Retirement accounts have lost $2 trillion
By JULIE HIRSCHFELD DAVIS, AP
SmartStops comment: Elderly investors can no longer rely on Buy and Hold in today’s volatile markets. It may take too many years for the prices to recover. Investment portfolios need the protection that SmartStops can help to provide.
Excerpts: WASHINGTON -Americans' retirement plans have lost as much as $2 trillion in the past 15 months, Congress' top budget analyst estimated Tuesday.
The upheaval that has engulfed the financial industry and sent the stock market plummeting is devastating workers' savings, forcing people to hold off on major purchases and consider delaying their retirement, said Peter Orszag, the head of the Congressional Budget Office.
More than half the people surveyed in an Associated Press-GfK poll taken Sept. 27-30 said they worry they will have to work longer because the value of their retirement savings has declined.
A new AARP study found that because of the economic downturn, one in five workers 45 and older has stopped putting money into a 401(k), IRA or other retirement savings account during the past year, and nearly one in four has increased the number of hours he works.
Link to full article:
Oct 18, 2008
Oct 6, 2008
Dividend Cuts Hit $22.5 Billion in 3rd Quarter
Dividend Cuts Hit $22.5 Billion in 3rd Quarter
Standard & Poors press release
SmartStops comment: Investors in high dividend stocks often believe that they can ride the market up and down with little concern over declines in the stock prices .(As brokers used to joke in down markets- the yields are simply going up.) But what if the dividends that help protect the stock prices start getting cut? Based on the current news in this article, even dividend investors might benefit from the protection provided by SmartStops.
Excerpt from article: New York, October 3, 2008 - Standard & Poor’s, the world’s leading index provider, announced today that 138 of the approximately 7,000 publicly owned companies that report dividend information to Standard & Poor’s Dividend Record decreased their dividend during the third quarter of 2008, representing a 557% increase from the 21 issues that decreased their dividend during the third quarter of 2007. Reported dividend increases fell 21.2% to 346 from 439 reported in the third quarter of 2007.
“It was the worst September for dividends since we started keeping dividend records in 1956,” says Howard Silverblatt, Senior Index Analyst at Standard & Poor’s. “During the second quarter, companies were nervous and cautious. The third quarter, however, saw many companies deciding to take action, and that action took $22.5 billion out of the pockets of investors.”
Link to article:
Standard & Poors press release
SmartStops comment: Investors in high dividend stocks often believe that they can ride the market up and down with little concern over declines in the stock prices .(As brokers used to joke in down markets- the yields are simply going up.) But what if the dividends that help protect the stock prices start getting cut? Based on the current news in this article, even dividend investors might benefit from the protection provided by SmartStops.
Excerpt from article: New York, October 3, 2008 - Standard & Poor’s, the world’s leading index provider, announced today that 138 of the approximately 7,000 publicly owned companies that report dividend information to Standard & Poor’s Dividend Record decreased their dividend during the third quarter of 2008, representing a 557% increase from the 21 issues that decreased their dividend during the third quarter of 2007. Reported dividend increases fell 21.2% to 346 from 439 reported in the third quarter of 2007.
“It was the worst September for dividends since we started keeping dividend records in 1956,” says Howard Silverblatt, Senior Index Analyst at Standard & Poor’s. “During the second quarter, companies were nervous and cautious. The third quarter, however, saw many companies deciding to take action, and that action took $22.5 billion out of the pockets of investors.”
Link to article:
Sep 7, 2008
Fannie, Freddie: The biggest losers
Fannie, Freddie: The biggest losers
Investors in Fannie Mae and Freddie Mac face massive losses when trading opens Monday.
By Colin Barr, senior writer, Fortune
SmartStops comment: Only a few months ago these stocks were considered safe investments that were widely owned by banks and conservative institutions. Now FNM and FRE are close to worthless. (SmartStops would have had you out in the mid $20s on June 9th.) If you think that you own quality stocks that are so safe that you don’t need protection then you are clearly mistaken. Even the preferred shareholders are in trouble. Look at the list of supposedly knowledgeable investors and financial institutions that could have saved fortunes by simply using SmartStops.
Excerpts: NEW YORK (Fortune) -- Big investors in Fannie Mae and Freddie Mac face a brutal Monday. Shares in the mortgage giants, which have already lost 90% of their value over the past year, are likely to plunge anew in the wake of the government's announcement Sunday that it is taking control of the companies and ending the payment of common and preferred dividends.
The prospect of a virtual wipeout of existing Fannie and Freddie preferred shares could lead to declines Monday in the shares of regional banks and major insurers that hold the shares. Among the holders of Fannie and Freddie preferred issues are Genworth Financial (GNW, Fortune 500) and MetLife (MET, Fortune 500).
The government intervention comes just over a month after Legg Mason's Miller reported a sizeable purchase of Freddie shares. Miller came to fame with a 15-year run of beating the S&P 500. But that streak ended in 2006, and since then his Legg Mason Value Trust has lagged far behind the market.
Miller's run of poor results hasn't made him any less aggressive, however. He has owned Freddie shares for some time but has been doubling down on the company as its shares plunged over the past year. Legg Mason owned 15 million shares at the end of 2007, when Freddie stock was fetching $34 a share in the market. He then boosted that figure to 50 million in the first quarter, as shares dropped into the teens in the wake of the collapse of Bear Stearns, and 80 million at July 31, when the price was below $10.
If the outlook for Freddie shares - which closed Friday at $5.10 but traded as low as $3.50 in the after-hours session when news of the Treasury plan began to circulate - is bleak, one ray of hope comes from the March collapse of Bear Stearns. Those shares were to be sold to J.P. Morgan Chase at $2 apiece in a Fed-brokered rescue of Bear, but the shares traded sharply above that level for a week, until the deal was renegotiated at $10.
Link to article:
Investors in Fannie Mae and Freddie Mac face massive losses when trading opens Monday.
By Colin Barr, senior writer, Fortune
SmartStops comment: Only a few months ago these stocks were considered safe investments that were widely owned by banks and conservative institutions. Now FNM and FRE are close to worthless. (SmartStops would have had you out in the mid $20s on June 9th.) If you think that you own quality stocks that are so safe that you don’t need protection then you are clearly mistaken. Even the preferred shareholders are in trouble. Look at the list of supposedly knowledgeable investors and financial institutions that could have saved fortunes by simply using SmartStops.
