Archive for the ‘Education’ Category

How To Get Rich Slowly

In 2015, Philstockworld.com is focusing on wealth-building techniques which, combined with our winning investing strategies, can help put you on the path to a life of financial independence.

 

 





How to Make $100,000 In 12 Months Trading Stocks, Options and Futures

You're here to make money, right?  

We do a lot of educational posts on various topics but, once in a while it's a good idea to put these concepts to some kind of practical use.  Recently we discussed "How to Get Rich Slowly" and, in that post, we talked about the great value of making a consistent 20% annual return and, to start the year off, we've put up over 20 long-term trade ideas for our Members in our Live Chat Room, as well as some in our Top Trade Alerts (Members Only). 

Our entire Long-Term Portfolio was up 20% last year, as was our Income Portfolio when we closed it and our smaller, Short-Term Portfolio managed to bring that net up over 25% for the year.  As always, our goal is to make 20% a year and it's OK not to make 20% EVERY year, what you really want to avoid is losing money.  Warren Buffett wasn't a famous investor in 1965 – or 1975 for that matter and, in fact, 1973 and 1974 were poor years for Berkshire – but they avoided losses – and that's the key!  

Buffett is also a value investor who plays the slow and steady game in accumulating wealth.  Not every year is going to be a big winner and not every year will beat the S&P because we HEDGE our bets and the same hedges that stop you from losing too much on the way down, stop you from winning too much on the way up.  That's OK though, because it's the CONSISTENCY that makes you rich.  While virtually unknown in 1975, by 1985 Warren Buffett was known as one of the greatest investors of all time.  

Why is that?  Did he do anything different?  No, not at all.  What Buffett did was simply to continue to grind out those wins and let the magic of compound returns do the rest of the work for him.  As you can see from the chart on the left, even making 20% for 10 years doesn't seem that dramatic (500% total gain, avg 50% a year) but, give it 10 more years and you
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Using Options to Pay Yourself Monthly Dividends up to 10%

Sometimes we forget the basics.

In our video series, there's a lesson called "The Secret to Consistent 20-40% Annual Returns on Stocks" and I hope you've seen it.  While the low implied volatility of the market has made it a rough year for option selling, we were still able to scratch out just under 30% profits in our long and short-term portfolios.  We also cashed out out Income Portfolio with a 20% profit earlier in the year and we did it by following the BASIC strategies we teach at Philstockworld, not by gambling! 

Not that we're adverse to gambling, gambling is fun – but fun means fun, which means it's a small part of our total investing portfolio while the vast bulk of our money is SENSIBLY INVESTED in safer strategies that are designed to grind out consistently good returns over many years.  Two weeks ago we discussed the long-term advantages of compounding annual growth in "How to Get Rich Slowly" and now we'll begin discussing some basic strategies that can generate those consistent annual returns.

In the "7 Steps" video, we're discussing a basic covered call strategy and we delve into the Fundamentals of stock selection.  At the time (Sept 2013), we were using ABX, which was trading at $19.15 and we sold the November $19 calls (45 days out) for $1.30.  The simple instructions were to wash, rinse and repeat to make up to 40% a year by simply selling calls against the stock.  

As you can see, ABX has dropped to $10.58 since then, down about 40% BUT, had you followed through and kept selling calls, we had a lovely 12-month period in which it stayed in our range and that would have given us 8 opportunities to collect at least $1 for $8 back before the stock turned down in September of this year.  That would have dropped the net outlay below $10 and stopping out at $15 would have been a 50% gain for the year – even as the stock dropped 22% (from $19.15 to $15).

You can't get more basic than that – just mindlessly selling covered calls every month or two and, even when the
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How to Get Rich Slowly

Do you want to be a Millionaire?  

Sure you do, why not.  $1,000,000 is a nice amount of money – even at 5% interest in retirement, it's enough to drop $50,000 into your bank account each year to supplement whatever else you may have coming in.  So let's agree that it's nice to have a Million Dollars.

Now I'll say something you may not agree with – if you are not on a path to have $1M in the bank by the time you retire – it's probably your own fault.  

Yes, I'm sorry but it's true.  It's really not as hard as you think to save $1M and I'm going to teach you how and, as long as you are under 50, I can show you how to get on the path to turning $50,000 into $1M in 25 years.  If you are under 40 – it's going to be a piece of cake to save $1M by the time you are 65 - as long as you can follow our plan.  

