Hints on short-term investing

 

            Points from short-term gurus

 

·        Develop a trading system that fits your personality, your skill and your timing available for trading. A beginner’s trading system is different from a skilled trader’s system.

·        Start with two or three technical indicators and learn thoroughly how to use them. Short-term trading should emphasize on price movements more than fundamentals.

·        Even with a win-loss ratio of 50%, you still can make a lot of money by protecting your portfolio with stop loss and your profits with trailing stops. Define and enforce your exit strategy.

·        Knowledge is everything, and hence learn from the best traders. There are schools (some on-line) teaching folks how to trade. It is less expensive than paying your tuition via actual trading. This book and most other books are a good start and most cost effective.

·        Beginners cannot beat professionals without luck. You do not gain knowledge by paper trading. Start small. Never risk the money you cannot afford to lose.

·        Need basic capital for trading and a laptop to start. Plus living expenses for a few months if you trade full time. Prepare your new venture psychologically. Be emotionally detached in investing. Silence is golden, the rule I just violated. Your friends will not share their wins but blames, and it affects your ego and your trading.

I know many made so much in 2000 and in early 2021 that they quitted their day jobs, and then they found out they had big losses later.

·         Diversify but not over-diversify. Most of us can handle about three trades simultaneously, or more if your holding period is longer than a day.

·         When the number of new heights exceeds the new lows by a large margin (determine it yourself as all markets are different), consider sell (the market could be peaking). Sell short vice versa.

·        When you have three unsuccessful trades in a row, it is time to take a break and/or switch to paper trading. Better double your bet on winning stocks, and not the other way round.

·        Record all your trades and the results in a trade journal. Review it and learn from your successes and losses periodically.

Modify your trade system according to your gained knowledge and the market trend. Test it out with no or minimum money until you are comfortable.

National debt, inflation and USD

 

National debt and USD

 

If you believe we should receive more free money from the government during this pandemic, think again. It is the tool that has been used by our government to buy votes for decades, as well as many foreign governments today.

 

Our government prints more money to buy our national debts. We have printed 20% of USD in 2020. As of 3/7/2021, the Senate passed the bill to print another 1.9 T (many zeroes after $1). Do the individuals making $75,000 need the aid? Obviously it is used to buy future votes. That is why our national debt has been sky rocketed. The poor should be helped for sure. However, the wealth of the rich has been increased substantially due to the rise of the stock market. It also reflects that we have plenty of free cash that are being invested in the stock market. It is a very unhealthy sign that the market rises while the economy is falling.

 

It is the same as in 2009. However, the economy did pick up and the debts were quite manageable. This time could be very different. Our children and grandchildren have to pay for the debts. When we have to service the debts, we will not be competitive in global markets. It is easy to pass the blame to China.

 

This is NOT the major problem. The major problem is the confidence of our USD as a reserve currency is shaken. The “supply and demand” rule works again. When we have too many USD circulating, we should have inflation.  When one USD can buy only half a loaf of bread and previously we could buy the full loaf, we are in trouble. Foreigners would dump the reserve USD that are used for trading and our treasury bills they own. With today’s internet and financial systems, it could happen in a day or even less.

 

USD is not backed up with gold today. Most likely, there will be new USD issued to replace the old one with one-to-ten, and then even higher. But, it is not helping us.

 

In the 50s, the British pound was replaced by USD as the reserve currency after WW2 and at that time many British colonies became independent.

 

Today, USD has been challenged. We gave Iran a tough time for not using USD in trading oil. So are Russia and China. I sincerely hope the USD would not be weak or valueless in my lifetime. I can tell inflation has come. When all the foreign central banks dump the USD, the market would drop and the long-term depression would begin. We do have inflation unless you trust our government CPI, which is adjusted to what the politicians want.

 

Links: Fiat currency: https://www.youtube.com/watch?v=bgPDW0ZpgJU

Gold: https://www.youtube.com/watch?v=pNIE7qUePq8&t=649s

Bond crash: https://www.youtube.com/watch?v=LPFfq_YWwd0

Silly consumers

 

Performance of my book "Best stocks to buy for 2021 2nd Edition

Both my book "Best stocks to buy for 2021 2nd Edition" and this book "100 Best stocks to buy in 2020" received 4.5 rating.

The biggest difference is this book and the previous book both did not beat S&P 500, the market to most, and my last two books beat S&P 500 by a good margin.

They sold over 250,000 copies and my books in the series sold a small fraction of that amount. It must be marketing.

The following is the detail of my performances.

Past Performances

 

Management Summary

 

Book	Beat SPY by (see Methodology)
Best Book for 2021 2nd Edition	404%
Best Book for 2021	83%
Best Book to Buy from August, 2020”.	29%

 

This new edition of “Best Book for 2021 2^nd Edition” (i.e. this book) has a new list of recommended stocks. The performance is from the publish date to 3/1/2021.

SPY is an ETF simulating the S&P500 index.

 

 

Performance of the first edition of my book “Best Stocks for 2021”

 

Besides the primary list of recommended stocks, we have several lists.

