Search Results gil morales fund performance

: How to Make Money Selling Stocks Short (Wiley Trading) (9780471710493): William J. O’Neil, Gil Morales:…

William O’Neil, publisher of Investor’s Business Daily, as well as the author of a handful of highly readable, and very useful investing books, has updated his 1976 original treatise on short selling with the assistance of Gil Morales, Chief Market Strategist for his firm. The book briefly covers the mechanics and rationale for short selling. Selling short is the opposite of buying long. However, many investors are afraid to short because they either think it is un-American or dangerous. Neither premise is correct. If you know what you are doing, have a game plan, have stop-loss rules and monitor the markets daily, the opportunity to make money is there. And the May through October timeframe in 2006 may turn out to be terrific shorting opportunity.

The first part (27 pages) of this 194-page three-part paperback covers how and when to sell short. Using colorful charts with detailed explanations of the key price and technical market conditions, the authors illustrate the proper timing of the short sale.

Part II entitled “The Anatomy of the Short Sale,” details the mechanics of a short sale in seven pages. Two page-size charts illustrate the four phases of a short sale and the logic used to known when to pull the trigger.

Part III is composed of 155 pages of annotated chart examples of different stocks pointing out the stock’s trading characteristics and exact sell point. The chapter includes detailed write-ups of nine stocks and their charts, and hundreds of single page charts with annotations

Some of the key points made in the book include:

1. Very few investors know how and when to sell short correctly. 2. Use daily and weekly charts of a stock’s volume and price. 3. Use 20 and 50-day moving averages of price and the piercing of these averages by the price. 4. Best short sales are the biggest winners in the prior bull market 5. Determination and persistence are required characteristics of a successful short seller

Overall, this book provides a very basic introductory discussion of short selling which is not totally inclusive of all the information needed to make the sale. Comparing this book to his other books, O’Neil does not provide the same degree of detail or insight. He could have put more emphasis on providing more indepth discussions on the psychology and practice of short selling, as well as show how to use options instead of stocks. An investor considering short selling should become familiar with the market’s internal statistics, sentiment indicators, and technical analysis (e.g., MACD, stochastics, RSI, etc.) before even considering a short sale. Since 50-70% of a stock’s move is dependent on the market’s trend that should be the first item to be determined.

Stock Picking Performance of Fast Money Experts

As suggested by a reader, this entry examines the stock picking performance of experts featured on CNBC’s Fast Money. According to CNBC, these experts “give you the information normally reserved for the Wall Street trading floor, enabling you to make decisions that can make you money.” Do their stock picks actually make money fast? Do they outperform the broad stock market? Using stock picks recorded in entries entitled “Your First Move for Monday†” (or Tuesday when Monday is a holiday) in the Fast Money Rapid Recap archive and weekly price data for those picks over the period 8/10/07 through 2/27/09, we find that:

This sampling method yields 212 picks encompassing 141 distinct stocks and funds. We analyze returns for these picks using the following assumptions:

  • Each recommendation executes at the open on the designated Monday (or Tuesday when Monday is a holiday). The return for the first week is therefore from Monday open to Friday close. The returns for holding the position for the next 12 weeks are from Friday close to Friday close. We stop tracking returns after a 13-week horizon because they are not “fast money.” We also stop tracking returns when a pick is acquired and no longer traded.
  • When the experts pick a stock more than once, we include its returns multiple times.
  • Weekly stock prices are from Yahoo!Finance, except for Hilton Hotels (HLT). Trading in HLT ceased in October 2007. Weekly prices for HLT are from an historical chart at MSN Money, covering only a 10-week holding period from the recommended buy date.
  • To adjust for market returns, we subtract contemporaneous weekly returns for SPY.
  • Averages weight each stock pick equally.
  • Return calculations ignore the impacts of transaction costs/trading frictions, dividends and capital requirements (except for an anomalous $51 dividend paid by MO, which we include).

