Wizard of Wall Street Oct-Nov Edition

If your not interested in long term strategies or retirement plans, then simply put, your not an experienced professional. In fact, only a "newbie" would not be pursuing multiple strategies.

Retirement accounts, like IRAs, are protected accounts and cannot be touched by creditors or bankruptcy courts. Many times you hear about those guys who made a killing either in the market. However, you do not ever hear about the guy who lost it all.

Losing it all does happen everyday to many individuals. Think of the guy who decided that he was going to short RNAI with full leverage. Uh-oh. There are many famous Americans who have died bankrupt men. The fact of the matter is that if they had a retirement account (that is after 1975), then they would not have died poor men.

Retirement accounts are a cheap type of insurance that assures you will live a semi-comfortable existence after the age of 65. Everyone should have one and parents should be opening up ROTH IRAs for their children.

When I say my IRAs and 401ks are my most valuable accounts, I mean just that. If I get sued or the IRS comes in here one day, they will not be able to touch those accounts.

It is my belief that someone, anyone, should not be speculating unless they have multiple layers of investments. At any given time, I have at least 6 months of living expenses in savings bonds. I contribute at least $30000 each year to different retirement strategies, IRAs, 401k, DRIP plans. Then there are my real estate holdings.

http://finance.yahoo.com/q/bc?s=^DJI&t=my&l=on&z=l&q=l&c=

In response to the second poster, when looking at the Dow since 1929, we notice that there are many different trends.

1929-1933 Market Crash
1933-1955 Recovery from Crash
1955-1965 Bull Run
1965-1983 Malaise
1980-2000 Super Bull
2000-current Consolidation and Correction

When superimposing historical trends over the DOW, we can (anectdotally) conclude that the reasons behind these phases was simply the leadership of the United States.

The Market Crash of 1929 was a direct result of the Smoot-Hawley Tariff Act. Hoover should have vetoed this legislation and that would have prevented the Great Depression.

The Recovery from the Crash was facilitated by World War II. Actually, World War II had caused a meandering in the market, but right after it was over was a time of great expansion.

The Bull Run from 1955-1965 was a result of great leadership and general content with the country.

When John F. Kennedy died in 1963, we then started down the road of malaise and a series of bad leaders. This mailase was not destroyed until Ronald Reagan. After Ronald Reagan, we had George Bush and then the powerhouse Bill Clinton. Ronald Reagan and Bill Clinton were both strong leaders.

Now we have George W. Bush, a controversial President, and we see the DJIA again meandering about. Only now is it catching up to its past high and what do you know, its almost time for Bush to go. A coincidence?

If you are old enough, then you have probably been through all this before. You dont need hind-site. All you need to do is look back and make a judgement based on your past experiences.

Here is one great example involving the real estate market. Here are three articles. Read them and do not look at the date.

http://query.nytimes.com/gst/fullpage.html?res=9D04EEDA153BF934A2575BC0A967948260

http://query.nytimes.com/gst/fullpage.html?res=950DE4D6143FF930A3575AC0A96F948260

http://seattletimes.nwsource.com/html/realestate/2003303607_harney15.html

Its hard to believe that all three articles were written in 3 different time periods 1981, 1989 and 2006. I have heard many things the last few years in regards to housing.

"It will never go down"
"We have to live somewhere"
"My house is my greatest investment"
etc etc

Most people had forgotten the lessons they learned back in 1981 and 1989. A man who had lived during those times would not have forgotten, however, and would have sold his house in 2004 foreseeing the problems that were about to take place in 2005 and 2006.

There is no replacement for experience, however, Wall Street never seems to want to hire mature workers. They favor the right out of college clowns. Those are the guys that seem to run the market.

You dont need hind-site if you have experience. Chances are, you have been down that road before. In fact, we have been down this bankruptcy thing with GM twice before I believe. 1975 and 1983?

Who does the market define as an "experienced professional"? A guy right out of college with an Ivy League degree.

What about a 55 year old with a wealth of experience and education who speaks about such things like 401k accounts and IRAS? I guess that guy is a wash-out, a has been and a newbie to this new age.

So there you have it. Thats the reasoning for the meandering of the DOW. The market is run by "experienced professionals"; translation, some guy right out of college with less then ten years of investment experience. The country is run by a controversial leader.

