Investment Lessons from the President and the Supreme Court

Politics is one of those topics many of us avoid discussing at family meals. We know it can lead to disagreements and ruin a perfectly enjoyable evening. Another topic usually avoided in polite company is money, a subject that can also lead to disagreements. But, there are many times these two topics merge into professional discussions since political decisions can affect financial markets and determine how much money investors earn.  Politics and money also come together in disclosure statements that reveal what might be the richest group of Americans own. Members of Congress, senior congr...
More

The Key to Success for Investors Is Understanding Your Investment Goals

Russian novelist Leo Tolstoy noted that "happy families are all alike; every unhappy family is unhappy in its own way" in his novel Anna Karenina. I’ve noticed a similar pattern among investors. Successful investors are all alike in some ways while unsuccessful investors all seem to chart their own course away from success. It seems safe to say that successful investors tend to be happy with their results while unsuccessful investors will tend to be unhappy, each in their own way. Among the attributes successful investors share, one of the ways they are alike, is that they understand their ...
More

A Strategy Academia Discovered Really Works

Markets are efficient which means the current market price incorporates all available information and represents the true value of a stock. At least that’s what the Efficient Market Hypothesis (EMH) says. If the EMH is correct, there’s just no way to beat the market because the market price is correct and there cannot be any undervalued stocks when every stock is priced accurately. By now, you’ve probably identified some flaws with the EMH. One flaw is that some investment managers do consistently beat the market. The academic community has a ready-made answer to this. They point out that t...
More

What Trump’s Policies Really Mean for Stocks

It’s been a challenge to keep up with the news lately. Since becoming President, Donald Trump has been busy and many of his actions have created emotional responses on both the right and the left. Viewing his actions as an investor, it’s important to take an unemotional perspective. Just like we have trouble making profits in the markets when we allow emotions to interfere with our judgement, it will be difficult to make profitable decisions about Trump’s policies when we allow emotions to get in the way.  After the first few weeks of his administration, we can make a few assumptions about ...
More

Does combining indicators improve results?

Some traders seem to believe that if one indicator is useful, more indicators must be even more useful. Fortunately for them, they can quickly add indicators to a chart with a few clicks of their mouse. Unfortunately for the, modern technology allows traders to hide almost all of the useful information in a chart. You might think that’s a bold statement but let’s take a look at an example in the chart below. This chart includes a variety of indicators and shows Bollinger Bands, Andrews’ Pitchfork, stochastics, RSI and MACD. To analyze the chart, we could say that prices bounced off of t...
More

The Best Trades for February

Last month, we applied a simple seasonal strategy to find potential buys for January. Now, we can review the results of this strategy. Of the 8 stocks, six moved up, a win rate of 75%. Half of the stocks beat the market, delivering a gain larger than the gain of the S&P 500 index. Results are summarized in the table below. This strategy outperformed because of the large gain in Illumina, Inc. (Nasdaq: ILMN). This demonstrates the value of trading a strategy. We never know whether a trade will be a winner or loser and we never know which stocks will deliver the biggest gains. That wi...
More

Is it Too Late for a Trump Trade?

As we all know, the election is long over and Donald Trump has now been sworn in as the President. These events have had a significant impact on investors. The S&P 500 index is up more than 9% since the election and economists have been revising their forecasts of GDP growth higher in anticipation of policy changes Trump is expected to make. Companies are also considering the impact President Trump and his policies will have on their operations. Early indications are they believe the impact will be significant and largely positive. This is based on an analysis of comments company CEOs a...
More

RVI and How You Can Become a Better Trader

In a recent blog post, one of our readers commented that they found the RVI to be a useful indicator. That comment illustrates what we try to accomplish with our blogs. We strive to introduce our readers to new ideas that they can use to improve their results. By explaining RVI we saw an opportunity to advance our goal. This is an indicator most traders haven’t heard of. The Relative Vigor Index, or RVI, was developed by John Ehlers and was first published in the January 2002 of Technical Analysis of Stocks and Commodities magazine. Ehlers has been a frequent contributor to that publication...
More

How to Find Stocks Ready to Breakout, and What This Indicator Says Now

Value investors are familiar with a problem most experienced investors have faced. Identifying value stocks to buy is relatively easy to do but the problem is that stocks can remain undervalued for extended periods of time, years in some cases. That means they buy an undervalued stock and then wait for it to move higher. Sometimes, they wait for months or even years before other investors discover their undervalued gem. There are a number of ways to deal with this problem but one of the simplest could be to combine value investing with relative strength analysis. This is the approach taken ...
More

A Trading System to Help Avoid Dead Money

One of the dangers of trading that many traders fail to consider is the problem of dead money. They may spend a great deal of trying to find buy candidates and working to limit the risk of loss. But they may completely forget about the risk of a market that doesn’t move. This can lead to disappointing results and if too many trades are in stocks that don’t move, a trader may never reach their ultimate financial goals. For traders, money is among their most important resources. Money, or trading capital, is the inventory for their business. Retailers who lack inventory are at risk of going o...
More