Browsing articles from "December, 2013"

Monday Morning Reading for the New Year

Dec 30, 2013   //   by Profitly   //   Market, News  //  Comments Off on Monday Morning Reading for the New Year

What I’m watching going into the New Year:

A record run for stocks has investors nervous about 2014 according to MarketWatch. The S&P 500 is set to end the year at a record high with a return of nearly 30% in 2014. (MarketWatch)

It’s no secret that equities did well this year. The S&P 500 has climbed 29% this year, meaning it beat government debt by 32 percentage points. That’s the largest spread since at least 1978, according to data compiled by Bank of America Merrill Lynch and Bloomberg. (Bloomberg)

One hedge fund titan is set to have a record year and take the title of highest paid hedgie. David Tepper of Appaloosa Management could see a $3 billion-plus payday in 2013 (New York Post)

Virtual currency bitcoin is becoming more mainstream. Some small-business owners in New York City are accepting bitcoin currency at their brick-and-mortar shops, The NYP reports. (New York Post)

Twitter is falling for a second consecutive day after hitting all time highs last week. It opened down more than 4% this morning. (MarketWatch)

Here are a few extremely unlikely predictions for 2014, including GM buying Tesla and United Airlines filing for bankruptcy. (Bloomberg)

Friday Morning Reading

Dec 27, 2013   //   by Profitly   //   News  //  Comments Off on Friday Morning Reading

What I’m reading this morning:

U.S. 10-year treasury yield crossed the 3% level on Friday, the highest since July of 2011. A stronger set of economic news and the Fed starting to taper their bond purchases weighed on sentiment. Yields rise as prices fall. (FT)

Shares of social network website Twitter continued to rise. The stock now sits above $70, or about 170% higher than its IPO price of $26. Shares are trading lower this morning, however, after investment firm Macquarie downgraded TWTR to underperform from neutral.  (WSJ)  (Morningstar)

Stocks continue to rally as 2013 winds down. Several economic data announcements, such as new home sales and durable goods orders, pointed to a strong end to what has been a great year for equities.  (WSJ)

Despite a strong year on Wall Street, many individual investors are still sitting on the sidelines and have missed out on the S&P’s 25%+ return.  (WSJ)

Shipping companies saw continued fallout after several packages that were supposed to arrive before Christmas failed to make it under the Christmas tree. Even though UPS had an extra 23 chartered aircrafts, they were unable to handle the roughly 7.75 million packages that were in their network on Monday. (WSJ)

After a 13-year bull run, gold has logged its first annual decline. Not only did it fall, but it fell hard in a year where equities seemed to be the place with the best returns. It is currently down roughly 29% with only a few trading days left in 2013.  (MarketWatch)

Commodities Risks

Dec 14, 2013   //   by Profitly   //   Market, Risks  //  Comments Off on Commodities Risks

A lot of people like to diversify their investments by finding alternative ways of trading. The large world of commodities is one way to do that. Particularly after the 2008 financial crisis, people wanted to put their hard earned cash to work in places other than equities. Corn, coffee, gold, orange juice, oil, and even cattle are different types of commodities that are traded on exchanges. This is a stark change from when commodities used to only be used for hedging, where for example farmers could ensure a certain price for their crops.

Some of these have turned out to be great investments since 2008; gold is up from $850 in January 2008 to about $1200 now. But actively trading commodities is an extremely tricky business and a lot of people don’t really understand what they are getting into.

In case you weren’t aware, most people who trade commodities lose money. A majority of the estimates are in the range of 80 to 95 percent who have lost or who are losing trading commodities. Pretty bleak statistics if you ask me. Yet, people continue to trade commodities every day and more and more people give it a try as well. Fortunately, there are several commonalities in terms of the mistakes that people make while trading commodities, meaning that if you read this and learn from it, you have far better odds of making money.

According to about.com, here are some of the most common trading mistakes:

First is lack of education. Just like I said above, a lot of people don’t know what they are getting into when they start trading commodities. This is just like people that try to trade penny stocks without learning from Tim or the other gurus. Sure, even without education you will get lucky and have a good trade or two, but the odds are not in your favor. Far too many new traders neglect to educate themselves on how to trade commodities before diving in head first. Commodities is a zero sum game, meaning for every person that makes $100, another person lost $100.

Second we have the leverage problem. This is probably the number one issue when it comes to trading commodities. There is huge leverage when trading commodity futures, so a couple bad trades can wipeout the over leveraged trader. Do not trade a contract that is too large for your account size. For instance, do not trade three futures contracts that average a $2,000 move a day when you have a $10,000 account.

