting place for you to understand optimal position sizing based on expectation. If Ken Heebner of CGM Funds can move around billions of dollars in just twenty names and still manage to beat the market, then a personal portfolio can surely manage sufficiently with 4-5 or 10-12 stocks. If you lose 5-6% on average and even if your position size is at 25% exposure, youre still only be risking about 1.25% of your capital per trade. Of course, if you dont have an edge, then you will lose no matter what your position sizing is.

Kirk: Good, thats helpful. So, do you use and set stops, Mark? If so, whats your stop loss method?

Mark Minervini: I always know where Im going to get out of a trade before I get in. I aim to lose no more than 5-6% on average over time on my losers.

Kirk: Do you ever average down into a losing trade?

Mark Minervini: Theres a reason Paul Tudor Jones had a sign posted on his wall that read Losers average losers, and that reason is because its true. I almost always only add to a position if it proves itself and then I may add to my position at a higher price, not lower.

Kirk: Do you scale up and into winning positions? If so, how do you know when to increase a position size relative to your overall portfolio?

Mark Minervini: Yes. I generally move money into the better performing names at subsequent pivot points or set-ups.

Kirk: All good traders dedicate a lot of time and effort to improvement and reducing mistakes. How has your trading method evolved and improved over the years?

Mark Minervini: It just becomes more and more crystallized because I continue to focus on the same timeless principles, which allows me to become more and more of a specialist. The power of a narrow focus is amazing. The key is to be a real pro at something. Know all you can about a style or a tactic. Then you can build on that foundation. Traders give up too easily and jump around too much when things get difficult. How good do you think Kobe Bryant would be if while he was developing his skills growing up every time he had a really tough game he changed to a different sport or played a different position?

Kirk: I couldnt agree with you more Mark. I see this problem among many. Can you provide an example of something you thought was true when trading early in your career and now believe is just completely wrong?

Mark Minervini: Yeah, everything. But I learned very quickly sound principles. It just took me many years to master the application.

Kirk: Why do you think most traders fail?

Mark Minervini: Here are 6 reasons:

1. Poor selection criteria; usually based on personal opinion, theory or tips and bad advice
2. They dont stick to and commit to an approach; style drift
3. Dont cut losses (#1 mistake made by virtually all investors)
4. Dont know the truth about their trading they fail to conduct in-depth post analysis
5. Treat trading as a hobby not a business
6. Want too much too fast; learning a skill takes time

Kirk: Please describe a typical trading day for you. How do you organize and dedicate your time?

Mark Minervini: Most of my work is done the night before. I already know what Im going to trade before the open. I watch the market all day long, never leaving my desk for more than a few minutes during trading hours.

Kirk: How much time and attention do you pay to others opinions about the market and/or stocks you are trading?

Mark Minervini: Zero. I avoid outside opinions like the plague!

Kirk: Are there any tricks of the trade that you use to help maintain a consistent successful approach over a long period of time?

Mark Minervini: Yeah, long hours, hard work, a sound approach and discipline. There are no tricks or big secrets. Again, is there a secret to having a good basketball shot? It starts with a good coach, proper practice, plenty of hard work, discipline and sacrifice.

Kirk: Amen. However, most traders I know have a set of rules that they have learned from past mistakes. What are a few of yours that you think most traders would benefit from?

Mark Minervini: Hard work alone wont cut if you dont have a sound approach and if youre not doing the right things. You must be facing west if youre looking for a sun set. Approach each trade from risk first; ask how much can I lose. Dont risk more than you can expect to gain on average. Know the truth about your trading; study your results carefully. Never average down. Always cut your losses; keep your losses small. These are fundamental rules that should never be compromised.

Kirk: I suspect like all good traders you are working on improving your performance in some manner. Can you share what youre specifically working on right now?

Mark Minervini: Sticking to the rules. Always making sure we stick to the rules. We have a great approach, I dont like to get to tricky and over complicate something that requires a straight forward approach.

