| My second Sudoku book, "Sudoku Fun: Volume 2" reached #76 on Amazon.com's Bestseller List for the category "Entertainment->Puzzles & Games->Sudoku". |
Saturday, 30 April 2011
My Book "Sudoku Fun: Volume 2" Reached #76 on Amazon.com's Bestseller List for Sudoku Books
Posted on 22:30 by Unknown
Tuesday, 26 April 2011
I Bought Colgate-Palmolive and Cirrus Logic
Posted on 14:26 by Unknown
On Thursday, I bought Colgate-Palmolive (CL) at $80.70 and Cirrus Logic (CRUS) at $16.49.
Colgate-Palmolive was recently mentioned in an article on how, paradoxically, the lowest volatility stocks actually have the highest total returns over time. Over the last 20 years, CL had a beta of 0.6 (the general market is 1, so anything below 1 is less volatile) and a total annualized return of 13.5% (vs. 8.8% for the S&P 500).
Around the time of this article, CL was also a recent pick of columnist Ken Fisher. He admits that many see it as a boring stock, but he sees it "as a low-risk, big-cap growth stock". At $78, he said it was trading at 16 times his estimate of 2011 earnings, and thinks it will trade at a 25% premium over the market as the economic cycle picks up.
Cirrus Logic is a way to bet on Apple without paying the premium. CRUS makes the chips for iPads and iPhones. Asset Manager Jim Oberweis anticipates revenue growth of 70% over the next 12 months.
Remember that I don't do short term trading. I try to buy good long term stocks at good prices, and then let the stock trading riches system manage the picks.
Colgate-Palmolive was recently mentioned in an article on how, paradoxically, the lowest volatility stocks actually have the highest total returns over time. Over the last 20 years, CL had a beta of 0.6 (the general market is 1, so anything below 1 is less volatile) and a total annualized return of 13.5% (vs. 8.8% for the S&P 500).
Around the time of this article, CL was also a recent pick of columnist Ken Fisher. He admits that many see it as a boring stock, but he sees it "as a low-risk, big-cap growth stock". At $78, he said it was trading at 16 times his estimate of 2011 earnings, and thinks it will trade at a 25% premium over the market as the economic cycle picks up.
Cirrus Logic is a way to bet on Apple without paying the premium. CRUS makes the chips for iPads and iPhones. Asset Manager Jim Oberweis anticipates revenue growth of 70% over the next 12 months.
Remember that I don't do short term trading. I try to buy good long term stocks at good prices, and then let the stock trading riches system manage the picks.
Friday, 22 April 2011
$1500 Gold and $45 Silver! The Difference Between Just Making A Prediction and Profiting From It
Posted on 10:40 by Unknown
"$1500 Gold and $45 Silver!" was the title of an email that a friend of mine sent me a couple of days ago. His email reminded me that he had predicted these prices last year.
So, I wrote him back and said:
Hopefully you were able to profit from your prediction - and have a plan for when to take profits.
Those two things separate an economist from a trader :-)
Well, it turned out that he had taken profits along the way, and saved them to reinvest in pullbacks. I told him that he could also have used my stock trading riches system. It would actually work for more than just stocks, ETFs, or mutual funds. You could use it to trade actual metals, commodities, or currencies. In fact, just about any good.
As an example, you could take $10,000 and buy $7,000 worth of gold (or silver, or oil, or tea) and keep $3,000 in a cash reserve. Once a year, if the value of the commodity has fluctuated by at least 10%, you could rebalance. Of course, the total amount, constant value, and reserve amount can be anything you want.
With a commodity, instead of strictly rebalancing, you may want to use the optional growth rule from my book. This way, the constant value would grow over time as your position went up.
So, I wrote him back and said:
Hopefully you were able to profit from your prediction - and have a plan for when to take profits.
Those two things separate an economist from a trader :-)
Well, it turned out that he had taken profits along the way, and saved them to reinvest in pullbacks. I told him that he could also have used my stock trading riches system. It would actually work for more than just stocks, ETFs, or mutual funds. You could use it to trade actual metals, commodities, or currencies. In fact, just about any good.