First I need to convince you of the value of SAVING YOUR MONEY – this is not something most people are good at – especially young people.  Unless you accept the VALUE of saving your money, you will not be able to make the wise choices you need to make to get on the path to saving $1M.

This is a compound rate table.  It's a mathematical fact.  If you start with just $10,000, even at 10%, you will have more than $450,000 in 40 years.  I'm 51 now and I can tell you that 30 years ago, I could have bought a cheaper car after college and saved $10,000.  I could have gone to 20 less concerts and saved $2,000 and 20 less fancy dinner dates for $2,000 and taken one less ski trip for $2,000 – you get the idea.  I was young and I was successful but I didn't know at the time that EACH $10,000 I spent in my 30s would cost me $450,000 in my 70s.

That was my excuse then, what's your excuse now?  Now I'm 51 and when I'm 91 I'm sure I'll
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    14 Characteristics Of Highly Successful Traders

    1. Discipline Is All Or Nothing

    One cannot be disciplined up to a certain point and yet call themselves disciplined. It’s all or nothing. Either you are going to be a trader or you are not. Discipline needs to be exercised at all times and not sometimes only. This doesn’t mean you focus 100% of your day on trading – that would be crazy – but that you are 110% committed to becoming better over time.

    2. Losing Is Welcomed To Learn From

    You will lose money – and the sooner you accept this fact the quicker you move on. Since everyone losses money, the thing that separates great traders from bad ones is that great traders learn from the losses. Welcome the opportunity to advance your strategy or adjust your trading plan after a loss. Here’s an example of one that happened to me recently.

    3. Never-Ending Student Of The Markets

    The markets are changing every day and you need to fully understand how it works.  As it’s changing you have to learn to evolve and change with it. Sometimes this requires adjustments on your part. The moment you engage to learning new things, there will always be good opportunities which will be opening up.

    4. Unique Trading Personality

    You are an individual and your trading should reflect that. Trading has a way of uncovering the personality of individuals by making them trade outside their comfort zones. So it is very crucial to match your personality with the right kind of trading.

    5. Can Separate News Hype From Reality

    It is a crucial trait for you to know how to think for oneself without being influenced by the media and the


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7 Steps To 40% Annual Returns on Stocks

From the Education Archives at www.Philstockworld.com:

Sign up to Philstockworld today and learn how to take control of your trading

 





Rational Debating 101

Thank God for Atheists!

If there is one place in society where philosophy and science are still debated with great verve it’s in the realm of Atheism blogs.  However you feel about God, or the lack thereof, what we do need in this world are better rules for discourse and JT from Atheismresource.com is the originator of the chart that’s been making the rounds in the blogosphere that is both funny and extremely well done.  

It is, unfortunately, a testimony to the very irrational prejudices and poor manners that still plague us all that most versions of the chart we see on-line have been altered to remove the original attribution because apparently – knowing that an Atheist may have drawn up the rules for having a rational discussion will somehow invalidate the concept.  

Perhaps that’s true.  Perhaps the very people who most need to read and follow these rules are the very same people who won’t read past the the title on the top left of the chart and the dreaded word "Atheism."  If you are one of those people, please consider:  Is it really possible that a concept is invalid just because you don’t like the source?  I will say that, as soon as I can get our site hosted on IBM’s Watson, I will hardwire these rules into the system so we can kick out all those conversations that aren’t going anywhere.   Well, a guy can dream, can’t he?

 

 





Option Strategy Workshop: Rolling Contracts

 OptionSage submits: 

Markets can remain irrational longer than you can remain solvent” – John Maynard Keynes

Much like Newton was inspired to understand gravity as the Apple fell on his head (or maybe not according to this article!) so too Phil was inspired by nature in his profound work which I affectionately label “Phil’s Market Wave Theory”.  With this week’s move in the markets, it seems a particularly appropriate time to recall what Phil said:  

At the beach, many people stake out spots near the water but, as the day goes on, the tide gets higher and the people move to higher ground.  Some people go much higher and some people move just a little but there’s a certain point where the water crests up onto the beach and sends everyone scurrying for higher ground in a mad dash.

Then it goes the other way!

Just when it seems that the water is going to go higher than it ever went before (and, thanks to global warming it does!) and just when you start to think the next wave will wash over the top and soak everyone, it suddenly stops and an hour later you can’t believe you ever thought the water would get that high as it seems so impossible as you watch it pull away from the beach, exposing sand that hadn’t been seen since the morning .

