Future Blind - Blog Review

Future Blind

A newer blog that I enjoy is Future Blind. Future Blind looks at investing from a value-fundamental perspective. The blog also takes a look at general economic trends with an eye towards innovation. The posts on Future Blind are well written and the valuation analysis are detailed. While Future Blind does not post everyday, each one is a is worth waiting for as they excel at informing the reader.

Future Blind

Payout Yield - Blog Review

Payout Yield

An interesting blog that covers share buybacks is Payout Yield. Payout Yield analyse announced share repurchase for their payout yield. Taking the announced buyback as well as the current dividend payment, Payout Yield examines the yield a shareholder might expect from the combined cash return.

While Payout Yield does not post often. it does provide an excellent resource for those interested in share repurchases.

Payout Yield

COTS Timer - Blog Review

COTS Timer

A blog that does a good job of focusing on developing and implementing a trading system is the COTS Timer blog. The COTS Timer blog focuses on trading using the Commitments of Traders (COTS) Reports. The COTS Timer blog provides a helpful resource for those interested in reading how to use a trading system.

COTS Timer

Warren Buffett Speaks - Book Review

Warren Buffett Speaks: Wit and Wisdom from the World's Greatest Investor





What Is It About?

This book collected and arranged selected quotes from Warren Buffett, Chairman of Berkshire Hathaway. Covering a variety of topics the quotes set forth Warren Buffett’s approach to business, market, and life in general. Until Mr. Buffett’s own book is published next year, this collection of quotes taken from his various speeches and writings is the next best thing.


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

What can’t I learn from Warren Buffett? This book provides a handy reference to Warren Buffett quotes culled from his shareholder letters, speeches, and other writings. Good quick read, the book is excellent reading.


The Good News

It is Warren Buffett’s own words in a book.


The Bad News

Not much downside here.


The Bottom Line

Nothing teaches like success and any way you measure it Warren Buffett is successful. Consequently, a book comprised of his quotes should be read by all.


Other Related Reading:


My Review My Review

Microcap Speculator - Blog Review

Microcap Speculator

Another blog that I enjoy reading is the Microcap Speculator blog. The Microcap Speculator blog covers the microcap realm from all angles, using diffrent styles and time frames to analyze various microcap stocks. Well written the Microcap Speculator blog provides concise commentary that does not waste the readers time. In other words, the blog author gets to the point.

For those looking for a blog focusing on microcaps in an intelligent fashion one may find the Microcap Speculator worthwhile reading.

Microcap Speculator

Stock Market Prognosticator - Blog Review

Stock Market Prognosticator

Another blog I enjoy reading is the Stock Market Prognosticator. As stated on the blog, the Stock Market Prognosticator takes "an alternative view of events in today's financial markets with an emphasis on value and contrarian investing." In taking the alternative view the Stock Market Prognosticator does an excellent job exploring little covered areas of the stock market.

As seen by the series of posts covering "Pink Sheets" (Parts I, II, III, IV, and V) the Stock Market Prognosticator takes the time to introduce readers to little covered and often ignored areas of the stock market. The Stock Market Prognosticator also provides a worthwhile discussion of more general topics related to investing as well. Overall, the Stock Market Prognosticator provides excellent value to those who seek the road less travelled.

Stock Market Prognosticator

Naked Capitalism - Blog Review

Naked Capitalism

Blogs that provide links to relevant investing articles are easily my favorite category of blogs. One such blog that I have added to my daily read is Naked Capitalism. Several times a day the authors of Naked Capitalism post links and excerpts of timely financial, market, and economic news stories. In addition, Naked Capitalism also does a fine job of adding its own analysis to the cited content.

With a copious 100 plus posts each month, Naked Capitalism is a blog that provides its readers with fresh and thoughtful material in abundance. Those looking to add to their collection of blogs that provide worthwhile links will not find disappointment with Naked Capitalism.

Naked Capitalism

Controlled Greed - Blog Review

Controlled Greed

Another fine blog I enjoy reading is Controlled Greed. Controlled Greed offers much to its readers. From detailing the authors current holdings and the rationale behind each selection to providing links and discussion of current news about investing Controlled Greed covers a wide range of topics related to fundamental investing.

As described on the site Controlled Greed is:

devoted to investing in undervalued stocks. The focus is global and typical investments can include net working capital discounts (also known as "net nets"), book value discounts, low P/E ratios, special situations and fallen angels.

Controlled Greed is a well written blog that I believe those interested in fundamental investing can learn much by reading.

SuperCash: The New Hedge Fund Capitalism - Book Review

SuperCash: The New Hedge Fund Capitalism (Wiley Trading)





What Is It About?

This book examines alternative approaches to success in the market. Looking at various techniques such as closed-end fund arbitrage, short-selling, and activism, the author explains to the reader how various strategies work and how an individual can mimic those strategies on a smaller scale. Well-written, the book is a quick read at just over 200 pages.


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

The book introduces a new investor or trader to the allocation of assets using alternative investments. Using examples of 13D filings the author demonstrates how the new investor can profitably ride the coattails of professional activist investors. The author also takes the reader through a step by step explanation on how to implement a closed-end fund arbitrage strategy. Several other chapters walk the reader through various other strategies employed by hedge funds. Overall, the book did a good job helping me understand that there are many alternative avenues to investing success.

The Good News

A helpful book for a new investor or trader hoping to understand alternative classes of investing.


The Bad News

The author says don’t read his books.


The Bottom Line

An informative book that provides the new investor or trader with a basic understanding on how to implement alternative investing strategies.


Other Related Reading:

My Review

Best Stock Trading In The World - Blog Review

Best Stock Trading In The World

Depth. It is what I most enjoy about the blogs I read. Depth both in content and quality of writing is what appeals most to me when I am reading a blog. The kind of content depth that forces you to pay attention when you a read a blog post to make sure you don't miss the point. The kind of writing depth that displays a nuanced command of the English language that allows one to read a blog post twice and still feel a sense of freshness the second time around.