Kirk: Youve been trading for some time now. What would you say are the biggest changes in the markets and trading in general youve seen during your career, both good and bad?

Mark Minervini: The order handling rule change in 1997 has changed the way stocks move short-term because Market Makers dont really keep inventory anymore. Its a topic that would require a lengthy discussion; maybe we could talk about it another time. Other than that, not much has changed except more information moves faster than before.

Kirk: What advice would you give a person just now beginning to trade the markets?

Mark Minervini: Find a good mentor. Commit to a strategy. Cut your losses. Tune out the media. Take full responsibility for your results.
Kirk: What do you think are the greatest misconceptions beginning traders have about trading the markets and about trading systems?

Mark Minervini: Way too many to mention. Just about everything a beginner thinks is a misconception.

Kirk: A number of people who read my website desire to trade for a living and I receive a lot of questions concerning capital requirements needed to start and how to make the transition to trade full-time. Do you have any words of wisdom or rules of thumb to share along these lines?

Mark Minervini: I started with a very small sum of money and turned it into a fortune. Capital is not the challenge. Mastering yourself is the challenge. Discipline is the challenge. Persistence is the challenge.

Kirk: Do you think trading for a living is getting more difficult or easier for the average individual investor? Why?

Mark Minervini: Much easier. Tools for pros and amateurs are virtually identical. The pro has no edge. The individual has the advantage. No real liquidity concerns for the small trader versus the big fund manager. Its a fantastic time to be a stock trader!

Kirk: When all is said and done, in your experience, what is the best way to learn how to trade?

Mark Minervini: Trade. As Ralph Waldo Emerson said: Do the thing and you shall have the power. And then conduct post analysis. Learn to be objective. You could try and find a mentor. However, the chances of getting great advice are slim at best. Trading is just like any other profession, there are only a handful of really outstanding practitioners.

Kirk: Do you have any books, websites, etc. that you highly recommend beyond your own website?

Mark Minervini: The Kirk Report. Why is there anything else? LOL!!!

Kirk: You are too kind Mark. Although I know both of us share a love for the markets and trading, what are your long-term career plans and future for your website?

Mark Minervini: I honestly dont know for sure. My long-term plans are too stay healthy and be a good father to my daughter. This past year I started a pilot training program. Also, we now offer my research to the individual investor not just exclusively to the institution anymore. It feels good to help others achieve their goals. I think I may continue to develop that. Why hog all the good trades for myself? LOL!

Kirk: What are some of your personal passions beyond the market?

Mark Minervini: Ive been a drummer since I was 6 years old and I continue to play. I play tennis, train boxing and lift weights to stay in shape, and I play an occasional round of golf.

Kirk: Finally, if you had only one piece of advice to share with all traders, what would it be?

Mark Minervini: Believe in yourself and never give up. Persistence is more important than knowledge. Make an unconditional commitment to trading and you will not fail.

Kirk: Thank you so much Mark. I really enjoyed this interview and Im sure others will find it helpful.

Mr. BHARARA said: “Todays truly historic settlement with the estate of Jeffry Picower is a game-changer for Madoffs victims. By returning every penny of the $7.2 billion her late husband received from BLMIS to help those who have suffered most, Barbara Picower has done the right thing. We will continue to work tirelessly with our partners from SIPC, the SIPA Trustee, the FBI, the IRS, and the U.S. Marshals Service to track down any and all proceeds of Madoffs Ponzi scheme and return them to victims.”

SIPC Chairman ORLAN JOHNSON said: “Since the discovery of the Madoff fraud, the United States Attorney, as well as the Trustee, Mr. Picard, his counsel, represented here by Mr. Sheehan, and SIPC personnel have worked relentlessly on the Madoff case. They have committed constant time, energy, and resources to benefit the victims of that fraud. The settlement announced today is an extraordinary achievement by all concerned. More than $7 billion dollars will be distributed to the victims. We will seek to distribute these proceeds as quickly as possible. This is by far the largest asset settlement in the 40 year history of SIPC. The result we see today shows that SIPC and the Securities Investor Protection Act can meet the challenges they face. Prior to today, SIPC had already advanced over $760 million to the Madoff victims. SIPC has also provided the financial wherewithal to conduct the research, investigation, and legal proceedings that led to this recovery, and, I am sure,
will lead to other recoveries in the future.”