Excerpts: NEW YORK (Fortune) -- Big investors in Fannie Mae and Freddie Mac face a brutal Monday. Shares in the mortgage giants, which have already lost 90% of their value over the past year, are likely to plunge anew in the wake of the government's announcement Sunday that it is taking control of the companies and ending the payment of common and preferred dividends.
The prospect of a virtual wipeout of existing Fannie and Freddie preferred shares could lead to declines Monday in the shares of regional banks and major insurers that hold the shares. Among the holders of Fannie and Freddie preferred issues are Genworth Financial (GNW, Fortune 500) and MetLife (MET, Fortune 500).
The government intervention comes just over a month after Legg Mason's Miller reported a sizeable purchase of Freddie shares. Miller came to fame with a 15-year run of beating the S&P 500. But that streak ended in 2006, and since then his Legg Mason Value Trust has lagged far behind the market.
Miller's run of poor results hasn't made him any less aggressive, however. He has owned Freddie shares for some time but has been doubling down on the company as its shares plunged over the past year. Legg Mason owned 15 million shares at the end of 2007, when Freddie stock was fetching $34 a share in the market. He then boosted that figure to 50 million in the first quarter, as shares dropped into the teens in the wake of the collapse of Bear Stearns, and 80 million at July 31, when the price was below $10.
If the outlook for Freddie shares - which closed Friday at $5.10 but traded as low as $3.50 in the after-hours session when news of the Treasury plan began to circulate - is bleak, one ray of hope comes from the March collapse of Bear Stearns. Those shares were to be sold to J.P. Morgan Chase at $2 apiece in a Fed-brokered rescue of Bear, but the shares traded sharply above that level for a week, until the deal was renegotiated at $10.
Link to article:
WHEN TO SELL
When To Sell Stock: Here's The Best Tool For Knowing When To Unload Your Investment by Alexander Green, Chairman, Investment U.
SmartStops comment: Another excellent article from Alexander Green, the Oxford Club’s Chairman of “Investment U”. However we would disagree on a couple of points. The article suggests a 25% trailing stop but our SmartStops formulas have been proven to work much better.
(See our comparison study)
Also the article says: “Under no circumstances should you lower your stop.” As you have observed our stops are frequently moved further away as volatility increases so that they are not triggered by random price action. That is one of the important pieces of logic that makes our SmartStops so much more effective than a simple 25% trailing stop.
Excerpts: Anyone can buy a stock. The art of investing is knowing when to sell stock.
There are a number of theories about when to cash in your chips. But most of them are misguided. And some are completely wrongheaded.
For example, any analyst who urges you to sell a stock because the market is about to tank is immediately discredited, in my view. While there are certainly many bear markets and bull markets ahead of us, no one - and I mean that literally - has ever demonstrated any proficiency at warning investors in advance.
If there is truth to any of the great maxims of Wall Street it's this one: cut your losses and let your profits run. Selling a rising stock, by definition, is not letting your profits run.
There is, however, one sell discipline that forces you to do just that. It's called a trailing stop. And if you're not using one to protect your stock positions, you should be.
A trailing stop is simply a stop-loss order set a certain percentage below the market - and then adjusted as the price rises.
Traders, who are short-term oriented, will always want to run their sell stops closer than long-term investors. But even a short-term trader shouldn't run his stops too close to the market. Why? Because no stock moves up in a straight line. And you don't want to get knocked out of a winning stock while its just going through its normal fluctuations.
There is plenty of research to back up the idea of running trailing stops, incidentally.
Link to article:
SmartStops comment: Another excellent article from Alexander Green, the Oxford Club’s Chairman of “Investment U”. However we would disagree on a couple of points. The article suggests a 25% trailing stop but our SmartStops formulas have been proven to work much better.
(See our comparison study)
Also the article says: “Under no circumstances should you lower your stop.” As you have observed our stops are frequently moved further away as volatility increases so that they are not triggered by random price action. That is one of the important pieces of logic that makes our SmartStops so much more effective than a simple 25% trailing stop.
Excerpts: Anyone can buy a stock. The art of investing is knowing when to sell stock.
There are a number of theories about when to cash in your chips. But most of them are misguided. And some are completely wrongheaded.
For example, any analyst who urges you to sell a stock because the market is about to tank is immediately discredited, in my view. While there are certainly many bear markets and bull markets ahead of us, no one - and I mean that literally - has ever demonstrated any proficiency at warning investors in advance.
If there is truth to any of the great maxims of Wall Street it's this one: cut your losses and let your profits run. Selling a rising stock, by definition, is not letting your profits run.
There is, however, one sell discipline that forces you to do just that. It's called a trailing stop. And if you're not using one to protect your stock positions, you should be.
A trailing stop is simply a stop-loss order set a certain percentage below the market - and then adjusted as the price rises.
Traders, who are short-term oriented, will always want to run their sell stops closer than long-term investors. But even a short-term trader shouldn't run his stops too close to the market. Why? Because no stock moves up in a straight line. And you don't want to get knocked out of a winning stock while its just going through its normal fluctuations.
There is plenty of research to back up the idea of running trailing stops, incidentally.
Link to article:
Aug 24, 2008
The Best Way to Lose Everything
The Best Way to Lose Everything
by Alexander Green, Chairman, Investment U
Investment Director, The Oxford Club
SmartStops comment: Excellent article and great example of the pitfalls of over confidence and lack of diversification. Reminds me of the well known hedge fund manager (he wrote a book) who was proud of the fact that he never used stops. He has now gone completely broke twice in the last few years losing all of his investor’s money and many millions besides.
This true story is intended to point out that there is often the assumption that good traders don’t need stops. Actually they need disciplined stops more than the bad traders. Unfortunately the bad traders are doomed to go broke quickly whether they use stops or not. Meanwhile the good traders will survive and be around for a long time. The good traders will be making many trades through all sorts of unusual and risky market conditions. They all know that sooner or later they will be glad they used stops.
Excerpts: Back when I was still managing money 10 years ago, I had a client who transferred in a rather sizable account. There was only one problem. Over 90% of his net worth was tied up in a single stock, Ericsson. He refused to use a trailing stop or sell a share of it or even to use a position sizing strategy.
