Following Smart Money (Real Shareholders)

My recent “discussions” with fellow InvestorGeek, Steve, about “baseball cards” as a metaphor for stocks have prompted more thinking on my part. Isn’t that what you wanted, Steve? Actually, I’ve already known that trading stocks is very much like trading baseball cards. I’ve already blogged about the same metaphor many times.

Though Steve and I disagree on whether dividend paying stocks are more than just baseball cards, another point of mutual agreement is that fact that most investors cannot affect any changes with their meager number of voting shares. Whether you own 1,000 or 10,000, or 100,000 shares of a company (even penny stocks), your ownership is no more than a drop in the ocean. But there are investors who do affect positive change through shareholder activism. Notable names include Warren Buffett (Coca-Cola), Carl Icahn (Time Warner), Kirk Kerkorian (General Motors), Ed Lampert (Sears/K-Mart). What if you followed them instead?

Invest to Win

On Saturday afternoon, a friend of mine called me and said “You don’t have to watch the Illinois game.” I said, “They lost right.” He said, “They were up 25-7 and the quarterback had 175 yards passing in the first half. He ended up with 190 yards passing for the game because they kept running the ball to milk the clock.” I said. “They were playing not to lose.”

I think all fans hate it when teams play not to lose. Every sports fan wants their team to continue pouring it on, go for the jugular, forget the prevent defense!

Averaging Down: Playing Chicken With Mr. Market

In case you doubt my membership in InvestorGeeks, I love movie trivia! What’s the highlight scene in James Dean’s 1950s cult movie, Rebel Without a Cause? You are right if your answer is the game called chicken, where Dean and his rival each drove a car towards a cliff. There are many variations of the chicken game, but in the movie, the game is won by jumping from the car later than the other player; but still in time to avert the cliff. For investors, it sometimes feels like your rival is Mr. Market daring you to jump out of your car first. The person who blinks first loses, but if you don’t blink, you might lose even more when you fly off the cliff! Sounds familiar?

I bet many investors out there have had the situation where you did all your homework before buying a stock and yet it still tanked 10%, 20% after you bought a position. It happens to the best of investors. What’s a person to do in this situation? Should you buy more? Should you get out early?

Singles Win Games in Baseball and Stocks

Sticking with the baseball theme, this article is going to look at the fascination with people wanting to find that ‘home run’ stock. It’s stupid. Quit doing it. It’s unnecessary and a really bad strategy.

Diversification Myths

One of the things I’ve learned in the past month is that diversification – the “holy grail” of investing, is not what it is cracked up to be. In fact, I’ve come to realize that one of my immediate investing goals should be to reduce the amount of diversification in my portfolio.

I realize that this statement will have many of you yelling and screaming, or immediately unsubscribing under the assumption I am a fool. But hear me out.

Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports – Reviewed

What a treat for investors or business owners! I wish I had this book when I started my first business – it would have certainly sped up my learning process at the time. And for investors who want a good solid background on reading financial statements, it’s hard to imagine a better introduction.

Share Your Chart Reading Skillz on YouTube

I found this interesting site through a link that came up on my Google Finance screen for Crystallex. Ant & Sons Chart of the Week Video: Ant & Sons has rolled out its updated Chart of the Week column with technical analysis video using the latest technology. The video is hosted through YouTube and displayed (more…)

Reading List for the Investing Master

By the time I was 20 years of age I knew about Benjamin Graham, Warren Buffett and Philip Fisher and was a big fan of Malcolm Forbes Sr.. I would do spreadsheets by hand and can you believe it on paper! It was not until 1990 that I converted to my first PC so I had a good 15 years of reading books in order to learn my trade.

Earnings Guidances: Stay Or Go?

Is it possible to predict the quarterly earnings for a business, or a giant multi-billion dollar conglomerate accurately down to a single/narrow cent-per-share figure? A large number of investment analysts out there sure think so! After all, who wants to be the sucker who can only give you a broad earnings range, when “I” can give you the exact figure, so “I” must be better. So pay “me”, and hire “me”! And may god strike it down if that company misses “my” estimate by even one cent! It’s not “my” estimation error, it’s their fault! (Returning back to normal) I’m sorry, I don’t know what came over me just now!

But can you hear the analysts tooting their own horns as they predict earnings? And when did companies think it was a good idea to help these overpaid statisticans along with corporate guidances? Is it a good idea? I’d love to hear from you, but I’ll first share my perpsective!

Getting Started with Margin Trading

I’ve been doing a little research on margin trading, because I’ve recently been using it to float purchases of stock while my sale of some mutual funds clear. So I had a bunch of questions, like “What’s buying power?” and “How much do I need to keep in my brokerage account?” Well, I was once again helped by a terrific tutorial on Margin Trading at Investopedia which answered most of my questions.

I hope you’ll head over there and read it, but let me address some potential questions for you here in case you don’t have time to check it out. (I’ll assume for brevity that you understand what margin trading is)