Archive for September, 2007

Buy More?

If you haven’t subscribed to www.alternet.org you are really missing an opportunity to get into the middle of some really great discussions.  Take for example this one that developed around the article The Conflicted Consumer written by Robert B. Reich and based on an excerpt from his new book, The Transformation of Business, Democracy, and Everyday Life

“The awkward truth is that most of us are two minds: As consumers and investors we want the great deals. As citizens we don’t like many of the social consequences that flow from them.”  is how he starts us off thinking about the incredible catch 22 in which we now find ourselves.  Caught between wanting to conserve what’s left of our planet and apparent success of our free market economy, we can only read in stunned apprehension as he delineates the problem by using Walmart (of all companies) as a prime example.  And then laugh.  Ha!  Walmart can’t stop being Walmart.   Can’t raise prices to raise wages because to do so would be to lose customers to the competitors who learned by example to emulate the Walmart plan.   Did any of you happen to see the new comedy adventure on NBC called Chuck?  Did you notice that he works for a store called BUY MORE?

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Just a few words …

I mentioned yesterday about my puzzlement at the current unemployment stats.  But upon further consideration I realized I had been seeing my answer on tv ads for weeks.  All those tech training colleges are now fully up to speed and offering courses and certification in Law Enforcement.   Yes, that’s right.  No more IT, it’s all about being secure these days.  All along the 3,000 mile border line, at our airports, along our city streets; everywhere safe from the constant (we are reminded) threat of another 9/11 or worse.  Line up those SWAT teams, you just know it takes 50 cops with guns at the ready to subdue those dangerous so-called criminals.  I am surprised more high schools haven’t started offering courses.  Geez, I remember a day when we actually used to make fun of the para military types but of course that was before Blackwater, right?

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Taxes . . .

TAXES . . .They say death and taxes are the only two things you can’t avoid.There’s a finality there that is hard to ignore.

A sense of dying already let in the door.

But what if you want to deny this truth?

What if you wanted nothing, and needed less? Would governments be

Satisfied without redress?

Somewhere out there on the edge, where the sky meets the earth, where

Birds fly and the unknown still lies like a sea serpent looking for dinner,

We look to find our salvation.

An eternal spring, a new life form that when wedded with ours will create an

Everlasting, always young, new humankind.

And I wonder, could we do that without changing, rearranging our current

Universe. Or would this change like some domino exhibit collapse us all
into

Some black hole that is worse than death and . . . taxes.

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A Funny Thing Happened

Actually two funny things but I kinda’ liked the sound of that title so I went with it anyway.  First funny thing.  The Democratic led congress tacked a hate crimes amendment onto the war funding bill that the senate is getting ready to send to the Pres.  Why’s that funny you say, well for one thing it bugged Bill Maher and two it is a continuing example of the chess game these two parties are playing with our country.  The Repubs make a move then the Dems do.  Check, no check you, no check you.  Here’s how I see it.  Since the Dems can’t override the President’s veto to curb spending on this war they decided to hit the ball back by adding on this amendment which the Repubs have said all along was unneeded legislation.   But the Pres can’t veto the funding bill can he?   So see, the Dems look like they’re doing something but they really aren’t because we still have a Pres stuck on war.

Meanwhile, the other funny thing is the deal that going on with the soon-to- be-ex CEO of Countrywide, Angelo Mozilo who apparently has cashed in 138 million in stock options since 2006 while steadfastly maintaining that Countrywide is a stable organization.   When I read that story aloud to my partner T. she wondered why it made me so agitated.  “Hah! Now you know why we always said you can never trust a suit.”  If the report is true, Mozillo has spent months cashing in while manuerving his loyal company into believing that there was no danger in the sub-prime lending fiasco to Countrywide Finacial Corp.   And something else makes me curious about this deal, if CW is laying off 12,000 and several other lending institutions have done the same, how the hell can the unemployment figures, 4.5%, be true?  This whole deal reminds me of the Standard Pacific deal I read about last Tuesday.  “In a deal that’s so counterintuitive it almost sounds illegal – though experts say it isn’t – the Irvine(CA)based company said Monday that it was selling $100 million in bonds that can be converted into its stock.  At the same time, Standard Pacific in effect is lending 7.8 million of its shares to buyers of the bonds, who will promptly sell the stock.”   The best that can be said about this is that at least it isn’t happening in secret and the company seems to be saying to its shareholders, we are all in this together.  Of course, it follows last weekend’s, “Mission Impossible Diamond Ridge Homes blowout sale” by the same builder so it may be a case of way to little too late.

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If You’re Going to Trade Stocks …

then I may just have the book for you.  But I’ll let you decide that after you read this review.  I came across the Stikky book series a couple of years ago when I was shopping for gifts at my local B&N.   The book that caught my eye was called Stikky Night Skies and I knew almost immediately upon opening it that I wanted it.   Learn how to read the stars.  What kid hasn’t wished for that skill?   But I didn’t know it was one of a series that used a similar learning approach until I went online to see if I could find a more frugal price.

It was there that I found that there were four books in the series and decided to buy this one, too.   Stikky Stock Charts was written in 2004 and proposes to teach the reader “the 8 major chart patterns used by professionals and how to interpret them to trade smart – in one hour, guaranteed.”  Since I had already completed reading the Stars book by the time Stikky Charts arrived, I had little doubt that this claim would turn out to be true.