I warned him it was crazy to have his entire financial future riding on one stock, especially since he was retired. "That's what everybody keeps telling me," he said. "But the stock keeps going up. I'm glad I ignored them all."
I congratulated him that the stock had appreciated so nicely. But I reminded him there might come a time when it didn't do so well. But he was stubborn. He wouldn't part with a share. Furthermore, he grew weary of having the same conversation. He transferred his account out again.
You may already know how this story ends. From a high of over $105 in March 2000, Ericsson took a breathtaking dive. It traded at less than $5 two years later. This is the kind of mistake - especially when you're already retired - from which recovery is simply not possible. However, I sometimes see other investors making similar mistakes.
Everything we do - asset allocation, trailing stops, position-sizing and stock selection - is done with an eye to not only maximizing returns but also limiting risk.
Link to article:
by Alexander Green, Chairman, Investment U
Investment Director, The Oxford Club
SmartStops comment: Excellent article and great example of the pitfalls of over confidence and lack of diversification. Reminds me of the well known hedge fund manager (he wrote a book) who was proud of the fact that he never used stops. He has now gone completely broke twice in the last few years losing all of his investor’s money and many millions besides.
This true story is intended to point out that there is often the assumption that good traders don’t need stops. Actually they need disciplined stops more than the bad traders. Unfortunately the bad traders are doomed to go broke quickly whether they use stops or not. Meanwhile the good traders will survive and be around for a long time. The good traders will be making many trades through all sorts of unusual and risky market conditions. They all know that sooner or later they will be glad they used stops.
Excerpts: Back when I was still managing money 10 years ago, I had a client who transferred in a rather sizable account. There was only one problem. Over 90% of his net worth was tied up in a single stock, Ericsson. He refused to use a trailing stop or sell a share of it or even to use a position sizing strategy.
I warned him it was crazy to have his entire financial future riding on one stock, especially since he was retired. "That's what everybody keeps telling me," he said. "But the stock keeps going up. I'm glad I ignored them all."
I congratulated him that the stock had appreciated so nicely. But I reminded him there might come a time when it didn't do so well. But he was stubborn. He wouldn't part with a share. Furthermore, he grew weary of having the same conversation. He transferred his account out again.
You may already know how this story ends. From a high of over $105 in March 2000, Ericsson took a breathtaking dive. It traded at less than $5 two years later. This is the kind of mistake - especially when you're already retired - from which recovery is simply not possible. However, I sometimes see other investors making similar mistakes.
Everything we do - asset allocation, trailing stops, position-sizing and stock selection - is done with an eye to not only maximizing returns but also limiting risk.
Link to article:
High Beta Stocks: Do They Offer Higher Returns?
High Beta Stocks: Do They Offer Higher Returns?
By Roger Nusbaum
SmartStops comment: This article points out that going after higher returns by taking on added risk is not necessarily a good idea. It also points out that the holding period for many “fad stocks” should be limited to only “a couple of years give or take.” We agree. Here is an alternative idea: In order to get higher returns you might occasionally consider taking on a few “fad stocks” with a high Beta and then use SmartStops to limit the risk. Now that sounds like the best of both worlds.
Excerpts: A high-beta stock is likely to have its day in the sun, but eventually it will start to rain. Pick any internet stock from the bubble. Chances are it gave ten years', or more, worth of appreciation from 1998-1999. The person who sold his net stock on Dec 31, 1999 and never went back had a different experience than someone who held on to internet stocks too long. This is true for every stock market fad. Success with the next fad will not come from holding forever; it will come from holding for a couple of years, give or take.
When I write about beta I use the word volatility, not risk. Increasing risk is really not something people want to do. They may want to increase volatility to capture a general rise in the market, but there is never a good time to absorb an 80% hit to one of your stocks.
Link to article:
By Roger Nusbaum
SmartStops comment: This article points out that going after higher returns by taking on added risk is not necessarily a good idea. It also points out that the holding period for many “fad stocks” should be limited to only “a couple of years give or take.” We agree. Here is an alternative idea: In order to get higher returns you might occasionally consider taking on a few “fad stocks” with a high Beta and then use SmartStops to limit the risk. Now that sounds like the best of both worlds.
Excerpts: A high-beta stock is likely to have its day in the sun, but eventually it will start to rain. Pick any internet stock from the bubble. Chances are it gave ten years', or more, worth of appreciation from 1998-1999. The person who sold his net stock on Dec 31, 1999 and never went back had a different experience than someone who held on to internet stocks too long. This is true for every stock market fad. Success with the next fad will not come from holding forever; it will come from holding for a couple of years, give or take.
When I write about beta I use the word volatility, not risk. Increasing risk is really not something people want to do. They may want to increase volatility to capture a general rise in the market, but there is never a good time to absorb an 80% hit to one of your stocks.
Link to article:
Aug 18, 2008
Fannie and Freddie Bring Credit Crisis to Defcon One
Fannie and Freddie Bring Credit Crisis to Defcon One
By Mike Swanson Wall Street Window
SmartStops comment: This article will definitely get your attention.
Just for the record:
Re Freddie Mac - FRE traded as low as $3.89 on Friday, July 11. Our SmartStops exit was at $22.64 on June 9.
Re Fannie Mae - FNM traded as low as $6.68 on July 11. Our SmartStops exit was at $24.39 on June 9.
When you read this article you will understand why you need SmartStops.net protection right now.
Excerpts: We are at a critical point in the economic history of the United States. I know of no other way to put it. The events of last week were of a character that we've never seen before. On Friday mortgage lender IndyMac Bancorp became the second largest federally insured financial company to fail after it got hit by a bank run. The Federal Deposit Insurance Corporation took it over. That news may be a big story, but is totally overshadowed right now by the teetering collapse of Fannie Mae and Freddie Mac. Both are in danger of going under and the Bush administration, Federal Reserve, and Treasury Department are now meeting on a daily basis to figure out what to do.
There is no news that would be worse than the collapse of these two institutions and such an event if it happens will have ramifications for the economy and stock market for years to come. Fannie and Freddie buy mortgages and then package them into bonds, which they guarantee. They then sell the bonds to investors, including mutual funds, hedge funds, pensions, annuities - just about any institutional investor you can think of. Odds are that if you own a mutual fund or annuity that you indirectly own a security backed by one of these two institutions. The two of them combined own half of America's twelve trillion in outstanding mortgages and their failure would be the implosion of the entire financial system.