The following chart compares the average cumulative performance of all expert picks in the sample to that of the overall market (SPY) for periods ranging from one week to 13 weeks after pick. Sample size generally declines with length of investment horizon (recent picks have not been held a full 13 weeks), from 212 picks for Week 1 to 174 picks for Week 13. As the sample has grown, the aggregate performance of the experts (before trading frictions) has generally become more like that of SPY. Note that:

The Fast Money experts have on average offered no “fast money.” Average raw cumulative returns for expert picks (black line) are negative for all weeks over the 13-week test horizon (before trading frictions).

The experts as a group perform very similarly to contemporaneous investments in SPY (green line) on a cumulative return basis over nearly all of the 13-week test horizon.

How have the long-only picks of the experts performed?

The next chart depicts the average raw cumulative returns for the 188 long and 24 short picks of the Fast Money experts. The short picks include six recommendations to buy inverse funds. The long positions by themselves have underperformed SPY over most of the 13-week test period and indicate no stock picking ability. The short positions alone generate positive cumulative returns for most of the 13 weeks in the test period. Declines in the broad stock market over parts of the test period tend to aid the performance of short positions. However, as seen in the previous graph, the short recommendations do not make the experts outperform the overall stock market.

Can we compare the stock picking abilities of individual Fast Money experts?

The final chart shows the average raw cumulative returns over a 13-week horizon for five individual Fast Money experts: Guy Adami, Karen Finerman, Jeff Macke, Pete Najarian, Tim Seymour and Others. Results suggest that there could be differences in stock picking abilities. However, subsamples for individuals are small (24-44 for Week 1), and the variabilities of returns across stock picks are very large. Just a couple very good or very bad additional picks could therefore alter relative performance noticeably.

None of the experts have generated attractive raw returns.

In summary, the Fast Money experts as a group probably do not offer fast money with their stock picks, and their stock-picking ability as a group is unimpressive.

Note that SPY is value-weighted, while the expert results are equally-weighted across picks. Some equally-weighted portfolio may be more appropriate than SPY as a benchmark for the performance of the experts.

See Guru Grades for a snapshot of the accuracy of various experts in predicting the direction of the U.S. stock market, including links to evaluations of their individual commentaries. See also Blog Synthesis: The Wisdom of Analysts, Experts and Gurus for more general research on the performance of expert investors.

You May Also Enjoy…

  • Testing Navellier’s Stock Picking and Market Timing Based on Fund Performance
  • Money Supply (M2) and the Stock Market
  • Money Supply (M1) and the Stock Market
  • Short-term Net Money Flow and Stock Returns
  • Forbes Evaluates Ken Fisher’s Stock Picking

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How to Make Big Money Safely in Stock Market

How to Make Big Money Safely in Stock Market
Henry Lu, Knowledge Level: , Keywords: how to make big money safely in stock market by henry lu
(1) Stock Market is Tough Place to Make Any Money Consistently

NASDAQ or SP&500 averaged about -6% per year for 5 years between 1999 and 2003. Many individual investors who made killing in the internet bubble period got wiped out during those 5 years. Many who trusted Wall Street experts by investing their life savings into mutual fund had rude awakening after the huge loss and scandals in many of the famous fund names.

Numerous academic studies have shown that more than 90% of mutual funds failed to beat market over the long run and that more than 90% of individual investors lost money in the stock market. Too many people and too many Wall Street experts or mutual fund managers are buying and selling stocks like madmen, with no sound strategy or any hope of long term success. Ironically, theyre the ones who create opportunities for prudent, long term oriented investors.

To be successful in stock market, you either have to become an expert yourself or to seek help from real successful experts. Stock market is such a brutal place that there is no room for half-expert or expert pretenders. The truth is that only a small percentage of disciplined and experienced people earn disproportionate huge amount of return, many times at the expense of the rest. It is an insult to “Wall Street expert” professional title when so many of such “expert pretenders” failed to beat index or merely stay break-even.