A blog that satisfies my criteria is the Best Stock Trading In The World blog. A rather new blog with nine posts in July and eighteen in the current month of August, the Best Stock Trading In The World blog caught my eye a few weeks ago due to the quality of the writing and the depth of the content. To date the blog seems to be posting in a serial fashion as it proceeds to some unknown destination. As such I would recommend that one start at the beginning and read the posts in order to better understand the current posts as they build on each other.

As for what the blog is about I will simply quote from the title page and allow the author to describe it:

This is a blog about thinking. It operates under the pretense of being about the stock market. But this may not be so bad; the stock market as a world is a suitable world in which to think. It is suitable because it has a goal. There is at least but one world more suitable for thinking but that world cannot be so easily entered. It is sometimes said that “One must swim to stay afloat. One must eat to stay alive.” This blog is intended to conquer that. Let us conquer it together.

Best Stock Trading In The World

Zero Beta - Blog Review

Zero Beta

Another fine blog I enjoy reading is Zero Beta. Zero Beta takes a look at the broader happenings in the market and economy and does so in an intelligent and insightful manner. Providing links as well as original content Zero Beta provides thought provoking views on all things finance related. An example of the fine analysis performed can be seen in this post regarding the recent subprime sell off.

Zero Beta

Covered Call Blog - Blog Review

Covered Call Writer Blog

An interesting blog that has made its way onto my feed reader is the Covered Call Writer Blog. The blog is a trading journal of an individual who has a system for writing covered calls. The blog details that system as well as the trades made using the aforementioned system. The blog also provides links to various articles and resources regarding writing covered calls.

An informative blog for the new investor or trader looking to learn about covered call writing.

Covered Call Writer Blog

The Financial Philosopher - Blog Review

The Financial Philosopher

Some blogs entertain. Other blogs educate. It is the rare blog that is smart. By smart I mean that feeling one has after reading an article knowing that the clarity of thought expressed is of a level few obtain. I classify The Financial Philosopher as falling into the smart category.

The Financial Philosopher blog provides the new investor or trader with the tools which provoke one to philosophically examine the field of investing and trading. The Financial Philosopher discuses those issues most pertinent to a new investor's or trader's success in the market and does so in a easy to understand manner. Simply put, I enjoy this blog because I agree with the blog author's statement that "everything goes back to keeping things simple and knowing intimately who you are."

The new investor would be well served to take the time to read The Financial Philosopher

blog.

The Financial Philosopher

The Smart Money Report - Blog Review

The Smart Money Report

Another blog that I have recently found that I like is the The Smart Money Report. The Smart Money Report provides several daily links to interesting articles and blog posts. A good blog for those looking to find things to read without spending a lot of time searching.

The Smart Money Report

James Altucher's Daily Blog Watch - Blog Review

James Altucher's Daily Blog Watch

Like Abnormal Returns, James Altucher's Daily Blog Watch is another excellent way to save time. Six times a week Mr. Altucher posts links to several articles and blog posts that merit attention. For those who do not have time it is a quick and easy way to stay on top of the investment blog world.

Additionally, as author of three great books on investing, the creator of the Stockpickr website, and a successful hedge fund manager, James Altucher's Daily Blog Watch provides the new investor and trader with access to a daily news briefing from an individual who offers valuable insight. The best part is that this access is free. So too are many other of Mr. Altucher's writings at TheStreet.com.

James Altucher's Daily Blog Watch has saved me time and provided value to my education as an investor/trader, and I think it will do the same for any new investor or trader.

James Altucher's Daily Blog Watch

The dk Report - Blog Review

The dk Report

The dk Report is a blog that provides an excellent daily overview on what transpired in the market. Mixing commentary with economic analysis accompanied by charts, The dk Report reviews how sectors, industries, and indices are performing.

Well written and detailed The dk Report nonetheless presents the material covered in a manner that even the new trader or investor can grasp. For the new trader interested in learning how to study market trends using charts, The dk Report provides informed analysis while not overwhelming the novice reader.

The dk Report

Cheap and Safe - Stock Screen

Here is a screen that looks for both cheap and relatively safe stocks. It comes from the Stingy Investor website which provides good resources for the new investor. You can make the screen by using the free deluxe screener available at the MSN Money website.

1. A member of the S&P500

2. Debt-to-Equity Ratio less than or equal to 0.5

3. Current Ratio of more than 2

4. Interest Coverage of more than 2

5. Some Cash Flow from Operations

6. Some Earnings

7. Price to Sales ratio of less than 1

Here is a link to the screen and the rationale behind it.

The Aleph Blog - Blog Review

The Aleph Blog

Another solid blog a new investor or trader may benefit from reading is the The Aleph Blog. The Aleph Blog is authored by David J. Merkel,a commentator at the website RealMoney.com. The Aleph Blog covers a wide variety of topics including macroeconomics, derivatives, quantitative strategies, insurance issues, corporate governance, etc. One of the better things that the The Aleph Blog does, as stated on the blog, is a review of the inter-linkages in the markets in order to understand individual markets better.

The highest compliment I give about the blogs I read is that a blog not only informs and educates, but also challenges its reader to think. The Aleph Blog does just that. A new investor or trader should make the effort to read The Aleph Blog.

The Aleph Blog

Best Stock Market Blogs As Voted By You

Last week I posted the top 10 blogs that have helped me the most since I started investing 18 months ago. Now it is your turn.

I created a list on Amazon's Unspun of Stock Market Blogs. The site also allows for the creation of a Widget as you can see on the right.

Either by visiting the above link or using the interactive widget to the right feel free to vote for those blogs you feel are your favourite or that have helped you the most. This list is by no means complete so feel free to follow the above link and add any blog you feel deserves a vote, even your own. Hopefully over time the list will present to the new investor or trader a road map to the more useful blogs.

Please note: Except for the first ten which are the blogs I have learned the most from, I started this list by simply selecting other blogs I enjoy from my blog roll. I will leave it up to you to rank them by voting.

