ZF Capital > 2009 December

Tradecraft – Incoming!

On December 16, 2009, In Good Articles, by ElfLord

MENTION A STOCK to my 97-year-old (and still shrewd) grandmother, and the first question she’ll ask is, “Does it pay a good dividend?” It’s only in recent years we’ve become so obsessed with capital gains. But although income-oriented investing is usually associated with retirees set on preservation of capital, it’s actually a strategy employed by professional investors, many of whom will often keep the majority of their assets in cash while focusing on a small number of more risky situations. Investing with an income focus is a portfolio approach we first outlined a few months back.

Yet income remains the Rodney Dangerfield of the investment world, and among many traders, dividends, interest and other income-oriented returns are often dismissed altogether. It’s much more adrenaline-pumping to buy XYZ at $50 and sell it at $55 than buy a 10% bond and wait patiently for a year.

The real advantage of hedge funds or other advisers focused on absolute return is that they realize real money is made over time — and is made by the effect of compound interest, not capital appreciation. (more…)

Thought of the Day (December 16, 2009)

On December 16, 2009, In Thought of the Day, by ElfLord

The market is like a courtroom where you are the accused– innocent until proven guilty. That is, when you initiate a trade, you have to assume that you are right until the market proves you wrong. It proves you wrong when the price hits your stop or your mentally chosen exit point, which is as absolute as a Supreme Court ruling– no appeal is possible, your freedom to act is gone, you must close out the position.

– Victor Sperandeo, Trader Vic — Methods of a Wall Street Master

Thought of the Day (December 15, 2009)

On December 15, 2009, In Thought of the Day, by ElfLord

The general market should be studied closely every day, since reverses in trends can begin on any one day. I emphasize this practical method rather than that of interpreting other subsidiary indicators that are supposed to tell you exactly what the market should be doing or listening to the many stock market letter writers or technical analysts that pore over twenty indicators and tell you what they think the market should be doing. Market letters sometimes may create doubt, uncertainty and confusion in an investor’s mind. Markets tend to go up when people are skeptical and disbelieving.

Learn to interpret a daily price and volume chart of the general market averages. If you do, you can’t get too far off the track. You really won’t need much else unless you want to argue with the trend of the market.

Experience teaches you that continually arguing with the market can be very expensive, That’s how people go broke!

– William O’Neil, How the Make Money in Stocks

Thought of the Day (December 14, 2009)

On December 14, 2009, In Thought of the Day, by ElfLord

The secret of trading is that there is no secret. There is no magic password to profits. Beginners keep looking for a gimmick, and plenty of crafty vendors sell them. In truth, trading is about work– and a bit of flair. It is no different from any other field of human endeavor. Whether you do surgery, teach calculus, of fly an airplane, it all boils down to knowing the rules, having the discipline, putting in the work, and having a bit of flair.

– Alexander Elder, Come Into My Trading Room

Tradecraft – Don’t Be So Passive

On December 14, 2009, In Good Articles, by ElfLord

MORE THAN 14 months ago, I pointed out how, despite the weakness in the familiar market averages, many lesser-followed and smaller-capitalized companies weren’t just outperforming index favorites, but posting solid results in their own right.

These days, many investors are starting to understand that it’s not the entire market that has been weak, but rather a relatively narrow (albeit widely watched) contingent of large-cap stocks.

Yet, as irrational as it may seem, large-cap U.S. stocks remain the “go-to” investment for both institutional and individual investors. Whether it be large-cap ETFs like the Nasdaq-100 Trust (QQQ) or the good old Vanguard 500 index fund (VFINX), most people’s assets are tied to one or another of the major indexes. But as we’ve pointed out over the last few months, the “broad” indexes aren’t really that broad at all, since they’re focused on large-cap U.S. stocks. (more…)

Thought of the Day (December 13, 2009)

On December 13, 2009, In Thought of the Day, by ElfLord

Managing the trade is only part of it. Managing the mind is vastly more important.

– DbBurrows, TMF Boards

Thought of the Day (December 12, 2009)

On December 12, 2009, In Thought of the Day, by ElfLord

Have no public opinions of your own, when asked; and ask for none. If you get into the habit of giving opinions you are inviting an argument at once. You may talk yourself out of a decision which was correct; you will become wishy-washy in your conclusions, because you will be afraid of giving an opinion which may turn out wrong. Soon you will be straddling the fence in your own mind; and you cannot make money in trading unless you can come to a decision.

– Humphrey Neill, Tape Reading & Market Tactics

ZF Capital

Tradecraft – Incoming!

Thought of the Day (December 16, 2009)

Thought of the Day (December 15, 2009)

Thought of the Day (December 14, 2009)

Tradecraft – Don’t Be So Passive

Thought of the Day (December 13, 2009)

Thought of the Day (December 12, 2009)

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