SIPA Trustee IRVING PICARD said: “The importance of this settlement cannot be overstated, as it shows significant progress in our efforts to assemble the largest Customer Fund possible. Every penny of this $7.2 billion settlement will be distributed to BLMIS customers with valid claims.”

FBI Assistant Director-in-Charge JANICE K. FEDARCYK said: “Among the thousands of investors in the Bernard Madoff scheme were individuals so taken in by his confidence game that they invested the bulk of their net worth with him. The unprecedented settlement announced today means people who two years ago faced the devastating prospect of losing everything now stand to recover a significant portion of their investment.”

IRS Special Agent-in-Charge CHARLES R. PINE said: “IRS Criminal Investigation has a unique role in Ponzi scheme related investigations. Our Special Agents come to the table with specialized talent and the ability to pour through transactional records, such as bank and brokerage account statements, and trace illegally earned income to other assets, such as cars, real estate, jewelry, and other highly valued items. IRS Criminal Investigators and its law enforcement partners will continue to work diligently in recovering assets to their rightful owners in illegal financial schemes.”

According to the Stipulation and Order of Settlement, and accompanying civil forfeiture Complaint, filed in Manhattan federal court today:

The investment advisory business of BLMIS was operated as a massive Ponzi scheme from at least as early as the 1980s, defrauding investors of billions of dollars. Rather than use client funds to invest in securities, as promised, BLMIS diverted those funds to (a) pay other clients redemption requests; (b) fund transactions to disguise BLMISs fraud; and (c) enrich Madoff, his family, and his associates. In order to support the lie that BLMIS was operating a legitimate investment advisory business, BLMIS created and disseminated fictitious account statements that, among other things, showed trades that never actually took place. During the course of the fraud, MADOFFs clients lost approximately $20 billion in funds they invested with BLMIS.

Since at least the late 1970s, JEFFRY M. PICOWER was an investor in BLMIS, holding an account in his own name and controlling accounts held by various individuals and entities. Over the course of his 30-plus year relationship with BLMIS, PICOWER withdrew a net total of $7,206,157,717 in profits from BLMIS. When MADOFF was arrested in December 2008 and his fraud was revealed, it became clear that PICOWER – like all of BLMISs investors who withdrew more money than they invested – had profited at the expense of more recent BLMIS investors.

PICOWER died in October 2009. In his will, PICOWER sought to establish a charitable foundation, which was to receive the overwhelming majority of his fortune, and continue his lifelong dedication to philanthropy and to funding medical research. In order to resolve potential civil claims by the Government against PICOWERs estate, and to enable the creation of the foundation called for in PICOWERs will, the estate, through PICOWERs widow BARBARA PICOWER, has agreed to give up the entire net total of any and all funds that PICOWER or any related entity received from BLMIS. The Settlement contains no finding or admission of fault against PICOWER, and his estate has claimed that neither PICOWER nor any of the related entities participating in the settlement had any involvement in, or knowledge of, MADOFFs fraud.

The United States Attorneys Office will use funds forfeited in the settlement announced today to compensate victims of MADOFFs fraud. Last week, in connection with a $625 million settlement involving the Office, the SIPA Trustee, and CARL SHAPIRO and his family, MR. BHARARA announced that the Department of Justice had appointed IRVING H. PICARD as Special Master to oversee the process of remission or mitigation under the forfeiture laws. PICARD is already serving as the court-appointed trustee for BLMIS under SIPA. Under the terms of todays settlement, and a related settlement submitted to the United States Bankruptcy Court for the Southern District of New York, PICARD will administer $5.0 billion of the funds being returned to Madoffs victims by the PICOWER estate through the SIPA liquidation proceedings. He also will administer the remaining approximately $2,206,157,717 through the Department of Justices remission or mitigation process.