Top Five Blogs For a new Investor Or Trader - First Half 2007

At the beginning of the year I selected the top five blogs I felt contributed the most to my development in the first 12 months as an investor and trader. You can see that post here. The five blogs I mentioned are Geoff Gannon: Gannon On Investing, Bill Rempel: Nodoodahs Investing, Bill Cara: Capital Markets & Social Equity, Michael Seneadza: Trader Mike, and Howard Lindzon: Trends - Find Them, Ride Them, and Get Off. Those five blogs I thought were essential in my obtaining a 19.63% return for 2006.

All of the above are still great blogs and I think any new investor or trader should read them. Of course learning is not static and as my knowledge grows so does the circle of blogs I draw on to learn from. To build on my previous "Top Five Blogs of 2006" I thought it would help other investors to know what other blogs I am currently learning the most from besides the above five. Therefore, the following are the five blogs (in addition to the aforementioned five) that I feel have had the most impact on my ability to achieve a 14.96% return in the first half of 2007.

1. Traderfeed

Exploring and understanding your competencies and limitations reigns paramount above all else. Traderfeed offers insightful analysis on how to unleash the inner power of your mind to increase market performance while at the same time controlling the destructive mental tendencies we all have that decrease investing performance.

2. Daily Options Report

Daily Options Report is a great resource for an investor or trader looking to utilize options as a means to enhance market performance. The author, Adam Warner, goes out of his way to explain in terms understandable to the uninitiated options trader what options are all about. Mr. Warner is also quick to respond to any questions is readers might have.

3. Maoxian

Since 2001, the author of the Maoxian blog has been providing insightful market commentary on all time frames and every style of investing and trading. While the current material is well worth the read, great value can be found in the extensive archive. For those wanting to read a perspective on the market from someone who was blogging before there were blogs then Maoxian is the place to go.

4. Cheap Stocks

Perhaps the best blog to read on applying the teachings of Benjamin Graham is Cheap Stocks. Each post provides a great teaching tool to the new investor who desires to see an example of the traditional "Grahamian" style of value investing. Reading the blog archive at Cheap Stocks, which dates to 2003, a new investor will be rewarded with a better grasp on traditional fundamental investing.

5. Abnormal Returns

Everyday Abnormal Returns provides a comprehensive review, with links, to some of the best investment and economic related posts on the Internet. Often, the posts are organized around a daily topic or theme. If you are a new investor or trader and do not know what to read, Abnormal Returns can help because it collects the most relevant daily links to the best investment related articles on the Internet which will then provide an invaluable education.

There it is, the five most important blogs to me in the first half of 2007. I think any investor or trader will be well served to read the blogs listed in my "Top Five Blogs of 2006" and the blogs listed currently for the first half of 2007. I know they helped me.

Cheap Stocks - Blog Review

Cheap Stocks


Another blog I enjoy and have learned a great deal from is Cheap Stocks. Cheap Stocks focuses on finding traditional value investments. In other words, Cheap Stocks finds value in assets as opposed to growth. The blog does this by using the teachings of Benjamin Graham to highlight stocks (often obscure and unlisted) which provide the investor with a demonstrable margin of safety.

While the blog is not updated as often as one would like (avg. of 5-6 posts a month) each post provides a great teaching tool to the new investor who desires to see an example of the traditional "Grahamian" style of value investing in action. By reading the blog archive which dates to 2003, a new investor will be rewarded with a cinematic view of the rewards that await those willing to take the road less traveled in stocks unloved or unknown.

Overall, Cheap Stocks is one of the best blogs that educates the new investor on traditional fundamental investing.


Cheap Stocks

First Half 2007 Results - Corrected

One of the reasons I am not Bill Rempel is I am math challenged. This morning, after writing this post late last night, I realized I made an error on my spread sheet. I had the dates off and therefore the number was wrong.

For the first six months of 2007 my year to date, annualized, is 14.96%. Using a simple interest calculation (current balance divided by January 1, 2007, starting balance plus any contributions without regard to date made) reveals a gain of 13.9%.

Sorry about the confusion. Suggestions on a good summer math camp I can send myself to will be appreciated.

Value Quest - Blog Review

Value Quest

I like blogs that save me time by providing links to interesting articles about investing. One of the newer blogs that does that is Value Quest. What I like about the site is that one can find links to articles and video interviews featuring successful investors. For example, a recent post consolidated the Financial Times articles penned by value investor Whitney Tilson. Several other recent posts contained links to insightful Bloomberg video interviews I may not have seen otherwise.

Overall, Value Quest is worth a visit as it may save you time by finding and highlighting relevant information you may not have been aware of or did not have the time to track down yourself.

Value Quest

Profitable Stocks Under $10 - Stock Screen

I collected a lot of stock screens this past year. Most use the free deluxe screener available at the MSN Money website. The screens are sometimes hard to find on the MSN website, so I thought I would share what I found..

This stock screen looks for companies that are profitable but that sell cheaply for under $10 per share.

Screening parameter: Previous day's closing price <=9.95

Screening parameter: Previous day's closing price >=2.00

Screening parameter: Average daily volume last quarter >= 40,000

Screening parameter: Return on invested capital >= 10

Screening parameter: price/sales ratio <= 8

Screening parameter: Revenue growth year vs. year >= 12

Screening parameter: Revenue growth quarter vs. quarter => 0.75* revenue growth year vs. year

Screening parameter: EPS growth next 5 years >= 15

Screening parameter: % institutional ownership >= 30

Screening parameter: Mean recommendation >= Hold

Screening parameter: Recent quarter surprise % >= 0


Here is a link to the MSN article by Harry Domash with a description of how and why the above parameters are used.

Super Value Guru - Stock Screen

I collected a lot of stock screens this past year. Most use the free deluxe screener available at the MSN Money website. The screens are sometimes hard to find on the MSN website, so I thought I would share what I found.

This stock screen takes several of the common criteria used by various value investors.

Screening Parameter: Last Price <= 0.75*5-year High Price

Screening Parameter: Pre-Tax Margin <= 0.9*Pre-tax Margin: 5-Year Avg.