Others have warned about what a collapse of Freddie and Fannie would mean. Warren Buffett has made statements in the past that he feared the failure of Fannie and Freddie could set off a "derivatives time bomb" that would implode the whole financial system. By insuring over half of the mortgages in the country they are too big to fail. This is serious situation folks. We've never seen anything like it before.
Link to article:
By Mike Swanson Wall Street Window
SmartStops comment: This article will definitely get your attention.
Just for the record:
Re Freddie Mac - FRE traded as low as $3.89 on Friday, July 11. Our SmartStops exit was at $22.64 on June 9.
Re Fannie Mae - FNM traded as low as $6.68 on July 11. Our SmartStops exit was at $24.39 on June 9.
When you read this article you will understand why you need SmartStops.net protection right now.
Excerpts: We are at a critical point in the economic history of the United States. I know of no other way to put it. The events of last week were of a character that we've never seen before. On Friday mortgage lender IndyMac Bancorp became the second largest federally insured financial company to fail after it got hit by a bank run. The Federal Deposit Insurance Corporation took it over. That news may be a big story, but is totally overshadowed right now by the teetering collapse of Fannie Mae and Freddie Mac. Both are in danger of going under and the Bush administration, Federal Reserve, and Treasury Department are now meeting on a daily basis to figure out what to do.
There is no news that would be worse than the collapse of these two institutions and such an event if it happens will have ramifications for the economy and stock market for years to come. Fannie and Freddie buy mortgages and then package them into bonds, which they guarantee. They then sell the bonds to investors, including mutual funds, hedge funds, pensions, annuities - just about any institutional investor you can think of. Odds are that if you own a mutual fund or annuity that you indirectly own a security backed by one of these two institutions. The two of them combined own half of America's twelve trillion in outstanding mortgages and their failure would be the implosion of the entire financial system.
Others have warned about what a collapse of Freddie and Fannie would mean. Warren Buffett has made statements in the past that he feared the failure of Fannie and Freddie could set off a "derivatives time bomb" that would implode the whole financial system. By insuring over half of the mortgages in the country they are too big to fail. This is serious situation folks. We've never seen anything like it before.
Link to article:
Financial Crisis Is Expected To Bring More Big Shocks
Financial Crisis Is Expected To Bring More Big Shocks
Monday August 18, 10:17 am ET CNBC
SmartStops comment: As might be expected in an uncertain market environment there have been plenty of “gloom and doom” articles lately. Here is another one to add to the collection. Whether you agree with the gloomy outlook or not, these articles should certainly prompt you to seek the portfolio protection being offered by SmartStops.net.
Excerpts: The year-old financial crisis is not only far from over but could actually get much worse, bringing more big shocks to the US economy and stock market, a host of experts said Monday.
Among the predictions: the failure of some of the country's biggest financial institutions, the collapse of 1,000 banks and a possible government bailout of mortgage giants Fannie Mae (NYSE:FNM - News) and Freddie Mac (NYSE:FRE - News).
Meanwhile, billionaire investor Wilbur Ross told "Squawk Box" that a thousand banks could fail before the financial crisis is over.
"Not very big ones necessarily," he said. "But a thousand banks is going to be a lot." And the impact on the credit crunch could be severe, he added.
"Each dollar of bank equity that gets lost takes out about 12 or 13 dollars of loans so there's a tremendous magnifier effect of small changes in bank equity."
His comments were echoed by Morgan Stanley co-President Walid Chammah, who told a German newspaper that the financial crisis will probably not end until next year or even 2010.
"We will likely see more insolvencies among small U.S. regional banks that have focused on mortgage business," Chammah said. .
And a Barron's article over the weekend said the U.S. Treasury is growing increasingly likely to recapitalize Fannie Mae and Freddie Mac in the months ahead on the taxpayer's dime.
The weekly financial newspaper said that such a move could wipe out existing holders of the agencies' common stock, with preferred shareholders and even holders of the two entities' $19 billion of subordinated debt also suffering losses.
Link to article:
Monday August 18, 10:17 am ET CNBC
SmartStops comment: As might be expected in an uncertain market environment there have been plenty of “gloom and doom” articles lately. Here is another one to add to the collection. Whether you agree with the gloomy outlook or not, these articles should certainly prompt you to seek the portfolio protection being offered by SmartStops.net.
Excerpts: The year-old financial crisis is not only far from over but could actually get much worse, bringing more big shocks to the US economy and stock market, a host of experts said Monday.
Among the predictions: the failure of some of the country's biggest financial institutions, the collapse of 1,000 banks and a possible government bailout of mortgage giants Fannie Mae (NYSE:FNM - News) and Freddie Mac (NYSE:FRE - News).
Meanwhile, billionaire investor Wilbur Ross told "Squawk Box" that a thousand banks could fail before the financial crisis is over.
"Not very big ones necessarily," he said. "But a thousand banks is going to be a lot." And the impact on the credit crunch could be severe, he added.
"Each dollar of bank equity that gets lost takes out about 12 or 13 dollars of loans so there's a tremendous magnifier effect of small changes in bank equity."
His comments were echoed by Morgan Stanley co-President Walid Chammah, who told a German newspaper that the financial crisis will probably not end until next year or even 2010.
"We will likely see more insolvencies among small U.S. regional banks that have focused on mortgage business," Chammah said. .
And a Barron's article over the weekend said the U.S. Treasury is growing increasingly likely to recapitalize Fannie Mae and Freddie Mac in the months ahead on the taxpayer's dime.
The weekly financial newspaper said that such a move could wipe out existing holders of the agencies' common stock, with preferred shareholders and even holders of the two entities' $19 billion of subordinated debt also suffering losses.
Link to article:
Jul 31, 2008
Investment Strategy: The Exit Strategy That Nets Big Winners And Reduces Risk
Investment Strategy: The Exit Strategy That Nets Big Winners And Reduces Risk
By Marc Lichtenfeld
SmartStops comment: Pulitzer Prize winning philosopher Will Durant once observed, “The trouble with most people is that they think with their hopes or fears or wishes rather than with their minds.”
That insightful observation seems to be particularly true of most investors. This helpful investment article by a Senior Analyst at Mt. Vernon Research offers some suggestions on how to lock in bigger profits after your stock doubles. What do you do if it doesn’t double? Use SmartStops of course.