Mr. BHARARA praised the work of SIPC and the SIPA Trustee. He also thanked the Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigation Division, the Securities and Exchange Commission, and the United States Marshals Service. Mr. BHARARA also thanked the U.S. Department of Labors Employee Benefits Security Administration and Office of the Inspector General for their work in this matter. Finally, he thanked the Department of Justices Asset Forfeiture and Money Laundering Section for their assistance.

This case was brought in coordination with President BARACK OBAMAs Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for
victims of financial crimes.

Assistant United States Attorneys LISA A. BARONI, JULIAN J. MOORE, BARBARA A. WARD, and MATTHEW L. SCHWARTZ are in charge of the case.

Many investors feel that following in Buffett’s footsteps will lead to riches. Income investors think that the top yielding Buffett stocks may be the best way to provide income and give some growth potential. WallStreetNewsNetwork.com has just updated its list of stocks owned by Warren Buffett’s Berkshire Hathaway and turned up seven of them with yields greater than 3%.

ConocoPhillips (COP), the multi-national oil company, is one of Buffett’s favorites which yields 3.5%. The stock trades at 10.2 times forward earnings, The company reported that earnings for the latest quarter more than doubled on an 18.8% revenue increase.

Johnson & Johnson (JNJ), the company that makes everything from Bandaids to Neutrogena to Listerine to Tylenol, also has a dividend payout rate of 3.5%. The stock has a forward price to earnings ratio of 12.5, with an earnings report showing a 2.2% earnings increase on a slight drop in revenues.

M&T Bank Corp. (MTB), based in Buffalo, New York, is another high yielder owned by Buffett, paying 3.6%. The stock sports a forward PE of 13.5. Recent quarterly earnings were up 50% on a revenue boost of 19%.

To see the rest of the high yield Warren Buffett stocks, check out the free downloadable Excel list which can be sorted and updated at WallStreetNewsNetwork.com.

Disclosure: Author does not own any of the above.

By Stockerblog.com

Getting back to work and into the grove (or rut) from vacation this week, I feel compelled to import some of what Im experiencing at work into my blog today.

Ill set the scene

Youre asked to work on a new project, its high-profile and youre the project manager. Youll be given resources, although there are limits. Youll be given time to complete the project, although there is a due-date down the road. Youll be given scope to work within, although youve got some wiggle room to manoeuvre. Youre excited and you want to get going. Thats great because theres a natural tendency to dive right into the work – do this; do that; full steam ahead. From my perspective, that’s the last thing youd want to do. Enthusiasm and keenness are great attributes for a project but youll have fun soon enough. Successful projects require effective management from the very beginning; creating objectives, plans and communication of your approach to name a few.

Is your personal finance journey any different than a long-term project? Not in my opinion…

According to the Project Management Institute (PMI) project management is the application of knowledge, skills, tools and techniques to project activities in order to meet or exceed stakeholder needs and expectations of a project. Technical, I agree, but I live this stuff everyday. In plain language, project management is a toolkit for folks to get work done effectively and efficiently.

At work, you might be responsible for implementing a new product or service. In your personal finance journey, the product is you. Youre the long-term project deliverable, financial independence is your outcome. At a very high-level, I dont see many differences between project management principles and the personal finance journey, I’ll explain:

1.Both need clear objectives - The most successful projects have clearly defined objectives from the outset. Wouldnt this apply to your financial journey?

2.Both need good plans - A carefully thought-out project plan serves two purposes. First, it allows everyone involved to understand and perform their part in the project. Second, it serves as a monitoring tool allowing you or others to take action if something doesnt go the way you thought it would. Written plans are always the best. I would argue your financial plan is simply a long-term project in disguise.