“The markets are like that.  Frothy highs and "impossible" lows and lots of investors scurrying back an forth trying to guess where the next wave will stop (day traders) while others stake out medium-term positions (deck chair people) and still others make substantial long-term plays (beach house owners) and are willing to ride out even the harshest storms.  While I have fun playing in the waves I guess I have to think of myself as a shell collector, looking for the opportunities that are uncovered once all the excitement dies down.  Let the other people get soaked trying to guess the waves – we can do very well renting deck chairs in any market!

Rolling Options to Ride the Waves

In the stock market, renting deck chairs is akin to selling options (in this case call options).  Always a buyer is on the prowl for the next
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Notes on JRW’s Pivot Point Strategy (Members Only)

We are hopefully going to have the Wiki project up and running soon (call me Kwan!) and then we can make a more interactive version of this as well as other strategy stuff.  

For now, here's some notes on JRW's strategy taken by Augrusot, who has been kind enough to share.   I'm sure JRW can add some comments (or maybe edit the post) to make it more useful over time.  I'll be linking it into the Education Section as well – Phil

My lines, 14,3,3 Stoch, RSI at 14, volume, Momentum also at 14, and pivots, with an overview from DeMark analysis. 

 

[click on chart to enlarge]

Sep 20, 2010

You must plug my lines into your chart; Pivot points are also significant as is the 200 SMA, but I play off my lines (usually).  When between lines the safest thing to do is WAIT until we reach a line and see which way we’re going from there to take a position.  You can use the 3 min chart and a cross of the 8EMA for conformation (if your wrong, get OUT) !!  Reverse above for exit strategy.

Also I usually post entries and exits, or intentions, so you can just follow me but my posts are about 2 minutes delayed from the trade.

And remember, do NOT get sidetracked while in a position (like eating lunch, you can go broke quickly)  

Confluence

(Jun 23rd, 2010)Confluence occurs when you take Fibonacci projections off of multiple trends and get the same number and strengthens when it corresponds with other technical advents such as gaps, swing high/lows, chart indicators crossovers (MACD, RSI, Stochastics, etc.), trading congestion, etc. The more confluence, the more significant the level. I really take notice when I get two or more fib #s (say a 38.2% and 61.8%) to correspond with a gap in the chart or a swing high. Confluence is very powerful as it combines multiple technical analysis techniques to arrive at the same conclusion, and should be relied on accordingly. I post the levels every morning. (Sig Rune links in the June 23rd post) 

 


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Charts From the Future: 5% Rule Update

Yawn!

As I said in our last 5% Rule Update, way back on May 5th, I’m not a big fan of TA.  We have our 5% rule and it serves us well enough but that’s a statistical analysis, not a technical one.  The only TA I put a lot of stock in is Fibonacci Retracements but that, also, is really statistical science and has nothing to do with trying to predict the movement of squiggly lines on a chart

The 5% Rule does NOT tell you which way the market is going.  It does tell you where the resistance points will be.  Of course, knowing that and knowing what kind of bounces to expect and knowing where a proper breakdown or break-out occurs is kind of useful and, when it coincides with the tea leaves that are read by the "real" TA guys – you can really have something good to go by! 

Unfortunately, the 5% Rule is not really a RULE because it requires a cynical background in statistics, especially regarding aberrant values or "outliers" and a general understanding of market history as well as current market events because all need to be taken into account in order to give you accurate "consolidation levels" from which we base out chart movement.

The great Harry Houdini used to enjoy amazing audiences with demonstrations of the supernatural, especially when he would pull back the curtain and reveal the frauds that others were passing off as reality.  That’s how I feel about TA - we can use these very simple scientific "tricks" to project the movement of the market and others can paint their charts and dress them up in whatever language they wish to make it unique but, to me, it still all boils down to the fundamentals with the underlying movement governed by normal regression patterns influenced by capital flows and sentiment. 

Whatever you want to call it, here’s our chart from May 5th, where I said: "So what lies ahead?  Most likely a retrace back to 1,100 (25% of our run) but if that holds and we consolidate a bit, I will be downright bullish.  I will also be impressed if we hold 1,145, which was our last breakout line but, for now, we have a 3.75% drop from 1,218 but a poor bounce yesterday indicates we are likely to get down to a 5% pullback from 1,218 to 1,157 and
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ValueWalk

Session 6: Measuring Relative Risk and first steps on cost of debt

By Aswath Damodaran. Originally published at ValueWalk.