Screening Parameter: Price/Book Value <=2

Screening Parameter: Price/Sales Ratio <= 0.75* Industry Average Price/Sales Ratio

Screening Parameter: Price/Cash Flow Ratio <= 15

Screening Parameter: ROE: 5-Year Avg. >= 7.5

Screening Parameter: Debt to Equity Ratio <= 0.9* Industry Average D/E Ratio

Screening Parameter: Current Ratio >= 1

Screening Parameter: Dividend Payout Ratio Above 85% False Now

Screening Parameter: Market Cap. >= 500,000,000

Here is a link to the MSN article by Harry Domash with a description of how and why the above parameters are used.

Comeback Stocks - Stock Screen

I collected a lot of stock screens this past year. Most use the free deluxe screener available at the MSN Money website. The screens are sometimes hard to find on the MSN website, so I thought I would share what I found.

This screen looks for out of favor large caps. The screen looks for the largest members of the S&P 500 who have had a negative return in the last year. The 10 with the greatest precent change are then considered. Here are the parameters for the screen:

Screening Parameter: S&P Index Membership = S&P 500

Screening Parameter: Market Capitalization >=$10,000,000,000

Screening Parameter: Last Price >= 5

Screening Parameter: 52-week price change percentage: <= 0

Here is a link to the MSN article by Harry Domash with a description of how and why the above parameters are used.

SFO: Technical Analysis - Book Review

SFO Personal Investor Series: Technical Analysis

What Is It About?

This book collects several articles on online trading from Stocks, Futures, and Options magazine. This anthology contains articles from such trading luminaries as John Murphy, Brian Shannon, Thomas Bulkowski, and Lawrence McMillan. The topics covered include the history of technical analysis, chart construction, patter recognition, and application of technical analysis.


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

A solid overview on the study and application of technical analysis. The editor of the book assembles the best articles appearing in Stocks, Futures, and Options magazine in order to walk the new trader through the process of understanding what technical analysis is all about. This book helps one understand the various factors that go into following a technical analysis style of trading.

From chart construction to trend and pattern recognition to using technical indicators the book provides an introductory overview to many of the common questions a new trader may have about technical analysis. All the articles provide answers to those common questions new traders have about technical analysis. In short, the book presents material most helpful to new traders wanting to learn technical analysis.


The Good News

A helpful book for a new trader with a basic introduction to issues regarding technical analysis.


The Bad News

While the book does assemble many great articles into book form which may appeal to the experienced trader, this may not be the best book for those who have moved beyond the introductory stage of technical analysis.


The Bottom Line

A solid informative book for the new trader looking for a comprehensive overview on technical analysis.


Other Related Reading:

My Review

Secrets of the Trading Pros - Book Review

Secrets of the Trading Pros: Techniques & Tips that Pros Use to Beat the Markets (Wiley Trading)





What Is It About?

The book is an insiders look at how professionals trade the markets. Told in narrative fashion, the book covers such topics as trading psychology, economic releases, and risk management. Overall, an interesting tale from a market insider.


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

Interesting read from the perspective of a professional market participant. Two important points I took from the book: know your market and the market will always do that which hurts the most people. Engaging read that does not bore the reader.


The Good News

Thought provoking in that the book helps one think about the markets.


The Bad News

Those looking for a specific plan on how to trade may want to look elsewhere.


The Bottom Line

A worthwhile read for those interested in understanding how to mentally approach the markets.


Other Related Reading:

 My Review    My Review

Income Investing Today - Book Review

Income Investing Today: Safety & High Income Through Diversification

What Is It About?

The book discusses the benefits of income investing. Looking at different income securities such as bonds, REITs, preferreds, and convertibles, the author covers various ways to invest for income. The book also does a good job of introducing the new investor to how income securities are priced and how they trade. Overall, a solid text on fixed income investing.


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

Income investing is a lot like riding a moped. It can be a lot of fun, you just don’t want your friends to see you doing it.

Using fixed income securities as investments often finds stereotyping as something for those entering the twilight of their years. But like all stereotypes there are exceptions to the rule. This book argues that properly done, income investing can be just as rewarding as common stock investing with a lot less risk. Well written the book convinces the reader that consideration of fixed income securities must form a part of portfolio construction. It does so in a manner which demystifies and explains how fixed income securities work.


The Good News

A good book which explains in an understandable manner to the new investor the various types of fixed income securities and how they operate.


The Bad News

The book states at the outset it does not endeavor to provide a comprehensive review of all things related to fixed income securities. Therefore, while this is a good book for the beginning investor in fixed income securities, at some point investors will need to seek out additional materials to further their education.


The Bottom Line

I came away more knowledgeable about fixed income securities and believe it is a good book for those looking to gain knowledge on fixed income securities.


Other Related Reading:

 My Review    My Review

Invest In Value - Investing Resource Review

Invest In Value


A new site I found the other day that provides value to a new investor is Invest In Value. The site is based on the teachings of Benjamin Graham as found in The Intelligent Investor. Overall, it is one of the more comprehensive sits for those wanting to understand Benjamin Graham's teachings.

Invest In Value provides a detailed summary of Benjamin Graham's approach to value investing. Invest In Value also sets forth in an easy to understand manner the rules Benjamin Graham set forth for defensive or enterprising investors. Finally, the site does an excellent job explaining Benjamin Graham's simple formula on how to value growth stocks.

While the information found on Invest In Value is available elsewhere, Invest In Value saves the new investor the time locating and collecting that information. I recommend new investors take a look.


Invest In Value

Online Discount Option Stock Brokers - Update

I have added another stock broker to my online discount option stock brokers review.


OptionsHouse

OptionsHouse is a new broker (January 07) that offers aggressive pricing for option traders. The cost for options trades are a flat $9.95. So for one contract you pay $9.95, 10 contracts $9.95, and fifty option contracts $9.95.

While OptionsHouse is a new brokerage it was given four stars by Barron's in the March 2007 stock broker review and rated as one of the best brokers for options traders.

