In Case You Want To Feel Insignificant

Okay, I admit it….I like space photography.  Something about it is so calm and relaxing and gives your Earthly problems a bit of perspective.

Check out this fantastic new photograph of one of space’s most iconic formations, the Horsehead Nebula, taken by the Hubble Space Telescope.

horsehead-nebula-hubble
Hubble Telescope Snaps Stunning Nebula Photo for 23rd Birthday (Space.com)

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

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This Stock Could Go Up 1200%

This post originally appeared on TraderPlanet.com.

Everybody is looking to find a stock that they can get a big return on. Well, what if I told you that I know of one that could potentially yield you a “twelve-bagger?”

That’s right–this stock could go up as much as 1200% from its current price.
This company seems to have all the right stuff, earning twice as much profit per dollar as the U.S. average for other companies in its field. Its product is considered the highest quality and is more desirable than its competitors.

THE BLOOMBERG STORY

This company is massively undervalued, and it not just me that thinks this. In fact I am basing this on the comments of industry experts quoted in Bloomberg no less.

Timothy Parker, who oversees $8.5 billion in stock at T. Rowe Price Group says in the article that the company’s product is “the bees knees” and Bloomberg itself says that based on similar median earning on other buyout deals in the same space, this company’s stock could fetch as much as $192.00 a share.

Here’s more from the Bloomberg article:

“It’s really an obvious takeout candidate, especially after the CEO resigned,” said Eric Green, a Philadelphia-based fund manager at Penn Capital Management, which oversees $6.5 billion….

While J. Christopher Haberlin, an analyst at Davenport, estimates the company may fetch between $185 and $215 a share, David Beard, an analyst at Iberia Capital Partners LLC, pegs a takeover at about $160 a share.

(it) was also one of more than 40 companies that Bloomberg identified in March that met the acquisition criteria Warren Buffett listed in his annual letter to shareholders. Buffett typically prefers “simple” businesses with pretax profit exceeding $75 million, “consistent” earning power, and “good” returns on equity while employing little or no debt, according to his report to Berkshire Hathaway Inc. (BRK/A) shareholders.

“Now is a good time to sell the company because of the near-record prices for met coal, strong global demand and constricted global supply,” said Davenport’s Haberlin, who’s based in Richmond, Virginia. “The assets have more value now than ever.”

The company should sell because it “now lacks the strong leadership needed,” which is “weighing on the share price,” Audley Capital, which owns 900,000 shares, or about 1.5 percent of the company, said in a July 17 letter to the board.

Walter Energy could fetch $240 a share in a takeover, based on the 2012 earnings multiple that Peabody Energy Corp. ($BTU) and ArcelorMittal are offering for Macarthur Coal Ltd. ($MCC), the letter said. That would be double Walter Energy’s closing price of $119.64 yesterday.

Wow…..So many experts with so much solid fundamental information on Walter Engergy ($WLT). I mean Bloomberg wouldn’t print this if these guys didn’t know what they were talking about, right?

CHARTS DON’T LIE

Here is a current chart of $WLT.

LundApril18.png

This chart starts on July 1, 2011, the day the Bloomberg article from which the above info was taken was published, when $WLT was trading at $121.00 per share. Today it is $19.00 per share.

DO YOUR OWN WORK

I have pounded to the table for years now on how you cannot rely on “experts” and you cannot use fundamental data or “stories” to trade and invest in the markets. Fundamentals are not objective and “experts” usually have an agenda. This example in $WLT, and there are hundreds of others like it, shows you why, in order to be a successful in the markets, you need to do your own work, focus on the technicals, and just tune all this other junk out.

How To Correctly Size Your Positions For Daytrading

This coming Thursday the 18th at 10:00am PDT I am going to host what I hope is the first of many “flash webinars.”  What is a flash-webinar….well I don’t really know since I just made the name up, but the concept is to have a concise, focused, mini-webinar on a single trading subject.  This week it is going to be “How To Correctly Size Your Positions For Daytrading.”

The webinar is free and I’m not going to try to sell you anything, but it is limited to the first one-hundred people who register.  You can do that by clicking the link below.

Register to attend the flash-seminar “How To Correctly Size Your Positions For Daytrading.”

The webinar should run 20-30 minutes and there will be a Q&A at the end.  I look forward to seeing you there.

Make sure to check out my free eBook Trading:The Best Of The Best-Top Trading Tips For Our Times  (just click the banner below).

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Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

Stop Me If You’ve Heard This, A Trader Walks Into A Party….

This post originally appeared on TraderPlanet.com.

The setting is a cocktail party– this one in a loft apartment in the heart of Manhattan. However it could be in a house high up in the hills of Hollywood or in the suburbs of Chicago–the dynamic is the same and the cast of characters, with minor variations, is standard.

Guests mill about, forming temporary cells of small talk, and not unlike dogs smelling each other for the first time at the park, nose around to find out what the professions of their semi-drunk soiree companions are. Once discovered, each has their moment in the sun to impress.

