Archive

Monthly Archives: October 2015

There would be no success, if there were no fails. We absolutely need something to compare so as anything could be qualified as success. However, it is much more obvious to find article on “positive” success side of any human activity. This way we are escalating the pressure to people and society to feel anything “not successful” as something undue, something what would never occur.

Compare by Yourself

                                   Success story                             Failure story

We all clearly understand deep difference between meaning of successful and outsider words. Deep psychological, sociological and marketing reasons force us to use specific “positive” approach. The worst is, that people are thus not prepaired to face to daily reality.

Whatever human activity You start to study, there will be ratio of unsuccessful versus successful attempts surely other than balanced and surely other than successful is always winner.

Success is one side at the dice. All the other sides are the other attempts.

Just throw the dice sufficient number of repetitions to receive Déjà vu success!

It is rather probable, that following stocks will fall significantly in near future.

User do not receive investment advisory, investment supervisory or investment management services and uses all information mentioned herein on his sole discretion and responsibility.

SYM NAME LAST
AAPL Apple Inc 119.08
ABBV Abbvie Inc. Common Stock 50.34
AMAT Applied Materials 16.44
BABA Alibaba Group Holding Ltd 75.62
COG Cabot Oil & Gas Corp 21.10
EMC EMC Corp 26.10
FCX Freeport-Mcmoran Inc 12.13
FTNT Fortinet Inc 34.91
GLW Corning Inc 17.60
HAL Halliburton Company 39.21
HLT Hilton Worldwide Holdings Inc 24.56
HST Host Marriott Financial Trust 16.54
HZNP Horizon Pharma Inc 17.6
JD Jd.Com Inc 27.10
KEY Keycorp 13.52
KMI Kinder Morgan 29.23
LHO Lasalle Hotel Properties 28.92
MRK Merck & Company 52.88
MS Morgan Stanley 32.62
MU Micron Technology 17.24
MYL Mylan Inc 40.96
NE Noble Corp 12.96
ORCL Oracle Corp 38.07
P Pandora Media Inc 12.39
PG Procter & Gamble Company 77.03
PHM Pultegroup 18.34
SCHW The Charles Schwab Corp 30.43
SKX Skechers U.S.A. 31.64
T AT&T Inc 33.74
TSM Taiwan Semiconductor Manufacturing 22.47
TWTR Twitter Inc 30.28
UAL United Continental Holdings 59.68
VFC V.F. Corp 63.75
VRX Valeant Pharmaceuticals International 116.16
VZ Verizon Communications Inc 46.16
WLL Whiting Petroleum Corp 18.15
WMT Wal-Mart Stores 58.30
XOM Exxon Mobil Corp 82.98
YHOO Yahoo! Inc 33.17

The decision which key words to use so as to make Your brand name the most successful in this context is one of crucial and at the same time one of most difficult. However it is possible to pick up such key words, that just Your brand name will succeed.

There are all necessary words in this text already involved.

Frequencies of occurrence of various key words and their combinations used in this text

successful brand name  – once in several days

successful name – once in 1-3 hours

successful brand – once in 1-3 hours

brand name – once in 2-3 minutes

name – once in 2-3 seconds

brand – once in 2-3 seconds

successful – once in 5-8 seconds

difficult – once in 10-20 seconds

however – once in 5-10 seconds

possible – once in 2-4 seconds

succeed – once in 20-30 seconds

The method, that I am going to show You leads to incredible results. However still You have to pick up the stocks very carefully and with exact plan. I call my method Reverse Fibonacci method.

There are several issues that everybody who wants to invest in stock market has to face to. If You use services of professional fund, you seemingly can miss these obstacles. Unhappily, this is false. Whenever You want to invest any portion of Your assets to stock market, there is no way out,  You have to understand it at least at some level. First of all, You must clearly understand, that there is no way to predict exactly what kind of price moves will happen and in what order. It would be big mistake to be angry with Your fund manager that some selected concrete stock or for example all over the stocks involved are suddenly falling in value. The question is not what is going on in everyday detail, but if the strategy used is vivid and leads to desired results. In other words, there has to be defined clever strategy. In case of funds, this is obviously done by prospectus. At least You would be interested in this document and all available information on how Your investment will be controlled.