For those who trade high volume contracts it may be worth a look.

Stock Screen: A Kirk Report Inspired Stock Screen

I collected a lot of stock screens this past year. Most use the free deluxe screener available at the MSN Money website. The screens are sometimes hard to find on the MSN website, so I thought I would share what I found.

One of the most popular investing websites is Charles Kirk's The Kirk Report. Much of what he does involves screening for stocks. Below is a screen which is based on several parameters that Mr. Krik is reported to favor. Among other factors the screen looks for poor performing shares with good fundamentals, strong earnings and improving relative price performance.


Screening parameter: Return on Equity >= 15 (Increase higher to 18%, 20%, etc., to narrow choices)

Screening Parameter: Leverage Ratio <= 5 (reduce to see stronger balance sheets)

Screening parameter: Price/Cash Flow Ratio >= 0.1

Screening parameter: 12-Month Revenue => 40 million

Screening parameter: Rev Growth Qtr vs. Qtr >= 20 (reduce to 15% if not enough candidates)

Screening parameter: : 6-Month Relative Strength <= 40

Screening parameter: On Balance Volume >= 75

Screening parameter: Last Price >= 50-day Moving Average


Here is a link to the MSN article by Harry Domash with a description of how and why the above parameters are used.

Discount Online Option Stock Brokers

As a follow up to my review of online discount stock brokers I thought I would take a look at option stock brokers and what they charge. I went around the various sites and priced option trades for contracts in various sizes (1 contract, 10 contracts, 50 contracts).

I limited my search to the cost of option trading. While important, cost is but one factor. Other factors that may influence the selection include option research tools, execution, and trading interface. I also ignored any discounts applicable to active traders and used the regular price listed. Here is what I found.


OptionsXpress (OXPS)

First up is OptionsXpress. I thought they might be the least expensive, but I was wrong. A single option contract is $14.95, ten contracts are $15.00 and 50 are a whopping $75.00. Perhaps the features of the website make up for the trade cost.


E*Trade (EFTC)

At E*Trade an option trade will set you back a trade fee of $12.99 plus .75 cents per contract. Therefore, a single option contract is $13.74, ten contracts are $20.49, and fifty are $50.49.


Scottrade

Scottrade charges a flat trade fee of $7.00 plus $1.25 per option contract. Consequently, a single option contract is $8.25, ten contracts are $19.50 and fifty contracts are $69.50.


TD Ameritrade (AMTD)

TD Ameritrade also charges a flat fee per option trade. That fee is $9.99 per option trade plus .75 cents per option contract. One option contract sets you back $10.74, ten option contracts go for $17.49, and fifty are $47.49.


Interactive Brokers (IBKR)

One of the least expensive option brokers is Interactive Brokers. There is no trade fee with each contract costing .75 with a $1.00 minimum. Under this fee structure one contract is $1.00, ten contracts are $7.50 and fifty contracts are $37.50.

Interactive Brokers also has a separate breakdown by option price. If your option is price at .10 cents or greater, the above rates apply. If it is priced between .05 and .10 cents the per contract price drops to .50 cents and anything less than .05 cents goes for .25 cents a share.

It would appear that Interactive Brokers is the cheapest but there is one thing to keep in mind. Interactive Brokers caters to the active trader. Therefore there is a certain minimum needed to avoid an automatic charge. One must execute $10 worth of traders per month or be assessed a $10 per month charge. Also one must also trade a total of $30 to avoid the data feed charge of $10 per month. Therefore at a minimum one will be charged either $20 per month ($240 annual) or trad enough to satisfy the $30 ($360 per year) minimum activity.


MB Trading

Much like Interactive Brokers MB Trading charges no trade fee and a low per contract fee. A single option contract cost $1.00, ten option contracts $10.00, and fifty contracts $50.00. One must trade a minimum of 10 contracts per month or a $10 ($120) per month fee will be assessed.


Trade King

A low cost surprise is Trade King which charges an option trade fee of $4.95 plus .65 cents per option contract. A single contract goes for $5.60, ten contracts for $11.45, and fifty for $36.45.


Zecco

Zecco is relatively new and offers low cost option trades. A flat fee of $3.50 is followed by a .60 cent per option contract charge. A single trade goes for $4.10, ten contracts for $9.50, and fifty for $33.50.


Think or Swim (SWIM)

Think or Swim is the final broker I researched. It offers the most flexibility on option trade pricing. The standard option trade rate is the lessor of $2.95 per contract or $1.50 per contract plus a flat fee of $9.95. Under this pricing scheme a single contract is $2.95, ten contracts is $24.95, and fifty is $84.95.

What is unique about Think or Swim is that they allow you to choose form several different pricing plans and will even allow you to keep the pricing plan you used at another broker.The first standard alternative rate is $1.25 per contract with a $12.95 minimum. Under this plan a single option contract is $12.95, ten contracts are $12.95, and fifty contracts are $62.50.

The second alternative pricing structure is .95 cents per contract with a $19.95 minimum. Both a single and ten contract option trade are done at the minimum under this plan and a fifty contract trade goes off at $47.50.As mentioned you can also choose to use any other brokers pricing scheme as detailed on Think or Swim's Rate Sheet.


OptionsHouse

OptionsHouse is a new broker (January 07) that offers aggressive pricing for option traders. The cost for options trades are a flat $9.95. So for one contract you pay $9.95, 10 contracts $9.95, and fifty option contracts $9.95.

While OptionsHouse is a new brokerage it was given four stars by Barron's in the March 2007 stock broker review and rated as one of the best brokers for options traders.


Overall

It usually does not make sense to trade one option contract. But if you must then Think or Swim at $2.95 is the lowest cost. At the other end, most will not trade fifty or more contracts, but if you do it will be hard to beat OptionsHouse at $9.95, which is over twenty dollars cheaper than either Zecco and the highly regarded Interactive Brokers.