Excerpt: Learning From The DotCom Boom To DotCom Bust
At first, the stock began to slide. Then, when the dot com demon ravaged the sector, the stock plummeted. Eventually, it became worthless and the company closed its doors.
After that, I vowed that if one of my stocks ever doubles, I'll either sell half and get my original investment back, or put a stop at that 100% mark, ensuring that I won't lose money.
And let me tell you, this investment strategy works. Plain and simple. Not only does it help you grab big gains at the time, but it also helps you capture even larger gains. That's because when you're not worried about losing money, you're more inclined to let your winners run. Fear is no longer a controlling emotion.
And that's the key to having a successful investment strategy: Limiting your losses and letting your winners run. Sounds simple, I know. But you'd be surprised how many people let fear and greed control their decision-making process.
Link to article:
By Marc Lichtenfeld
SmartStops comment: Pulitzer Prize winning philosopher Will Durant once observed, “The trouble with most people is that they think with their hopes or fears or wishes rather than with their minds.”
That insightful observation seems to be particularly true of most investors. This helpful investment article by a Senior Analyst at Mt. Vernon Research offers some suggestions on how to lock in bigger profits after your stock doubles. What do you do if it doesn’t double? Use SmartStops of course.
Excerpt: Learning From The DotCom Boom To DotCom Bust
At first, the stock began to slide. Then, when the dot com demon ravaged the sector, the stock plummeted. Eventually, it became worthless and the company closed its doors.
After that, I vowed that if one of my stocks ever doubles, I'll either sell half and get my original investment back, or put a stop at that 100% mark, ensuring that I won't lose money.
And let me tell you, this investment strategy works. Plain and simple. Not only does it help you grab big gains at the time, but it also helps you capture even larger gains. That's because when you're not worried about losing money, you're more inclined to let your winners run. Fear is no longer a controlling emotion.
And that's the key to having a successful investment strategy: Limiting your losses and letting your winners run. Sounds simple, I know. But you'd be surprised how many people let fear and greed control their decision-making process.
Link to article:
Survey: CEO Candor On the (Steep) Decline
Survey: CEO Candor On the (Steep) Decline
By Jessica Stillman
SmartStops comment: If you think you can rely on candid information from corporate CEOs to help you decide when to sell, forget it.
Excerpt: The Find: Top U.S. CEOs issued 21 percent more confusing and misleading statements last year than they did in 2006 — and 85 percent more than they did just five years ago.
The Source: The 2007 Rittenhouse Rankings survey. The Takeaway: Rittenhouse Rankings Inc. compiles an annual CEO Candor benchmark survey of 100 Fortune 500 companies, and this year’s results show those at the top of America’s biggest companies are increasingly unable to give a straightforward explanation of what’s going on at their companies.
Link to article:
By Jessica Stillman
SmartStops comment: If you think you can rely on candid information from corporate CEOs to help you decide when to sell, forget it.
Excerpt: The Find: Top U.S. CEOs issued 21 percent more confusing and misleading statements last year than they did in 2006 — and 85 percent more than they did just five years ago.
The Source: The 2007 Rittenhouse Rankings survey. The Takeaway: Rittenhouse Rankings Inc. compiles an annual CEO Candor benchmark survey of 100 Fortune 500 companies, and this year’s results show those at the top of America’s biggest companies are increasingly unable to give a straightforward explanation of what’s going on at their companies.
Link to article:
We've moved from a world of risk to a world of uncertainty
We've moved from a world of risk to a world of uncertainty
Thomas Homer-Dixon
SmartStops comment: It is becoming increasingly difficult to recognize risk and protect against it. SmartStops can help.
Excerpt: “So the rules of the game have now changed. Our global financial system has become so complex and opaque that we've moved from a world of risk to a world of uncertainty. In a world of risk, we can judge dangers and opportunities by using the best evidence at hand to estimate the probability of a particular outcome. But in a world of uncertainty, we can't estimate probabilities, because we don't have any clear basis for making such a judgment. In fact, we might not even know what the possible outcomes are. Surprises keep coming out of the blue, because we're fundamentally ignorant of our own ignorance. We're surrounded by unknown unknowns.”
Link to article:
Thomas Homer-Dixon
SmartStops comment: It is becoming increasingly difficult to recognize risk and protect against it. SmartStops can help.
Excerpt: “So the rules of the game have now changed. Our global financial system has become so complex and opaque that we've moved from a world of risk to a world of uncertainty. In a world of risk, we can judge dangers and opportunities by using the best evidence at hand to estimate the probability of a particular outcome. But in a world of uncertainty, we can't estimate probabilities, because we don't have any clear basis for making such a judgment. In fact, we might not even know what the possible outcomes are. Surprises keep coming out of the blue, because we're fundamentally ignorant of our own ignorance. We're surrounded by unknown unknowns.”
Link to article:
Jul 18, 2008
How to Stay Ahead of a Bear Market
How to Stay Ahead of a Bear Market
By Jeff Greenblatt | TradingMarkets.com
SmartStops comment: This article is primarily for knowledgeable technicians. The author is very heavy into using Fibonacci levels, moving averages and support and resistance to detect turning points in the markets. If you’re not interested in technical analysis then just read our excerpts which are not technical. SmartStops was intended to simplify the exit side of investing so that complicated technical analysis is not required.
Excerpts: I was watching financial news on TV the other day, and the general theme from the money managers being interviewed was to invest in stocks for the long term. One person even dared to suggest that had you invested in the stock market in August of 1929, while you may have had to wait 16 years, you ultimately would have been ahead of the game. This person may have forgotten about an event called World War II, and there's a chance that some of the people who invested in 1929 might not have been around to see the market recover.
That may seem like an extreme example, but it does raise an interesting issue. If Wall Street wants us to be invested all the time, what happens if our time frame is not in sync with the market? What if you had invested in the Dow on October 11, 2007? As of Monday, the close of the second quarter, you were down 20%. This is just not acceptable. Not only is it not acceptable, it's also unnecessary. This article will show you not only how to recognize a change in trend but also how to take advantage of it.
Link to article:
By Jeff Greenblatt | TradingMarkets.com
SmartStops comment: This article is primarily for knowledgeable technicians. The author is very heavy into using Fibonacci levels, moving averages and support and resistance to detect turning points in the markets. If you’re not interested in technical analysis then just read our excerpts which are not technical. SmartStops was intended to simplify the exit side of investing so that complicated technical analysis is not required.
