Archive for April, 2011

Only Hold Stocks on the First Day of the Month

I was reading a blog post by James Altucher who commented on the trading strategy of buying on the last day of the month, and selling on the first day:

It’s probably the most important trading day of the month, as inflows come in from 401(k) plans, 1RAs, etc. and mutual funds have to go out there and put this new money into stocks. Over the past 16 years, buying the close on SPY (the S&P 500 ETF) on the last day of the month and selling one day later would result in a successful trade 63% of the time with an average return of 0.37% (as opposed to 0.03% and a 50%-50% success rate if you buy any random day during this period).

Various conditions take place that improve this result significantly. For instance …. one of his traders showed me a system and said, “If you show this to anyone we will have to kill you.”

Basically, the system was: If the last half of the last day of the month was negative and the first half of the first day of the month was negative, buy at 11 a.m. and hold for the rest of the day. “This is an ATM machine” the trader told me.

I leave it to the reader to test this system.

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How to Trade Around a Fed Announcement

There is a Fed Announcement today at 2.15 ET.

I was reading a blog post by James Altucher who commented on what happens after a Fed announcement: tests have shown that whatever the market is doing before a 2:15 p.m. Fed announcement on Fed days, chances are it will reverse after 2:15.

I will track this to see if it holds up.

UPDATE: If you look at either the DOW or the S&P, both were either flat or down before the fed announcement.  Both were up, significantly, after the announcement.

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Film: Client 9: The Rise and Fall of Eliot Spitzer

By Oscar-winning filmmaker Alex Gibney.

While running for Governor, with the election near [he’s expected to win by a landslide], Spitzer claims he was drawn to websites in the classified ads in New York Magazine, found the Emperor’s Club while searching the web, calls them, and [according to the owner] books 3 women, back to back that evening.

Wow.  Good stuff.

This is a very interesting film.  Gibney does a fine job at making one ponder if Spitzer was brought down by his powerful, revengeful enemies [greedy Wall Street titans and dirty Republican bigwigs he went after].

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Book: The Little Book of Common Sense Investing

I was reading The Little Book of Common Sense Investing, by John C. Bogle.

The author is REALLY into Index Funds. On and on and on about buying and holding Index Funds.

I too used to believe in “being the market” and owning Index Funds. That was before I realized that one needs to actively manage their stocks and get out to take your profit, and then buy it again when it’s lower.

I was big on Index Funds from around 2003 – 2007.

I looked at the copy write date, and the book was published in 2007. OK…that makes sense.

My Index Fund of choice? Without a doubt, the highly respected Vanguard Funds with their low fees.

Upon further pondering, I realized that the author, Bogle, is the person who founded Vanguard. Hmmm. It all makes sense now why he is pumping Index Funds so much. He wrote this book to promote his own funds! Brilliant PR move on his part!

From the author:

An Index Fund is simply a basket/portfolio that holds, many, many stocks designed to mimic the overall performance of any financial market or market sector. Classic Index Funds, by definition, basically represents the entire stock market …NOT just a few stocks. Such funds eliminate the risk of individual stocks, the risk of market sectors, the risk of manager selection, with only stock market risk remaining.

The Classic Index Fund simply owns an interest in each stock in the stock market in proportion to its market capitalization and then holding it forever.

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Parents in the Parade?

Today I watched the Earth Day parade, and I’m reminded once again of an apparent “new trend” in parades: Parents who must accompany their kids in the parade.

Why can’t kids just be in the parade by themselves?  Why must a parent be there to either hold their hand, or just walk beside them?  Are kids too insecure to walk by themselves, or are helicopter parents too afraid to let their kid out of their sight, in this small town parade?

And if the parent is insisting upon being in the parade…then DRESS UP…actually be part of the parade!

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Stiffing the Kids

Here is a quote from the book “The Little Book of Main Street Money” by Jonathan Clements.

“After you’ve reined in the money you spend on protecting your family, the decisions get tougher. Do you go for the big house, pay for the kids’ college, or fund your own retirement? I would argue that, if money is tight, is it no contest: Forget the big house, stiff the kids, and shovel those dollars into your 401(k).

I am not arguing that real estate is a lousy investment, that children ought to pay their own college costs or that there’s virtue in financial selfishness. If you can afford to buy a big house and foot the bill for part or all of your children’s tuition, that’s great. But the fact is, you don’t have to own a big house and you don’t have to pay for the kids’ college, but one day you will have to retire.

But what about the kids? If necessary, your children can always borrow to pay for college. In fact, there’s a heap of financial assistance available to college students, including grant money and low interest loans. By contrast, NOBODY will lend you money to pay for retirement, except maybe the local reverse mortgage lender. Want to retire in comfort? You will need to pony up cold, hard cash.”

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Hip Pose for Teenagers

I was at the new east side library and just happened to look at the magazine rack.  Side to side was this:

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New Braunfels High Unicorns!

I was recently in New Braunfels Texas, where New Braunfels High holds the distinction of being the only public high school in the US which has a unicorn as their mascot.

Yes, a unicorn. Their motto is: Unicorn Pride is Justified.

What does that mean?

I’ve been searching for the official mascot photo and have found several. I’m gonna go with the one with the Texas flag…this is Texas after all [part of their Texan pride is that they’ve got to put their flag everywhere to remind people where they are].

 

And what does the football entry tunnel look like?

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The Analyst at Citi Was Asleep

Yesterday after hours, Texas Instruments [TXN] announced that they would buy National Seminconductor [NSM] at $25, which is a premium of 78% over their last close price.

NSM shot up 73% after hours.

Then this morning…Get This…Citi upgrades NSM from sell to hold. They also increased NSM’s target price to $25.

Brilliant work there Citi.

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NO Prenup For Kate!

I was just reading that Kate Middleton has NOT signed a prenup with Prince William, and that “British lawyers are urging the young couple to work out the tawdry details…”.

What if Kate just says: NO!

What are they going to do…call of the wedding?  Highly unlikely.

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