MightyMO : Rob The Stock Markets Blind: Animals of Wall Street -for a July weekend

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The stock market is full of dangerous animals, seriously !

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ANIMALS OF WALL STREET

Unlike the San Diego zoo with it's pandas, unlike the DC zoo with it's snakes and wolfs, and unlike the party animals at some of our state universities, Wall Steet has it's own animals lurking about. It's a zoo out there when it comes to investing, and like any zoo there are quite a few species to be found down on the Wall Street menagerie.

DEAD CAT

A Dead Cat Bounce means that even a dead cat will bounce a bit if it falls off the fence. In stock trading terms it means, ..don't get encouraged if a stock goes up a little after a very hard fall.

PIGS

High-risk investors looking for the one big score in a short period of time. Also used by pump & dump marketeers who go about ' putting some lipsick on this pig'.

DOGS

Dogs of the Dow. An investment strategy that calls for buying the 10 Dow stocks with the highest yield.

SPIDERS

SPDRS (pronounced spiders) enables investors to participate in the price performance and divident yield of the Standard & Poor's 500 index by purchasing shares at a price equal to roughtly 10% of the value of this index. Be careful spiders wrap their prey up in their web.

WHITE ELEPHANT

Any investment that nobody wants because it is unprofitable

COCKROACHES AND WORMS

One piece of bad news can open a can of worms for other bad news. Bad news tends to be released in bunches which holds that, if you see one cockroach in your hourse, you have to assume there are many more lurking unseen.

SQUIRRELS

A squirrel is a perfect metaphor for a small-cap company. Squirrels, like good small-cap companies, are nimble, efficient, and adaptable. They are quick to avoid danger. They can thrive in small niches that most don't even think to look in. And if they do get in trouble, they can outrun their larger predators or quickly change directions. However, of course, not all squirrels survive.

SHARKS

We all heard of boiler room sharks. Enough said!

LAMED DUCK

Those who refuse to fulfil their contracts.

And of course...the Wall Street Zoo is abundent with BULLS and BEARS

Do any of you Whale Watch (Icahn, Soros, Buffet) ?

Have any of you read the stock books titled "Way of the Turtle" and 'The Black Swan"?

SHEEP

This type simply listens and follows others for financial advice and runs with the 'herd'. A sheep can be eaten by a bull or bear if it is not in the right place in the market.

A little bird told me that this certainly isn't a complete list. I hope you didn't get goose bumps reading this. There's a frog in my throat so I will end this now. If you know other animals, let's get it straight from the horse's mouth and please let us know about it in this round robin.

Do you want to win on Wall Street? Beware, the menagerie is loose. One needs to be 'smart as a fox'.

Copywrite 2007 by author of 'mightymo'

Update 7/4/2013 by author of 'mightymo'

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The Portfolio

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News

THE STOCK MARKET INDICATOR

"What seems too high in price and risky to the majority usually goes higher eventually, and what seems low and cheap usually goes lower." This famous statement is from William O'Neil in his best selling book, How to Make Money in the Stock Market.

There are numerous indicators measuring everything from sentiment to fundamental ratios to technical chart patterns. Every one of them is subject to interpretations which can result in incorrect decisions.

Even if some of these indicators had predictive value, on any given day there are so many potential news events that could change market direction that it is impossible to keep track of them all.

But there is one indicator, one core piece of information, that is always up to date and always correct. That piece of information, is price. And particularly the closing price at the end of every trading day. All the news, inside information, economic and fundamental data available, is reflected in that closing price. Price is the ultimate stock market indicator.

The buying high price strategy works whenever the market is accommodating and the market is certainly in an accommodating mode.

THE FEDERAL RESERVE SYSTEM AND MARKET DIRECTION

My approach has always been to ignore the predictions and forecasting from the market media and tune in to the music from the Federal Reserve and stay with the trend. I have found out after a very long experience in the stock market, is to never fight the FED. As you all know, the FED implemented a process to rescue the US economy from the brink of a depression starting in 2008. It consisted of buying bonds and risky assets to pump money into the economy. It has been known as QE. Even with all the criticism , the economy has managed a recovery with unemployment declining, with the economic numbers pointing to further expansion and the housing market has definitely improved. ------------------------------------------------------- My MAJOR stock market axioms.

1. If the stock you purchased is going the wrong way, YOUR BEST AND SMALLEST LOSS IS YOUR FIRST LOSS (cut your losses short)

2. As best as you can, the market can be very volatile, NEVER LET A PROFIT BECOME A LOSS (sell before it drops below your cost basis)

3. Be on the lookout for stocks hitting their first 52 week high or all time high. The chances are excellent it will continue to hit new highs. BUY WHEN A STOCK HITS IT'S FIRST HIGH. A STOCK'S FIRST HIGH IS USUALLY IT'S LOWEST HIGH

4. Don't hesitate selling a stock if the trend has changed or market direction has changed. DO IT FAST.

5. When you have a winning stock, buy more of it and add to position. LET YOUR PROFITS RIDE.

6. IF you are in a position where you can't watch the market, sell your positions. One can always buy back the stocks.

7. Do take advantage of market irrationability. There are excellent opportunities when this happens. I will be relating these opportunities in future postings. It is the basis for the ROB the Markets Blind portion of my strategy.

8. Avoid people who are overly negative on the market. They don't make money consistently and you won't either. (Joe Granville was negative on the market for ten years (1990-1999) during one of the best 10 year bull stretches in history).

9. You're not in a contest to see how many picks you got right. Remember you goal is to make an overall profit.

10. NEVER, DON'T EVER, FIGHT THE FED

Animals of Wall Street -for a July weekend

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