Thursday, November 30, 2006

Blog Review: Value Discipline

For those who invest using a fundamental approach, Rick at Value Discipline has a great blog. As described on his site, Rick is a professional money manager who ran a portfolio for institutions for over 25 years and now currently works with individuals.

Using a value approach, Rick's blog offers analysis on specific companies and discusses topics timely to the current market. Like other fine blogs Rick does a good job of providing links to great articles and research material of interest to any investor.

Rick was also named to James Altucher's Top 100 blog list found here.

If you want solid fundamental analysis from someone who knows what he is writing about, Rick at Value Discipline is a blog I recommend.

Value Discipline

P.S. If you know James Altucher let him know it's okay that I did not make the Top 100, but geez I actually liked his book and gave it a good review. You think that would get me a little love with a link on his daily blog watch, especially how he is always complaining that his book is often ignored. lol.

Blog Review: Update On The Trading Goddess

News Alert!

Hidden Website Of The Trading Goddess Found By Value Blog Review

by Steven

Through much hard work and at the risk of grievous bodily injury this reporter has uncovered a little known alternate website run by the Trading Goddess.

While previous published reports have indicated that the Trading Goddess could be found at this website:

Our in-depth research has shown that the Trading Goddess also has this other website:

Please note the deceptively ingenious way that the Trading Goddess has masked this other website by using a clever and hard to figure out alternate URL.

Of interest on this other website are discussions of various stocks and a learning center where the Trading Goddess shares her wisdom. For fans of the Trading Goddess this other site is worth a look.

Trading Goddess' Other Website

Wednesday, November 29, 2006

Blog Review: NYSE Trader

Another great blog I read often is J.C.'s NYSE Trader.

J.C. is a scalper. For those who do not know what that is, think a daytrader with attention deficit disorder. A scalper buys and sells shares by the second or minute. J.C. trades more shares in one day than the average person will trade in a lifetime. For instance, today he traded over 116,000 shares.

Now for someone who is a wee bit more long term oriented you might wonder what value J.C.'s blog might have for me. A lot actually. Everyday J.C. gets up, goes to work, trades, comes home, and writes about it. Good or bad, up or down, J.C. lets you know how he did.

For many, looking into the mirror and taking responsibility for the good and bad that happened today is a hard thing to do; it is even harder when it costs money. Yet everyday J.C. mans up and lays it all out.

Whether you are an investor or trader, short term or long term, you don't get better until you can look yourself in the eye and acknowledge your mistakes, fix them, and move on. Reading J.C. helps understand that simple, yet difficult to do, concept.

And that is why he is worth reading.

NYSE Trader

P.S. No I do not like his blog just in case the initials J.C. stand for something that rhymes with "cheese n' rice."

New Books Due Out In December

Here are some upcomining titles set to be released in December. If you hurry you may be able to order and receive before the in-laws come over for the holidays.

Books for those who have an Asian Fetish:

Playing the REITs Game: Investing in Real Estate Investment Trusts

From Wall Street to the Great Wall: How to Invest in China

Jim Cramer's New Book aka Books That Are Better Than Having To Listen To Your In-laws:

Jim Cramer's Mad Money: Watch TV, Get Rich

Books For Super Quants Only aka Books I Am Going To Buy Bill Rempel And Have Him Read And Explain To Me Cuz I Have No Clue:

The Mathematics of Derivatives: Tools for Designing Numerical Algorithms (Wiley Finance)

Books For Those Who Subscribe To The Idea That The Apple Does Not Fall Far From The Tree:

The Only Three Questions That Count: Investing by Knowing What Others Don't

Books For The Professional Money Manager aka Books For The SOB Who Added No Alpha To Your Account AND Charged You 2 and 20:

Asymmetric Returns: The Future of Active Asset Management (Wiley Finance)

Wealth Management: A Concise Guide to Financial Planning and Investment Management for Wealthy Clients (Second Edition)

An Oldie But Goddie:

Standard & Poor's 500 Guide, 2007 Edition (Standard and Poor's 500 Guide)

Books For Those Who Still Have The Training Wheels On:

Equities: An Introduction to the Core Concepts (Mark Mobius Masterclass Series)

Books For Those Interested In Personal Finance:

Untapped Riches: Never Pay Off Your Mortgage--and Other Surprising Secrets for Building Wealth

Books For Those Looking For The Next Big Thing:

Finding the Next Starbucks: How to Identify and Invest in the Hot Stocks of Tomorrow

Books That Charles Kirk Says He Keeps On His Desk:

The Stock Trader's Almanac 2007 (Stock Trader's Almanac)

Blog Review: Daily Options Report

Daily Options Report

Have you thought about options? Do you have questions about options but are too afraid to ask? Or are you just sick and tired of reading blogs that only discuss stocks or review books?