If You take all responsibility on Your own arms and manage Your investment Yourself, still You have to create clever well defined plan what You want to achieve in what time and what is desired profitability of this scenario. Furthermore, You have to respect Your own scenario and carry out simple steps under these rules. That is the beginning of any successful strategy.

There are plenty possible strategies. In few words, we can say, that nearly every person might have his rather specific personal strategy. There is no way to decide which of these strategies are more or less profitable. Furthermore, some strategies are more profitable under some specific market conditions. As soon as these specific market conditions do not take effect, the strategy might not be functional or at least might offer smaller profitability, than expected.

I am testing not one strategy but several strategies for many years. As my experience shows, all these strategies are at some circumstances very successful. Just You have to wait to the right moment and allow the strategy to win. Yes, exactly! Not You are winning or losing, but the strategy, You have chosen does this miracle instead of You. Your task is very simple – not to cause damages not taking into the consideration own previous decisions.

I will come back to theme what were strategies, that I have already tried for long-enough time so as to show some more ideas. Let us do it in yet another article.

In the meantime of many years the most profitable of all methods that I have used seems method, that I name Reverse Fibonacci method. The idea behind is as usually very simple. We are not discussing the stocks selection process, but only the question when to buy and when to sell. These are crucial questions with no exact and correct answer.

There are many stock traders buying only when the stock has proven enough bullish trend. Personally I do not believe to this approach. On one side there is no way to decide what is the local minimum of stock price. Nor You might not be able to guarantee(if You are not using options as an insurance) that bearish trend will stop at some price and turn to bullish again.

Even you have no guarantee, that the stock will grow to some desired value. What we have is set of various indices. These are really good to approximate probability if, under what conditions and in what timing the stock price will slide to desired value.

What You have to think about is also the size of the investment. As the fund grows, it takes even longer to carry out buying or selling the stocks.

For all these reasons I have developed my method how(and when) to buy and how(and when) to sell the stocks. It is rather difficult to pick up exact moment, when the stock price is at local minimum. At the same time as the amount of stocks that You want to buy grows, it takes longer time and price behind is not stable all the time. Thus I select for concrete stock such an entry point, that represents good enough approximation of local minimum and start buying with limit order.

The first portion that I want to buy will usually not exceed more than 2% of value of the fund as a whole. At the same time I set the threshold. If the price of stock drops down under this threshold(for example let threshold is 50%, than if price drops under 50% of former value of first buy), then I extend the position to 3% of current actual value of the fund. Let us remind, that these numbers might be very different, it does not depend on price of this concrete stock only but also on overall fund stocks evaluations at then current moment.

We have chosen threshold that is valid all over the buying season, so if the price drops down again under this threshold from previous price-stop level under this threshold, I will buy such a portion of stock so as to achieve 5% of then current value of fund invested to this concrete stock.

Similarly next steps are to 8%, 13%, 21% etc, exactly under Fibonacci sequence but with reverse moments set to buying.

There is also easy way to decide the moments when to sell as well and these techniques we will discuss in next part of this article.

(to be continued)

…All the graphs used that You can look at are in logarithmic base. In other words, if You pick up any portion at y-axes and take it as an unit, then equal portion of y-axes corresponds to equal profitability. I will discuss another time at another place, but it is important to understand the graphs. Many times somebody shows You graph that looks very pretty, but if You seriously analyze the data involved, You can find deep problems up there. Data and perception manipulation are phenomenon itself, I will return also to this idea another time. However, the purpose of this series of articles is correctly to show You, what is really possible to achieve, if You remain disciplined.

The second drop down was also difficult, time consuming and there were no lights to count to. That time, everybody was trying to sell-off all Fannie Mae and Freddie Mac stocks. It became new fashion wave. Despite huge problems of market, I did believe that the real estates will stay on place and not evaporate. It might take very long time to recover. I was already advised by own experience, that it is necessary to review all information available with respect but keeping own point of view. When massive market pressure to sell-off these stocks arose, I simply held it as long as necessary and softly supported on downside expanding existing positions. Market proved my theory true and later on these stocks were growing in necessary extent so that not only clearing the loses, but generating profits. But already I did not want to count on financial sector solely and was actively searching for additional stocks.

