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EverydayInvestor (< 20)

February 2009



Never too early to tax-loss harvest; increasing (slightly) my equity exposure

February 26, 2009 – Comments (16) | RELATED TICKERS: VTV , VWO

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]



S&P 500 aggregate earnings calculated wrong; much higher than reported

February 25, 2009 – Comments (27) | RELATED TICKERS: SPY

So says Jeremy Siegel in a WSJ commentary today, and I agree. Excerpts from the article:  [more]



Only idiots invest in mutual funds in taxable accounts

February 22, 2009 – Comments (18) | RELATED TICKERS: VTI , VEU , VTV

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]



Why Nouriel Roubini is certainly wrong in his current predictions

February 22, 2009 – Comments (19)

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]



The TARP, in pictures

February 20, 2009 – Comments (15)

The TARP, in Pictures                                                                                                                                                        

    Publish at Scribd or explore others:            Humor              Creative Writing                  tarp          



New evidence against market timing

February 20, 2009 – Comments (13)

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]



Dorel Energy (DEGY.ob) first pump & dump of 2009

February 18, 2009 – Comments (8)

Thanks to 4everlost. See his blog post here.


(ps--it is too small to rate in CAPS, so no free points)




A little late to the pump & dump, SEC?

February 12, 2009 – Comments (14)

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]



Companies with lots of cash tend to outperform the stock market

February 11, 2009 – Comments (18) | RELATED TICKERS: DTG.DL2 , GM , F

Synopsis of a new academic paper, courtesy of CXO Advisory Group blog (you really need to read their blog):   [more]



Why it is time for a flat tax

February 10, 2009 – Comments (21)

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]



Margin interest rates are low! Time to lever up!

February 10, 2009 – Comments (16)

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]



Motley Fool Champion Funds Shows Why Actively-Managed Mutual Funds Suck

February 09, 2009 – Comments (13) | RELATED TICKERS: VTI , VEU , VEA

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]



So you want to be a stock trader? Finding a Trading System & Dealing with Emotion (Part Two of Many)

February 07, 2009 – Comments (45) | RELATED TICKERS: BRK-A , BRK-B , KVPHQ.DL

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]



Stimulis: The Drug for Economies with Performance Issues

February 06, 2009 – Comments (9)

From Reason.TV



What Every Stock Trader or Investor Needs to Know About Regression to the Mean

February 05, 2009 – Comments (10)

[This is the same article posted awhile ago on my 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]



So you want to be a stock trader? (Part One of Many)

February 02, 2009 – Comments (63) | RELATED TICKERS: AAPL , AMZN , SKF

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]



Questions for a Stock Trader

February 02, 2009 – Comments (20)

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]

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