As an example, you could take $10,000 and buy $7,000 worth of gold (or silver, or oil, or tea) and keep $3,000 in a cash reserve. Once a year, if the value of the commodity has fluctuated by at least 10%, you could rebalance. Of course, the total amount, constant value, and reserve amount can be anything you want.
With a commodity, instead of strictly rebalancing, you may want to use the optional growth rule from my book. This way, the constant value would grow over time as your position went up.
Tuesday, 19 April 2011
In Defense of House Flippers / Investors Buying Foreclosures
Posted on 12:07 by Unknown
This past Sunday's Chicago Tribune "Money and Real Estate" section had an article on how house flippers have changed tactics.
During the bubble, they loaded up on easy credit, bought at high prices, did complete renovations, and carried the properties for a few months before trying to sell at higher prices.
Now, house flippers try to acquire homes cheaply - frequently from foreclosure auctions, use cash, make minor changes (such as painting or landscaping), and try to sell the properties quickly. The idea is they make less per property, but flip more per year.
Some of the flippers interviewed must have felt that people will think they are profiting by taking advantage of people losing their homes, so they offered a good defense of what they are doing.
I think this description also describes the value that stock market speculators create:
"Some people's bad fortune is other people's opportunity. I know it sounds callous...but I also feel like we provide a backstop to the market."
"Anyone who depletes the foreclosure inventory is helping the marketplace because we will not see appreciation or increases in value until foreclosures go away."
During the bubble, they loaded up on easy credit, bought at high prices, did complete renovations, and carried the properties for a few months before trying to sell at higher prices.
Now, house flippers try to acquire homes cheaply - frequently from foreclosure auctions, use cash, make minor changes (such as painting or landscaping), and try to sell the properties quickly. The idea is they make less per property, but flip more per year.
Some of the flippers interviewed must have felt that people will think they are profiting by taking advantage of people losing their homes, so they offered a good defense of what they are doing.
I think this description also describes the value that stock market speculators create:
"Some people's bad fortune is other people's opportunity. I know it sounds callous...but I also feel like we provide a backstop to the market."
"Anyone who depletes the foreclosure inventory is helping the marketplace because we will not see appreciation or increases in value until foreclosures go away."
Saturday, 16 April 2011
Unix / Linux Scripts For Computing Compund Interest
Posted on 11:19 by Unknown
On my unix blog, I posted three scripts for calculating compound interest.
They are written in awk, which is included free on all unix and linux systems. Since Macs are unix-based, it should be included on them , as well. Versions of awk are also available for free download on PCs.
The three scripts are called "compound", "compound_add", and "compound_add2".
Here are some examples of how to use these scripts:
1. You open a money market account with $5,000 and earn 0.45% / month. How much is the account worth after 1 year? You would use "compound 5000 .45 12"
2. You open a money market account with $200, contribute $200 each month, and earn 0.45% / month. How much is the account worth after 1 year? You would use "compound_add 200 .45 12"
3. You have an existing money market account with $5,000. You now contribute $200 each month and earn 0.45% / month. How much is the account worth after 1 year? You would use "compound_add2 5000 200 .45 12"
They are written in awk, which is included free on all unix and linux systems. Since Macs are unix-based, it should be included on them , as well. Versions of awk are also available for free download on PCs.
The three scripts are called "compound", "compound_add", and "compound_add2".
Here are some examples of how to use these scripts:
1. You open a money market account with $5,000 and earn 0.45% / month. How much is the account worth after 1 year? You would use "compound 5000 .45 12"
2. You open a money market account with $200, contribute $200 each month, and earn 0.45% / month. How much is the account worth after 1 year? You would use "compound_add 200 .45 12"
3. You have an existing money market account with $5,000. You now contribute $200 each month and earn 0.45% / month. How much is the account worth after 1 year? You would use "compound_add2 5000 200 .45 12"
Grant Achatz's Next and Doughnut Vault: How To Succeed In Business By Playing Hard To Get?
Posted on 07:33 by Unknown
I was reading in the Chicago Tribune about two new restaurants that are thriving despite (or maybe because) they make it hard to buy their food:
1. In order to make a reservation at "Next", you have to buy a non-refundable ticket from their website. There are 14,000 names on the email waiting list, so tickets are going for up to $600 on Craigslist. Remember, this is just to get in - the actual dinner cost is separate.
