Finally found the limits of zoom space. It's time to start level 2.
This now makes a lot of sense. Before, when I thought zoom space was only a few clicks deep, starting a new level every few clicks looked impossible. But now that I know zoom space is quite deep, I can do the whole site with two or three levels. That's big.
Friday, January 27, 2012
Tuesday, November 22, 2011
charts or fundamentals?
I loooove charts. I say, use them.
Fundamentals are cool, too, but such a chore!
I'm an impulsive type. I'm sticking with the charts.
But, can you actually find a good trade with charts? Isn't it all just an illusion? Doesn't it look like there are patterns, but actually they aren't meaningful?
What the actual truth is, I can't really say. I'm actually a failed investor, but I've stuck with it, reviewing hundreds of charts a year for 30 years, and I'm starting to feel I understand what's going on.
And it makes me mad that people are being told they can't make it in the stock market. What are they telling you? That you have to risk too much money? I'm telling you you only need to risk a little money. Are they telling you it's all a big scam and only crooks succeed in it? No! The stock market provides capital for all sorts of wonderful industry. Creating capital is incredibly productive. Your tiny investment creates millions of dollars worth of valuable goods. You are being rewarded for being smart with your investments: you chose really productive places to put your savings, which means more abundance for everybody. Finally, is it, as they say, impossible for you to do well? Are you just not smart enough to beat the market? (Nobody is, right? Except for a few, right?) Is doubling your money in a year way, way too much to expect? Well, I think you're smart enough. It's not that complicated. You just need some basic insight. Read on! And, is doubling your money a ridiculous thing to expect? Well, do some kind of survey of stock charts. Make a list of companies you know ... GE, Apple, Starbucks, etc. Look at a ten year chart for each company. How many of them, during some part of those ten years, didn't double?
Um, well, Apple, in the last 5 years (quickly found a chart) doubled in a year, then doubled again in two years. GE fell by 80%, but then doubled in a year. Starbucks fell by 80% but then doubled in a year and doubled again in two years.
Well, sure, these are famous companies, and they're famous for a reason. Buy my scanning course, and learn how to create lists of arbitrarily selected stocks - or just figure it out yourself. Look at each chart on a list, and see how many have doubled at some time in the past. How many have doubled several times. Bet you it's a lot of them.
Stocks double and quadruple and go up ten times with great regularity - not ephemeral whilothewisps but massively traded great companies. They also go down 50%, 75%, 90%, with great regularity. And they do that and then go back up with great regularity.
There's a truism in the markets - goes with the truism that you are safest expecting a modest return, and that you aren't smart enough to beat the markets - that timing the markets is dangerous. Wrong! Timing is everything. Buy my timing course next (but also buy my scans course).
Fundamentals are cool, too, but such a chore!
I'm an impulsive type. I'm sticking with the charts.
But, can you actually find a good trade with charts? Isn't it all just an illusion? Doesn't it look like there are patterns, but actually they aren't meaningful?
What the actual truth is, I can't really say. I'm actually a failed investor, but I've stuck with it, reviewing hundreds of charts a year for 30 years, and I'm starting to feel I understand what's going on.
And it makes me mad that people are being told they can't make it in the stock market. What are they telling you? That you have to risk too much money? I'm telling you you only need to risk a little money. Are they telling you it's all a big scam and only crooks succeed in it? No! The stock market provides capital for all sorts of wonderful industry. Creating capital is incredibly productive. Your tiny investment creates millions of dollars worth of valuable goods. You are being rewarded for being smart with your investments: you chose really productive places to put your savings, which means more abundance for everybody. Finally, is it, as they say, impossible for you to do well? Are you just not smart enough to beat the market? (Nobody is, right? Except for a few, right?) Is doubling your money in a year way, way too much to expect? Well, I think you're smart enough. It's not that complicated. You just need some basic insight. Read on! And, is doubling your money a ridiculous thing to expect? Well, do some kind of survey of stock charts. Make a list of companies you know ... GE, Apple, Starbucks, etc. Look at a ten year chart for each company. How many of them, during some part of those ten years, didn't double?
Um, well, Apple, in the last 5 years (quickly found a chart) doubled in a year, then doubled again in two years. GE fell by 80%, but then doubled in a year. Starbucks fell by 80% but then doubled in a year and doubled again in two years.