I say to give it some time. The college graduates will get a few years more experience and they will elect a new leader. Can the American public get it wrong again?

As for recognizing an opportunity like American Airlines, I should be able to slap down all the paperwork right in front of you and you should be able to give me the right answer within a reasonable period of time. The piano player knows his job. He can play the music without missing a beat. If you are the one, then you can give me the right answer too. Dont give me this hind site baloney. I've studied for tests that were harder to figure then American Airlines.

Many people make the simple mistake of looking on Yahoo and coming to a decision, but making a decision like the one with American Airlines takes time. You have to look at the players, look back through history, you have to look at the books. Simply put, American has the best frequent flyer program in the industry and they have many brand loyalists. Their employees are patriots as well and will not quit. They will bend to demands and make sacrafices if it means taking a financial hit.

Delta? Who flies Delta? The employees hate working there. Frequent flyer program?
 
Quote from eagle488:

In response to the second poster, when looking at the Dow since 1929, we notice that there are many different trends.

1929-1933 Market Crash
1933-1955 Recovery from Crash
1955-1965 Bull Run
1965-1983 Malaise
1980-2000 Super Bull
2000-current Consolidation and Correction

When superimposing historical trends over the DOW, we can (anectdotally) conclude that the reasons behind these phases was simply the leadership of the United States.
More...

Think again. Its called inflation. Any of these indexes (balanced) matched to inflation shows somewhat dismal growth. Money merely goes in circles.
Minus the massive growth from the tech boom, the DJIA is nothing special:

http://www.itulip.com/realdow.htm

Looking at this chart, 1995-2000 seems quite an anomaly. Something we may never see again in our lifetime. I think this round of inflation (which will worsen - we're just at the beginning) may counteract it, however, and normalize this chart.

The tail of this chart reminds me of Al Gore's graphs in his latest documentary. It signals an evolving monetary devaluation of serious significance. I think the most recent inflation #s are not correctly factored. The tails of that chart will change as time progresses and current inflation rates are reassessed.
 
Eagle, the scale of your chart is very misleading. Please scale it more appropriately and then you can see the difference between the last 10-15 years and historical norms. It is unprecendented and clearly a sign of "greed". You should pound the table. If this isn't greed, I don't know what is. That doesn't mean it can't continue or even flatten out for many years, I just won't own stocks for long-term investment purposes in my lifetime likely. I do other stuff which is very lucrative. Anyway, did you own American Airlines stock?
 
I have been away for the last week because I have been very busy, so I have not been able to post.

The last happy hour I attended a very nice young man came down and told me how one of his co-workers was pulling his hair out wondering what is going on with his trades.

Now that I have gotten your attention, Im ready to reveal to you all how you can stop pulling out your hair. I have a very simple method of technical analysis. Some of you may already know this simple valuable way. I will now tell you how you can predict your entry and exit points.

Why did WFMI fall to where it is at in the last week? Why did Hansens fall to where its at? Why did UTK stop at 12 and not go lower? Where should your entry point be for JSDA? Is it time to get into Y?

All this will be revealed on Sunday as to my simple profitable technique.

Now I want to address the moderators of this forum. When I first mentioned BRLC, you deleted my post saying that it was a penny stock. Now look at where is BRLC. When I post something up, Im being serious. Im not fooling around. Do not doubt my methods. Do not delete my posts like I am a fool.

My Sunday post will be very lengthy and it will take some time to put together fully. Please stay tuned. You will be amazed...maybe some more people will stop by at the happy hour;)
 
(Sorry it took so long to post this up, but I have been busy.)

The title of my journal is the "Wizard of Wall Street". Now you may think the Wizards are these guys who are able to turn $500 into a million within a year. I come to you today to tell you that these wizards only exist on the Yahoo message boards. There are no such wizards out there. The Wizard of Wall Street is actually more like the Wizard of Oz. There is some guy behind a black curtain pulling ropes, pushing buttons and yelling into a microphone that command the market. One of these guys can be seen on television every night, Jim Cramer. The Wizards are not people to envy. They are crooks who try to talk up stocks or pull other complicated devious things to sell you a piece of junk stock. These are the true wizards.