Ideas were as usually simple and easy to implement. My best experience showed me, that any prediction is only prediction and always might happen something unpredictable what changes the game. Virtual funds at Marketocracy are subject to obvious rules for mutual funds as defined by SEC. So You can not invest any portion of fund to some stock. You have to follow obvious rules, fund managers know it, anybody else can simply read for example at SEC or open an account at Marketocracy, where all the rules are available. What is important, if the value of some stock grows, You can not extend the position as You wish, but only in conformance to obvious rules.

This is dramatically other story, when the stock price falls. If You hold for example 8% of fund in one stock and this drops down 75%, You actually hold only roughly 2% of fund in these securities(illustrative, not exact numbers). Now if You extend existing position, You need not to break SEC rules for mutual fund and simply extend position to for example 5%. Then You carefully and patiently wait until market gets to the former positions, but actually You have not 8% but roughly 20% of fund in this stock.

This simple idea is exactly what I have developed up to concrete numbers. The numbers here are only for illustrative purposes and in general I am not going to reveal my obvious thresholds of legibility. These are subject to specific know-how.

Now You know, how I was going to carry out buy side, just it is not clever enough what I wanted to buy. The idea was, that as the production will develop, marketing and business will need obvious advertising channels again. Thus it was possible, that these traditional and new developing advertising channels will grow dramatically. I have studied many available resources on this theme. The point of view was and still is changing. However, there are some predictions what we can count on at this field. Paradoxically, the televisions were already the worst advertising channel. Internet already was one of the best. The radios were relatively down, but were equipped by huge growth potential. After some evaluations and information collecting I realized, that the best one at that time was Citadel Broadcasting. This company was in financial fears. As I could analyze from data available and public information, it was probable that nor this company will fall at all, nor will offer unusual investment dynamics. The last point, that made me believe in this company was management systematically working on broadening own networks of radio stations. However, the success was not 100% sure. As Citadel Broadcasting was falling in value of stock I was systematically buying and extending positions.

I expected, that this company will firstly slowly grow and later on will offer next exponential rally for DMF fund. But reality was other. One day company Cumulus Media(CMLS) merged Citadel Broadcasting under publicly acceptable conditions. Great moment! You suddenly need not to wait many years but the goal steps up right to Your arms.

This merger You can recognize instead of long-time lasting rally or slow growth as a skip-up at following graph.

DMF2008-2015Paradoxically all what happened all the time before this single moment is somehow pressured to a “line”.

It is time to discuss more how to evolve the fund after this less frequent moment.

And this is exactly what we will discuss next time…

(To be continued)

 

Many years ago a small local stock-trading platform become visible to me. It was important idea for me and I knew immediately that it is something of value. Simple reason why it is really important is, that You can “freely” test several trading strategies without loosing real money. You can back-test as long, as necessary. On the other hand despite this stage, once You have to decide if You want to train only, or to make a deal.

Repeatedly that local small platform was facing several technical issues and as the experience grow, it was already unusable for next purposes. So I started to search for yet another platform, that would be more stable and would allow me such conditions as at the market itself. It is rather important to have opportunity to show the results to the others as well. Furthermore expected platform would allow only realistic “moves”. There is no problem to put together a platform that simulates market irrespective really sold and bought securities. But tell me, what would it be available for?

Little bit searching I found several platforms, but most of all my eyes fall to www.marketocracy.com. There were not only features that I was looking for, but much more standard features that fund manager would look for including necessary reporting and realistic trade simulation. Furthermore there was promise for the most advanced fund managers to be involved to real trading later on.