2. Even more intriguing, a small doughnut shop called "Doughnut Vault" (just a order/pickup window in an alley) opened in Chicago's River North area without much publicity, and they sell only coffee, and 5 kinds of expensive ($2 - $3 each) doughnuts.
But the lines are jammed every morning. People start lining up by 7:30 am, but the shop has no set hours. They could open at 8 am or 9 am. They send out a Twitter just before opening time. Once open, they sell out fast, because they only make so many.
The Tribune interviewed one woman who lined up for hours twice, and didn't get any doughnuts.
With "Next", it is a bit understandable, because the chef / owner is Grant Achatz - who is a celebrity chef. His "Alinea" restaurant has three Michelin stars and is considered the best restaurant in the United States. He even gets his $100,000 Viking ovens almost for free, in exchange for them to mention his name in their marketing materials.
"Doughnut Vault" is owned by Brendan Sodikoff, a veteran of famous restaurants like Alan Ducasse, who also owns Gilt Bar and Maude's Liquor Bar. But, this fact isn't advertised. In fact, there wasn't much publicity or advertising.
What are the business lessons in this?
1. People are attracted and interested in the mysterious and exclusive.
2. Being hard to attain is not the same as anti-customer service or substandard products. People rave about the food quality at both places. Sodikoff told the Tribune that he doesn't like making people wait, and he makes up to 600 doughnuts a day.
3. Restaurants and food tend to be fads. Especially with "Doughnut Vault", it is possible that there will be no wait in 6 months, or it might even have closed down.
1. In order to make a reservation at "Next", you have to buy a non-refundable ticket from their website. There are 14,000 names on the email waiting list, so tickets are going for up to $600 on Craigslist. Remember, this is just to get in - the actual dinner cost is separate.
2. Even more intriguing, a small doughnut shop called "Doughnut Vault" (just a order/pickup window in an alley) opened in Chicago's River North area without much publicity, and they sell only coffee, and 5 kinds of expensive ($2 - $3 each) doughnuts.
But the lines are jammed every morning. People start lining up by 7:30 am, but the shop has no set hours. They could open at 8 am or 9 am. They send out a Twitter just before opening time. Once open, they sell out fast, because they only make so many.
The Tribune interviewed one woman who lined up for hours twice, and didn't get any doughnuts.
With "Next", it is a bit understandable, because the chef / owner is Grant Achatz - who is a celebrity chef. His "Alinea" restaurant has three Michelin stars and is considered the best restaurant in the United States. He even gets his $100,000 Viking ovens almost for free, in exchange for them to mention his name in their marketing materials.
"Doughnut Vault" is owned by Brendan Sodikoff, a veteran of famous restaurants like Alan Ducasse, who also owns Gilt Bar and Maude's Liquor Bar. But, this fact isn't advertised. In fact, there wasn't much publicity or advertising.
What are the business lessons in this?
1. People are attracted and interested in the mysterious and exclusive.
2. Being hard to attain is not the same as anti-customer service or substandard products. People rave about the food quality at both places. Sodikoff told the Tribune that he doesn't like making people wait, and he makes up to 600 doughnuts a day.
3. Restaurants and food tend to be fads. Especially with "Doughnut Vault", it is possible that there will be no wait in 6 months, or it might even have closed down.
Friday, 15 April 2011
Develop A System Before Trading
Posted on 23:09 by Unknown
When I was first starting out as a trader, I sometimes traded impulsively - where I tried to use my "gut feel" to execute buys and sells. What happened every time was that I lost money and got stressed.
This also includes jumping in and buying a stock because of a hot tip or because you like the product. Now, don't get me wrong - I do buy stocks based on analyst recommendations or because I like to shop there. But, I follow my Stock Trading Riches system so that I know at which prices I will buy and sell, and at what quantities. So, I am never trading impulsively.
No matter what happens to the stock, I can fight the emotions of fear and greed because I have an objective way to calculate my buy and sell points.
I'm not saying that everyone should use the Stock Trading Riches system - because different systems appeal to different personalities. Even if system A is better than system B, you would be better off using system B if it appeals better to your investing philosophy.