For the majority of traders who trade in the ten option contract range the brokers ranked in order from most to least option trade price for ten option contracts are:

E*Trade $20.49

Scottrade $19.50

TD Ameritrade $17.49

OptionsXpress $15.00

Think or Swim $12.95

Trade King $11.45

MB Trading $10.00

OptionsHouse $9.95

Zecco $9.50

Interactive Brokers $7.50

While Interactive Brokers does come out the least expensive it must be remembered that one will spend a minimum of $240 per year either in trades or fees. Excluding Interactive Brokers would leave Zecco as the lowest priced broker. Of course the relative newness of Zecco may put some off. Of the brokers which cater exclusively to option traders OptionsHouse and Think or Swim appears to be the best price with no minimum trade fees.

Stock Gumshoe - Blog Review

Stock Gumshoe

Have you ever received an unwanted email hinting at the next great stock and wondered what it is?

Have you ever received junk mail with a teasing description of a stock and tried to guess at it identity?

Well Stock Gumshoe is the blog for you. The blog at Stock Gumshoe is devoted to taking the descriptive teases found in ads for stock picking newsletters or the so called news articles from some sites that are nothing more than a come-on for their services and figuring out what hidden stock is being touted.

Discussing not only his own selections but those submitted by his readers, the author takes the clues contained in the newsletter teasers and searches for the unnamed stock. An example of the authors abilities is this analysis of an unnamed water stock found in a Motley Fool ad.

Overall, Stock Gumshoe is a blog that is worth reading for its unique offering among the numerous investing and trading blogs.

Stock Gumshoe

World Beta - Blog Review

World Beta

Another website I enjoy reading and which has made it on my RSS feed reader is Mebane Faber's World Beta blog. The World Beta blog describes itself as focusing on:

a worldwide beta asset allocation program. It also tracks global alpha portfolios comprised of ETFs, mutual funds, and closed-end funds. Lastly, it follows portfolios based on the top value and activist hedge fund managers through their 13F filings.

Offering daily commentary on a wide range of economic and stock market related events the blog informs as well as educates. In particular, I find useful the several portfolios created by the blog author which gathers and presents the holdings of several hedge and activist funds. A good place to start researching those portfolios is to follow this link which is the most recent update of the Hedge Consensus, Activist Consensus, and Hedge Fund Best Ideas portfolios presented on the website.

Overall, World Beta presents useful information in a succinct and insightful manner useful to the new investor.

World Beta

Fear, Not Greed, Must Animate Your Investing Decision

Greed. It is the motivating emotion for anyone who invests or trades. Greed, despite what some would say, is neither good or bad. Greed is nothing more than the desire for more than needed. That is why I invest, to achieve excess wealth such that I have more than I will need at some future date.

But while I invest and trade because of Greed, I do not let Greed animate my investing and trading decisions. Rather, I rely on an entirely different emotion to guide my way in the market. The emotion on which I rely is Fear.

I rely on Fear because I find that it provides the voice of reason in contrast to Greed’s “siren song” which often sounds pleasing, but masks hidden dangers. My Fear serves to place a rationale check on Greed’s unbridled enthusiasm telling me to buy, buy, buy or sell, sell, sell. No matter a trader or investor, fear should have the same value to you.

Whether you follow a fundamental process and find an asset that sells for sixty cents on the dollar; or you are a technician whose analysis indicates that a stocks behavior is demonstrating a positive risk to reward scenario, Greed without Fear exposes you to unknown factors. Greed tells you all the reasons why you should make the trade, Fear asks you to consider why you should not.

Yet most would rather be Greedy than Fearful. Perhaps because nothing that serves to check your passion is ever popular. Yet Fear, properly embraced, can serve you much better than Greed. Fear, unlike Greed, forces you to stop and ask yourself not what is it that my Greed will earn me, but what is it that my Greed will cause me to lose. That is Fear’s value to any new investor or trader.

Fear may not be as sexy as Greed, but it will make you a lot more money.

Competition Demystified - Book Review

Competition Demystified: A Radically Simplified Approach to Business Strategy





What Is It About?

The book devotes itself to understanding and explaining how to analyze the competitive advantage a business may or may not posses. The book simplifies the analysis, arguing that a competitive advantage analysis simply determines whether there exits barriers of entry that protect the incumbent firm.


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

A straight forward book which explains competitive advantage in a manner easy for the new investor to understand. Using discussion and case study, the authors explains how an investor should determine whether a competitive advantage exists in the firm under review. The best part of the book is a simple decision tree that repeats throughout the book, showing how too quickly asses any competitive advantage that may exist. One of the better books I have read that added to my development as a new investor.


The Good News

Understandable without sacrificing depth, this book does a great job demonstrating to a new investor the required analysis for finding competitive advantages.


The Bad News

Written by a college professor the book reads as a textbook. The reader would be better off digesting the material over several weeks to allow for consideration of each chapter.


The Bottom Line

Great book for those looking to gain knowledge on the subject of competitive advantage.


Other Related Reading:

 My Review     My Review

AAII: American Association of Individual Investors - Investing Resource Review

American Association of Individual Investors (AAII)


The American Association of Individual Investors (AAII) is one of the best resources for a new investor. Reasonably priced yet comprehensive in coverage, AAII.Com is all about educating new investors. AAII is simply one of the best values out there.

A one year subscription to AAII costs a paltry $29.00. I say paltry because for $29.00 one receives quality information that could easily cost much more. A year's subscription entitles one to 12 issues of the AAII Journal both print and online. In addition, there are numerous resources on how to build a portfolio and how to invest in stocks. As an example here is a recent article on how to trace a firm's cash flow.

Perhaps the best part of AAII is the Stock Screen section. Every month AAII updates several stock screens developed and based on the teachings of several different investors and traders. For the value minded there are screens based on the works of several famous value investors including David Dreman, Benjamin Graham, and John Neff. For the growth investor there are screens based on the work of Phil Fisher, Martin Zweig, and others. Overall, for a new investor the screens provide the ability to study how a screen works and to develop ideas form them.