Technical analysis provides us with the truth. It is the only way to see the truth. There are guys out there that have a better position on this battlefield to know what is going on. There are large institutions and hedge funds that have specific analysts who heavily research the companies and industry. These guys sometimes go out to the companies themselves to interview the management and observe the operations. These guys then report back to the Wizards who will then pull the ropes and push the buttons. The Wizards will never tell you the truth and go to great lengths to hide what they are doing.

So we must be doctors to discover the truth. The lines on a chart are just like an EKG. They tell you if the company is healthy or not.

I posted a while back asking what indicators people used and I received many different answers like money flow, rsi, etc. I tried using all these different ones and it looked like a mess. Hard to understand and I dont actually believe many people use these from day to day. In fact, they are probably the guys that lose money and wonder why.

I have used a simple chart for many years. When someone gives me the name of the stock, I do no further research before I look at this one chart. If the company's chart does not make sense to me, then I move along. I dont want to hear or see anything further.

The chart I use is the 50/200 week (NOT DAY) moving average. Each chart for each stock tells a different story. Some guys attempt to use specifically defined rules for every chart. There is some logic to that. If you know what other traders are using then you can trade ahead of them. My approach involves common sense. Warren Buffet has used simple common sense approaches for his entire lifetime. Im not sure if he would know exactly what an RSI indicator or Bollinger bands are.

Basically, you have the blue line (50 week) and the red line (200 week). A healthy company walks up above the blue line. When it crosses below the blue line, then its a problem. Someone is selling the stock. When it crosses the blue line, then something has to happen or it will continue to the red line. I will now give you an example:

Indymac Bank NDE-

http://stockcharts.com/h-sc/ui?s=NDE&p=W&b=1&g=0&id=p47338082646

Notice in the chart we see many spooky things happening. Can you see the structures that look like NYC buildings? There is a very rough head and shoulders in the middle. Every skyscraper formation ends in a retreat back to the blue line. Everytime the price has crossed over the blue, Mike Perry (CEO) comes out cheerleading which shoots the price up. Last time he came out of nowhere raising the guidance and dividend.

When a stock crosses that blue, then someone has to do something.

Here is another example:

Hansens HANS

http://stockcharts.com/h-sc/ui?s=HANS&p=W&b=1&g=0&id=p47338082646

Since 2003, this was a very healthy chart. This is the type of dream chart that we would all like to see. I dont see any skyscraper or bubbly formations. Just a good old fashioned staircase walkup. Look though at the end, uh-oh. There is a major problem telling us that we should sell the stock.

Hansens has never hit the blue line on this chart. When it did hit the blue line, then suddenly Goldman Sachs stepped up to the plate with its conviction buy list rating. However, there was a truth out there that someone had known. There was a specific reason they dumped Hansens.

If you read the Yahoo message board, then you would see testimonials about how HANS is the greatest company in the world. I dont trust those guys, I trust the chart. The chart tells me something is wrong, its time to sell.

(continued in next post, otherwise I will hit the 10,000 character limit)
 
So why did Whole Foods go down to $45? Thats easy. The 200 week moving average was right at that point.

http://stockcharts.com/h-sc/ui?s=WFMI&p=W&b=1&g=0&id=p47338082646

However, there was an indication on the chart a while before the earnings call that tells you something is wrong. Someone knew the Titanic was sinking well before the earnings call. They slipped out on a lifeboat leaving the prop traders behind. At the end of 2005, the stock price had suddenly plunged to the blue line (50 week MA). This indicates a problem of some type. It has not touched that blue line in 2 years and now its doing it. Why? I dont know and I dont care to know. Its time to sell.

You see how others thought that it would bounce off the blue line, but the problems were not resolved just yet. Then we see the first retreat to the red line. Any stock is dangerous when its in between the blue and the red line. You simply dont know whats going to happen next. I wouldnt take a position in this company when its betwen blue and red. 2004 was the time to take the position, 2006 was simply too late.

If the stock falls past the red line, that means its really bad. What is the problem? I dont care. I just want out.

Here is a classic chart that I simply love.

Candella Laser - CLZR

http://stockcharts.com/h-sc/ui?s=CLZR&p=W&b=1&g=0&id=p47338082646

We can see the formation of death right before the fall. I call that formation the Empire State Building because its so easy to remember. When you start to see the building image, its time to find an exit. Notice how the stock fell to the 200 week MA. It then went to 14 because the CEO came out at the meeting with an excellent conference call. When a stock loses its mojo, someone has to step in and he did.