Excerpts: I was watching financial news on TV the other day, and the general theme from the money managers being interviewed was to invest in stocks for the long term. One person even dared to suggest that had you invested in the stock market in August of 1929, while you may have had to wait 16 years, you ultimately would have been ahead of the game. This person may have forgotten about an event called World War II, and there's a chance that some of the people who invested in 1929 might not have been around to see the market recover.
That may seem like an extreme example, but it does raise an interesting issue. If Wall Street wants us to be invested all the time, what happens if our time frame is not in sync with the market? What if you had invested in the Dow on October 11, 2007? As of Monday, the close of the second quarter, you were down 20%. This is just not acceptable. Not only is it not acceptable, it's also unnecessary. This article will show you not only how to recognize a change in trend but also how to take advantage of it.
Link to article:
Jul 15, 2008
Fannie and Freddie Bring Credit Crisis to Defcon One
Fannie and Freddie Bring Credit Crisis to Defcon One
By Mike Swanson Wall Street Window
SmartStops comment: This article will definitely get your attention.
Just for the record:
Re Freddie Mac - FRE traded as low as $3.89 on Friday, July 11. Our SmartStops exit was at $22.64 on June 9.
Re Fannie Mae - FNM traded as low as $6.68 on July 11. Our SmartStops exit was at $24.39 on June 9.
When you read this article you will understand why you need SmartStops.net protection right now.
Excerpts: We are at a critical point in the economic history of the United States. I know of no other way to put it. The events of last week were of a character that we've never seen before. On Friday mortgage lender IndyMac Bancorp became the second largest federally insured financial company to fail after it got hit by a bank run. The Federal Deposit Insurance Corporation took it over. That news may be a big story, but is totally overshadowed right now by the teetering collapse of Fannie Mae and Freddie Mac. Both are in danger of going under and the Bush administration, Federal Reserve, and Treasury Department are now meeting on a daily basis to figure out what to do.
There is no news that would be worse than the collapse of these two institutions and such an event if it happens will have ramifications for the economy and stock market for years to come. Fannie and Freddie buy mortgages and then package them into bonds, which they guarantee. They then sell the bonds to investors, including mutual funds, hedge funds, pensions, annuities - just about any institutional investor you can think of. Odds are that if you own a mutual fund or annuity that you indirectly own a security backed by one of these two institutions. The two of them combined own half of America's twelve trillion in outstanding mortgages and their failure would be the implosion of the entire financial system.
Others have warned about what a collapse of Freddie and Fannie would mean. Warren Buffett has made statements in the past that he feared the failure of Fannie and Freddie could set off a "derivatives time bomb" that would implode the whole financial system. By insuring over half of the mortgages in the country they are too big to fail. This is serious situation folks. We've never seen anything like it before.
Link to article:
By Mike Swanson Wall Street Window
SmartStops comment: This article will definitely get your attention.
Just for the record:
Re Freddie Mac - FRE traded as low as $3.89 on Friday, July 11. Our SmartStops exit was at $22.64 on June 9.
Re Fannie Mae - FNM traded as low as $6.68 on July 11. Our SmartStops exit was at $24.39 on June 9.
When you read this article you will understand why you need SmartStops.net protection right now.
Excerpts: We are at a critical point in the economic history of the United States. I know of no other way to put it. The events of last week were of a character that we've never seen before. On Friday mortgage lender IndyMac Bancorp became the second largest federally insured financial company to fail after it got hit by a bank run. The Federal Deposit Insurance Corporation took it over. That news may be a big story, but is totally overshadowed right now by the teetering collapse of Fannie Mae and Freddie Mac. Both are in danger of going under and the Bush administration, Federal Reserve, and Treasury Department are now meeting on a daily basis to figure out what to do.
There is no news that would be worse than the collapse of these two institutions and such an event if it happens will have ramifications for the economy and stock market for years to come. Fannie and Freddie buy mortgages and then package them into bonds, which they guarantee. They then sell the bonds to investors, including mutual funds, hedge funds, pensions, annuities - just about any institutional investor you can think of. Odds are that if you own a mutual fund or annuity that you indirectly own a security backed by one of these two institutions. The two of them combined own half of America's twelve trillion in outstanding mortgages and their failure would be the implosion of the entire financial system.
Others have warned about what a collapse of Freddie and Fannie would mean. Warren Buffett has made statements in the past that he feared the failure of Fannie and Freddie could set off a "derivatives time bomb" that would implode the whole financial system. By insuring over half of the mortgages in the country they are too big to fail. This is serious situation folks. We've never seen anything like it before.
Link to article:
Jul 5, 2008
Is Wall Street Full of Bull?
Is Wall Street ‘Full of Bull’?
A well-respected analyst for 32 years, Stephen McClellan describes how analysts’ advice is biased and misleading for individual investors
Book review by Ben Steverman
SmartStops comment: This article is a Business Week magazine review of Stephen McClellans brilliant new book Full of Bull. Be sure to read this informative and well written review which will help you understand why being a self-directed investor can be a big advantage. You will also appreciate how SmartStops helps you to time your selling and protect your capital while the highly paid Wall Street analysts can’t seem to help you at all. Your comments about the article and the book are welcome. Post them here on our Blog.
Excerpts: “ In his new book, Full of Bull: Do What Wall Street Does, Not What It Says, to Make Money in the Market (FT Press, 2007, $22.99), McClellan, admits that price targets are "fiction," and buy/sell/hold ratings aren't taken seriously by professional investors. Analysts spend perhaps only 20% of their time on research and the rest on marketing and other tasks, he says. They create sophisticated computer programs to track a company's earnings, revenue, and cash flow in close detail. But the results are "not accurate at all," he says. In fact, analysts often miss big trends and have a terrible record as stock pickers.
Research isn't written for retail investors, but for institutions. Those institutions, including mutual funds and hedge funds, have far too much influence over an analyst's research, McClellan says. Companies and executives are also too good at manipulating analysts.
Even more blatant biases were exposed as part of the 2002-03 investigation by the New York State Attorney General and securities regulators, which led to the Global Settlement of Conflicts of Interest Between Research & Investment Banking that required 10 of the nation's top investment banks to pay $1.4 billion in penalties and restitution to harmed investors, including money for investor education and independent research.”
