2014 Outlook
First of all, this is NOT a prediction post. I used to post them for fun in the past, but that's all they were...for fun. I'm not a big fan of predictions because 1) NO ONE knows where the market it going and 2) We are all allowed to change our minds based on the information the market gives us. As Scott O'Neil says: "We are not in the prediction business, we are in the interpretation [...]
Profit Taking In January?
90% of your success as a trader should come from the work, research and effort you put in OUTSIDE of market hours. That's why I recommend traders do post analysis of their work and study market history. Since 2013 was a very strong year for the markets, we could possibly see some profit taking in January as investors put off 2013 tax gains by selling in January 2014. I remember this happened in other recent strong years. [...]
The American Dream
“In 1923, seven men who had made it to the top of the financial success pyramid met together at the Edgewater Hotel in Chicago. Collectively, they controlled more wealth than the entire United States Treasury, and for years the media had held them up as examples of success. Who were they? Charles M. Schwab, president of the world’s largest steel company; Arthur Cutten, the greatest wheat speculator of his day; Richard Whitney, president of the [...]
A Story About Short Selling
Back in 1999, there was an Internet company called CMGI. For those of you who remember, the stock was INSANE! Split adjusted, it went from 0.30 cents to $120. After this happened, I spoke to a very sharp friend of mine who was managing a $2 Billion hedge fund. His exact words were: "Joe, this stock is a piece of shit and it's going back to $1." He was dead right! The only problem is...the [...]
Stories From 1999
I recently wrote a blog post titled "This is NOT a Bubble!" At the end of the post, I said I would tell a few stories from 1999 to emphasize my point that we are NOWHERE CLOSE to the bubble and the euphoria we saw back then. Enjoy! - Back in 1999, many of the companies that were trading at $100-$1000 had earnings of less than 0.50 cents per share. Some had no earnings and [...]
The Market’s Pattern This Year
Here is a pattern I have noticed in the market about 6 or 7 times this year: 1) The market goes on a 3-6 week run. 2) The run usually stalls when we get extended from the moving averages, bullishness increases (based on many sentiment measures), and active investment managers are aggressively long the market (based on the NAAIM survey). 3) Leaders start to break down, the market starts to correct down to (or below) [...]