But, the key is that you do need a system.
This also includes jumping in and buying a stock because of a hot tip or because you like the product. Now, don't get me wrong - I do buy stocks based on analyst recommendations or because I like to shop there. But, I follow my Stock Trading Riches system so that I know at which prices I will buy and sell, and at what quantities. So, I am never trading impulsively.
No matter what happens to the stock, I can fight the emotions of fear and greed because I have an objective way to calculate my buy and sell points.
I'm not saying that everyone should use the Stock Trading Riches system - because different systems appeal to different personalities. Even if system A is better than system B, you would be better off using system B if it appeals better to your investing philosophy.
But, the key is that you do need a system.
Interesting Article on Walter Breuning, The World's Oldest Man
Posted on 20:57 by Unknown
| Walter Breuning, the world's oldest man, died Thursday at age 114. The Associated Press article on his death included his story - based on an interview they did with him last October. It's very interesting reading, because they framed his story in parallel with the history of the U.S. Some highlights: 0. His mother died at 46, and his father at 50, so he didn't have longevity in the family. His advice for living a long life: a) Embrace change. b) Eat only 2 meals a day. c) Work as long as you can. d) Help others. e) Accept death. 1. His earliest memory is at 3 - with his grandfather horrifying him by telling stories of killing Southerners during the Civil War. 2. In 1912, his parents split up and he had to work on the railroad at 16. He ended up working there for the next 50 years. 3. His mother died at 46 and his father at 50. 4. In 1919, he bought his first car, and said it spooked the horses that he had to share the street with. 5. He got married in 1922, and bought vacant land for $15. The Depression hit and he was never able to build a house. Eventually he sold the land for $25, making a $10 profit. He never bought property again and was a lifetime renter. 6. His wife died in 1957 - they had no children, and he never remarried. |
Friday, 8 April 2011
Gadhafi's Surprising.ly Internet Asset
Posted on 15:15 by Unknown
In an ironic twist, it turns out that, whenever NATO, the U.S. Air Force, celebrities like Charlie Sheen, or just regular people, have been sending out links to their Twitter followers, they have been using a Libyan asset.
Many of the most popular free services for condensing links, such as bit.ly or owl.ly, are using domains owned by Libya.
Here is a link to the Wall Street Journal article about it:
http://finance.yahoo.com/banking-budgeting/article/112508/gadhafi-ly-web-suffix-libya-wsj
Many of the most popular free services for condensing links, such as bit.ly or owl.ly, are using domains owned by Libya.
Here is a link to the Wall Street Journal article about it:
http://finance.yahoo.com/banking-budgeting/article/112508/gadhafi-ly-web-suffix-libya-wsj
Like Enlightenment, Winning Trades Are An Accident
Posted on 11:24 by Unknown
One of my favorite quotes that I share on my Tao of Simplicity blog is:
A zen master was once quoted:
Enlightenment is an accident, but some activities make you accident prone.
Yesterday, I read a blog post by trader Rob Michell, who said something similar about winning trades:
"It is impossible to distinguish between luck and skill in most cases."
"Having said that, here is another tidbit of crazy inside knowledge. Since you cannot distinguish between luck and skill a good portion of the time, the real truth of the matter is you are not responsible for your winning at all. The market is."
"I said before, you have to manage your risk and then, at some point (and here is the blaspemous statement that will make most traders cringe), a good accident happens. Accident you say?? Yes. I use that word, because it is the only one that is strong enough to remind me there is nothing personal about trading. It is all management of risk. It is a disipline."
I really like this fresh way of saying a trading truth, which is that the market goes where it goes, and nobody can predict it 100%. No strategy or model can always pick the best times to buy and sell.
We have to think like a casino. We want to take bets where we have an edge. On any individual trade, it is an accident if we make a profit. But, if we have a trading system with an edge, it won't be an accident if we profit over time.
A zen master was once quoted:
Enlightenment is an accident, but some activities make you accident prone.
Yesterday, I read a blog post by trader Rob Michell, who said something similar about winning trades:
"It is impossible to distinguish between luck and skill in most cases."
"Having said that, here is another tidbit of crazy inside knowledge. Since you cannot distinguish between luck and skill a good portion of the time, the real truth of the matter is you are not responsible for your winning at all. The market is."