The doctor talks of the patients he sees and the lives he saves while guests try not to look bored. Yawns and glances at watches are on tap when the real estate agent talks of his big sale. The lawyer, the scientist, the fireman and cop all suffer similar fates–nobody is really that interested in what they do or have to say.

And then the trader is discovered.

Unless there is an astronaut, movie star, or Head of State in attendance, the announcement that you are a “trader” will always elicit the most interest from the crowd. Unfortunately, it is not always the type of interest you would wish for.

ANYONE CAN DO IT

The unique thing about trading–opposed to most other “professions”–is that anyone can do it, or at least attempt it, as long as they have the money to open a brokerage account. The low barrier of entry gives “civilians” the impression that there are no unique skills or abilities that the trader possesses.

Doctors don’t have their medical expertise challenged nor are lawyers debated on points of law at cocktail parties, backyard BBQ’s, or their kids swimming lessons. Yet everybody seems to feel free to aggressively engage with the trader.

The typical interaction starts with skeptical surprise. “Oh, you trade for a living?”

Followed by an “equivalency statement.” “Well, I have a number of brokerage accounts and am pretty active in the markets myself!”

Then the “what do you think about XYZ stock” question comes up. The XYZ generally being AAPL 80% of the time. “So what do you think about AAPL? I have been buying it on every dip, you’d be crazy not to at this discount.”

Soon after the challenge statement comes in. It can take many different forms such as “I think that shorting stocks is un-American and that it should be outlawed” or “so tell me Mr. ‘Trader,’ where is the market going to be in six months?”

And it just goes downhill from there.

Some will want you to teach them to trade. Some will assert that there is no way you can be making a living from trading. Others will explain to you how the markets are one giant conspiracy, manipulated by global and extra-terrestrial forces. And still others will quiz you on every piece of terminology you use, the glazed look in their eyes indicating that they have no idea of even the basic workings of the market.

At the end of the day you open a can of worms up that is better left sealed when you announce that you trade for a living. My suggestion is to take the advice of my good friend Joe Fahmy and do what he does when his occupation is asked.

“I work in an ice cream shop,” he replies, leaving him, once the disapproving looks fade away, to enjoy his cocktail and hors d’oeuvres in peace.

Make sure to check out my free eBook Trading:The Best Of The Best-Top Trading Tips For Our Times  (just click the banner below).

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Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

Trading With Astronomy….Man

This post originally appeared on TraderPlanet.com.

When you have been involved with the markets for as long as I have, you invariably hear some very odd theories and ideas from people about when to buy and sell stocks. Wild concepts like using things called “P/E ratios” and “forward looking guidance.” I once had a guy tell he used “intrinsic value” to determine what stocks to buy. Hah….intrinsic value, that is funny. It sounds like something you would feed your unicorns at your summer home on Atlantis.

These types of traders and investors need to get in touch with reality and learn to use more normative and objective indicators for their buys and sells. Things like MACD’s, BollingerBands, and the retrograde cycles of Jupiter’s third moon Ganymede.

Astronomy…??? Is Brian really going to try and tell me that astronomy can seriously be used for trading? Well…not exactly. What I am going to tell you is that the ideas of using astronomy to time your entries and exits in the market is not as far out as you might imagine.

Oh Crap!  SELL...SELL...SELL...!!!
Oh Crap! SELL…SELL…SELL…!!!

ENTRIES AND EXITS

Think about it! We use indicators in trading not to predict what a stock will do in the future, but to give us objective criteria as to when to buy or sell an instrument. And the interesting thing is that the accuracy of the indicator is not as important in the long run as the objectivity is. Why is this? Because in any robust trading methodology we tie risk management to objective entry/exit criteria.

This is where the logical (though perhaps apocryphal) story of the “coin-toss” experiment comes in. The story goes that an experiment was conducted between actual traders and a coin, where on one side traders were able to pick and trade whatever stocks they wanted, and on the other, a coin was tossed and if it came up “heads” those same stocks the traders picked were bought long, and if the coin came up “tails” the stocks were sold short.

However the difference was that the coin-toss method had very strict risk parameters, whereas the traders could use their discretion to decide when to sell or cover a stock. Of course in the end the coin-toss method beat the traders proving that objective risk control was more important than directional accuracy. Which is why astronomy base trading is not as crazy as it sounds.

If you buy a stock based upon subjective criteria like “intrinsic value” you are just leaving yourself wide open for a disaster. Not only is there no way to tie that criteria to timing for entries and exits (read risk management) but you also have to play the game of trying to determine when “value” has changed, and if so, for the better, or the worse?

Astronomy on the other hand will provide you with objective cycles and rhythms with which you can create entry and exit rules that correspond with you risk tolerance.

BE OBJECTIVE

Look, I am not advocating that you throw your indicators out and start arbitraging S&P Index options based upon the phases of the moon, but what I am trying to do is to get you to look at what methodology you are using for your trading and ask yourself if it is really one that can give you cut and dried signal for entries and exits, or if it is too open to interpretation, and thereby exposing you to too much risk.

