School of Hard Knocks 02 (Jan 10 - Jan 13)

[winston]

How to Avoid the Next Netflix by Alexander Green

A little over a month ago, a new researcher contacted me and suggested I put out a buy recommendation on Netflix (Nasdaq: NFLX).

I disagreed and told him I wouldn’t touch the stock – or one like it – with a barge pole.

The price of a stock today relative to where it has traded in the past is irrelevant. It should have no bearing on whether you buy it or not.

Price is only important in relation to direction (technicals) and value (fundamentals). And in this case, both were flashing serious warning signs.

How can this be avoided in the future? Three ways:


• Buy (and hold) only companies that are experiencing robust growth in sales and earnings.

It was apparent months ago – with the initial price increase – that fundamentals at Netflix were beginning to deteriorate.


• Buy (and hold) only companies whose share prices are rising on good volume.

Everything that can be known about a company, its employees, its customers, its competitors and its business prospects, is reflected in daily share prices.

With the exception of market-wide corrections, a falling share price is a signal that something is amiss. A rising share price tells you the business outlook is improving.


• Use a trailing stop as your trading discipline to enforce rules 1 and 2. It will protect your profits during the good times and your principal during the bad.

Anyone who bought Netflix a year ago and used a trailing stop made out very well. Those who didn’t are now gnashing their teeth.

http://www.investmentu.com/2011/October ... tflix.html

[kennynah]

How to Avoid the Next Netflix by Alexander Green

write before netflix get into trouble ...maybe get some credibility...

after event posting = extra spray

[winston]

Bubbles are Easy to Spot, well almost…

Bubbles are easy to spot. Wait, don’t most people say that bubbles are impossible to spot?

To find bubbles there are indicators to watch, such as:

1. Low credit spreads and equity volatility
2. Low TED spreads
3. High explicit/implicit leverage at the banks
4. High levels of short term lending/borrowing (asset / liability term mismatches)
5. Credit complexity and interconnectedness
6. Poor Credit Underwriting
7. Carry trades are common (many seek free money through seemingly riskless abritrages)
8. Accommodative monetary/credit policy


http://alephblog.com/2011/11/05/bubbles ... ll-almost/

[winston]

TOL:-

Peter Lynch: There will always be something to worry about

Currently, it's Europe.

If somehow, they managed to find a bazooka somewhere for Europe, maybe it would be back to the US deficit or Japan deficit or Chinese slowdown or Chinese inflation or Deleveraging or High Commodity Prices or Israel taking out Iran or North Korea or 2012 etc.

The news are all skewed towards to "half-empty" part of the glass ...

[winston]

Three Psychological Stumbling Blocks That Kill Profits BY KEITH FITZ-GERALD, Money Morning

Three reasons: recency bias, herd behavior, and fear.


Recency Bias

Recency bias is what happens when short-term focus trumps long-term planning and execution.

This is why momentum trading works, for example, or the news channels seem to cover the same stocks at nearly the same time – because a huge number of people are focused on exactly the same companies simultaneously.


The Herd Mentality

We’d rather be wrong in a group than right individually, so the vast majority of investors tend to make decisions, and mistakes, together en masse.


Fear

People are more likely to let a losing position go against them than they are to take profits – because they can’t take the “pain” of being wrong.


So how do you break the habits that you didn’t know you had?

Here are three simple options:

1. Have a plan.

That way you can sleep well at night, knowing that even if the markets pitch a hissy fit, your money is properly concentrated in income, stability, and growth.


2. Take a measured approach.

Dollar cost average into positions over time by splitting your money into chunks instead of investing it all at once.

That way you’re investing a little at a time and can overcome the recency bias associated with big down days or bad news that rocks the markets.


3. Use trailing stops.

Conventional wisdom tells you to sell your losers and let your winners run. I think that’s backwards. Nobody ever made money by selling losers.

You have to periodically sell your winners without interference and trailing stops let you do that.

Of course, you’ve got to trim your losses, too, so don’t get me wrong here.

http://www.yolohub.com/economy/6219

[winston]

"The important thing is to learn a lesson every time you lose."

-- John McEnroe, tennis champion

[iam802]

"The important thing is to learn a lesson every time you lose."

-- John McEnroe, tennis champion

Must have include how to 'swear', 'curse' etc.

[winston]

"Start where you are. Use what you have. Do what you can."

-- Arthur Ashe, Tennis Player

[winston]

THE VIRTUE OF PATIENCE

There will always be those who believe that they’ve found some way to determine what the stock market will do tomorrow, next week, next month, etc.

The prize usually goes to those who sit tight as it is better to be a stock market investor than a stock market guesser.

Source: wisdomtips.com

[winston]

How to Be Dramatically More Productive, Successful, and Wealthy By Dr. Steve Sjuggerud
Tuesday, December 6, 2011


Last night, I was out to dinner with a couple of the most successful guys I know – and they were giving me a hard time.

They were ribbing me about what Porter Stansberry calls the "Sjuggerud Advantage."

Hey, I can take it… The Sjuggerud Advantage, as I'll explain, is a major secret to my life's success.

The nice part is anyone can do it… The Sjuggerud Advantage requires no special skills. Let me tell the story…

We were at the Prime 112 restaurant in South Beach, Miami. It's a hip restaurant today, no doubt. As we were leaving, rap star Rick Ross was walking in, stepping out of his Rolls Royce.

Dinner was great… But my definition of a great dinner is "good times with good friends." I don't need a fancy bottle of wine or an unpronounceable delicacy to enjoy a meal.

Around 9:45 p.m., I started checking my watch… And Porter and the other guys at dinner gave me a bit of a hard time…

You see, I don't drink. I don't normally go out for fancy, three-hour meals. And most importantly, I go to bed early and get up early.

Porter was giving me a hard time about missing out on some of life's finer things. But I know these are parts of what Porter calls "the Sjuggerud Advantage."

I've heard Porter tell others: "You don't see the benefits of the Sjuggerud Advantage across a day or two. But over time, it adds up. The guy gets a lot done."

It might sound silly. But I think the most important part of the Sjuggerud Advantage is simply getting out of bed… but doing it an hour earlier than anyone else…

"Getting to work early is such a common virtue of successful people that I'm tempted to call it the single most important thing you can do to change your life," my friend Michael Masterson wrote in his book Automatic Wealth. Michael's a self-made multimillionaire.

And I agree with him…

I get more done in the first two hours of my morning than I do in any other four-hour stretch during the day. More importantly, I get my BEST work done then – with no interruptions and no distractions, just focus.

I probably take it too far… I've come to like driving the streets when they're empty, before the sun has come up. I think it's partly because I know I'm going to get A LOT done.

And I've found that once it gets past 10:00 or 10:30 at night, I'm not very productive at all. I'm tired, I'm sidetracked thinking about the day's problems, and I'm better off calling it a day and starting up fresh in the morning.

While Porter would likely tell you there's more to it, I think simply getting up early is the big secret of the Sjuggerud Advantage. It's the big secret to getting a lot done.

It requires no special skills to get up a half-hour or an hour earlier than you usually do. And most of the extremely successful people I know get their days started very early. It's a simple thing, but it could have a dramatic effect over time.

As Porter said, you might not see the benefits after a day or two… But they add up. You get a lot more done early in the morning… And ultimately, you become more successful than the next guy.

It costs you nothing, and it could make you dramatically more productive, successful, and wealthy.

It's certainly worked for me. I think it's the biggest part of the Sjuggerud Advantage.

It's so simple. But most people don't do it. Based on what I've described, though, isn't it at least worth giving it a shot?

Source: Daily Wealth