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:
Jul 31, 2008
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:
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