A good thing about being a self-employed stock trader is that my earnings are capital gains. That means I don't have to pay the 15% self-employment tax (I'm 26, so I'm never getting Social Security anyway). It also means that in times of falling investment prices I can deduct my investment losses from my income (people are limited to deducting $3,000 per year against 'earned' income). So today I took the opportunity to realize some losses and increase my net stock investment (only slightly, though). [more]
So says Jeremy Siegel in a WSJ commentary today, and I agree. Excerpts from the article: [more]
So says a smart guy at MIT who ran some simulations. A mutual fund manager would have to outperform the market by 4.3 percentage points per year before expenses to equal the performance of an index fund for a high-tax investor investing in a taxable account. Such performance is virtually impossible over the long run. [more]
The simple answer? Because he was right mostly because of luck, just like many of the other "great seers" who "predicted" the crash. Say something often enough and eventually you will be right. He wasn't even that right, having predicted financial troubles since 2004. I suggest checking out this interview with Philip Tetlock (an expert on experts) from the current issue of Money magazine. [more]
See original synopsis on the CXO Advisory Group's blog and see the original academic article ("Data Snooping and Market Timing Performance") that just came out. [more]
Thanks to 4everlost. See his blog post here.
from THE NATURAL CONTRARIAN
(ps--it is too small to rate in CAPS, so no free points)
Some of you may remember Hydrogen Hybrid Technologies (OTC BB: HYHY.ob). It was a spam stock from last summer, perhaps the most recent successful pump and dump. The SEC just halted the stock, trading at 3 cents. During its pump & dump days, this stock reached $2.50. [more]
Synopsis of a new academic paper, courtesy of CXO Advisory Group blog (you really need to read their blog): [more]
Dealbreaker has the article. I like their political arguments -- it is time for a flat tax because there is a better chance to pass it because everyone who opposes it has been weakened. [more]
I just checked my broker's interest rates for the first time in a long time and I found out that because interest rates are so low, I no longer receive any interest whatsoever on cash for on the proceeds of short sales of stock. Conversely, margin interest rates are insanely low. For any amount I borrow below $100,000, the interest rate is 1.73%. From $100,000 to one million dollars, the interest rate is a 1.23%. Above one million dollars, the interest rate drops to 0.73%.
I do not know about you, but for me the logical response to such low interest rates is to lever up and put all that borrowed money to use in low yielding but relatively safe trades* (hmmm ... I think I'd describe one of my trading strategies in those terms in a very recent blog post). Unfortunately, unlike the Investment Banks I am limited to 4x leverage. My other brokerage has offered me up to 10x leverage because my trading is so consistently profitable. I may actually take them up on that offer if they can offer me similarly low interest rates. That being said, unlike the Investment Banks and mortgage companies, I know how to limit my risk.
From the macro point of view, I find it curious how everyone seems to believe that the cure for a debt-laden economy is to lower interest rates so far that saving remains illogical and borrowing is encouraged. Was that not how we got here in the first place? [more]
Here is how the Motley Fool Champion Funds "Aggressive" portfolio has done since inception 13 months ago (data as of today from newsletter subscriber website): [more]
This article will address the emotional requirements, discipline, and risk controls necessary to be successful at trading. I will then address how to find a trading strategy that works. This is the second article in a series. I suggest reading the first article (on the extreme difficulty of trading profitably). [more]
[This is the same article posted awhile ago on my GoodeValue.com blog. I thought it important that everyone reading my "So you wanna be a stock trader" articles read this before they read part two of that series]. [more]
I am a professional stock trader. I sit in my home office all day and look at numbers on my computer screen clicking here and there. For some reason, people believe that stock trading is sexy, fun, or a worthwhile hobby. It is not. It is perhaps one of the most difficult pursuits available because it is a zero-sum game. For every winner there is a loser. Whereas if you are a hand surgeon or a statistician or a synthetic organic chemist or an entrepreneur you can make money just by being good at what you do, if you are a stock trader you make money only if you are better than the traders that take the opposite side of your trades. In other words, the second best entrepreneur might become a billionaire. The second best trader will lose money. If you are interested in trading stocks I will give you some pointers, but first I will explain why most of you should not trade stocks. [more]
You asked, it is coming. My forthcoming blog post "So you want to be a stock trader" will be epic. I have maybe a page already (all killa no filla as they say) and I have lots more to write. If you have any suggestions or questions for me that you think I should answer / include in the article, please write them below. [more]