Well, sure, these are famous companies, and they're famous for a reason. Buy my scanning course, and learn how to create lists of arbitrarily selected stocks - or just figure it out yourself. Look at each chart on a list, and see how many have doubled at some time in the past. How many have doubled several times. Bet you it's a lot of them.
Stocks double and quadruple and go up ten times with great regularity - not ephemeral whilothewisps but massively traded great companies. They also go down 50%, 75%, 90%, with great regularity. And they do that and then go back up with great regularity.
There's a truism in the markets - goes with the truism that you are safest expecting a modest return, and that you aren't smart enough to beat the markets - that timing the markets is dangerous. Wrong! Timing is everything. Buy my timing course next (but also buy my scans course).
how to avoid risk
How much money do you need to play and maybe win?
It depends on the return you expect from a typical trade.
If you only expect a 10% annual return, you can expect to double your money in about 10 years. Let's say your goal is to have $100,000 in ten years. (This is by investing in stocks.) you need to invest $50,000 today.
What if you expect to double your money in 1 year. You can almost multiply your money by 10 in 3 years, so you can multiply your money by 10 3 times in 10 years. Let's see, $100x10(3years)=$1000x10=$10,000x10=$100,000. Spot on target! So, if you can double your money every year, you can turn $100 into $100,000 in ten years.
Do you have $50,000 to risk in the stock market? If you put the money in, it's at risk.
Do you have $100 to risk in the stock market?
Yes, you do. You can play.
But you don't want to play and lose, even if you're only risking a little. Can you, a true non-expert, play this game and win. I really think you can.
Yes, I recommend setting your sights high, only risking a little, and applying some basic smarts, as a recipe for security: security from loss in the markets, and security from future poverty.
It depends on the return you expect from a typical trade.
If you only expect a 10% annual return, you can expect to double your money in about 10 years. Let's say your goal is to have $100,000 in ten years. (This is by investing in stocks.) you need to invest $50,000 today.
What if you expect to double your money in 1 year. You can almost multiply your money by 10 in 3 years, so you can multiply your money by 10 3 times in 10 years. Let's see, $100x10(3years)=$1000x10=$10,000x10=$100,000. Spot on target! So, if you can double your money every year, you can turn $100 into $100,000 in ten years.
Do you have $50,000 to risk in the stock market? If you put the money in, it's at risk.
Do you have $100 to risk in the stock market?
Yes, you do. You can play.
But you don't want to play and lose, even if you're only risking a little. Can you, a true non-expert, play this game and win. I really think you can.
Yes, I recommend setting your sights high, only risking a little, and applying some basic smarts, as a recipe for security: security from loss in the markets, and security from future poverty.
It's clear at a glance that stock charts look like ocean waves. But are they really like ocean waves?
In the sea, you'll have a thousand waves, one after another, that are mostly the same height and depth. Isn't the stock market quite irregular, compared to that? Sure, it's easy to find several similar waves in a row, in charts, but then prices move to new levels, either up or down. The patterns don't hold up.
But think about this: If you were on the shore, and you measured each wave for a whole day, your chart would go up and down and up and down, but then it would start to go down more each time, so, really, your chart would go down and down and down, until, actually, the tops of the waves might be below the bottoms of earlier waves. We're talking about tidal action, here. And you could tell when low tide was reached, because the waves would start to all be about the same height, and the same depth, instead of each one being lower than the last. The bottom of a big wave - the tidal cycle - is sort of round and flat.
OK, you've measured waves for a whole day. Your chart shows wave heights and depths going up a little, and then going down down down, rounding off, then going up, up, up, and now they've rounded off in to a top and started to go down again. Where are you going to look for the next low tide? You know that tides, too, vary in height and depth. The next tide is likely to be slightly different from the last one. But, pretty much, you can predict the level of the next low tide, and, when it arrives, you'll see the evidence of it, the rounding off of it.
And you'll see bottoms in the bottoms, the bottoms of waves at the bottom of a tidal cycle. You're riding in a little boat, and the waves are going up and down - ever heard of a stock letter that makes you sea-sick before? - up and down. You can feel the boat going up a wave ... ah, we're coming to the top, whee, down we go, boom! That's the bottom! Well, you know it's low tide, so your job is to buy at the bottom of a wave. You've now bought at the bottom of a bottom.