Third we have money management. This is another biggie and relates to the tip we previously discussed regarding leverage. You should not risk more than a small percentage on any given trade. There are statistics showing that most professional money managers risk less than 2 percent on any one trade. This becomes more difficult when trading commodities and other futures contracts.

Finally, remember to have a plan. How many times have Tim and I written about having a PLAN before making a trade?! Traders get so lazy and impatient when it comes to this. You have to have a plan.

So now that you have that advice, let move in to the elevated risks of trading commodities. You can’t help but think about risk when you think about trading commodities.

The key reason why commodities are considered risky is that commodities are traded in futures contracts and they are highly leveraged (addressed in the four tips above). A commodities trader normally only has to put up 5 to 20 percent of the contract in futures margin value to control the commodity investment. When you buy one contract of crude oil, you aren’t just buying one barrel, unlike when you buy a stock, you can buy one stock. You are actually buying 1,000 barrels of crude oil when you purchase one contract. That means in crude oil is trading at $90 a barrel, you are buying $90,000 worth of oil, not $90. However, a trader doesn’t need to put up the full $90,000. They would be required to put up a much smaller percentage, around $6,000 in this case. This also means that if oil moves from $90 a barrel to $89, the value of your position would change by $1,000. That’s leverage since you don’t have to put up the full amount. How do you feel about entering a commodity trade with $5,100 in margin and realize that position can move for or against you by about 40 percent every day?

The fact that uneducated traders do this without even realizing what they are getting themselves into is very, very scary. This kind of leverage in the hands of an undisciplined trader is the reason so many new commodity traders lose money. It is commonly discussed in the futures industry that anywhere from 80 to 95 percent of traders lose money in commodities, slightly more than the average number of people that lose money trading stocks. Those educated in trading commodities, such as commodity trading advisors (CTA’s) have a much better track record with managed futures. The popular Barclay CTA Index has CTA’s making an average compound annual return of 11.56% from 1980 to 2009. There were only 3 losing years and the worst was -1.19%.

Emotions in Investing

Dec 10, 2013   //   by Profitly   //   Psychology  //  Comments Off on Emotions in Investing

As Tim and I have written about before, emotions can be a huge road block in becoming a successful trader. “Trading Psychology” is something you must continuously work on in order to improve your success rate. It is very easy to start buying when everyone else does or selling when everyone else does, known as the crowd mentality, but often people make those bets too late. You here about this a lot right now since the major equity indices like the Dow and the S&P are up around 30 percent on the year, which is a phenomenal return when compared to other years. People can taint each other with their behavior and cost everyone a substantial amount of money. This is sometimes called “market contagion.”

I found an article on Investopedia recently and wanted to repost much of its context here.

Contagion often leads to people making irrational decisions and prevents them from making proper evaluations of the investment opportunities that they comes across. As I stated above, people begin doing things like buying into overvalued stocks or selling at the very bottom. Remember, you want to buy low and sell high, essentially the exact opposite. There are arguments to be made for being the contrarian, but think about where you would be if you had made that move this past year? You’d be out a lot of money.

So let’s look at how exactly contagion impacts your brain when investing. Here is the life example that the article on Investopedia gives:

“Let’s assume that Ivan leads a placid life, earning a good living and putting his money into a secure retirement fund that does ok, but does not ‘shoot out the lights.’ Some of his friends are investing money in foreign bonds, and making double the return that Ivan receives from his conservative fund. Ivan’s resistance is strong at this point, and he follows his gut feeling that these bonds are too risky.

However, out of a mixture of curiosity and envy, Ivan the investor starts asking his friends how well the bonds are doing. They tell him that the returns are excellent, and are sure to stay that way. Ivan’s resistance slowly weakens, as he hears repeatedly how much he is losing out on and eventually, he gives in, buying bonds when they are nearing their peak.

Soon afterwards, some crisis occurs overseas, and his friends start to panic – as do many other investors. Once again, Ivan is contaminated and thinks he should also sell out before it is too late. After all, that is what his friends are doing.

Two months later, when the price is half of what it was when Ivan bought in, he is disillusioned and still recovering from his losses. Under normal circumstances, this would be the ideal time to make an initial investment, to get back in to the market or to top up existing holdings, but the emotions of contagion always work in the wrong direction, and Ivan retreats to recover.”