If you answered yes to the above questions, the Daily Options Report, authored by Adam Warner, could just be the solution to what troubles you.

The Daily Options Report is self-described as "Learn Everything You Need to Know About Options....And You Might Even Have Fun Doing It." Well Adam is not kidding when he says that.

Like many of the blogs I like to read Adam mixes three things into his blog to make it a worthwhile read: solid analysis on the market, humor, and a daily round-up of interesting and relevant news stories with links. Adam is also a contributor to the Wall Strip show.

So far Adam's blog is one of only two blogs I have found that deal solely with options trading (the other being Simply Options Trading) and I would recommend either for those who want to learn more about options.

Daily Options Report

Tuesday, November 28, 2006

Blog Review: Trading Goddess

The Trading Goddess is a new blog that started about a month ago, but one that I now read everyday. I do this for three reasons:

The writer is smart, funny, and female!

That is right. An honest to gosh blog written by a female trader. While I am sure there are many women traders out there, I have yet to come across more than one other female trader blog (that being Powerswings which is also a great blog).

Not only does the Trading Goddess post solid trading articles, she often takes a lighthearted look at the market and is not afraid to poke fun at herself. In short like every other great blog, she is smart and funny. The added bonus is she is a woman.

So if you like humor, solid market analysis (and are tired of getting it from men) go check out the Trading Goddess. Did I mention she is a woman?

Trading Goddess

Voted # 1 trading website that is: written by a woman, on the west coast, in NorCal, who is looking for a husband.

Monday, November 27, 2006

Book Review: Latticework

Latticework: The New Investing

What Is It About?

The book is about developing a process (as advocated by Charlie Munger) for investing that does not solely rely on financial information. As the author indicates in the preface, this is not a how-to book. Instead this book is about using core concepts from different disciplines (physics, economics, psychology, etc.) to evaluate a company. Simply put, the book advocates that successful investing is a result of practical thought using several disciplines of study.

What Did I Get Out Of It As A New Investor?

The book is short (under 200 pages) and reads fast. The best feature of the book is the reading list provided at the end of the book. The book covers the topic and investigates the various areas of study in quick fashion without being superficial, but leaving the reader with a desire to learn more. The reading list provided allows one to efficiently conduct a deeper investigation of the material presented.

The Good News

The book is short and to the point. As stated, for those who wish to investigate further, the provided reading list saves the time needed to compile such a list.

The Bad News

Those looking to be told what to buy and sell should look elsewhere. Similar to other books which encourage thinking, this one lacks any concrete “how-to” examples.

The Bottom Line

I found value in this book two ways. It gives the reader a table of contents showing the different areas of study and provides a comprehensive list of materials in each area that the reader should investigate. I would recommend you check it out from the library

Other Related Reading:


Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger

Friday, November 24, 2006

Quick and Fun Game

Bill over at a Nodoodahs left a comment on a post of mine and gave me a link to a fun little game. If you watch People's Court and buy your underwear at K-Mart you just might be better at it than Charlie Babbitt.

Link To The Game

Just in case you were wondering my high score was 785 at Level 7...Definitely not my underwear.

Tuesday, November 21, 2006

Resource Review: Internal Rate of Return (IRR) Spreadsheet

As I have mentioned before George at Fat Pitch Financials has a great site for new investors. If you are like me and are somewhat math challenged when it comes to setting up a spreadsheet to determine IRR for your investments when you have made deposits and withdrawals of various amounts at different times of the year, George solves your problem. A few months back George posted an article on calculating the IRR as mentioned above. The best thing is that George included links to spreadsheets he created on both Google and Excel. I like the Google one best.

Before you can customize it, in the Google spreadsheet you will need to click on file in the upper right, select copy spreadsheet, and rename it. Both boxes are the same except the one on the left is for transactions during a single year and the one on the right uses once a year transactions. If you look at either book you will see three columns "Date" "Payment" and "Note."