So, look at the charts. The illustration is quite typical. In a ten year period, there's been a big wave, up and down. That's your tidal cycle. It's quite convincing. It's pretty easy to see the bottom rounding off. We just need to buy and wait for the next high tide.
The wave is rounding off at the bottom, and the bottom seems to be at 8. You can clearly see the low of an earlier tidal cycle, seven years ago, also at 8. You might note that that low was sharp and sudden, not rounding off like this one is. That's evidence of where we are in an even longer cycle. Does it affect our decision-making, here? I'm inclined to say it doesn't. It could be a useful thing to think about, though. If you can learn when to expect a sharp-bottomed wave, by analyzing longer cycles, you might be able to buy at some of those sharp bottoms.
Right, now, though, we're in a rounded bottom type pattern, at an established longer cycle low. This looks good. Buy at a bottom in a bottom, that's the rule. Look, the long term cycle high is 34. The recent and past long term cycle lows were 8. We're just past the top of a wave in the long term cycle bottom, and even headed down a little. Let's say we're at 12. Even if the next long term cycle tops out well below the last one, it only has to go to about 25 to double our money ... after commissions.
I equate this with Graham's margin of safety. The next long term wave is likely to go to 34, and we only need to ride it to 25 to achieve our goal in the trade.
Don't buy higher than the last price on this chart, though. There's no sign of a bottom in the short term wave we're in, yet. It's a safe bet you can easily buy it at the last price, and not higher.
See, the key mistake everybody's making is, they see something going up, and say, oh, I need to buy it now!. No! You need to buy when something is going down!
Are these long term cycles rooted in legitimate business? Yes! The stock is available at a bargain price. The company is run by purposeful experts, determined to succeed. Succeed they do. The price of the stock goes up. The early investors are well rewarded. They are interested in selling. The company's successes give it legitimacy as an investment vehicle. Larger players decide to cash out some of those early investors. But then more and more of the early investors cash out. The market starts to say "uh uh uh". We're not cashing out any more of you guys. It's time to get some new investors in here. We're dropping the price. So the stock becomes a bargain again.
Another worry is, is this company going out of business? You can really look at the chart and tell. Is trading robust. At this long cycle low, is the stock moving up and down with vigor? At its earlier long cycle lows, was it vigorous? Did it produce a strong price surge, and a sustained top? But you can take a look at the fundamentals, too. Is the company selling $100,000,000 worth of something, or, on a regular basis, $10,000,000 worth? Is it making some money, too? Or is it in a very dynamic industry (i.e., drugs)? Ten million dollars of sales every year is worth a lot of money, and getting there took a lot of doing. The people running these companies have a lot at stake, and they're good, too. They're going to work hard, and produce another wave of successes, and of profits for you.
Just kind of an odd note to wrap up with: I'm sort of suggesting buying and selling near the bottom. Maybe that's silly of me ... in fact, almost certainly it is ... why not ride a cycle to near it's top, then sell right away when it gets there, and look for something at a cycle bottom to invest in anew? ... but the idea of going for a double, cashing out, and looking for another one, is kind of fun. What I'm wondering is, what kind of role would we be playing in the markets? You're like a wholesaler. Through astute buying, you got a bunch of this stock at a really good price. Now, a retail buyer realizes a long cycle bottom is in place, and wants to get in on it. You say "I'm getting a good profit, I'll sell you some shares." You're a retailer. That's a service to people.
The people selling at the bottom are like the earth in which the crops grow, that sustain us. Innocents, sheep. Mostly they toil and accept a small reward, a decent life of some kind. Their happless wanderings into stocks haven't hurt them too badly, and haven't helped them either. Now, you're there, offering a little money for their shares, and they say "ok". Mostly, they are there, saying, "will anybody give me anything for these shares?" You happen to be there, and you offer them something, and they take, and say thank you. It's a bit hard hearted of you, but you've got a job to do, and you're not being evil about it. You're just harvesting the bounty of the earth, which would lie in the fields rotting, if you didn't.