AAII was one of the first subscriptions I paid for when I started last year and I renewed this year. I recommend it to new investors. For $29 it is well worth the money spent.

American Association of Individual Investors (AAII)

Bespoke Investment Group - Blog Review

Bespoke Investment Group

I usually read a blog for at least a month or two before deciding to add it as part of my regular feed reader lineup. Time is short and I like to get a feel for the blog before I make the commitment to add a blog to the 20 I check everyday. But in rare cases I make an exception. The Bespoke Investment Group blog is one of those exceptions.

Barely over two weeks old this blog has already impressed me with not only the quality of their writing but the well researched content as well. Covering such topics as commodities, ETF's, stock analysis, and the economy the Bespoke Investment Group blog provides just the type of analysis investors and traders should be reading and learning from. A fine example of how Bespoke Investment Group can help the investor or trader is found in this very useful ETF Cheat Sheet.

Overall, I recommend the Bespoke Investment Group blog as one that should be read regularly.

Bespoke Investment Group

30 Days To Market Mastery: A Step By Step Guide To Trading - Book Review

30 Days to Market Mastery: A Step-by-Step Guide to Profitable Trading (Wiley Trading)






What Is It About?

This book provides a step by step guide on how to trade. The book divides into 30 different chapters, each one teaching a new lesson. The book is structured for reading over a thirty day period in order to fully digest each lesson. To that end, each lesson concludes with a short quiz asking multiple choice questions on the material covered or presenting charts which the reader must interpret.


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

A complete book for a new trader. Offering both theory and practical application the book excels in helping new traders understand what it takes to develop a trading system. The book does this by providing a comprehensive overview on how to trade.

Starting with the basic understanding that all trading systems require a setup, trigger, and follow-through, the book does a good job showing the new trader what it takes to develop and implement a trading system. Using specific examples, with detailed charts and explanations, the book provides several different trading systems which a new trader can study. Demonstrating its commitment to teaching the new trader, the book provides a short quiz at the end of each chapter. These quizzes are not just a retread of material described, but actually challenge the reader to demonstrate competence as the read the book. Overall, this is one of the few books that covers all one might need to read in order to grasp how to trade.


The Good News

The most complete book for the new trader I have read.


The Bad News

Not well suited for those who have a distaste for charts or technical indicators.


The Bottom Line

A great book for the new trader looking for a step by step guide on how to trade successfully.


Other Related Reading:

 My Review    My Review

Benjamin Graham Loved Traders Too

I read a lot of different blogs which focus on one style of investing to the exclusion of another. As I have mentioned before, I do not believe that there is only one style of investing or trading that can lead to success. Nor to I believe that there is a "right" way to invest or trade. Rather, I embrace the idea that every new investor or trader must find that style which fits their specific skill set in order to achieve market success.

I am glad to see that I am not alone in this approach to achieving stock market success. Most stock bloggers will be surprised (especially the more ardent fundamental investor) to know that Benjamin Graham supported such a view. Towards the end of his life, Mr. Graham stated that one should do those things that you know you can do well.

As detailed in "The Rediscovered Benjamin Graham: Selected Writings of the Wall Street Legend" Mr. Graham specifically stated that:

If you can really beat the market by charts, by astrology, or by some rare and valuable gift of your own, then that's the roe you should hoe. If you're
really good at picking stocks most likely to succeed in the next 12 months, base your work on that endeavor. If you can foretell the next important development in the economy, or in technology, or in consumers' preferences, and gauge its consequences for various equity values, then concentrate on that particular activity. But in each case you must prove to yourself by honest, no-bluffing self examination and by continuous testing of performance, that you have what it takes to produce worthwhile results.

Of course, Mr. Graham made clear that fundamental investing with a margin of safety was best in his opinion because that worked for him. But as the above passage indicates he acknowledged and accepted that each investor and trader must determine for themselves which means would provide success, provided that the selected means was subject to rigorous testing to ensure its validity.

Although it is difficult for the new trader or investor to cancel out the noise of various sources which champion exclusively one point of view, that is what you must do. In the end, being honest with yourself, even if it means following a system of trading which others may scoff at, is precisely the most important step in achieving stock market success. And if you don't believe me, than heed the words of Benjamin Graham, who eloquently defends the proposition that one size most definitely does not fit all and that we each must strive to identify that manner of investing and trading which best suits us individually.

Best Blog To Read If Your Wife Just Gave Birth To Your Baby

Abnormal Returns

Little did I know that less than 24 hours after my last post my wife would deliver to me a baby boy. But that is what exactly happened early Thursday morning. While I may still not be back to regular blogging for a bit of time I did want to recommend a website which may appeal to those short on time who desire to stay informed in a most efficient manner.

As I have said before, one of the most useful blogs I read is Abnormal Returns. Everyday Abnormal Returns provides a comprehensive review, with links, to some of the best investment/economy related posts on the Internet. Often, the posts are organized around a daily topic or theme. But the true value of what Abnormal Returns does is only realized when one is pressed for time.

For the last few days, time has been short and I have not had the ability or desire to leisurely browse the Internet for investment related articles. Thanks to Abnormal Returns and its links though, I have been able to quickly find and read nearly all the important headlines and blog posts necessary to satisfy that daily news fix I crave.

Consequently, Abnormal Returns gets my vote for "Best Blog To Read If Your Wife Just Gave Birth To Your Baby (or any other event which may cause you to be short on time)." Simply put, if you are short on time and need a blog that collects the most relevant daily links to the best investment related articles on the Internet, Abnormal Returns is where you need to go.

Abnormal Returns

A Note To Readers Of This Blog

As many of you my know already, my wife and I are expecting are first child on May 8th.

Of course he may have a different timetable.

Therefore, I just wanted to drop a quick note and let those who enjoy reading my blog regularly know that I may post sporadically or not at all in the next few days or weeks.

Hopefully you will stick around and be here when I get back.

Take care

Steven

Don't Worry About The Market

Do you think about beating the stock market? Well you shouldn't. I don’t. Here’s why.