What you want to do is change the notes to reflect your own needs. I am using this in my IRA accounts, so there is no withdrawal or taxes going on right now, only deposits. All I care about is tracking deposits and current balance. For example, if this is the first year and I open my IRA on 1/15/06 with $1,500, I would put 1/15/06 in the date field, enter -$1,500 in the amount (NOTE: deposits are entered as a NEGATIVE number using "-" before $ sign). For the note box I would just use "Deposit." Let's also assume that I made another $1,500 deposit on 6/12/06 and $1,000 on 8/23/06. (go ahead and delete George's sample numbers in the "payment" field, but leave the other dates alone for right now unless you want to get into the formula).

Now lets assume that I now have an account balance of $4,400 as of today. I would enter that in as positive number in the last box and change "sell investment" into "current balance." Now if I used today's date it would show that I have an APY of a little over 18%. If I finished the rest of the year at the same pace I would end up with an 18% return. If instead I use the year end date of 12/31/06 I get a APY of a little over 15%, which means that if I sold everything today and went all cash or my stocks stayed flat from this point I would end up the year with a 15% return.

This is a nice little sheet that George has and I recommend it for the new investor looking for a quick way to track their progress.

Blog Review: Bill Rempel AKA Nodoodahs

Bill Rempel's Nodoodahs blog was one of the first three blogs I came across when I first started learning about investing. It is also one of the best blogs I read and would be in any top five list of blogs that I have learned the most from.

Bill mixes a lot of different topics on his blog outside of the stock market. The posts about the stock market though are unique because it is one of only a few websites (and one of the best) that attempts to mix the best qualities of various styles of investing to achieve success as opposed to relying on only one methodology.

One of the best things I like about Bill's blog is that any stock market question or problem you might have Bill can offer a quick understandable mathematical formula to help show you how to solve the problem. To paraphrase a movie, Bill is just "wicked smart." He is so good at math I think that if I ever met him I would throw a box of matches on the floor to see if he could count them. Seriously though, in my opinion Bill's blog is one of the most intelligent bodies of work you are going to read for free on the internet and learn something.

Monday, November 20, 2006

Book Review: Rule # 1

Rule #1: The Simple Strategy for Successful Investing

What Is It About?

This is one of the more unique books on investing. It is unique because it attempts to meld two styles of investing often considered at odds with each other: value investing and technical/momentum trading. The book does this by explaining: how to evaluate a company and identify its competitive advantage; how to determine what a fair price for the company is on a per share basis and determine whether a margin of safety exists; and how to apply certain technical indicators to buy and sell stocks. The author has a blog which provides further detail on many concepts discussed in the book.

What Did I Get Out Of It As A New Investor?

This is a good book for a new investor. The book adequately introduces the core concepts of value investing. The book also does a good job explaining the margin of safety concept. The book’s value is not found in the originality of the above subject matter; rather, value is added because the book provides a more accessible way for people to understand the concepts found in the original works.

The book also provides an introduction in the use of technical indicators. The author believes that three different indicators (stochastic, MACD, and moving averages) assist in determine the future direction of any price movement. The reliance on the specified indicators is based on the theory that the selected indicators offer a “tell” when large institutional buyers are accumulating or distribution a particular stock. Therefore, the use of indicators is not advocated as a means to determine whether you should buy a stock, the author clearly argues that it is “value” investing which aids in that process. Rather, the indicators are a means to determine when large investors are making a move and to get in, and more importantly, out of a position to avoid significant loss of capital.

It is important to note that in reading this book a new investor must resist the temptation to gloss over the more demanding parts (understanding and learning how to perform a thorough and intellectually honest analysis to find a great business selling at a discount) to focus quickly on the technical indicators. Following a certain buy or sell signal without determining whether the company is worth owing in the first place can lead a new investor to suffer a loss of capital. Additionally, by conducting the initial fundamental analysis to insure a margin of safety, the investor adds a layer of protection if the use of the technical indicators goes awry.

The Good News

This is a good introductory book which helps a new investor or trader identify a great business; how to do a discounted cash flow analysis; and explain how technical indicators may be used to make gains and avoid losses.

The Bad News

I think the book over simplifies the process of identifying a great business by ignoring the fallibility of multi-year future projections and relying too much on a companies past performance. The book also over simplifies the dangers in using technical indicators.

The Bottom Line

The material covered in this book is a good starting point for any new investor, but it is just that, a starting point. The book is worthy of reading because it exposes a new investor or trader to the idea that one should be open and flexible enough to accept that success in the stock market can come from a myriad of different techniques.

Other Related Reading:


Blog Valuation: How Much Are You Worth?