(2) Majority of huge performance claims in Ads by “Experts” are not real

Too many investment newsletters or hot mutual funds touted their huge past performance and went into disaster later on. Who do you believe? I have been in this stock market long enough to know that majority of their claims are not “real”. I will tell you why below.

The first reason is simply due to “cheating”. Lets be honest about many Ads. Many of them do not tell the whole and true story of their performance. For example, they would tout huge percentage of gains for certain winning stocks and hide the losing stocks. If you look deeper into their whole portfolio performance, their portfolio performance was not impressive at all. Many investment newsletters will have multiple portfolios in publication. In their ads, they will only mention the performance of the winning portfolio and hide the losing portfolio. The problem with multiple portfolios is that when you subscribe to their newsletters, you would not easily know which portfolio out of many will have best performance in the long run. Which portfolio do you follow? Most important of all, which portfolio out of many does the newsletter author invests for his/her own money? If the newsletter author or the mutual fund manager does not invest into a portfolio himself or herself, how would you trust their services?

Even if past performance of a newsletter or a mutual fund was pretty good, it may not indicate good performance in the future. Many hot technology mutual funds jumped up 100% or more in the 90s and dived to their death after 90% to 99% of loss. Certain investment methods such as growth stocks investing are known to be risky. Momentum investing or day trading methods are known to be extremely risky methods that can wipe out life savings over night. There is simply no free lunch. While a risky method can produce fabulous gain in relative short term, over the long run, a risky method is more likely to make people poorer rather than richer even if a short term gain was gigantic. Gigantic short term gain is just a dangerous stock market trap to lure the inexperienced people into the market. Dreaming for instant satisfaction of huge short term gain overnight with speculation is just a recipe for disaster ahead.

(3) Value Investing is the Only Proven Safe Method

Value mutual funds are well known to have lower volatility than growth mutual funds. Numerous industry and acedemic studies have shown that value stocks as a group performed far better than growth stocks in bear market. Many technology and internet so called “growth stocks” lost 90% to 99% of value in just a couple of years after 2000 while many value stocks went up during the same time frame.

In fact, the single most important element to obtain high investment performance over the long run is to maintain MARGIN OF SAFETY of a portfolio. That is why the greatest investor Warren Buffet once quote “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”.

(4) Value Investing is the Proven Method to Make Big Money in the Stock Market

I know that Im going to catch a lot of flak for saying this, and that many people will misunderstand what Im saying. There are certainly other methods of investing or trading, which made people rich. There are certainly many under- performing value mutual funds, which give people wrong impression that value investing is equivalent of low performance with less risk.

However, I want to emphasize that in fact value investing is investment style that can obtain high performance with less risk. I want to stand by my above statement for the following reasons:

* In the early years of my investment career, I have studied and tried all kinds of well known methods of famous investors or traders, Short term trading, Momentum trading, Technical Analysis, CANSLIM, growth stock long term buy and hold, Random Walk theory, etc. I have been there and I have done there. Evidenced by my past investment performance, value investing is the only method that delivered gigantic investment return consistently for me over past many years. In 2003, I have made more than $150,000 in stock market with value investing method. In 2004, I have made even more money than 2003 so far. With the power of compounding, there is really no upper limit for the investment profit with value investing.

* In 1984, Warren Buffet gave a speech titled The Superinvestors of Graham-and-Doddsville, which categorized performance of many famous value investors who beat market year in and year out. Many of people mentioned in this article are legendary multi-billionaire right now. It is true that only a small percentage of investors can beat market consistently. However, it is not by chance at all that so many of students of Benjamin Graham became super riches in America while other methods have not produced that many rich people. It is also not coincident at all that the second richest person in the world is a value investor named Warren Buffet, a student of Benjamin Graham as well.

(5) Value investing will not distract your regular job

The nicest thing about value investing is that it will not distract your regular job if you choose not to stare at the stock market frequently in your office. In fact, it is quite healthy to forget about stock market in your office and worry about that only at your home after work.