During my first year of law school, like many other first year law students, I was very stressed out about exams. In law school unlike undergrad, there are no mid-terms, papers, or other ways to earn points towards your final grade. There is but one examination which can cover a semester or even two semesters worth of material.

This of course leads to much discussion among students about the “test.” How difficult the exam is and whether one could do well enough to “beat” the test were common concerns raised. And for a while I joined in the stress fest, until someone told me a funny story.

The story went like this:

There were these two hunters who decide one day to go hunting for a bear. After several days on the hunt they had yet to capture their prize when out of nowhere a bear jumps from behind a thicket. Being the inexperienced hunters that they were, the hunters drop their weapons and begin to run down the trail with this very angry bear hot on their heels.

After a bit of time, and without much success of eluding the bear, one hunter turns to the other and gasps “Hey, I sure hope we can outrun this bear.” Being a bit more in shape than the other, the second hunter just turns and smiles and as he begins to run faster yells back over his shoulder “I don’t have to out run the bear, I just have to outrun you!”

Once I heard that I never worried about law school exams again. Oh sure, I still studied hard in order to get the best result I could, but the anxiety of failing dropped away. You see, law school exams are graded on a curve. Therefore, nobody beats the test. If there are a hundred points on the exam and the best score is 90 then that is the A+ paper. All other grades flow from that. I realized I did not need to beat the test to survive, I just needed to do better than my fellow students.

Once I knew that, any stress I had about the test disappeared. I began to look around at my fellow students and assessed my chances of running faster than them. And I liked the odds.

Now of course by now you may be wondering what does this have to do about the stock market for a new investor or trader. I think it is important to remember that the market is made up of individuals. When you buy or sell you are not buying/selling to the market, you are conducting an individual transaction between you and another person. Consequently, you should not be worrying about beating a market or some arbitrary index, you should be thinking about the person on the other side of the trade.

If you are a fundamental investor and you buy a stock because you think it is undervalued, you should ask yourself “why does the person selling think it is overvalued enough to sell.” If you rely on charts which indicate you should sell, do you ask yourself “what does the buyer see in his chart that I do not?” Instead of getting excited that the market has made a mistake, you should look to make sure you are not the slow one making the mistake.

As you develop as a trader or investor don’t spend too much time worrying about beating the market. Instead focus your energy on doing the best you can do relative to other investors and traders. You don’t have to beat the market, you just have to be more right than the next person when you make a decision.

After all, the devil always takes the hindmost, don’t let that person be you.

The Dhandho Investor - Book Review

The Dhandho Investor: The Low - Risk Value Method to High Returns





What Is It About?

The book describes fundamental investing as followed by the Graham-Buffett style of value investing. The book covers topics such as business analysis, developing a focused portfolio, and understanding the value of finding low risk-high probability of success investments. Overall, the book helps new investors achieve success in the stock market following a disciplined investing approach.


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

Straight forward book on value investing. Using examples from his own work as a private fund manager the author helps the new investor understand how to use a focused fundamental style of investing in order to achieve success. Touching on such important topics as discounted cash flow analysis, competitive advantage, and margin of safety, the book educates the new investor on the basic principles that Warren Buffett and others encourage all investors to follow. Short and to the point, the book delivers a lot of value to the new investor.


The Good News

For those who are looking for a solid introduction to focused value investing this book does the job.


The Bad News

Great book for the new value investor, less so for the more experienced investor already adept at using the techniques of fundamental investing.


The Bottom Line

If you want a book to help you understand value investing, this book can help you accomplish your goal.


Other Related Reading:

 My Review    My Review

First Things First: Knowledge, Analysis, Trigger

Participating in the market can seem to be a daunting prospect for the non-professional. Having a simple system to help acclimate one to a whole new process can be helpful. When I want to learn anything new I employ a three step process. I describe the three steps as: Knowledge, Analysis, and Trigger (KAT). Here is how I go about that process to aid my development as a new investor and trading.

Knowledge

The obvious and most simple step in my KAT system is that one must first determine where one can gain knowledge. Will you use books from Benjamin Graham or Van Tharp’s Trade Your Way to Financial Freedom, or newspapers like the Wall Street Journal? Or perhaps you will rely exclusively on charts or company reports. Whatever the case, as a new investor or trader you must first figure out how and where you will gain your knowledge.

Analysis

The second, and a more difficult step in the KAT system, is developing the ability to analyze the knowledge acquired. In other words, you must gain the ability to filter the useful from the useless. Then one must take the useful knowledge and determine what is actionable and what is not.

There are no shortcuts here at this step. The amount of information available is mind boggling and overwhelming. Without the development of a system of analysis to determine what knowledge you can use, the mere possession of that knowledge is worth nothing.

Trigger

The third and most difficult final step in KAT is what I call the Trigger, as in pull the trigger. Once you have obtained your knowledge sources and once you have developed the ability to analyze what is useful, you must then develop the emotional ability to act on your analysis. This is why the trigger is the most difficult step to develop in KAT.

Acquiring knowledge and analyzing can be easily thought of as logical processes. Pulling the trigger and applying that knowledge and analysis is not. Taking ones knowledge and analysis and implementing it, is an affirmative (and emotional) declaration that you have the self confidence and belief to take action (or inaction) when other may disagree with your conclusion.

The decision to buy a stock (or sell it) is based on knowledge and analysis, but ultimately being able to implement that decision and pull the trigger comes down to emotional confidence in ones ability. If one does not have the ability to recognize and execute that which their knowledge and analysis dictates then mastery of the first two steps of KAT mean nothing

While all this may seem obvious, obvious information is not so obvious when you are unfamiliar with a subject. For those like me who are relatively new to investing and trading, discovering the obvious is a rewarding experience. That is why I think one must understand the above three important (but perhaps obvious) things when you begin to participate in the market.

Understanding that one must gain knowledge, develop the ability to analyze that knowledge, and maintain the emotional discipline to pull the trigger on that analysis is one of the most important and basics things I could understand. And I think you should too.