No? You're not sure you agree about the ethics of this? What about if you think about it this way: What if you are doing it for a great reason? I mean, I think enjoying yourself and being secure and free is a great reason to do something, but, if that's all you do, you may land in trouble, eventually. You've got to bring lots of people along for the ride, when you hit the big time. Do something interesting with a lot of your money. Be ambitious. Be somebody. Be a scholar. Be a philosopher. Find people doing crazy, out there things to help lots of people have great lives, and invest in their projects. Be a leader and promote ideas. Build wonderful things and give them to people, or sell them cheap. Become someone who can sell things cheap and make a lot of money doing it. Host wonderful parties for thousands of people. Or for dozens. Or for your grand kids. Learn the value of frugal living - the absolute terrificness of it - too. Keep the same house for years and years, and truly make it your own. Plant trees in the garden. Turn off the stupid ac and suffer the heat in the summer, and, in the winter, make a herculean effort and heat your house with clean burning kindling in a Rumsford fireplace. Collect a set of dishes and cookware to last your whole life and delight everybody. Choose your furniture well and then keep it for 20 generations. Meditate on everything that's old and beautiful. Teach these methods to others.
is there money?
Looking at a random selection of stocks, how many have, during the time for which a chart is available, doubled after making a predictable bottom?
Recording format:
fail/succeed: symbol, bottom date, predictable bottom, earlier high, later high, fail/succeed
open order: symbol, predicted bottom, earlier high, last price, signal date, open order
open trade: symbol, trade date, predictable bottom, earlier high, last price, open trade
vsnt, 2005, 2.5, 30, 30, succeed
vly, none, none, none, none, no pattern, 7.5, 21, 12
ve, 2003, 20, 30, 90, succeed, 20, 90, 10 (fail)
valu, 2005, 30, 75, 59, fail,
valu, 2009, 20, 55, 35, fail
valu, 2011, 13, 55, 13, open trade
unam, 2003, 3, 7, 14, succeed
unam, 2008, 7.5, 11, open trade
umpq, 2002, 4, none, 30, succeed
umpq, 2009, 8.5, 30, 16, fail
umpq, 7, 30, open order
ubs, 2002, 7, none, 55, succeed
ubs, 2008, 20, 55, 22, fail
ubs, 7.5, 55, 12 2009, open order
tyw, 2005, 13, none, 16, fail
tyw, 2007, 12.5, 16, 13.25, fail
tyw, 2009, 5.5, 16, 12, succeed
tyw, 5.5, 16, 11, 2009, open order
ttf, 2002, (3.5), (5.5), 12, succeed
ttf, 2008, 3.5, 14, 14, succeed
ttf, 3, 14, 12, 2008, open order
tkf, 2004, 5, none, 30, succeed
tkf, 2007, 16, 30, 16.5, fail
tkf, 2009, 5, 30, 19, succeed
tkf, 5, 30, 12, 2009, open order
tcrd ---
tbi, 2003, 6, none, 26, succeed
tbi, 2009, 6, 28, 16, succeed
tbi, 6, 28, 12, 2009, open order
taxi, 2003, 3.25, 9, 13, succeed
taxi, 2008, 6, 14, 12, succeed
taxi, 2009, 3.25, 14, 12, succeed
taxi, 3.25, 14, 12, 2009, open order
sybtp ---
surw, 2005, 20, 55, 30, fail
surw, 2009, 7.5, 55, 15, succeed
surw, 7, 55, 12, open order ***
sunhv ---
strl, 2004, 4.5, none, 30, succeed
strl, 7.5, 30, 12, open order ***
stfc, 2003, 14, none, 38, succeed
stfc, 2008, 17.5, 40, 20, open trade/fail
stfc, 2011, 12.5, 40, 11, open trade
stel, 2003, 8-28 in 5 y, succeed
stel, 2008, 13, 28, 15, open/fail
stel, 8, 28, 2009, open order ***
stbc, 2002-2005, 12 to 24, (succeed)
stbc, 2007, 13, 24, 17, fail