3.Both need lots of communication - Your projects at work are a collaborative effort between all of the individuals involved, even if its just you and your boss. Your personal finance project is probably not so personal, it likely affects your spouse, your kids, maybe even your parents. Everyone needs to be on the proverbial same page at home, just like work, if the journey is to be a successful one and all successful ventures begin and end with effective communication.

4.Both need controlled scope Just like work, numerous issues will arise during your project and not all these changes will help you achieve your objectives. There will be setbacks, there will be changes, its inevitable. At work, its important to stay focused on your objectives. I dont see your personal financial journey being any different. In my opinion, it doesnt matter if your financial objectives are 100% GICs or 100% stocks – managing your scope and staying true to your plan is absolutely necessary.

5.Both need sponsorship and support - Projects typically involve several stakeholders, folks who invest time, resources and have a vested interest in the project. If the project is you, you need to remain invested and vested. That can also mean, getting support when necessary, from your spouse, kids, parents, friends or a financial professional when you need it. Rarely can anyone achieve success (financial or otherwise) without help from others. While it may be a personal finance journey, the journey isn’t taken in isolation.

I could go on. I think theres tons of parallels between the project management world many of us experience everyday and the personal finance journey. In the end, good management is simply that, at work or at home.

What do you think?
Do you see any of the same parallels I see?
Do you think I’m nuts and too immersed into my work?

Cheers,
Financial Cents

Ken Fisher Interview Part 2
Please note: Interview took place on Wednesday, October 27, 2010

Stockerblog: I’m going to get back to the bunks shortly but I read recently that you’re moving your offices or some of your offices to the State of Washington?

Fisher: We have 325 people in the state of Washington., and we started moving people into Washington three years ago. We’re building a building in Washington because traditionally we like to own our own real estate and not to be in leased space. At this point in time, we now have about a third of our employees in Washington and we are not doing anything that I consider as very radical.

Stockerblog: What this was leading to was, I was wondering what you think is the future of California, not from a political standpoint but a financial standpoint in the next couple years.

Fisher: In the next couple years, California will largely continue on the trend that is has been on. Let’s just think that through. Forgetting about other things, the driving feature in California for some period of time now, forgetting about budgets per se, has been to slightly lose population While shifting the demographic of the citizenry and the voter base, away from productives towards non-productives.

That becomes a momentum unto itself because the productives move out of the state of California and the non-productives into California, the non-productive become dependant, if you will, on the professional political class, which provides more support for more big government which requires more spending which requires more taxes and/or bigger deficits., either way, which again drives more productives away. Until you break that cycle, which is not easy to do, and if not done quickly, California continues down the same basic path.

So if you look at this year, which is on a national basis, is a year that is aiming towards more fiscal responsibility, supposedly, or more conservative people being elected, House of Representatives almost certainly going to Congress, governorships shifting heavily away from Democrats towards Republicans, California isn’t going there at all. California is going to elect or in a sense you could say re-elect Jerry Brown governor. [Ed. note: Interview was Oct. 27] The legislature is going to remain heavily Democratic. The same dilemmas that Arnold Schwarzenegger faced as governor Jerry Brown is going to face as governor.

If you look for example at it from a different way and this is somewhat telling, if you look at the House races across the country that are thought of as toss-up races, the ones that could go either way, not a one of them is in California.

California isn’t shifting so its basic problems will remain the same. Its socio-political world has continued to tilt away from productives a little bit each year toward more unproductives a little bit each year, which maintains and establishes the voting populace at a little more dependant on the professional political platform.

Stockerblog: I think the fear from investors is, could the state go bankrupt, is that even a possibility, and if that did happen, then what?

Fisher: You asked about the next few years. The state is not going to go bankrupt in the next few years. The state’s going to have severe budget problems in the next few years. Might the state eventually go bankrupt? Yea, but not in the next few years.