Link to article:
A well-respected analyst for 32 years, Stephen McClellan describes how analysts’ advice is biased and misleading for individual investors
Book review by Ben Steverman
SmartStops comment: This article is a Business Week magazine review of Stephen McClellans brilliant new book Full of Bull. Be sure to read this informative and well written review which will help you understand why being a self-directed investor can be a big advantage. You will also appreciate how SmartStops helps you to time your selling and protect your capital while the highly paid Wall Street analysts can’t seem to help you at all. Your comments about the article and the book are welcome. Post them here on our Blog.
Excerpts: “ In his new book, Full of Bull: Do What Wall Street Does, Not What It Says, to Make Money in the Market (FT Press, 2007, $22.99), McClellan, admits that price targets are "fiction," and buy/sell/hold ratings aren't taken seriously by professional investors. Analysts spend perhaps only 20% of their time on research and the rest on marketing and other tasks, he says. They create sophisticated computer programs to track a company's earnings, revenue, and cash flow in close detail. But the results are "not accurate at all," he says. In fact, analysts often miss big trends and have a terrible record as stock pickers.
Research isn't written for retail investors, but for institutions. Those institutions, including mutual funds and hedge funds, have far too much influence over an analyst's research, McClellan says. Companies and executives are also too good at manipulating analysts.
Even more blatant biases were exposed as part of the 2002-03 investigation by the New York State Attorney General and securities regulators, which led to the Global Settlement of Conflicts of Interest Between Research & Investment Banking that required 10 of the nation's top investment banks to pay $1.4 billion in penalties and restitution to harmed investors, including money for investor education and independent research.”
Link to article:
The Market's Quiet Crash
O'Brien: The markets' quiet crash
By Chris O’Brien Mercury News Staff Columnist
SmartStops comment: In our recent Beta test process we received a surprising number of complaints that we were publishing too many exit signals. Our Beta testers were skeptical of our new service and assumed that our methodology might be overly protective of their portfolios. Unfortunately most of them decided that our exits needed to be ignored because they saw nothing alarming in the markets at the time and they were comfortably attuned to a Buy and Hold mentality. How helpful were our exits? Pick any stock and look at where the SmartStops exits were triggered and calculate how much money might have been saved. As you can see SmartStops was not just crying “wolf”. These were very real and very accurate warnings of what was about to happen.
Excerpts from article: The stock markets are tanking. While you were staring slack-jawed at the "Price Reduced!" sign on your neighbors' house, the three major stock market indexes decided to jump off a cliff. Since the start of 2008, the markets' tailspin has analysts reaching for some historic comparisons. And unfortunately, the one they're using is the Great Depression.
Yes, that Great Depression. Hoovervilles. FDR. Got your attention now?
Perhaps the most surprising thing, though, is how little people around here are talking about this swoon. In some ways, it may actually be a healthy sign that we have become a little less obsessed with our stock options and portfolios. Or maybe it's just a sign that following the dot-com bust, many of us shifted our easy money fantasies to the value of our homes, pinning our hopes for a luxurious retirement on the rapid rise in housing prices.
We're still busy grieving the end of that convenient fantasy. But in the meantime, the stock markets have sneaked up and delivered a painful sucker punch while we weren't looking. Just consider some of the historic comparisons being made:
• The Dow Jones industrial average was down for the quarter ending June 30, marking the first time it had experienced three consecutive quarters of declines since 1978.
• The S&P dropped 8.6 percent in June, its worst June since 1930, and its worst month since September 2002.
The hardest hit, of course are those near retirement, who are being forced to recalculate their portfolios and budgets.
Link to full article:
By Chris O’Brien Mercury News Staff Columnist
SmartStops comment: In our recent Beta test process we received a surprising number of complaints that we were publishing too many exit signals. Our Beta testers were skeptical of our new service and assumed that our methodology might be overly protective of their portfolios. Unfortunately most of them decided that our exits needed to be ignored because they saw nothing alarming in the markets at the time and they were comfortably attuned to a Buy and Hold mentality. How helpful were our exits? Pick any stock and look at where the SmartStops exits were triggered and calculate how much money might have been saved. As you can see SmartStops was not just crying “wolf”. These were very real and very accurate warnings of what was about to happen.
Excerpts from article: The stock markets are tanking. While you were staring slack-jawed at the "Price Reduced!" sign on your neighbors' house, the three major stock market indexes decided to jump off a cliff. Since the start of 2008, the markets' tailspin has analysts reaching for some historic comparisons. And unfortunately, the one they're using is the Great Depression.
Yes, that Great Depression. Hoovervilles. FDR. Got your attention now?
Perhaps the most surprising thing, though, is how little people around here are talking about this swoon. In some ways, it may actually be a healthy sign that we have become a little less obsessed with our stock options and portfolios. Or maybe it's just a sign that following the dot-com bust, many of us shifted our easy money fantasies to the value of our homes, pinning our hopes for a luxurious retirement on the rapid rise in housing prices.
We're still busy grieving the end of that convenient fantasy. But in the meantime, the stock markets have sneaked up and delivered a painful sucker punch while we weren't looking. Just consider some of the historic comparisons being made:
• The Dow Jones industrial average was down for the quarter ending June 30, marking the first time it had experienced three consecutive quarters of declines since 1978.
• The S&P dropped 8.6 percent in June, its worst June since 1930, and its worst month since September 2002.
The hardest hit, of course are those near retirement, who are being forced to recalculate their portfolios and budgets.
Link to full article:
Jun 10, 2008
Buy and Hold Stocks: Why This Investing Strategy Is Dangerous
Buy and Hold Stocks: Why This Investing Strategy Is Dangerous for Your Portfolio by Mark Skousen, Chairman, Investment U
SmartStops comment: A brief and very well written article about the hazards of Buy and Hold even if it’s a famous well known company. Some very interesting charts are used to illustrate the point.
Excerpt: The Strange Case of Three "Solid Growth" Buy and Hold Stocks
In The Money Game, Goodman identifies "three sisters of solid growth" - companies that "everyone" on Wall Street agreed were so "solid" for the long term that you could buy and take delivery of their stock certificates, deposit them in a safe deposit box, and your heirs would be wealthy beyond their dreams by simply holding on for dear life.