The date range is from 12/10/2020 (the publish date) to today, 02/06/2021 (almost two months later). It is close to the publish date of this edition. See Methodology for details.

 

List (#of  stocks)	Return	Annualized	Beat SPY1
Primary list (4)	10%	67%	83%
Primary list without GLD (3)3	14%	92%	152%
Secondary list (6)	29%	185%	406%2
Year-End list    (5 )	8%	49%	34%
Secondary list for Year-End (5)	10%	65%	78%
Secondary list without foreign countries (2)	34%	215%	486%2

 

¹  “Beat SPY by” = (Return – SPY Return) / SPY Return. Again, dividends & fees are not considered.

²  Not a typo.

³ Gold is optional and it is used for safety.

 

SPY, an ETF simulating S&P500 index, is used as a yardstick. The numbers below have been rounded up for easier to read. Interestingly, the secondary lists performed better. All lists have positive returns and beat SPY by good margins. It seems this time the research work with the current market conditions; it may not in future conditions. I am not responsible for any errors; I did double check the figures.

 

 

Why this edition of this book

 

The original book is about 2 months old, and now we have a new edition. I include a new list of recommended stocks in this edition plus a bonus list for short-term buy. Buy this book as a subscription service as I expect a lot of repeated buyers; if it continues to work, the price of this book is trivial.

 

The primary reason of the short duration from the initial publish date is the incredible performances of the recommended stocks. All the lists of the recommended stocks beat SPY (an ETF simulating the market) by good margins. The performances are REAL based on my book. A similar book does not even stated their previous performance as it did not beat the market for at least the last two years in a row. Some said their recommended stocks appreciate many times, but they did not say how many of the recommended stocks losing most of their values.

 

Important notice. Past performance have nothing to do with future performances. Consult your financial advisor before taking any action.

 

Performance of my last book “Best Stocks to buy from August, 2020”

 

The performance is the returns from 07/28/2020 to 12/07/2020. The average of the 14 recommended stocks beats SPY (an ETF simulating S&P500 stocks) by 29%. The 29% is unbelievable as SPY has been weighted heavily by a lot of tech stocks such as Apple, Tesla and Microsoft, and they have been increased in value substantially during this period. If you believe they will continue this trend, SPY or any ETF weighted on tech stocks would be beneficial. However, I believe they are peaking and the fall seems inevitable – it is my personal opinion.

 

There are 13 winners and 1 loser. Again, dividends and fees have not been included.  CMCSA and FDX are big winners profiting from the pandemic.

 

Symbol	Name	Sector	True EY	Return	Ann. Return
ABBV	AbbVie	Drug	7%	10%	27%
ABT	Abbott	Drug	3%	8%	21%
CHE	Chemed	Diversified	4%	4%	12%
CMCSA	Comcast	Media	11%	19%	52%
FDX	FedEx	Transport	8%	76%	211%
GTS	Triple-S	Health	N/A	26%	72%
JNJ	Jonson & J	Drug	6%	2%	4%
MCK	McKesson	Drug	8%	16%	45%
MSFT	Microsoft	Software	4%	6%	18%
SCHN	Schnitzer	Metal	10%	46%	127%
SMCI	Super Micro	Computer	11%	9%	24%
UFPI	Universal	Building	10%	-6%	-17%
UNH	United Health	Health	9%	15%	43%
ZBRA	Zebra Tech	Computer	5%	39%	107%
Avg.				19%	53%
			SPY	15%	41%
	Beat SPY by				29%

 

 

Methodology

 

·         ‘Beat SPY by “= (Return – SPY’s return) / (SPY’s return) with adjustments to negative numbers.

·         Dividends and fees are not included. Hence, the ratio usually looks better than it actually is.

·         Past performances have nothing to do with future performances.

So far, the last two books perform well with the market conditions.

The performances are for reference only. These incredible performances are not sustainable.

·         Start date and end date could be one or two days off. I need to prepare performance calculations at least one day before the publish date, so I can enter the updated info for the recommended stocks.

·         Start date usually is the publish date; sometimes it is one day off.

·         End date usually is within a few days of the publish date of the next book in the series. However, if available, it could be one year after the publish date of the last book, or today’s date for long-term recommendation (usually the primary list). It could be one, two or up to 3 months for the short-term lists (year-end losers, momentum and short stocks).

·         True EY is the earnings yield considering debts and cash. Compare it to one-year Treasuries and CD which are basically risk free. It is the reciprocal of “EV/EBITDA”. It is obtained from Yahoo!Finance (under Statistics).

·         Most figures are rounded up for easy reading, but not in the calculation in “Beat SPY by”.

·         In the future edition, I may add the performances of older books in this series.

 

I should have sold a lot of books in this series, if readers buy this kind of book based on past performances. I have not so far. Recommend this book to your friends if you want this series to be continued and/or at this low price. Again, you should consult your financial advisor before taking any actions. I am not liable for any of your trades. For my stock recommendations before the next book, you can be my Patreon and search for Tony Pow. https://www.patreon.com