Archive for November, 2008


Investor Shares

Filed Under: Investment Strategy by Bill — 1 Comment
November 26, 2008

I’m not one to promote putting all your money in a burlap sack with a big bold money sign $$ on it and handing it on over to the money manager, hedge fund trader, investor guru, or crazy day trader uncle of your choice.  However, sometimes it makes sense to buy into some of their funds or methods in just the same way you would diversify your portfolio between two stock sectors. 

Want some Warren Buffet stock picks?  Buy some Berkshire Hathaway (BRK.A) or you really believe the Turtle Traders had something going…figure out how many shares of Turtle Traders you’d want to buy and set aside that percentage of your portfolio and trade it that way.  (You’ll have to do your homework of course.) 

Buying into these investor shares will expose you to a wider investment style, investor shares should reduce your overall portfolio risk by reducing the amount of related returns, and hopefully improve your investments CAGR.

You can treat these investments like other investments.  If one style has a serious run over the other and your investment rules (You’re keeping that journal right?) say to keep your portfolio balanced, you can redistribute from one investment or investment strategy over to the other.  If you are a momentum style investor and you’re day trading is kicking your LEAP strategies butt then transfer the money from the loser to the winner for the time being.  As always the key is knowing what works for you then giving yourself the most choices possible to find the winning strategy.

I recommend taking time to read classic investment works, current popular books, blogs, news, etc and invest in the styles that work for you as well as the stocks.  You might even save yourself a hefty fee for just throwing that money to someone else and learn something in the process.

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Caterpillar (CAT) Heavy Equipment Time

Filed Under: Stock Pick of the Day by Bill — 9 Comments
November 24, 2008

O.K. my stock pick of the day has been more like stock pick of the week, but hey if I picked stocks  I only liked for the day, the opportunity would usually be past before I ever got the post up.  Today’s stock choice is Caterpillar.  Here’s my long term view of the stock:

http://invest.kleinnet.com/bmw1/stats40/CAT.html

While I normally choose stocks that have well fallen below their average CAGR, Caterpillar at 7.9% has been very steady for 40 years with only one period in the 1980′s where it low it’s -2RMS.  In the late 70′s and early 80′s interest rates were sky high and no one was loaning for serious construction or capital improvements, this would have a serious impact on Catterpillar and I don’t see the same conditions today.  The speculative portion of the play, which I’m going to keep listening to President Elect Obama’s comments, is that he’s going to kick off a New New Deal (Newest Deal?) and I see a lot of government sponsored construction projects using a lot of heavy equipment .  Maybe a nuclear plant or two, new highways, some federal sponsered alternative energy farms, who knows exactly what, but this government will want to spend jobs and keep unemployment low.  I see this combination being very good Catepillar.

The dividend at 1.6% is a little low for my taste for such a mature company, but at only a 25% payout ratio, at least it is safe.  The 5 year PEG is at 0.51, I personally like PEGs under 1.0 so even if earnings are cut in half (not completely out of the question these days) the stock is still fairly priced.

Looking at the charts, we’re starting to flatten out with the 50 day Simple Moving Average which is currently priced at about $45, however there is a lot of overhead room if it can get crossed with any momentum.  The RSI is sitting neutral and the MACD has been negative for months so I don’t see it happening yet, but I’m going to keep an eye on it.

This week my plan is to keep finding ways to tighten my belt and throw more money at the market, both because I think there are great deal with no real sign of when the market will turn so I’ll just keep dollar cost averaging while it’s low, and to do my civic duty of helping holding the market up.  (With my vast wealth of course)

Good luck this week.

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Stock Symbol

Filed Under: Glossary by Bill — 2 Comments
November 22, 2008

New York Stock Exchange (NYSE)

These stalwarts of our financial institution (hey quit snickering) are only allowed on the New York Stock Exchange if they have shown consistent earnings over $5 million and have at lease 2 million shares available for trade.  Well heck, I’m pretty sure there’s some kids making that much off google ads, but who am I to set the standards.

NYSE stocks can be named using 1 letter like ATT (T), two letters like Boeing (BA) or three letter stock symbol like Lowes (LOW).

National Association of Securities Dealers Automated Quote system (NASDAQ)

The NASDAQ has less requirements to get listed so your choices (regardless if you think this is a good thing or not) is much more varied on the NASDAQ.

NASDAQ stocks symbols have four letters to distinguish them from their NYSE counterparts.  Microsoft (MSFT) is an example of a NASDAQ stock symbol.  You tend to find some humorous names in the NASDAQ universe, I just don’t suggest you invest simply because of a catchy name, however there may be some trading strategies where that could be of assistance.

Options Listings

Options are named using a smart system to give you all the key information about the option in one naming string. 

First is the stock symbol exactly how you see the stock ticker if it’s 3 letters or less.  The four letter ones have a 3 letter variation.

The next part tells you the month and if it’s a call or put.  Here is the table of letters:

 So a Pepsi Put ending in May would look like this at this point: PEPQ

The final part of an option symbol is the strike price.  Here’s the table:

So if you had a Pepsi Put with an expiration in May with a strike price of 55 it would read as: PEPQK

Hopefully the alphabet soup is a little less confusing now.

Best of luck out there.  Keep up the stock market 101 learning.

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Stock Tip Trading

Filed Under: Investment Strategy by Bill — 2 Comments
November 19, 2008

Have you ever hung out by the water cooler and had Biff telling everyone how fantastic stock so and so is and it’s the best investment he’s ever made and you’re an idiot if you don’t buy too.  Well unless Biff brought some stock records from the future with that sports almanac then all you’re doing by listening is trusting Biff’s a smarter, better investor than you are.  In most cases I’d highly doubt that, if you’re still stock tip trading than you need to learn to fish for yourself.  Here we’ll never give stock tips without tying a lesson or two with it.  We have no interest in having your stock universe limited to what someone else tells you about.  So grab an energy drink or a cup of coffee, read around the site, and feel free to ask any questions.  I’d much prefer to write about what you out there want to know.

Not to say you can’t use stock tip trading at all, following Cramer or the news you may be able to catch a momentum wave early, however have it as part of a more well rounded stock trade plan.

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