Aswath Damodaran Session 6: Measuring Relative Risk and first steps on cost of debt

Published on Sep 26, 2016

This class represented a continuation of the discount rate discussion. We started by reviewing the pitfalls of regression betas and went on to talk about bottom up betas, focusing on defining comparable firms and expanding the sample. I did make a big deal about bottom up betas, but may have still not convinced you or left you hazy about some of the details. If so, I thought it might be simpler to just send you a document that I put together on the top ten questions that you may have or get asked about bottom up betas. I think it covers pretty much all of the mechanics of the estimation process, but I am sure that I have missed a few things.
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Zero Hedge

Stocks Give Up "Hillary" Gains As Debate Dead Cat Bounce Dies

Courtesy of ZeroHedge. View original post here.

Well that de-escalated quickly...

It seems the kneejerk reaction of markets was misplaced that Clinton was the clear winner (or Trump to clear loser)...

"Get back to work Mrs. Clinton"

...

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Phil's Favorites

Who Won the Debate? My View and Some Surprising Polls

Courtesy of Mish.

I thought Trump did poorly.

Trump missed a chance to go after Hillary about Libya, especially her statement “we came, we saw, he died” in which she bragged about killing Gaddafi. Libya erupted in a civil war following that event and terrorists are running the country. Well done Hillary.

Trump also missed a chance to attack the Clinton Foundation.

Trump faced three gotcha questions, and Hillary zero. On those grounds, the debate was quite a bit biased. Still, Trump missed a golden opportunity on some of the questions.

On the nuclear war issue, Trump should have commented “Hillary has supported every war every time.”

On the Birther issue, he simply should have stated, “I changed my mind. If we saw the birth certificate soone...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker.

Please review a collection of WWW browsing results.



Date Found: Saturday, 26 March 2016, 02:36:15 PM

Click for popup. Clear your browser cache if image is not showing.
Comment: ZH: Its a BULLARD market, the FED jaw boning is keeping the market up!



Date Found: Sunday, 27 March 2016, 02:31:30 PM

Click for popup. Clear your browser cache if image is not showing.
Comment: RTT: World trade near 2008/09 lows. SP500 near all time highs. PLACE YOUR BETS! Roll up! Roll up!



Date Found: Tuesday, 29 March 2016, 02:42:11 PM

Click for popup. Clear your browser cach...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Asia stocks, Mexico peso bounce as markets see Clinton as winner of debate (Reuters)

Asian shares recovered and the Mexican peso surged on Tuesday as investors seemed to award the first U.S. presidential debate to Democrat Hillary Clinton over Republican Donald Trump.

Chinese Exports Slow Their Decline; Imports Increase (The Wall Street Journal)

BEIJING—Chinese exports fell again in August as weak demand ...



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Kimble Charting Solutions

Leading indicator testing key breakout level

Courtesy of Chris Kimble.

The German Stock Market has been a quality leader in both directions the past few years. Below looks at why one might want to keep a “close eye” on this key global stock index, to see if it can hop over a important breakout level.

CLICK ON CHART TO ENLARGE

Similar to the S&P 500 and many stock indices in the states, the DAX index remains inside of a uniform rising 6-year channel, since the 2009 lows.

Th...



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OpTrader

Swing trading portfolio - week of September 26th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Members' Corner

Market Liquidity and Macroeconomic Bullshit

 

Market Liquidity and Macroeconomic Bullshit

Courtesy of The Nattering Naybob

STJL - "Apparently macroeconomics is all bullshit – ROFL! Paging Naybob now… Famous Economist Paul Romer Says Macroeconomics Is All Bullshit."

The Nattering One muses... Macroeconomics as practiced by academics and those in charge is pure voodoo. Better to chant over goat blood, bird feathers and scattered entrails...

As for reality, overnight CNH HIBOR (...



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Mapping The Market

Here's a Cautionary Tale of Pension Privatization From Chile

Via Jean-Luc:

"When you let the free market take over, the little people get screwed and bankers get rich. Chile tried privatizing retirement plans and surprise, surprise, fund manager ate the profits… Pretty sure the results would be the same here..."  ~ Jean-Luc

Here's a Cautionary Tale of Pension Privatization From Chile

By KEVIN DRUM, Mother Jones

Among free-market fans, Chile's privatized pension plan has long been held up as a model for us to follow. The problem, as the Financial Times notes today, is ...



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Digital Currencies

Gold, Silver and Blockchain - Fintech Solutions To Negative Rates, Bail-ins, Currency Debasement and Cashless

Courtesy of ZeroHedge. View original post here.

By Jan Skoyles

I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.

...



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Biotech

Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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