What were these stocks? Goodman named:
• International Business Machines (NYSE: IBM)
• Xerox (NYSE: XRX), and
• Polaroid
Here's what happened to these three "sure-fire" winners over the last couple of decades…
What's the lesson? There's no such thing as a "buy and hold" stock. You must be eternally vigilant on the fundamental outlook of your favorite investments… especially in today's three "golden growth" stocks:
Link To Full Article
SmartStops comment: A brief and very well written article about the hazards of Buy and Hold even if it’s a famous well known company. Some very interesting charts are used to illustrate the point.
Excerpt: The Strange Case of Three "Solid Growth" Buy and Hold Stocks
In The Money Game, Goodman identifies "three sisters of solid growth" - companies that "everyone" on Wall Street agreed were so "solid" for the long term that you could buy and take delivery of their stock certificates, deposit them in a safe deposit box, and your heirs would be wealthy beyond their dreams by simply holding on for dear life.
What were these stocks? Goodman named:
• International Business Machines (NYSE: IBM)
• Xerox (NYSE: XRX), and
• Polaroid
Here's what happened to these three "sure-fire" winners over the last couple of decades…
What's the lesson? There's no such thing as a "buy and hold" stock. You must be eternally vigilant on the fundamental outlook of your favorite investments… especially in today's three "golden growth" stocks:
Link To Full Article
Jun 7, 2008
Merrill Tries to Temper Pollyannas
Merrill Tries to Temper the Pollyannas in Its Ranks
May 15, 2008Market Place By JENNY ANDERSON and VIKAS BAJAJ
SmartStop’s comment: It’s good to finally see a major Wall Street firm paying some attention to the importance of giving investors helpful “sell” advice. We hope this is the beginning of a new trend that will help focus investor attention on the importance of knowing when to sell.
Excerpts: Sometimes Wall Street seems a bit like the make-believe Lake Wobegon: Most stocks are above average, and it is always a good time to buy.At least that is the impression you might get from stock analysts who recommend where you should put your money. Even in bad times, the Street’s army of analysts rarely shout “sell.” In fact, they rarely utter the S word at all.
But Merrill Lynch, the nation’s largest brokerage firm, unveiled a new system on Tuesday for rating stocks that suggests Wall Street finally may be mustering up its courage to say “sell” more often. Starting in June, Merrill will require that its analysts assign “underperform” ratings to 1 out of every 5 stocks they cover. About 12 percent fall into that category now.
Today, after the Nasdaq bust and the outbreak of the deepest financial crisis since the Depression, only about 5 percent of all stock recommendations on Wall Street advise investors to sell, according to Bloomberg. That is up from less than 2 percent back in the heady days of the dot-com boom.
The bank analyzed stock performance over a decade and determined that from 1997 through 2007, on average, 37 percent of stocks in the MSCI world index and 40 percent of stocks in the Standard and Poor’s 500-stock index declined each year. The bank covers about 75 percent of the stocks in those indexes.
Link to full article:
May 15, 2008Market Place By JENNY ANDERSON and VIKAS BAJAJ
SmartStop’s comment: It’s good to finally see a major Wall Street firm paying some attention to the importance of giving investors helpful “sell” advice. We hope this is the beginning of a new trend that will help focus investor attention on the importance of knowing when to sell.
Excerpts: Sometimes Wall Street seems a bit like the make-believe Lake Wobegon: Most stocks are above average, and it is always a good time to buy.At least that is the impression you might get from stock analysts who recommend where you should put your money. Even in bad times, the Street’s army of analysts rarely shout “sell.” In fact, they rarely utter the S word at all.
But Merrill Lynch, the nation’s largest brokerage firm, unveiled a new system on Tuesday for rating stocks that suggests Wall Street finally may be mustering up its courage to say “sell” more often. Starting in June, Merrill will require that its analysts assign “underperform” ratings to 1 out of every 5 stocks they cover. About 12 percent fall into that category now.
Today, after the Nasdaq bust and the outbreak of the deepest financial crisis since the Depression, only about 5 percent of all stock recommendations on Wall Street advise investors to sell, according to Bloomberg. That is up from less than 2 percent back in the heady days of the dot-com boom.
The bank analyzed stock performance over a decade and determined that from 1997 through 2007, on average, 37 percent of stocks in the MSCI world index and 40 percent of stocks in the Standard and Poor’s 500-stock index declined each year. The bank covers about 75 percent of the stocks in those indexes.
Link to full article:
Jun 6, 2008
No Sign of Sell on Wall Street
No Sign of `Sell' on Wall Street as Analysts Say: `Buy,' `Hold'
By Yalman Onaran and Christine Harper
SmartStops comment: Every self-directed investor needs to understand that research analysts are reluctant to ever publish an outright “sell” recommendation. To do so would risk alienating the corporate executives that provide the data and insight that good analysts need for their research. The hedge funds and institutions speak the same language as the analysts and know that in most cases a downgrade to “hold” really means “sell”.
Excerpt: Anybody who followed the advice of Wall Street's top-ranked analysts, none of whom would say ``sell'' for a single company in the securities industry this year, is reckoning with subprime-like losses.
Research analysts were unreliable guides during the collapse of the subprime mortgage market. They failed to foresee about $66 billion of writedowns that led to the unprecedented departures of CEOs from Zurich-based UBS and New York-based Merrill and Citigroup in less than six months.
Only 7 percent of analysts' recommendations have been sell this year, down from 11 percent in 2003, data compiled by Bloomberg show.
Link to full article:
By Yalman Onaran and Christine Harper
SmartStops comment: Every self-directed investor needs to understand that research analysts are reluctant to ever publish an outright “sell” recommendation. To do so would risk alienating the corporate executives that provide the data and insight that good analysts need for their research. The hedge funds and institutions speak the same language as the analysts and know that in most cases a downgrade to “hold” really means “sell”.
Excerpt: Anybody who followed the advice of Wall Street's top-ranked analysts, none of whom would say ``sell'' for a single company in the securities industry this year, is reckoning with subprime-like losses.
Research analysts were unreliable guides during the collapse of the subprime mortgage market. They failed to foresee about $66 billion of writedowns that led to the unprecedented departures of CEOs from Zurich-based UBS and New York-based Merrill and Citigroup in less than six months.
Only 7 percent of analysts' recommendations have been sell this year, down from 11 percent in 2003, data compiled by Bloomberg show.
Link to full article:
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