Trading Tips

The Presidential Cycle is nonsense! Or is it?

The theory behind the Presidential Cycle is that stocks tend to do well in years 3 & 4 of a president’s term, but poorly in years 1 & 2. Why? That’s one of thing you’ll learn in this video. But more importantly, you’ll learn whether or not the whole thing is true — or just a bunch of “nonsense.”

What’s more, we did some original research here at Wealthpire. Instead of looking solely at all years 3 & 4 and 1 & 2, we look specifically at years 3 and 4 of presidential terms where the president is seeking reelection. After all, the idea behind the cycle is that a president seeking office pulls out all the stops to juice the economy, but an outgoing president would have no reason to.

In this episode, you will learn:

- The Federal Reserve’s role in the Presidential Cycle — as well as the business cycle!

- What are some common criticisms of the Presidential Cycle theory — and just how valid they really are.

- How the Bush administration compared in years 3 & 4 of term 1, versus years 1 & 2 of term 2.

- What this could all mean for stocks and other investments in 2012 and beyond.

We also did some extensive research in looking at how stocks fared during the last two years of the Bush Sr. administration, versus the first two years of the Clinton administration. Then years 3 & 4 of Clinton’s first term, versus years 1 & 2 of his second term — the results were shocking!

Is the Presidential Cycle “nonsense”? Watch this video and then decide for yourself!

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

How the Stock Market Will React to the Presidential Elections

This episode of Trading Tips is as good as gold… In fact, it’s about gold. Whether or not you’re a gold man, the fact is that Goldman Sachs says gold is going to take off in 2012, and they have good reason to think so. The reasons are detailed in this episode.

Goldman Sachs isn’t alone, either. While the firm calls for a $1,940 gold price, Morgan Stanley says gold will top out around $2,200. But how does one even buy gold? What are the best ways?

Find out in this episode!

In this episode, you will learn:

- Four major catalysts for a huge bull rally for gold in 2012.

- Four different ways you can add gold exposure to your portfolio — not just physical coins and mining stocks, either.

- Why gold is desirable in the first place… What gives it its “intrinsic value”?

- How Portfolio Crafter has picked several big winning gold stocks over the past few years.

Back in 2000, gold was trading at around $300 per ounce. Now it’s at over $1,600. In that same time, the Nasdaq has gone from 4,100 to 2,700! This shows why it pays to have some diversity in your portfolio, and this episode will show you how you can do it.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

The case for a huge gold rally in 2012

According to the American Association of Individual Investors, market portfolios traded according to CAN SLIM were up an astounding 1,351.3% between January 1998 and December 2008, compared to a loss of 6% by the S&P 500.

Wow!

But does this mean that CAN SLIM is guaranteed to continue to post these kind of results? Of course not. Does it even mean that this is likely? Watch the video to find out.

In this episode, you will learn:

- What the CAN SLIM acronym actually stands for.

- CAN SLIM’s history, how it was formulated, and why it has worked so well in the past.

- Why CAN SLIM Is a difficult strategy to implement — and may be more work than it’s worth.

- How CAN SLIM has under-performed in recent months and why this may be indicative of things to come — but that doesn’t mean CAN SLIM is all bad either!

Recently, however, CAN SLIM has not been as successful, and the index of CAN SLIM stocks has been scaled back from 100 to 50. Nevertheless, there are some valuable insights in CAN SLIM that can be implemented by every trader and investor, and they should be. Watch this video and find out how YOU can implement the good while ignoring the bad and/or outdated.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

The CAN SLIM stock trading strategy

U.S. growth in the solar sector is skyrocketing. The total domestic market surpassed 1 gigawatt in 2011, and the Solar Energy Industry Association says that solar is THE fastest growing industry in the U.S., and, within a few years, the U.S. will be the world’s largest solar market.

There are dozens of solar stocks, so which one(s) should you invest in? All carry risks… Wouldn’t it be nice to spread your risk across many solar plays, thereby getting a “pure play” on solar without the company-specific risk?

You can. How? With Solar ETFs!

In this episode, you will learn:

- What an “ETF” is and how they work.

- Why solar is one of the best industries you can invest in — no joke!

- How solar is an even better play on higher gas prices than oil stocks.