However, the chart indicates that this is a troubled company. Notice how the price seems to skit up and down throw the blue. There is trouble here and an equity like this has to be carefully watched.

Here is a stock that I will NOT trade, EVER.

SIX FLAGS SIX

http://stockcharts.com/h-sc/ui?s=SIX&p=W&b=1&g=0&id=p47338082646

You could see a clear signal to buy. The red line crosses the blue. Indeed, some guys were fooled and they bought in heavy. However, the company let everyone down. They fooled us.

If a company fools the chart or I cant make sense of it, I move on.

Your wondering how you could have predicted to get into American Airlines. If you had only gone to stockcharts.com and did a free simple lookup.

http://stockcharts.com/h-sc/ui?s=AMR&p=W&b=1&g=0&id=p47338082646

That cannot be a bigger sign to me. Look at how the two lines cross. Its like the man on the runway with his light wands waving to you and telling you where to put your cash. That is the sweetest, most notable entry point that I have ever seen. Then it did start to turn spooky from there. We are starting to see the NYC building formation in the middle and then the poke down through the blue line.

The reason why it poked down there was because oil had reached a high. When oil pealed back, then AMR was cleared for take off once more.
 
Well first of all, to all of your thinking greed and fear does not move the markets, sorry. Although it is principal which can be read in pretty much any book on trading. Institutions move the markets, usually based on fundamentals, but quantative and statistics make the trades. It is impossible for retail investor to move the markets, but can be achieved if you are really rich. Take for example, George Soros. The man who BROKE English bank...bleachable blah.... etc. BuT I do find our journal interesting.


Can I ask you couple of questions?
I need to know because I am doing a anthropology report on trader and I just need some back ground information....also I am doing interviews for my school newspaper about this subject.

Where do you work? ( Title, Industry, position, etc)
How many hours do you spend researching?
How many hours do you trade?
How many years of experience do you have?

More question will follow.....

PS this answers will benefit your credibility to the posts....although you dont have to answer them....but it would be beneficiary for me if you did.
 
ALLSTATE INSURANCE ALL

http://stockcharts.com/h-sc/ui?s=ALL&p=W&b=1&g=0&id=p47338082646

This is a great company. Dont worry, just throw your cash into their drip plan. Keep it there. Your money is in good hands with All State.

I know many people who work at All State. These guys are so tight with the cash, it is unbelievable. They will not pay one dime more then they have to. The management is the best in the industry and they get away with underpaying claims where other insurance companies could not get away with. The work ethic at the company is simply insane.

THUMBS UP FOR ALL STATE.

However, now lets look at the chart. 2004-2005 were sweet years and then the candlesticks started touching the blue line. Clear sign to sell, time to get out. Warning, warning, danger danger.

Now it did bounce, but the bounce was a dead-cat and it continued further into the realm of darkness.

The weakness was because of the hurricanes and the perception that there would be more. However, there was a clear buy sign that is not on this chart. The CEO of All-State came on CNBC with both fists flying. He took control of the issue and instituted many cost containment programs. He sent other management officials to CNBC such as the director of the claims catastrophe team.

When the candles cross the blue, then management needs to step up. When they are seen on top of the issue, that is the buy sign when the stock is in-between the blue-red.

So far no one from Hansens has stepped up to the plate. I can guarantee you that that stock will continue down to the red line. Management doesnt care. No interviews on CNBC. They made their cash off of Monster now its time to go back to good old days. Only some analyst from Goldman Sachs decided to step up, but you dont send your mom out to confront the bullies. The Goldman Sachs analyst was a clear sell sign. Management needs to step up, not their mom.

Utek- UTK

http://stockcharts.com/h-sc/ui?s=utk&p=W&b=1&g=0&id=p47338082646

Marc Cuban declared war on UTEK in his blog. However, there was a strong sign of danger even before the blog. This company crossed the blue line in 2005 and nobody cared. Then we see the Empire State Building being constructed once more. This bounce was a dead-cat though. Where it goes from here, who knows? Once it crosses the red, it becomes a non-investment for myself.

The stock came down quick and at first bounced off the red line
 
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