stbc, 3.75, 24, 12, open order
ssw, 2005-2007, 18 to 37, (succeed)
ssw, 2009-2011, 5 to 20 (succeed)
ssw, buy today at 11, buy if available at 7, 35/20, open order **
srdx, 2004, 20 (clear signal), 40, 55, succeed
srdx, 8, 55, 2010, open order ***
sos ---
skyw, 2003, 9, 26, 34, succeed
skyw, 2009, 8, 32, 18, succeed
skyw, 8, 34, 12, open order ***
Recording format:
fail/succeed: symbol, bottom date, predictable bottom, earlier high, later high, fail/succeed
open order: symbol, predicted bottom, earlier high, last price, signal date, open order
open trade: symbol, trade date, predictable bottom, earlier high, last price, open trade
vsnt, 2005, 2.5, 30, 30, succeed
vly, none, none, none, none, no pattern, 7.5, 21, 12
ve, 2003, 20, 30, 90, succeed, 20, 90, 10 (fail)
valu, 2005, 30, 75, 59, fail,
valu, 2009, 20, 55, 35, fail
valu, 2011, 13, 55, 13, open trade
unam, 2003, 3, 7, 14, succeed
unam, 2008, 7.5, 11, open trade
umpq, 2002, 4, none, 30, succeed
umpq, 2009, 8.5, 30, 16, fail
umpq, 7, 30, open order
ubs, 2002, 7, none, 55, succeed
ubs, 2008, 20, 55, 22, fail
ubs, 7.5, 55, 12 2009, open order
tyw, 2005, 13, none, 16, fail
tyw, 2007, 12.5, 16, 13.25, fail
tyw, 2009, 5.5, 16, 12, succeed
tyw, 5.5, 16, 11, 2009, open order
ttf, 2002, (3.5), (5.5), 12, succeed
ttf, 2008, 3.5, 14, 14, succeed
ttf, 3, 14, 12, 2008, open order
tkf, 2004, 5, none, 30, succeed
tkf, 2007, 16, 30, 16.5, fail
tkf, 2009, 5, 30, 19, succeed
tkf, 5, 30, 12, 2009, open order
tcrd ---
tbi, 2003, 6, none, 26, succeed
tbi, 2009, 6, 28, 16, succeed
tbi, 6, 28, 12, 2009, open order
taxi, 2003, 3.25, 9, 13, succeed
taxi, 2008, 6, 14, 12, succeed
taxi, 2009, 3.25, 14, 12, succeed
taxi, 3.25, 14, 12, 2009, open order
sybtp ---
surw, 2005, 20, 55, 30, fail
surw, 2009, 7.5, 55, 15, succeed
surw, 7, 55, 12, open order ***
sunhv ---
strl, 2004, 4.5, none, 30, succeed
strl, 7.5, 30, 12, open order ***
stfc, 2003, 14, none, 38, succeed
stfc, 2008, 17.5, 40, 20, open trade/fail
stfc, 2011, 12.5, 40, 11, open trade
stel, 2003, 8-28 in 5 y, succeed
stel, 2008, 13, 28, 15, open/fail
stel, 8, 28, 2009, open order ***
stbc, 2002-2005, 12 to 24, (succeed)
stbc, 2007, 13, 24, 17, fail
stbc, 3.75, 24, 12, open order
ssw, 2005-2007, 18 to 37, (succeed)
ssw, 2009-2011, 5 to 20 (succeed)
ssw, buy today at 11, buy if available at 7, 35/20, open order **
srdx, 2004, 20 (clear signal), 40, 55, succeed
srdx, 8, 55, 2010, open order ***
sos ---
skyw, 2003, 9, 26, 34, succeed
skyw, 2009, 8, 32, 18, succeed
skyw, 8, 34, 12, open order ***
Monday, November 21, 2011
a sample search
I've had to look through quite a number of these 11 to 12 dollar stocks to find one I'm at all satisfied. I want a really convincing historical low to trade from, and historical high prices that at least aren't barely my target. I want to feel the stock will go to my target fast and without hesitation when I buy it. The one I've finally found just meets these requirements. There's no history of truly high earlier prices, but there's a pretty solid history of historical highs a bit above my target. The historical low is quite dramatic, with a spike low and up and down action. I'm going to try to buy at the spike low. There will probably be a wait to get that price, but I think it'll be reached eventually - within months, say.
wbco 2011 11 21, buy at 6 (not above).
wbco 2011 11 21, buy at 6 (not above).
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