"Stock Trading Riches" is now available in Kindle format on Amazon.com

My book "Stock Trading Riches" is now available in Kindle format on Amazon.com.

Since this is a new format, it's priced for now at $2.99.

They did a good job in the conversion - I saw that the stock tables and programming scripts display well, and the links are click-able.

You don't need to own a Kindle to buy this edition. You can download free readers for PC's, Mac's, iPads, etc.

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How To Understand My Method for Trading Stocks

I made a break-through when I shifted my mind-set from digital thinking to analog.

A digital system has two values (i.e. yes or no), while an analog system has a range of values. For example, a computer memory bit can only be off or on, but your oven can be set to a range of temperatures.

Normally, we trade digitally. After we buy a stock, we either hold it or sell it. So, for the trade to make us money, we only have one chance to buy the stock correctly, and then one chance to sell it correctly.

My Stock Trading Riches system is analog. After you initially buy into each stock, fund, or ETF, the constant value rebalancing formula automatically uses feedback to adjust each position (once a year under the basic rules) - buying and selling portions of your holdings. It works like a self-correcting gyro control in a torpedo.

At the portfolio level, the system uses constant ratio rebalancing to add new positions whenever excess cash builds up.

As a result, we are never trying to predict where the market it going. We profit from volatility while having a robust portfolio that can tolerate a few companies going bankrupt. No single company puts the portfolio at risk.

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Bought two small cap stocks: APKT and JOBS

On Monday, I bought two small cap stocks: ACME Packet (APKT) and 51Job (JOBS).

As I mention in the market cap section of my book, I try to balance my portfolio across market caps, since companies in the different caps have different risk / reward profiles, and the caps themselves follow different cycles.

APKT specializes in session border controllers (SBCs), which provide control and security at the edges of IP networks that carry voice, video, and multimedia traffic.

This is a fast growing company, but volatile stock with quartely fluctuations. The stock was up 104% in 2010, but I bought it now because it fell 50% after it missed it's third quarter estimate (due to a large order slipping into the fourth quarter).

I don't mind volatility, of course, since I will manage the position through my stock trading riches system.

51Job, based in Shanghai, is the human resources market leader in China. They provide recruiting, payroll processing, and training to companies across 25 cities in China. The stock fell into the $40's after a peak of $70. They have $10/share in cash. According to small cap guru Jim Oberweis, the stock trades for 15 times his 2012 earnings estimate, and has expected earnings growth of 55%.

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When Buying A Stock, Invest in Management

The Oct. 10 issue of Forbes had an interview with billionaire growth fund manager Ron Baron.

He listed 4 criteria for investing in a new company. He said many others look at the first three, so the fourth one is especially important:

1. The business must have growth opportunities.

2. The business must be appropriately financed.

3. There should be a competitive advantage (i.e. barrier to others from competing with them).

4. There needs to be a trustworthy leader that inspires people to follow them - who will invest in the business, even if it hurts the short term bottom line.

The example he gave was Ralph Lauren. His European franchisee was doing poorly, and Lauren realized that Europe was the next big market. He had to pay such a high price to acquire the franchisee, that it diluted the stock. In the long run, however, the move paid off.

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More Halloween Fun

Ben and Jerry's Halloween interactive website:

http://www.benjerry.com/halloween/

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Happy Halloween!

I publish this link on my blogs every year at Halloween time, it's pretty cool:

http://ak.imgag.com/imgag/product/preview/flash/bws8Shell.swf?ihost=http%3A%2F%2Fak.imgag.com%2Fimgag&brandldrPath=%2Fproduct%2Ffull%2Fel%2F&cardNum=%2Fproduct%2Ffull%2Fap%2F3125133%2Fgraphic1

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Learn To Relax and Not Panic In Volatile Stock Markets

In a wild, see-saw market like we've seen in the last few weeks, it is common for regular people to become worried and confused. In fact, even many professional traders are probably stressed out.

The thing is, there is never any reason to really worry - as long as you don't have to cash out the whole account in the next 5 years and you aren't trading with leverage.

Instead, there are only two things to know: stocks fluctuate, and fluctuations allow you to boost your return by buying low and selling high. When a stock you own goes down, buy some more. If a stock you own goes up, sell into the rise to generate your return.

In fact, buying into declines and selling into rises is the best way to trade - it does not require hindsight, luck, special knowledge or hours of research.

My book stock trading riches gives a complete trading system that follows this strategy. It also provides information on portfolio building, diversification, and choosing stocks and funds.

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