This happened roughly at October 2008. I was looking for the first stocks to be involved to my back-testing at new platform and put together simple list of stocks to use and some basic strategy. It was very well based firstly on financial sector. My idea was easy – whatever happens, one of the first sectors that will survive will be financial sector. The second part of strategy was and still is, in the meantime of market obstacles to involve occasionally other segments. This idea proved true later on. However, the stocks, that I have chosen for the beginning were very unhappily chosen as I experienced not too far away in time since then. There were many banks stocks including Lehman brothers and others that were later not “too big to fall” by political decision. That was time of obsession for Fannie Mae and Freddie Mac and because of luck of small experience I fall to this trap as well as many other people around the world.

At November 14 2008 I have established my first virtual fund – DMF (Drastich´s mutual fund). My goal was simple. I wanted to become absolutely the best fund manager.  First months did not look so. In fact, very soon I was facing to radical market fall that we all remember very well. In no way it seemed to be realistic to win with my strategy.

DMF2008-2011

For next nearly two years I was facing only deep loses. Some stocks evaporated at all. I know, You say, that it is virtual platform, so it is enough to put together yet another portfolio and start again. It was absolutely clever, that this would solve nothing. The point is, that everybody does also bad decisions. What is of value is to face also own bad decisions and survive. Simply to use the status as it is and find a constructive way out. Now I am talking much more on psychology than on experiencing new possibilities. So I did keep this very poorly looking fund and was looking for usable other sector and concrete stocks to use as a supplement. And I successfully found such a complementary stocks several times.

Now I was really patient knowing that if I use some other stock that will evaporate, all over virtual fund will be in state that I would not be able to recover again. The idea was, that still before financial sector survives, firstly survives automotive industry. But automotive industry was damaged at all and facing still more troubles than financial sector itself.

But there was an important company, that was producing parts for automotive industry as a whole. they were facing huge problems and it was also possible, that this company will not survive. It was Visteon corporation. Financially they were at knees. They had facilities and production program for nearly all over automotive industry that still survived. What is most important – they changed management and new management did radically series of steps that were necessary and they succeeded.

I released as much cash as possible and bought Visteon stock. What happened, You can see at the graph before July 2010, when I released Visteon again. From today´s point of view, it was big error too, nowadays Visteon is sold somewhere around $100. I was learning and payed for this “school”.

Yet another wave of market obstacles came again and I was facing to the same decision to look for additional segment and stock to use, again successfully. And which one it was? Read next time…

(to be continued)

 

It is rather probable, that following stocks will fall significantly in near future.

User do not receive investment advisory, investment supervisory or investment management services and uses all information mentioned herein on his sole discretion and responsibility.

SYM NAME LAST
AAL American Airlines Group Inc 43.71
AAPL Apple Inc 111.04
AMAT Applied Materials 15.83
BABA Alibaba Group Holding Ltd 71.99
BAC Bank of America Corp 16.12
C Citigroup Inc 52.69
CEMP Cempra Inc 19.29
CSX CSX Corp 27.43
FCX Freeport-Mcmoran Inc 12.44
FOXA 21St Century Fox Class A 29.48
GLW Corning Inc 16.89
HAL Halliburton Company 37.81
HON Honeywell International Inc 97.03
HPQ Hewlett-Packard Company 28.86
JPM JP Morgan Chase & Co 62.43
KEY Keycorp 13.21
MAT Mattel Inc 23.89
MRK Merck & Company 51.48
MS Morgan Stanley 33.95
MU Micron Technology 18.50
MYL Mylan Inc 43.55
NE Noble Corp 12.53
ORCL Oracle Corp 37.37
PWR Quanta Services 18.74
RIG Transocean Inc 15.91
SLB Schlumberger N.V. 74.51
STX Seagate Technology 39.56
SWN Southwestern Energy Company 13.14
SYF Synchrony Financial 30.15
T AT&T Inc 33.83
TWTR Twitter Inc 31.15
UAL United Continental Holdings 55.97
USB U.S. Bancorp 40.77
VZ Verizon Communications Inc 44.70
WFC Wells Fargo & Company 52.88
WMT Wal-Mart Stores 58.89
WYNN Wynn Resorts Ltd 72.90
XOM Exxon Mobil Corp 82.48
YHOO Yahoo! Inc 33.37