- How solar stocks have fared, in general, thus far in 2011, and why that story is a bullish one.

Not only is domestic growth in solar booming, global growth is too! Over the past 10 years, sales of solar photovolaics have surged from $2.5 billion to $71.2 billion — a compound annual growth rate of 39.8% per year. Solar is already big in Europe, and the U.S. is set to be the #1 solar market in the world soon… But let’s not forget about China! Even if that rapidly industrializing nation is a bit behind the curve, there are still a billion-plus potential solar customers, and regardless, that country’s appetite for fossil fuels is bound to jack up prices, thereby making solar more attractive to the rest of the world. It’s an almost no-lose scenario.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

How to invest in the Solar market with ETFs

In the commodities sector, oil and gas, along with gold and
silver, garner most of the headlines. But that could be a
shortsighted view, considering the potential investment
power of nature’s hardest asset – gem diamonds.

Increasingly, investors are taking a longer look at diamonds
as the price of gold hovers $1,700-an-ounce this week...

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Relishing diamonds isn’t anything new. It goes back to the
ancient Egyptians, where diamonds were highly valued as
gemstones. Ancient Greeks viewed diamonds as splinters of
starts that fell to earth, with many believing that diamonds
were the tears of the gods.

Well, the Greek gods are long gone, but there are plenty of
tears on Wall Street these days. Now, investors are turning
to the precious hard metal to soothe their jangled nerves,
and that has turned the diamond market on its shiny, pointy
head.

Investors considering adding the hard asset to their portfolios can cross one concern off of their lists – the notion that a sluggish economy would prevent consumers from buying diamonds and jewelry. According to the National Retail Foundation, of the estimated 131 million U.S. shoppers out on Thanksgiving weekend, 13.8% of them bought "jewelry or precious metals accessories".

That puts jewelry in the consumers "favorites" category of books and video games, and clothing and electronics, the NRF
reports.

Diamond providers are cautiously optimistic that the trend,
after a brief dip, should continue past the holidays, and
carry over into 2012.

"We’ve seen much more demand than we can supply, especially
for very expensive diamonds, which is where we operate,"
noted Gem Diamonds Chief Executive Officer Clifford Elphick,
which recently saw its stock price to rise to its highest
levels in a year (to $250 per share, before sliding back to
the $200 level in early December). "We expect a pause in the
rise in diamond prices. It is unlikely that prices will
continue rushing ahead as they’ve done in the past year. But
then it will get back in its upward phase."

Diamonds as an investment in 2012

Elphick may be on to something – here are some other trends
that favor diamonds going into the new year:

Big performer in 2010 – Many investors might have missed it,
but diamonds actually outperformed other commodities as an
investment in 2010, according to Saul Singer, a partner at the
alternative assets investment firm Fusion Alternatives, which specializes in diamond investments. Says Singer; "Many might remember 2010 as the year global commodity prices continued to surge. The Dow Jones-UBS Commodity Index ended the year up 36 percent. Strong gains were experienced across all major commodity markets with the industrial metals market leading the charge. Investment diamonds gained 20 percent in 2010, however on a risk-adjusted basis, Investment diamonds outperformed even the surging commodities market."

Overseas growth skyrockets – De Beers, one of the world’s
biggest diamond companies, says that while the hard metal’s
growth was limited to 7% in the U.S. last year, growth in China (26%) and India (37%) were big hot spots – and have continued to be in 2011. "Jewelry" CPI on the upswing – The U.S. consumer price index for jewelry – yes, it actually does exist – jumped by 12% on a year-to-year basis, to a record rate of 182.64 in October. That’s the seventh-straight month that the index climbed above the 170 level, and the first time it exceeded 180 points.

Demand favors diamonds – Some money managers say the
combination of high demand and low inventory has really
driven diamond prices higher – but that’s not stopping the
uber-rich from trying to grab as many high quality diamonds
as they can.

In an interview with CNBC recently, Henri Barguirdjian, CEO of luxury jewelry Graff Holdings, says that burgeoning interest in diamonds as an investment is a relatively new phenomenon.

Barguirdjian tells CNBC that some Forbes 400 types are
investing up to $100 million in the diamond market these
days, mostly favoring "finished" diamonds over rough ones.