I will make one point, that’s an observation that so far does not seem to get the light of day. In November, I turn sixty, and in my lifetime, my adult lifetime, there has never been a November election in California that did not have multiple bond issue initiatives on the ballot. For the first time in my adult life, there are no bond issues on the California ballot and nobody seems to notice that. The San Francisco Comical hasn’t written about it, the LA Slimes hasn’t written about it. That’s an interesting sign. It’s a sign to me that California isn’t going bankrupt anytime soon, but that’s also a sign that’s good that they can’t sell any bond issues anyway.

End of Part 2

The Debunkery book is available at Amazon.

Ken Fisher obviously doesn’t give individual stock recommendations in his interviews, but some stocks he likes that were mentioned in his recent Forbes columns are available in the form of a free Excel list at WallStreetNewsNetwork.com.

Part 1 of this interview is available HERE.

By Fred Fuld at Stockerblog.com

Disclosure: Interviewer doesn’t own any of the stocks mentioned in this interview series at the time the article was written.

Copyright 2010. All rights reserved. Reproduction of this interview prohibited without permission. All opinions are those of Ken Fisher, and do not represent the opinions of Stockerblog.com or the interviewer. Neither Stockerblog nor the interviewer nor the interviewee are rendering tax, legal, or investment advice in this interview. If you want tax, legal, or investment advice, contact the appropriate professional.

I think its safe to say that everyone knows the markets are manipulated but during options expiry week we tend to see prices move beyond key resistance and support levels during times of light volume which triggers/shakes traders out of their positions.

Trading during low volume sessions Pre/Post holidays for swing traders or between 11:30am 3:00pm ET for day traders tends have increased volatility and false breakouts. This happens because the market markets for individual stocks can slowly walk the prices up and down beyond short term support and resistance levels simply because there is a lack of participation in the market.
SP500 4 Hour Candlestick Chart

That being said, the chart below of the SPY (SP500 ETF) shows that last Thursday, (the day before Friday options expiry) the put call ratio was showing extreme bullishness. I also mentioned that we should expect a pop of 0.5 -2% in the next 24 hours as big guys will try to shake everyone out of their short positions (put options).

The put/call ratio indicator at the bottom of this chart is a contrarian indicator. When it shows that everyone has jumped to the bullish side, the big money knows its about time to change the direction so they can cash in at premium price levels.

read the rest

Chris Vermeulen
www.TheGoldAndOilGuy.com

Precious metals soar as investors flock to gold and silver. But are they looking deep enough to truly understand the current trends at hand?

When reviewing the metals sector, I like to look at it from different angles to get a solid understanding of the patterns and trend forming. I follow multiple time frames along with monitoring the gold mining stocks. Gold stocks tend to lead the price of gold bullion and when its out performing the price of gold substantially by 10% or more you should be expecting a pause or pullback in both gold stocks and gold bullion prices temporarily.

Below are a few charts showing the long and short term trends for gold.

Gold continues to be in a strong up-trend. The occasional test of support at the major moving averages can provide great long term points for adding to a position. The 50 period average is one which is tested frequently.

Looking at the weekly chart does give me a red flag for the intermediate price of gold.

Read the rest

By Chris Vermeulen

BCEs annual common share dividend will increase to $1.83/share later this year.
Their quarterly dividend will be $0.4575/common share.
This new dividend will be paid on October 15, 2010 to shareholders on record as of September 15, 2010.
This means (if youve been counting) BCEs annual common share dividend has increased by 25% in the last 18 months!

BCE justified their decision to raise dividends, among other factors, given their TV revenue growth was 11.6% and their wireless revenue growth was 9.6%. Also from their website:

Bell’s strong operating momentum and financial performance are
the direct result of the Bell team’s strong execution of our strategic
imperatives. We continue to accelerate our growth businesses in an
increasingly competitive marketplace, while continuing to invest in
the service programs and broadband networks that support our growth
into the future,” said George Cope, President and CEO of BCE and Bell
Canada.