Many newbies in the stock market still believe that if they stare at stock price quote closely, they can obtain better chances of winning. It will not. Staring at the stock quote is least important part of this game. In fact, staring closely at the stock price quote is more likely to create a loser rather than a winner because of greed and fear in the stock market. The more one is unable to resist the mad mood of Mr. Market, the more likely one is unable to invest successfully with value investment method.

I am not saying that successful value investing does not require time. The time you will need in value investing depends on the investment vehicle you utilize. If you invest with a value mutual fund, you will not need much time in stock market and you only need to follow up quarterly with your funds performance. If you are a passive investor of my investment newsletter Blast Investor Real-time Plus and you follow my model portfolio passively, you will only need to pay attention to my infrequent trade alert closely and read my newsletter issues every 2 weeks. If you invest by yourself, you will certainly need hours of time every week to look at hundreds of value stock leads and do your own due diligence by reading 10Q or 10K SEC filling, or by listening to conference calls, or by talking to companys management.

(6) Successful Value Investing is Hard, But You can Do It!

I certainly do not want to make you to believe that value investing is as easy as reading couple of books. Value investing not only requires tons of knowledge and expertise in financial analysis, accounting, US tax law, US bankruptcy law, etc., it also requires real life training of right psychology to fight against greed and fear in the stock market. It is hard to do.

However, successful investing certainly can be done and I have done it over past decade myself. You certainly want to look at my investing articles of this web site for more information.

(7) You need to start early in value investing

Lets be honest about value investing, it is not a get-rich- quick scam and it takes time to really make living with value investing without need of your regular job. You need large starting principle if you want to make living from stock market investment than your salary.

By reading Warren Buffets article above, you can pretty much guess that successful value investors can achieve 20% to 30% per year performance consistently over the long run regardless of whether market is bear or bull although it is possible to obtain significantly higher performance in earlier investment years due to smaller fund size and luck. 20% or 30% more consistent investment return is already very high return over the long run. Since Peter Lynch retired from Fidelity, you can rarely find a mutual fund with that kind of performance over past many years.

The best approach is to treat stock market investment as side business in addition to your regular job. Your regular job help you pay your bills and help you earn the initial principle for value investing. Once your investment net worth surpasses $100,000, sooner or later you will realize that your regular job salary can hardly keep up with compounded rate of investment return. Too many people naively believe that they can get rich quick with speculative trading method in stock market rather than a hard work with a job and value investing at side. It is a lot easier to make your first $50,000 net worth with a job rather than speculation in stock market.

Even if you do not have large sum of money right now as principle to make really big profit out of value investing, you still want to start value investing early so that you can learn in and out of value investing in your earlier years of investing in the stock market. Successful investment is long term process. The earlier you start investing successfully, the better off your pocketbook will be, and the quicker you will reach your financial freedom. Lets do a quick math, if your starting capital for investing is $50,000 and your annual compouned rate of return is 30%, you will need 9 years to surpass $500,000 net worth. However, to turn $500,000 net worth into 1 million, you only need 3 more years, think hard!

Webmasters and Ezine Publishers: Free professional content – pre-licensed to you..

You are invited to use any or all of these value investing articles in your publication or website. The only requirement is the inclusion of the following, after each article…

* Article by Henry Lu of BlastInvest LLC, a premium investment newsletter publisher in Connecticut. Visit www.BlastInvest.com for FREE “how-to” value investing assistance, web services and more.

Article Source: EzineArticles.com (1) Stock Market is Tough Place to Make Any Money ConsistentlyNASDAQ or SP&500 averaged about -6% per year for 5 years between 1999 and 2003. Many individual investors who made killing in the inter. Article on how to make big money safely in stock market by henry lu by Henry Lu


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Bill Miller laments losses, but is silent on strategy

NEW YORK (Fortune) — Shareholders of the battered Legg Mason Value Trust mutual fund won’t find many answers in manager Bill Miller’s second-quarter letter to investors.