The Kirk Report had a link to a website the other day. The site, Leapfish, provides a quick estimate of the value a domain name might have if sold. For instance, You Tube comes in at over 9 million.

So I thought it might be interesting (read pretty funny) to see what some of the bloggers I read are worth.

Coming at number one (of course) is the man, the myth, the legend in his own mind Trader X with an estimated value of $3,542.00.

Second place goes to Trader Mike who clocks $240.00. I detect a bit of west coast bias here seeing how Mike comes out of Stanford.

Showing in third is Howard Lindzon who comes in at $125.00. Don't know if that is CDN or USD. If we give HL credit (or blame) for Wallstrip he pulls ahead of Mike with an additional $427.00 added.

In fourth is all around good guy Bill Rempel with $21.00. It has been confirmed that Bill's valuation is actually understated by a factor of 100 as a result of a vast right AND left wing value investor conspiracy due to his many technical analysis posts.

Bringing up the rear is the lovable miscreant Tapeworm at Tale of The Tape who is worth an astonishing $19.00, and that is USD. Rumor has it that Mr. Worm is a former Jerry's kid and that next year's telethon will be featuring him in an attempt to get that valuation up.

An honorable mention goes to the Trading Goddess who is a new blogger. While her valuation appears to be quite low at $12.00, one look at her blog (and her picture) convinces this reader that this is a classic market mis-pricing.

Please note: Due to observed statistical anomalies Ugly at Ugly Chart was disqualified. While his valuation was listed at $49,532.00 the judges deemed such a figure to be a result of untoward manipulation. When asked for their rationale the judges issued this terse statement: "Nothing that Ugly could be worth so much."

Saturday, November 18, 2006

Trade Like Warren Buffett - Book Review

Trade Like Warren Buffett (Wiley Trading)

What Is It About?

Unlike other books that focus on Warren Buffett's buy and hold investment style, this book takes a look at other stock market strategies Buffett uses. The author does this in acomprehensivee, yet easy to read format. The best description of this book is that it takes many concepts discussed in Joel Greenblatt's You Can Be a Stock Market Genius and examines how Buffett has for many years applied similar techniques.

What Did I Get Out Of It As A New Investor?

For the uninitiated there is the perception that Warren Buffett buys but never sells. That is false. As the book describes, Buffett often employs trading strategies to achieve superior results. Although trader-like, the author makes clear that the one constant between Buffett's trading and investing strategies is the assurance of a margin of safety.

One of the more interesting aspects of this book is found in Chapter 9. This chapter discusses Buffett's personal holdings. While extensive coverage of Buffett's private transactions is not widely available, the author does a good job of gathering what is available and explaining exactly what, why, and how Buffett did over the years for his own trading account.

Chapter 9 also has an interesting tidbit of information. Buffett often relates that he owns a 100 or so shares in many different companies as a means to keep abreast of companies he believes are possible investments or as a way to follow competitors of companies he already has an interest. The book lists those securities owned by Buffett's private foundation, most of which are owned in 100 or so shares. For those interested in trying to decipher what Buffett is looking at the list presents interesting research material.

The Good News

A good solid look at Buffett's other means of achieving stock market success. Rather than examine the more well known facets of Buffett's investment style the book charts a fresh course of examination into Buffett's more trader-like investments.

The Bad News

Many of the ways in which Buffett trades may not be available to investors who lack significant trading capital. On a lighter note, the book cover has one of the worst pictures of Buffett I have ever seen.

The Bottom Line

For those who desire a complete understanding of Warren Buffett, this book is one that should be included in your library. For the merely curious, reading your local library copy should suffice.

Other Related Reading:


Thursday, November 16, 2006

Trade Your Way To Financial Freedom - Book Review

Trade Your Way to Financial Freedom

What Is It About?

This book is about finding and a trading system that works for an individual investor and then utilizing that system to successfully trade stocks. Rather than suggest one way of trading, the author convincingly details many different methods of trading and leaves it to the reader to decide which style (or mixture of styles) suits them best. In discussing trading systems the author does not simply discuss when to buy, but more importantly how much to buy and when to sell.

What Did I Get Out Of It As A New Investor?

This book is an excellent book for both traders and investors. This is because buying a stock in the hope of one day selling for more than you paid is stock trading, not stock investing, be it based on “value” or “technical” methods. Whether you buy and sell a stock in the next minute or buy and sell many years later, you are still a trader. Time frame is irrelevant. Therefore, because most people purchase stocks in the hopes that one day they can sell for a price greater than that at purchase, a book such as this has great utility.