Harsh reality at its truest form. Stories like Ivan’s happen every day. These emotions are automatic and sometimes we don’t even realize that they are taking hold. It causes investors to forget about conventional wisdom and no longer use caution as they should. When people see what they are missing out on, they immediately want to give in and take part in whatever that is. The same happens when their friends start to get scared, as Ivan’s did. When you see a stock up 60% for the year, you obviously want to think it’s a great stock and that you should get in, but it may be overvalued at that play and begin taking a turn for the opposite direction.

Fear is one of the most powerful emotions. Thus, downward pressure Is more powerful than upward. Negative events, whether macro or micro, will generally bring out strong and faster responses from traders than a positive event would. So, when markets take a turn for the worse, the contagion of panic is far worse than the pressure people feel to buy when there are positive events.

The article goes on to note that there are some positives that comes from contagion. People tend to imitate those that are successful, meaning they will work harder and strive to better themselves in order to have that same level of success. This natural emotional process thus has it’s pros and cons much like most things in life. Just note that it seems to do more harm than good when it comes to investing.

In order to fight this, you have to try to be “emotionally neutral.” make your investments with rationality and a thorough thought process. Do not buy XYZ because your friend did a week ago and is now up 20%. Fear, excitement, and other similar emotions are your enemies when it comes to putting your money to work. Make sure you try looking at both sides of the story. What are the reasons to buy this stock, what are the reasons not to buy this stock. What price seems to be a fair value when compared to its peers, what are some of the macro and micro level risks that could make this stock fall and what are some of the positive events that could make the stock rally?

Superman and his super alerts

Dec 7, 2013   //   by Profitly   //   Profitly  //  Comments Off on Superman and his super alerts

How the Man of Steel Made hundreds of thousands of dollars this past week:

So as many of you already know, Superman has been on FIRE. His trade alerts have been outstanding, and his students are quickly learning how to trade stocks the right way. So many people try to figure out how to do things like day trade without following the best stock traders and learning from them. That is a fools game. Sure, after several years and big losses you may figure it out, but life is short so why waste your time trying to learn how to trade professionally on your own when you have gurus like Superman to learn from?

Here are some of his biggest winners from just last Friday to this Friday, along with his comments on each:

First we have OCLS (Oculus Innovative Sciences, Inc.), where he banked $15,405. His entry comments were “FDA approval…mental loss 2.5….target 3.5-4 plus if works” and exit comments “SUPER trade like $16k!!”

Second we have a $7,275 profit on CAMT (Camtek Ltd.). His entry comments on this super trade were: “TRADE – ….chart rules apply for a long……” and exit comments “OUT TRADING SHARES FOR NOW may add back.”

Third we have a $8,413 profit on BOSC (B.O.S. Better Online Solutions) on Monday. His entry, “Trade on good numbers target 6-8 and mental loss 5.20 ish.” and exit comments “SUPER TRADE !!!!”

Fourth we have a massive $23k win on ZOOM (Zoom Technologies, Inc.). His entry comments were, “DONT CHASE – SWING – LOW FLOAT – merger with leading china mobile ad co….target 5-10 if it works and risk 2.5″ and exit “SUPER TRADE – will look for new entry or more info from company — i am shorts will bash all weekend and i do not see 8-k yet.. so taking profit for now.”

So you all thought $23k was a big day right, well, wait until you see number five. He banked $140k the day after Thanksgiving! No, you didn’t read that wrong, he banked more than $100,000 on ONE trade! His entry comments on this epic trade were, “Swing – downside 1.8 and target 4-10 …unkown 3d printer play…according to cc notes they have 3d printer for PCB market that is 700-800mm coming out next year….good balance sheet….profitable” and exit comments “ALl out – SUPER Trade !! Will revisit with more info.”

Remember, these are all verified on Profitly. That’s the beauty of that site and all of the gurus on it, you have to verify the trade. You can’t just say you made that much on a trade and hope people believe you. There is no way around it and you can’t fake profits like sooooo many people on other websites do. And if you want more proof that these guys are the real deal, head on over to Investimonials. One review for Superman just this month is called Low Float Rippers and says:

“Super is the king of alerting low-float stocks and making them rip $1.00 after his alert. He can make a stock move so fast it sets off a circuit breaker and gets halted. He has about 400 people in the chatroom and when he buys, they buy. I have made really good money on his alerts but you have to be careful not to chase them! He tells the chatroom repeatedly not to chase, but people do it anyway and get upset when they lose $. This is just part of the deal. Don’t chase. Wait for them to come back to you, if they don’t, wait for the next alert. He alerts a few trades almost every day. I would probably never take a really large position of his alerts just in case of a halt or a huge washout. Overall, Super has tight stops and profit targets of 10x his stop limit. I take smaller positions and have gotten as much as 74% profit from his trades.”