In his note this week, Miller, who famously beat the S&P 500 for 15 consecutive years until stumbling in 2006, deplores market conditions that continue to punish value investors, but doesn’t discuss his strategy. His $9.7 billion LMVTX (LMVTX) fund has dropped 34% since last July, while the S&P 500 fell 12%, and suffered outsized losses as financial stocks plummeted. (Read Miller’s letter here.)

Investors have responded by pulling out $2.4 billion from the fund in the first six months of the year, according to Financial Research Corp. The impact has been felt throughout Legg Mason (LM), which announced its second straight quarterly loss last week. Miller is not only the firm’s star manager, but also chairman and chief investment officer of its stock investing arm, Legg Mason Capital Management.

But aside from reminding shareholders that the best time to buy the fund is during its grimmest stretch, Miller offers no specific plan for fighting his way back.

Unlike his missive after the first quarter, in which he suggested the worst was over after the collapse of Bear Stearns, he also offers no timelines. Instead he writes that the crisis around Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), which have dropped over 65% this year, has convinced him that this market is the most difficult he’s faced.

Still, he seems to dismiss critics who suggest that his bad bets on housing and banking stocks were foreseeable, or that he should have anticipated the commodities boom driven by growth in China and India. He also asks, but doesn’t answer, whether buying fallen financials or correcting energy stocks are “obvious” moves today.

“I do think some things are obvious,” he writes, citing the eventual end of the credit and housing crises, the return of the credit markets, and the long-term strength of the American consumer and economy. “It is obvious stock prices will be higher in the future than they are now,” he writes in his only projection for the market.

While it’s true that value investors – who look for beaten down stocks that they think the market has misjudged – have suffered this year, Miller has been hurt more than most. Large value funds have fallen an average of 16% since last July, according to Morningstar. The research firm lists LMVTX as a large blend fund, but Miller trails his peers there too: on average, those funds have dropped 11%.

LMVTX has been so hard hit partly because the fund is highly concentrated, with only 35 stocks at present. When bets sour, as they did with Miller’s large crop of financials, including Citigroup (C, Fortune 500) (down 33% for the year), the whole portfolio reels. Two of Miller’s other top ten holdings, Unitedhealth Group (UNH, Fortune 500) and Aetna have also been pummeled this year, down 51% and 29%, respectively.

But there’s another reason why Miller’s losses have outpaced other value managers. He’s never toed the traditional value line and is famous for scooping up high-multiple stocks like Ebay and Google, now two of his top 10 holdings. Both have fallen this year, with Ebay down 18% and Google off 26%.

As Legg Mason continues to struggle, Miller’s latest shareholder letter leaves a lot unsaid. So does the manager: Miller didn’t respond to a request for comment Wednesday.

Time! | Investing

You are a world-class expert. Yes, you are, just like Stephen Hawking is a world-class expert on the Big Bang and Martha Stewart is a world-class expert on making festive party favors out of tissue paper.

Your personal interests, life and work experiences and education add up to real expertise in a number of subjects. Do you tinker with cars? Read Shakespeare for fun? Beat your buddies at chess? Lecture your friends about proper diet, or Web design, or Star Wars collectibles?

Then you’re an expert, and there’s a place online that can help you turn that avocation into hard cash.

There are at least three types of Web-based businesses that can help you earn cash in your spare time — and a fourth type you shouldn’t go near.

All three of the legit types supply the online base, the software and the marketing muscle you need to get started. You supply the expert “content,” to use the hideous neo-media word for what we call “facts” in plain English.

This is not the get-rich-quick scheme you may have been looking for. The people who make real money through any of these schemes are working hard for it, really know their subjects and are good at communicating.

The money they earn is based on hard numbers. Page views and user ratings are modern equivalents to piece-work counts in a factory.

But if you can’t find a full-time job, can’t work regular hours or outside your home, or want to moonlight to supplement the 9 to 5 grind, one of these might be for you. For more strategies on how to moonlight, see Ten Ways to Moonlight.

A look at some of these online businesses suggests they are being used by young and out-of-work professionals to build up their resumes and hone their skills until the economy recovers. And, of course, many managers are using the services to get the job done until they can afford to add headcount.