Lets take a look first at how the book is arranged because that is definitely a part of the learning technique that Lawrence Holt books uses.  There are four main sections.  In Sequence One you are shown how to work with trends, draw trendlines, support lines, and resistance lines and how to place an order.  In Sequence Two you are shown several charting patterns, shown how to interpret a volume chart, and you meet the idea of protecting your investment by setting up a stop loss.  In the Epilogue you are given the opportunity to reinforce what you’ve learned by facing some new and unfamiliar stock situations.  And in the last section, Next Steps you are given reference material locations, charting web site info, a list of software package sources, an overview of the wide field of stock charting, and technical analysis, and several short definitions of the types of instruments that are considered securities and thus something that can be bought or sold.

What makes this book stand out for me though is the teaching strategy it employs.  First and foremost is the fact that it is visual.  Right from the start you are asked to look at a chart and to see it with the goal of “finding patterns on a piece of paper.”  So even though there is text to guide you, you are really looking at a picture all the way through.    Pacing is also important in the Stikky approach.  Each section takes about 30 minutes but you can take as long as you want.  The only caveat is that “you promise yourself that, when asked a question in the text, you will not flip ahead until you have tried to answer it.”  In addition to this direction they suggest that you pause between reading each section to digest the material before moving on.   So when they say you will learn it in one hour they mean spread out over a couple of days.

As we begin Sequence One, we see our first chart and in few short pages we are looking at the daily bars that tell us the high and low price of a stock, high mark inside, low mark outside.  The point here seems to be to get you to look closely so that as you begin to look for patterns you will remember the details that make them up.  As you learn to see short term patterns (one that develops within a month) and then medium term patterns (one spread over several months), you are asked to make decisions about buying, selling or holding a stock.  Simple, look at a chart, see a pattern, learn what the significance of a pattern’s direction may be and then make a decision.  This sequence of events is repeated as you work through learning what a trendline is, what upper and lower ones are, how the daily bar’s touches form the basis for your chart pattern, how many touches (3 at least) count, and finally what usually happens when a bounce occurs off of the resistance line or the support line.  Yes, I sound like I really know what I’m talking about, don’t I?

A cute little role play game at the end of this section is really a very practical reminder that you need to remember how to take care of your money even as you begin actual trading.  What’s fun is realizing that in the shortness of the dialogue is the clue that brief and accurate is the key to successful communication in this field, too.

In Sequence Two we get a little history – from Charles Dow’s work in 1900 to the work of MIT’s Andrew Lo in 2000 – to start us off and then we are given a slightly different chart to look at – one that shows the daily volume of trades for a particular stock.  At this point we have already learned that the market is driven by sentiment and that patterns and charts can be useful in reaching a decision but that there are occasions when additional info is needed.  How much stock is being traded on given day can tell us the strength (if a lot is being traded) or the weakness (if the amount is small) of a trend. 

This section of the book also introduces us to several pattern shapes that begin to suggest that this charting thing might be a bit more complex.  Megaphones shapes and symetrical or ascending or descending triangles are used to let us see the direction of a trend and whether it indicates a bearish (selling) or bullish (buying) market.  We learn to set a stop loss and to wait for the breakout.   Patterns called Double Top and Head and Shoulders are used to demonstrate the idea of no top no drop.   My partner T.  tells me that shapes like these have other names like M for murder and W for win.  Just remember, she reminds me, set that stop loss to cement your gains or limit your losses.

In the Epilogue section we get our final review.  New charts are used to study trends and patterns.  We are reminded by one exercise that if the only pattern we can see is a horizontal line then think stop loss and if we are looking for a breakout clue then check out the volume chart.  One final example points out that in the real world the news travels faster than the stock market can sometimes react.  I really like the tone of this section because it is clear that authors want us to think before we act and to keep on learning.

Which is what the last section of the book, Next Steps, is all about.  It provides a list of resources such as,  prophet.net, signalwatch.com, and nirvanasystems.com omnitrader.   Recommends two texts as being seminal:  one in its eighth edition since 1948 is Technical Analysis of Stock Trends by Robert D Edwards and John Magee, and the other is Essential Technical Analysis by Leigh Stevens.  And provides a set of eight steps to follow if we decide to pursue stock trading.  After analyzing the different types of brokers available, the book suggests we pick the one that fits our purpose.  It then recommends that we use one of the online trading simulation games to further hone our skill before we go real.  Get tax advice.  Learn about the types of orders you can place.  Develop a crash plan to take care of emergencies.  Think stop loss.  Now, start trading.  And finally, with experience on your side, educate yourself about options, short sales, and how to use puts or calls.

Should you invest in this text, by all means.   If you plan to trade on the stock market it will give you a basic understanding of the complex task you have set for yourself.  And if you just want an entertaining and educational way to gain more knowledge about the world of finance, then that is a good reason too. 

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Hello world!

Just a few words for now about this site.  I have been looking into the world of personal finance lately.  On the one hand, you have your saver’s and folks aiming for their retirement and the blogs that want to help them, and on the other you have bubbles bursting to the right and the left both here and abroad.   Somehow both sides appear to be in denial.   I think it may be time to take a look at just how funny this is.  You folks are welcome to come along for the ride.

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