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