All the sites claim to conduct a vetting process for contributors, and quality control over contributions, but their criteria are positively loosey-goosey compared to the personnel departments of a major corporation.

After all, their system of paying based on actual usage and client ratings ensures that only really good contributors get paid, and bad ones sink into the unplumbed depths of the database.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer’s business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2010 Minyanville Media, Inc. All Rights Reserved.

22 swinging stocks for quick-hit profits

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Swing traders are the markets’ tigers, devouring short-term gains and moving on before the stock goes cold. Here are some rules for the short-term game and some possible prey to get you started.

By Jon D. Markman

In early 2003, shares of Denver-based Titanium Metals (TIE, news, msgs) sold for the equivalent of $1.55 a share. Today, the stock fetches $77. During those three years, the stock has been terrific for buy-and-hold investors. But even if you didn’t buy the stock early in Titanium’s run, there were plenty of opportunities to make big profits with low-risk trades.

Normally in this space I write about the multiyear investment opportunities that arise from corporate, political and economic events, such as the race by Boeing (BA, news, msgs) and Airbus to build lighter, stronger, faster planes that has led to accelerating titanium demand.

Today, though, Id like to get down and dirty in the world of people whose investment horizons extend no more than a month or two. Not red-eyed day-traders, but so-called position or swing traders who look for chances to buy stocks like Titanium Metals for 20% to 40% gains, and then move on and find another. If buy-and-hold investors are anacondas, eating one big meal every few months, swing traders are tigers, hunting and killing once a week.

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How can you become a short-term tiger, while not abandoning your inner anaconda?

Its really not that hard. Youll need five things: A willingness to narrow your investing universe to companies undergoing fundamental change that have stocks that trend well; a subscription to a decent online stock-charting service; a little courage; and an unswerving ability to face up to occasional failure quickly without remorse.

Demand performance
To get started, let me make one thing clear. A lot of what you think you know about why stocks go up and down is right in the long term but wrong in the short term.

  • Over long periods of time, companies that are undervalued in relation to their future growth prospects, and which grow earnings at a pace greater than the markets expectations, make great investments.
  • Over short periods of time, what makes stocks go up is a group of passionate buyers that are more aggressive than sellers. End of story. Think of it this way: If there is a finite number of shares available, and current holders are reluctant to part with them, then buyers must offer increasingly greater amounts of money to encourage holders to change their minds. Stocks rise when they are most profoundly wanted.

To swing trade successfully, your mission is to find stocks that are in demand. But not just any rising stocks. The ones with the best chance of actually being successful over the next two to six weeks are ones that are rising on progressively higher volume.

Makes sense, right? The more buying transactions that are taking place, the more the story behind the demand is appreciated — and the more likely it is that you will find willing sellers when you are ready to offload your purchase at higher prices.

A piece of the action
Who are these buyers? Most often, they are large financial institutions. Mutual funds. Hedge funds. Pension funds. People with a lot of money. Duh, right? But theres more to it.

Virtually all of these institutions specialize. For instance, they tend to concentrate on growth stocks, or value stocks, or small stocks, or foreign stocks. The greatest number focus on some shade of growth, but as a glib rule of thumb, the bravest and smartest of the most successful fund managers in the world focus on value. These guys can do open-heart surgery on a balance sheet and find life where others see death. These are the guys who bought Apple Computer (AAPL, news, msgs) at $10 three years ago, or Titanium Metals at $5. Its hard work, and you dont hear about all the times it doesnt work out.

As a swing trader, you are not looking for value. You are looking for volatility, for action, for a trend. So much of the time, you will be looking for stocks that are sort of crossover hits: Shares are being handed off from the value guys to the early-bird growth fund managers, and then to plain-vanilla growth fund managers, and finally to momentum traders. These changes of constituency provide some of the best opportunities for traders, as the number of managers who consider the stock applicable to their investment style widens.

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May 2012
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