BCEs second dividend increase this year gives me a great opportunity to showcase the horsepower compounding can provide you using BCE as my buy and hold dividend-payer.

Hypothetically, if you

Bought 100 shares of BCE today,
At $32.00 per share,
Assuming the stock price would grow at 3% (with inflation),
Assuming the dividend would grow at 5% (much less than 2010; see above),
The dividend yield would be 5% (about what it is now), AND
You sat around and did nothing for 20 years.

your total value if you reinvested all the dividends would be $19,757.67

(Without reinvesting the dividends, your total value would be $11,501.29). About $8,200 less*

*Reference.

Impressive isnt it?
Sure, many assumptions, 5% this, 5% that, but those numbers aren’t unrealistic. Just some quick math to illustrate why I consider BCE a Big Compounding Engine.

BCE, you made my weekend. Did it make yours thinking about passive income possibilities?

Take care!

To overcome this, I read many books and visited numerous websites and blogs. I did this to understand the basics before taking the plunge. I built my understanding and confidence by reading some of Derek Fosters books, reading the Canadian DRIP Primer and the reviewing the DRIP Investing Resource Center to start with. There were more books and articles than these, but the above were my initial guides. To you, thank you. Because of you and your expertise, I started my journey down the road of dividend investing and the ride to date hasnt been too bumpy.

While I still have much to learn and apply to become a savvy dividend investor, I learned something new this summer and I want to share it with you my takeaways for how to transfer a stock share to children.

Why do it?
Transferring a stock share to children (your kids, nieces or nephews, family friends) could be done for many reasons. Some time ago, a follow blogger Passive Income Earner had a great post about the positive reasons to teach children about money. I agree with everything Passive said, there are many positive outcomes that I wont go into detail here. In my opinion, the objective is not to make them wealthy (although that could be a great outcome) but learn how to use money as one of lifes essential tools. Like every tool, you should know how to use it efficiently and effectively. You dont need a hammer for a toothpick nor a saw when scissors will do. I think money is no exception.

If children in our family could learn some of the financial principles Ive acquired in my twenties and thirties, think how financially savvy they would be? Wouldnt they be better off, to make better financial decisions? However they choose to use their money at least they would know the risks, benefits and impacts of their decisions. How great is that?

After my wife and I got going with some dividend reinvestment plans (DRIPs), we thought it would be a great idea to transfer one of our Canadian dividend-paying stocks to our oldest nephew. Our longer-term plan is to set up each niece or nephew in a DRIP and give them some money each Christmas to invest in their stock. Do they “need” this? No. They are fortunate kids. They have tons of toys and games. They have loving parents. In this regard, they want for very little if anything. My wife and I simply want to contribute to their post-secondary education needs and we think dividend investing is a way we can help. The toys will come and go. The games will change. Their financial needs wont. We figure we have an opportunity to help them out albeit only in a small but hopefully meaningful way.

What did I learn?
Here is the general process I followed and what I learned to transfer one stock share to our nephew last month:

1. Call the transfer agent.
I did this to confirm transfer requirements. If you have a share certificate like I did, you dont need to sign the back of the share certificate like some transfer documentation prescribes. Call the transfer agent and ask them what’s best. They know, they see it all the time and they have to process what you send them. The agent I talked to coached me through items #2-6 below…

2. Access the transfer agents website get the securities transfer form.There are many types of security forms listed on the transfer agent’s website. Estate transfer, trust transfer and basic security transfer forms are there. Youll want to use the latter.
3. Complete the securities transfer form.I filled in the names and addresses of the persons I wanted the security transferred to. In this case, after talking with our siblings, we decided it was best to transfer the share ITF in trust for to our nephew. We could have transferred the share in just our nephews name since it is not mandatory to have the share held in-trust for children over 12 (our oldest nephew is turning 13 soon). Instead, we chose the ITF route like this:
Big Bear (insert parents name) in trust for Little Bear (insert childs name)
We did this because of the following:

a) Our siblings (the parents) wanted it this way. The share is the childs but held in-trust by one parent until such a time the child has responsibility to manage the security and money associated with it in the account. This could be at age 13, 16, 18 or whatever.
b) Because the share is in-trust, the parent can control the account and its administration. The parents felt it would be easier for them to resolve any issues that could come up if they held the share was in-trust, and I think they’re right.
c) With account administrative rights, the parent can sign for the child. This will make DRIP registration and optional cash purchases (OCPs) easier. In our example of Christmas gifts, we can write a cheque; the parents can desposit the cheque; the parent can issue a cheque on behalf of the child for the stock purchase. Our nephew might have a bank account but probably not a chequing account nor the responsibility to manage all this.

d) Dividend-income payments (and taxation related to this) would be attributable to the source and this means the parent, not the child. Taxation for many parents is complex enough and keeping our nephew out of the tax equation is probably a good choice for our siblings.

We completed the form by filling in the equity securities section (# of shares, type of shares) and who currently holds the share (me).
4. Obtain a signature guarantee to accompany the stock transfer.I obtained a signature guarantee from my local branch from the institution I keep my brokerage accounts with. I chose to get this signature guarantee before completing the securities transfer form, but you can do this after form completion all the same. Please sure to get this stamped as indicated on the securities transfer form and signed by a branch staff member. In my case, this was a financial advisor at the branch.
5. I completed a letter of direction.I wrote a brief, half-page letter describing my stock transfer intentions. The transfer agent advised me to do this. In my letter, I was sure to state who I wanted the share to be transferred to and how. Above, I already explained the who (Big Bear (insert parents name) in trust for Little Bear (insert childs name)) but how was important as well. If you have a share certificate like I did, you can direct that share to be transferred. If you dont have a share certificate, you have the option to withdraw a share from your dividend reinvestment plan. A letter of direction helps you clarify your intent.
6. Send all documents via registered mail.I mailed i) my completed securities transfer form, ii) my share certificate and iii) my letter of direction to the stocks transfer agent by registered mail. I chose this route because I wanted to be sure my share got there to start the transfer process. Registered mail assured me of this and I would recommend it to others.
The result?
Less than ten business days later, a new share certificate was sent to me with the parents name ITF the childs name, our nephew. Our nephew now has one share held in trust for him. Our next step is to support our siblings in completing the necessary paperwork to initiate their DRIP and optional cash purchase (OCP) plans for this new share. In time were confident this share in-trust for our nephew will be a tidy little investment for their post-secondary educational needs. Hopefully our nephew will not only enjoy the dividends at some point but learn about dividend investing and gain financial acumen along the way. Who knows, maybe he’ll become his own (financial) advisor down the road?

Lastly, there is more good news. Not only does this transfer process work but my wife and I already know what were giving our nieces and nephews for Christmas

Do you have any experiences of your own – transferring a stock share?

Several casino support companies are publicly traded. WallStreetNewsNetwork.com has just updated their list of all the major casino companies and casino support stocks, along with their financials.

One example is Bally Technologies, Inc. (BYI) has a very reasonable price to earnings ratio of 17.3 and forward PE of 13.8. The company makes and markets gaming devices, and computerized monitoring, accounting, and player-tracking systems. The stock has a reasonable PEG ratio of 1.03..

Another casino supporter is International Game Technology (IGT), which designs, makes and sells electronic gaming equipment and systems. The company was recently the recipient of two awards, the ‘Slot Provider of the Year’ Award and the ‘Employer Above and Beyond Award’ for Exemplary Guard and Reserve Support. In addition, the company’s CEO was named to the Board of Yahoo (YHOO). The stock has a PE of 39.6 and a forward PE of 15.9, with a PEG of 1.32. In addition, it pays a yield of 1.3%.

For a list of all the top casino and casino support stocks, including some that pay dividends of 1.2% and greater, go to WallStreetNewsNetwork.com.

Author owns YHOO.

By Stockerblog.com