By and large, historically, research shows that demand for diamond jewelry is tied tightly to consumer disposable income at a household level – that’s the sentiment from a research report by BMO Capital Markets. Keep an eye on consumer income, and buy and sell diamond stocks accordingly.

What stocks look interesting in the diamond sector?

If prices keep rising, look for stocks that have experienced a decline in share prices, as they have the most room for growth in a highly volatile, but potentially lucrative equity sector.

So if you’re on a commodity hunt, give diamonds a hard look. It might give you the edge you need going into 2012.

Until next time,

Manny Backus
President, Wealthpire Inc.

Are you a serious trader? Or just a hobbyist? Do you think it’s “okay” to consider trading “just a hobby”? Well, do you know how the IRS defines a “hobby”? As “an activity not engaged in for profit.”

If you want to be a profitable trader, you need to take it seriously. You need to treat it like you would a business — not like a “job,” and not like a college course, but a business… And a special kind of business at that.

Why? Because there are several work ethics we are instilled with in our culture that are at odds with the ethics that are required of successful traders.

In this episode, you will learn:

- How stock trading is a “performance-based discipline” and what that means.

- Why intellect is virtually unimportant to your success as a stock trader.

- How trading differs from both a 9-to-5 job, and most types of small businesses.

- What you can do, mentally, to prepare for success as a trader. It’s easier than you might think!

The key to trading success is to dismiss counterproductive societal values and recognize trading for what it is: a UNIQUE kind of business — and a performance-based discipline. Once you’re armed with this knowledge, you’ll be mentally ready to take the next step and transform your trading from hobby-level to business enterprise.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

Stock Trading as a Business

A common misconception among stock-market novices is that you can only make money in a bull market. Or, maybe you can make money in a bear market, but you have to find stocks that are going against the trend — which is very difficult to do.

Nonsense!

Short selling allows you to make money when a stock goes down. Instead of the old “buy low, sell high” strategy, short selling allows you to sell high AND THEN buy low — that’s right: you can sell stocks you don’t even own! Sound crazy? Well you’ll learn all about it in this video.

In this episode, you will learn:

- The basics of short selling: how you can “borrow” shares you don’t own, sell them on the open market, get the money for the sale, and then later return the shares you borrowed — hopefully buying them at a lower price.

- How to identify good stocks to short — what technical and fundamental indicators you should cross-reference before placing your first short-sell order.

- How to place a short-sell order with your online broker — it’s easy!

Included in this video are charts and other graphics helping to illustrate the short-selling concept. We look at how stocks tend to go down much faster than they go up, go through an example of how short selling works, and show you a screen shot of me placing a short-sell order with an online broker.

In fact, because stocks do tend to go down faster than they go up, bear markets can be great opportunities. So instead of thinking you can only make money during a boom, perhaps you’ll be crossing your fingers for another stock-market bust after watching this video.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

Short Selling – Making Money in a Down Market

There are four important elements to stock trading: (1) Determining the direction of the market, (2) Selecting stocks, (3) Establishing a trading strategy, and (4) Implementing and sticking to that trading strategy. Previous episodes of the TradingTips.com video newsletter have covered numbers 1 & 2 extensively. This episode will look at a particular trading strategy: Letting Your Winners Run by Using Rolling Stops.

In this episode, you’ll learn:

- All about stop-losses: regular stop-losses, firm stop-losses, modified rolling stop-losses, and rolling stop-losses.

- How having a good stop-loss is only half — no, one-third — of the game. You also need to know when to sell for a profit, since you can never make money in the stock market without selling for a gain! But do you take 100% of the position off the table, or do you let a portion of it run?

- What “letting your winners run” really means. How would you like a conservative strategy that could produce gains of 85% or more, while limiting downside risk at the same time? Watch the video to see for yourself.

Included in this video is an example of how the strategy could have produced huge gains with Apple. Rather than selling when the stock had produced 10, 15, 20, or even 50% gains, using a rolling stop-loss to let the winner run would have provided a shocking 85.2% gain on the second half of the position. We’ll break down exactly how this would have worked.