Make sure to check out my free eBook Trading:The Best Of The Best-Top Trading Tips For Our Times  (just click the banner below).

TBoBbanner

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

The Fast And Easy Way To Make Money In Trading

If you are reading this post right now after seeing my linkbait-ish title you probably fall roughly into one of three categories;

The first would be those of you who said, “whoa, a quick and easy way to make money in trading, that is just what I am looking for.  As soon as I order my new Ferrari that I will pay for with the quick and easy money I am going to make in trading I will check it out.”

The next group is here no doubt because they thought, “Yeah right!  What a bunch of bullshit that is.  Nobody can make quick and easy money trading.  In fact nobody can make money in trading or the markets.  The system is rigged, the game is stacked against me, there’s no way we actually landed on the moon, Kate Upton is a guy…” and so on.

If you fall into one of those two groups first I am going to give you some insight and then I am going to give you something of tangible value.

For those in the first group you need a reality check.  Technology and the democratization of information has made it easier to get access to knowledge about trading and to shorten your learning curve up incrementally, but there is no fast way, nor will there ever be an easy way to make money in the markets.

For those in the second group, well, you need to seriously relax.  Though it is true that the vast majority of people who attempt to trade end up losing money, it’s not because there is some “Star Chamber” type of conspiracy going on, it’s because most people refuse to do the hard work that is needed in order to become proficient in the markets.

Everybody who has read this blog for any amount of time knows my back story.  I was working nights at a dive bar when someone dared me to go up on stage on Karaoke night.  A talent scout for Star Search happened to be in the audience and I was “discovered” and asked to be on the show.  I quickly became a fan favorite and America’s sweetheart, but because I refused to “play ball” with Ed McMahon in the green room he sabotaged my final performance, sending me into a downward spiral of pills and booze that left me a broken shell of a man.

Wait, that was my second cousin Ryan’s story.

My story is that I bought my first stock when I was eighteen and traded consistently for twenty years until I decided to sell my business and trade full-time.  It was a big risk and it meant that it I had to make a serious commitment towards taking things to the next level.  I did that by doing a lot of woodshedding,  meaning I went through hundreds of charts each month, deconstructing what things worked and what things didn’t.

Most of those charts came from two blogs that I followed and have written about before, “Trader-X” and the “Wall St. Warrior.”  But I didn’t just look at their charts on-line, I downloaded their images, cut-and-pasted the commentary and analysis for each, added it to the images, and printed them out individually.  Then I put them into individual plastic folders grouped by long and short trades.

This was before Ipads, smart phones, or mini-notebooks and I carried that plastic folder everywhere I went.

I reviewed it while waiting for my wife to shop at the mall.  I reviewed it while my car was being washed.  I reviewed it at boring family functions.  I reviewed it til I knew the setups backwards and forwards, and then I began incorporating them into my own trading, building on ones that fit my style and cutting out ones that didn’t.  It wasn’t quick and it wasn’t easy, but it worked.

So what is the point of this story, just to say “look at me, see how cool I am?”  Well, of course it is; that’s always the point of my blog posts….duh!  But besides that it is to tell you that there is no shortcut to success in the markets.

Doyle Brunson once said that he had to play twenty thousand hands of poker before he felt he had really mastered the game.  And he went on to say that today with the advent of online poker, new players to the game could go through that many hands in one tenth the time he did, but, they still had to go through the same amount of hands in order to have a chance to achieve success.  It’s the same with trading.

Technology gives you the ability to get more information and knowledge in fast, but you still have a minimum threshold that you have to consume in order to give yourself a chance in the markets.  Now, for that “tangible value” I referred to earlier….

While cleaning out some closets recently I came across my folders full of those trading charts and commentary I mentioned, and being the giver that I am, I took them down to Kinko’s and had them scanned so your could have copies for yourself.  The markets have changed since these charts were made, but some of the core ideas on setups, trade management, and risk are still of value.  In fact you can’t put a price on this stuff, although it did cost me thirty-five bucks to scan it all in.

There are four files in all and you are welcome to download any or all of them as many times as you want.  Note: I am assuming this will not upset Trader-X or the Wall Street Warrior because A) All this stuff is public B) it was all offered free of charge C) I am giving full credit to them, and D) they have both shown themselves to be very generous individuals who are willing to help others learn.

Trader-X: Long Trades

Trader-X: Short Trades

Wall St. Warrior: Long Trades

Wall St. Warrior: Short Trades

Oh, and those of you who make up that third group, the ones who read the title of this post and said, “there is no way Brian could be writing a serious post on THAT topic, but I know he is going to take it somewhere good so I have to check it out…”  Well then congratulations, you have a balanced view of the markets and I greatly appreciate you giving me the benefit of the doubt that this post would be of value to you.

Make sure to check out my free eBook Trading:The Best Of The Best-Top Trading Tips For Our Times  (just click the banner below).

TBoBbanner

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.