The lessons taught in this book are applicable across all time frames. If you are curious on how to enter or exit a trade this book will provide answers to your questions. If you have wondered how to establish a position in a stock without taking a disproportionate risk based on the size of your account, this book will provide answers your questions. If preservation of capital is paramount, this book will provide answers to your questions. In short, this book is one that any new investor or trader should read.

The Good News

Whether you are a new trader or new investor this book has something for everyone and will make you better at both styles of investing.

The Bad News

If you have a bias against books that deal specifically with trading you may not find this book useful. That would be a mistake. While not everything in this book fits within the framework of long-term investing there is enough to make it worthwhile to any investor.

The Bottom Line

This is book belongs on the bookshelf of trader and investor alike.

Note: My review is of the first edition. Amazon shows that a second edition is due this month. The image above is a link to the still unavailable second edition. A link to first edition is found here .

Other Related Reading:


Wednesday, November 15, 2006

Book Review: Finding Hot Spots In Global Investing

Finding the Hot Spots: 10 Strategies for Global Investing

What Is It About?

This book is about investing globally in emerging markets. The author is a founder of an independent research group specializing in covering emerging markets. The book is designed to provide the new investor with a basic but thorough understanding of the issues, both postive and negative, of investing in emerging markets. The book is refreashingly compact, packing a lot of information in ten short chapters covering just about 200 pages. It was a very easy read without being mind numbing or simple.

What Did I Get Out Of It As A New Investor?

This is a good book for a new investor who is interested in learning about the benefits of investing in emerging markets while minimizing untoward risk. The author efficiently explains how to quickly and easily invest in foreign companies (use ADRs, which are stocks of foreign companies listed on U.S. stock exchanges that provide the same financial disclosures required by the SEC of U.S. companies); how to set up a diversified, but focused, portfolio of foreign stocks (invest across sectors); and explains how to avoid common mistakes when selecting foreign companies (avoid companies whose competitive advantage depends on regulatory protection).

In addition, this book provides value by citing to sources where one can find information related tro global investing. For instance, did you know that the continent of Africa has 94 ADRs listed on U.S. stock exchanges or that the country of Malaysian has 13 companies with ADRs listed on U.S. exchanges? Neither did I before reading this book. One can learn this and other useful information by using the link citation to the Bank of New York ADR website as provided in the text. The above are just a few examples of useful facts provided, with corresponding links, which aid the new investor in researching emerging markets.

The Good News

A new investor who desires to invest in emerging markets would benefit from acquiring and reading this book. The material presented is well balanced in discussing both positive and negative aspects of foreign investing.

The Bad News

The more experienced investor who has already gained competence in foreign market investing may find this book useful only as refresher material.

The Bottom Line

A solid introductory text on investing in emerging markets worth consideration for purchase.

Other Related Reading:


Monday, November 13, 2006

Blog Review: Trader Mike

A website that I look forward to reading every day is the Trader Mike blog. Trader Mike is an accomplished trader whose site offers a lot to the budding trader. He offers a daily link to articles of interests for investors or traders; a daily watchlist of stocks for short term trades; links to informative articles about how to trade; discussions on position sizing and risk measurement; and even goes into the details of his own trading system. In fact I once read that Mike let the Dave from Stock Tickr go over his house and watch him trade for the day. In short, Trader Mike has shown a great desire to help others benefit form his experience. A blog like that is worth reading.

On a lighter note Value Blog Review has learned some little known facts about Trader Mike. When not trading Mike is a race care driver with his very own "Mike Mobile" seen here:

When he has a bad day trading he will also earn a little coin driving part time for Howard Lindzon over at Wallstrip. He can often be seen in the company of Lindsay, the lovely host of Wallstrip as seen here:

This part time job does not come without drawbacks as it does cause tension between Mike and his good friend Trader X, who is widely known to have an unrequited affection for Lindsay. As seen here in these never before released photos of Trader X staring down Trader Mike, the tension is quite palpable:

Rumor as it from our friends over at the Rad Report that Trader X as well as several other traders are a bit envious of Mike, as Trader Mike is the first trader to have a bobble head produced and marketed on his behalf to commemorate his receipt of the trader of the year trophy, as seen here:

Note the ever present "M" helmet lest you forget it is Trader Mike as well as the "G" which most agree is short for "G-money."