And it isn’t just hypothetical, either. We have started using modified rolling stop-losses at Portfolio Crafter, and we’ll show you how it has worked out for one of our picks, PayChex (Ticker: PAYX), which was just sold for a big gain last week.

Is there a downside to using rolling stops? Yes. If, for example, your stock falls to its rolling stop, but then soars much higher, you would have sold too soon. But the system is a conservative way that you can both lock in profits AND potentially get huge gains.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. In our next episode, we’ll be doing another trading strategy video. Be sure to tune in!

Let Your Winners Run With Rolling Stops

Call it a tale of two mindsets when it comes to oil and gas stocks.

Some traders take the conventional approach, and believe that history is correct in its assessment that oil stocks neatly track the health of the economy. When gross domestic product is strong, Americans are working, and consumer sentiment is healthy, energy stocks tend to run higher and hotter as more cash flows through the economy – and the oil sector.

But lately, there’s a developing school of thought that oil – which is, after all, a commodity – may be just as good a hedge in tough economic times as “safe haven” commodities like gold and silver.

Maybe even better.

That’s the investment strategy James Paulsen, chief investment strategist at Wells Capital Management is touting these days. Paulsen points out that an ounce of gold buys about 23 barrels of oil, the most since early 2009. The spread between oil prices and gold has tightened a bit since late August, when gold was selling at $1,881 an ounce (it’s at $1,760 an ounce on November 4, 2011), and crude oil was trading at $80 a barrel (it’s at $93 per barrel on November 4), but Paulsen says that playing that spread is still a crafty move.

 “Investors should go through their portfolios and take advantage of people’s fear and the rush to safe-haven assets by lightening up on those safe-haven assets and buying all the stuff people have thrown out of the window,” says Paulsen, in an interview with Bloomberg News. “The price difference is quite striking. Play that spread. You’ll be pretty happy six months from now.”

While gold remains expensive right now to other commodities, oil still has ample room to grow, especially if the economy grows even moderately better. Let’s examine two big reasons why:

Demand – Unlike gold, oil fits better in a supply versus demand environment. As the U.S. economy grows (albeit slowly), domestic demand for oil will rise. But demand is already strong in emerging market country like China and India – a demand that one oil industry commentator dubs “insatiable” as middle-class consumers begin to really flex their financial muscles.

Oil stocks remain undervalued – Adam Hamilton, a financial analyst at Zeal Research, says that oil has been undervalued since the spring of 2010, when investors fled oil sticks after the Deepwater Horizon Spill in the Gulf of Mexico. He thinks oil stocks are trading disproportionally lower than oil prices – he says the XOI oil investment benchmark is trading around 2006 levels when oil prices were in the $60-per-barrel range. Such “emotional investing” will give way as the demand picture picks and up, and clarifies the strength and value of oil to the global economy.

Conditions actually seem fairly ripe for a run-up in oil and gas stock prices, even as the XOI has regained some of its losses, as it’s up 24% since October 2, 2011.

With oil trading in the $90-$95 a barrel range this week, and with lousy economic data in the form of another lackluster jobs number from the U.S. Labor Department, a reduced 2012 GDP estimate from the Federal Reserve, and continuing debt struggles in the Eurozone, there is enough value in the global economy for oil and gas prices to keep rising – and make oil stocks a solid bulwark against a volatile U.S. and global economy.

My Prescription – Seek Value!

Oil stocks have seen a run-up since early October, so you’ll need to pull your boots on and start kicking some tires to break away from the herd. What you want from an oil stock right now are three key ingredients: growth potential, fat dividends, and value.

One stock that fits the bill on all three fronts is Occidental Petroleum (NYSE:OXY)

Occidental is trading at about $95 per share but analysts polled by Yahoo Finance say that the stock is heading toward $112 per share. The stock pays a decent annualized dividend (1.84%) with a dividend yield of1.93%. OXY has a long, dependable track record on dividends – it’s regularly paid them since 1975.

The company saw a 49% rise in Q3 profit and investors jumped in right away, with the stock price jumping 10% immediately on the news. But even at $95 per share, stock-watchers say there’s ample room for upside growth.

Until next time,

Manny Backus
President, Wealthpire Inc.

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How to Overcome the Vicious Cycle of Doubt