"I said before, you have to manage your risk and then, at some point (and here is the blaspemous statement that will make most traders cringe), a good accident happens. Accident you say?? Yes. I use that word, because it is the only one that is strong enough to remind me there is nothing personal about trading. It is all management of risk. It is a disipline."
I really like this fresh way of saying a trading truth, which is that the market goes where it goes, and nobody can predict it 100%. No strategy or model can always pick the best times to buy and sell.
We have to think like a casino. We want to take bets where we have an edge. On any individual trade, it is an accident if we make a profit. But, if we have a trading system with an edge, it won't be an accident if we profit over time.
Tuesday, 5 April 2011
Topics Covered in "Stock Trading Riches" Book
Posted on 22:47 by Unknown
Here are some of the topics covered in "Stock Trading Riches":
My Simple Trading System
Optional Ideas for Customizing The System
Zen and the Art of Speculation
The Hidden Dangers of Investing Too Conservatively
7 Stock Market Secrets for New Investors
Divorce of A Trader - The Perils of Leverage
Why Stocks Are Better Than Mutual Funds
Exchange Traded Fund (ETF) Investment Success - Stick to the Basics!
Combining Fundamental and Technical Analysis for Stock Trading
How to Invest in an Era of High-Inflation and a Weak US Dollar
Deflation and Stock Picking
How Markets React to News and Reports
The Problem With Trading From Charts - The Secret Flaw Technical Analysts Never Talk About
Evaluating Trading Systems Critically - Be Wary of the Well-Placed Example
How to Select IPOs That Are Ready To Explode
Stock Market Cap Analysis - Secrets for Building a Diversified Portfolio
6 Unconventional Metrics for Stock Picking
Bonus 2009 Updates
Bonus Awk, Perl, and Excel Scripts
My Simple Trading System
Optional Ideas for Customizing The System
Zen and the Art of Speculation
The Hidden Dangers of Investing Too Conservatively
7 Stock Market Secrets for New Investors
Divorce of A Trader - The Perils of Leverage
Why Stocks Are Better Than Mutual Funds
Exchange Traded Fund (ETF) Investment Success - Stick to the Basics!
Combining Fundamental and Technical Analysis for Stock Trading
How to Invest in an Era of High-Inflation and a Weak US Dollar
Deflation and Stock Picking
How Markets React to News and Reports
The Problem With Trading From Charts - The Secret Flaw Technical Analysts Never Talk About
Evaluating Trading Systems Critically - Be Wary of the Well-Placed Example
How to Select IPOs That Are Ready To Explode
Stock Market Cap Analysis - Secrets for Building a Diversified Portfolio
6 Unconventional Metrics for Stock Picking
Bonus 2009 Updates
Bonus Awk, Perl, and Excel Scripts
Saturday, 2 April 2011
How to Become A Billionaire
Posted on 14:21 by Unknown
Rich Karlgaard, publisher of Forbes Magazine wrote an essay in the latest billionaire's edition about How to Become A Billionaire - Zero by Zero.
He starts with what he thinks people mean by "millionaire" today - an 8 figure net worth ($10 - 99 million). He thinks that there are hundreds of these in every big city in America - either CEO's or people with their own successful businesses. Alternatively, you can become a partner at a top law firm or investment bank - if you have the right credentials.
To get to the next step, 9 figures ($100 - 999 million), he thinks you need to create "a company beloved by the capital markets", and then sell it through an IPO or to another company.
To take the final step, and become a billionaire, requires you to build a company that follows a Moore's Law curve (doubling every year) and scale it up globally.
He starts with what he thinks people mean by "millionaire" today - an 8 figure net worth ($10 - 99 million). He thinks that there are hundreds of these in every big city in America - either CEO's or people with their own successful businesses. Alternatively, you can become a partner at a top law firm or investment bank - if you have the right credentials.
To get to the next step, 9 figures ($100 - 999 million), he thinks you need to create "a company beloved by the capital markets", and then sell it through an IPO or to another company.
To take the final step, and become a billionaire, requires you to build a company that follows a Moore's Law curve (doubling every year) and scale it up globally.
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