Another review from just the month before is called Solid Trader and Good Service and says:

“He does a lot of low float stocks and they move real fast. Recently, he played ARCW (Arc Wireless Solutions, Inc.) and that was and still is a great win. Mainly long, not much shorting, but it’s good stuff. Kind of expensive compared to similar services but worth it if you take the time to understand.”

He has a total of 14 reviews on Investimonials and only 2 of them are short of the full five-star review. In other words, more than 85% of people that have reviewed the service have given it a huge thumbs up and recommend it to others.

 

November Profitly Highlights

Dec 3, 2013   //   by Profitly   //   Profitly  //  Comments Off on November Profitly Highlights

Some of the gurus on Profitly have been making an absolute killing in the markets lately. Tim made a video detailing the $140,000+ profit that Superman had last week (click here), and Superman posted the verified trade on Profitly. His comments for his trade on CAMT (Camtek Ltd) were “(entry) Swing – downside 1.8 and target 4-10 …unkown 3d printer play…according to cc notes they have 3d printer for PCB market that is 700-800mm coming out next year….good balance sheet….profitable. (exit) All out – SUPER Trade !! Will revisit with more info.” He entered the trade on the 22nd at $3.04 and exited on the 29th at $4.58, more than a 50% gain with a total profit topping $140,000! Basically, he made a doctor’s annual salary in a week.

CAMT (Camtek Ltd) has 435 verified trades on Profitly, with 65% of them being profitable and average gains of $1,300. Total profits on this stock total $350,000.

camt

This isn’t the only trade worth highlighting either. Another top guru on Profitly is Lx21. Both Superman and he were speakers at Tim’s annual pennystocking conference this year, and they continue to prove why they were asked to make presentations at the event.

Lx21 shorted OXBT (Oxygen Biotherapeutics, Inc) on November 6th at $9.96 and exited the trade the next day at $7.26 for a 27% gain. His profit on this position was a whopping $338,869. It would take most people a few years to earn that amount of money, and Lx21 did it in less than 48 hours. That’s pretty crazy. His comments were “I alerted the entry and exit real time in the Investors Underground chat room.” AKA, if you had already signed up for the Investor Underground newsletter, you would have known about him entering the trade in real time and could have earned a profit yourself.

There were 808 verified trades on Profitly in OXBT, with 61% of them being profitable and average gains of $1,200. Total profits were $470,000.

oxbt

OXBT (Oxygen Biotherapeutics, Inc) and CAMT (Camtek Ltd) are currently the top two tickers in terms of user’s total profits on Profitly for the past 30 days, with FNMA, NURO and OXGN rounding out the top five. Profitly users wkulmann and Luke had the largest gains in FNMA this past month, while guru Lx21 had the largest profits in NURO and OXGN in that same time frame.

So on just two of their trades during the month of November (they both made far more than just these two, but they are two of the best ones that they have had so far this month, so I am highlighting them) they made nearly half a million dollars. Wow. Be sure to check out more of their trades on Profitly, they had a fantastic November, and I am sure it will be followed by an even better December, which is already off to a great start!

Superman alerted his subscribers to buy BOSC (B.O.S. Better Online Solutions) when it was in the low $5’s. It made an intraday move to more than $10, a 100% winner and it was only a Monday!

Keep in mind that in all of their trades, these top guru’s have executions plans before they take a position. For example, on his BOSC trade, Superman had entry comments of “Trade on good numbers target 6-8 and mental loss 5.20 ish.” The stock didn’t fall below $5.20, so he did not exit due to a mental stop loss, and he did get out at $7.50 which was right between the $6 and $8 numbers he had listed in his entry. Sure, he didn’t hold on all the way to the stock’s high of more than $10, but he still made more than a 20% gain and was in the stock during the majority of its run up. You’ll hear Tim talk about how he isn’t a perfect trader either, and that the important part is to take your profits before they turn in to losses. BOSC could easily open up below $5 tomorrow, and then anyone that sold in the $7 range with Superman will be glad that they didn’t hold on. They’ll also be glad they didn’t chase it and buy it at $9 only to hold on and see it fall below that level.

According to Profitly, there are 142 trades on BOSC, with 70% of them being profitable and an average gain of roughly $800. Total profits were around $70,000. Lx21 and Superman also traded this stock last year, where they netted $13,400 and $10,550 gains respectively. Noticing a trend in who always has the largest profits??