Flophouse News

Flophouse News - 2008-11-19

2008-11-19T15:52:16-05:00

Been awhile since we've heard any news around this joint. Been jonesin' to hear who's riding the rails and who's been sleeping off hangovers in the big house? Here's an extended edition to catch you up on all the news.

Silent Congress Best For Stocks? at IBD – Talk about crooks in a big house! To sum it up in the words of young River Tam: People don't like to be meddled with. And neither do markets.
Deflation: the new threat at CNN.com – Last week it was inflation. Next week it'll be stagflation. In a month or so, we'll round the bases again.
UAW pressed for sacrifices at The Detroit News – What?! Unions have to give up some of their power too? But they're the people, and they do all the work! Oh, right, if GM, Ford, et al go under, they won't have any jobs. Hmmmm....
Market Bottom? For Some Investors, It’s Close Enough at The New York Times – The reason Graham and Grantham are buying is because they can get deals that nobody else can. When you buy 10-15% below current value for a stock (the actual price isn't that low, but because it's preferred stock with guaranteed returns, it's effectively that low), then you can have the cojones to call a bottom while others still have a ways to fall if they buy in now. Not saying these guys are dumb or wrong – just that they have opportunities none of the rest of us have.
Financial Reversals at Reason – Everything that happens is bad. Woe be us.
Will The Markets Be Higher Ten Years From Now? from Meridian Business Group – Maybe this declaration from The God Buffet will finally convince The Motley Fool that 11% annual returns are not guaranteed, even over the long term.
[Mark Cuban responds to] The SEC from blog maverick – Cuban goes ballistic Wyatt Earp-style (the Kurt Russell Earp, not the Kevin Costner Earp) on The SEC, telling them: You suck!

And that's all for now folks. Enjoy!

Flophouse News - 2008-10-02

2008-10-02T06:43:00-04:00

It's been two weeks since the last news, and hopefully you're not sleeping in the gutter yet. A lot has happened, and a lot is yet to come, in this poor brother's opinion.

10 links to walk you through today’s financial crisis at I Will Teach You To Be Rich – It's no 12-step plan, but if you don't already know why the things that are happening are happening, then it's a great place to start learning about them all. It's a good review too, for those who already understand.
The Common Sense Fix (PDF) by Dave Ramsey – I normally can't stand the guy, and I disagree with some of what he says here (isn't government backing of loans what got us into this mess in the first place?). The "remove mark to market" and "eliminate capital gains" ideas are two that I can get behind.
How Magazines Led Investors to Ruin at Gawker – People are sheep, and their shepherd is mass media. This excellent piece of blognalism shows how some of the most revered financial magazines (like Forbes and Fortune) led investors, um, sheepishly into vortices of financial despair.
Bargain Prices? at Freakonomics Blog – Steven Levitt asks a pertinent question about the marketability of "toxic debt."
Warren Buffett Tells CNBC He Wholeheartedly Supports Bailout Plan at CNBC – Proving, once again, that he is a socialist.

And this week's adrenaline-pumping ultra-thrill post is: I Just Day-Traded AIG, It’s Dangerous & Addicting by Jim at Blueprint for Financial Prosperity

Don't let the market get you down. It might be the best time to buy.

Flophouse News - 2008-09-17

2008-09-18T00:23:16-04:00

Well, getting back into the swing of things here at Poor Brother Tom has been quite a hassle. And to boot, I haven't heard from Dave in more than a couple days – must be his little sprout finally, um, sprouted. Congratulations, if that's the case!

Anyway, on to the reinstitution of one of our regular weekly features: Flophouse News. Enjoy these investment-related news stories and blog posts from around the Web.

Time the Stock Market from Blueprint for Financial Prosperity – Go ahead, Jim dares ya in this "Devil's Advocate" post. (Actually, I think some of the points made are valid... maybe that makes me the devil.)
10 Ways to Get Rich from Parade – Wisdom for growing your estate from the Big Guy himself. Warren Buffett, that is, not God, unless you think they're one and the same.
A lifeline for AIG from Economist – In case you've been living in a fallout shelter for the past several days (which is really a quite reasonble place to live, all things considered), you may not know yet that the U.S. Government, in all its glory and wisdom and power, has ~~nationalized~~ given a loan to the largest insurance company in the country.
The Power of the Fed at The Volokh Conspiracy – David Bernstein notes the tunes that the central bankers are singing now versus three or four years ago. And boy, are those tunes ominous.

Bonus: Lest we all forget in these times of troubled markets where people are slinging around words like "greed" and "corporate responsibility" as though they were 50-caliber shells, Michael Douglas is here to remind us that Greed Is Good!

Flophouse News - 2008-06-20

2008-06-19T19:37:34-04:00

This week's Flophouse News is a day late, but not a dollar short, and while Poor Brother Tom is feeling a little dried out this morning, he hopes you'll sit back with a styrofoam cup of whatever gets you going in the morning and check out these bum-worthy articles and blog posts.

Find True Leader In Top Industry Groups from Investor's Business Daily — Don't settle for second best. Industry leaders in good sectors typically have the best performance, and industry leaders in bad sectors typically do the least damage to your portfolio.
Converting Series I Paper Bonds into Electronic Bonds from Blueprint for Financial Prosperity — 'Cause all that paper is bound to get lost while wandering dark alleys at night.
Thoughts on Financial Planners from Free Money Finance — They're thiefs! Swindlers! Low-down, rotten, money-grubbin' rogues who got no respect for other people's money. As the late Harry Browne often said, nobody will look out for your money better than you.
A Fully-Funded Roth IRA At Age 18 Could Net You 3.5 Million Dollars from No Credit Needed — Poor Brother Tom ain't 18 no more, but if there's any young persons out there who haven't started saving for retirement yet, he encourages you to do so.
Where to Find Dividend Growth Rates at The Dividend Guy — Valuable tools and techniques for anyone who wants a little more than merely stock appreciation

And while this next item has nothing to do with investing, it happened to touch Poor Brother Tom's more sensitive side.

Ten ways being fat costs you money from Mighty Bargain Hunter — Don't be fat, PBT. Don't be fat.

Anatomy of a trade: RIO

2008-06-09T17:02:52-04:00

It is good to review your past trades and evaluate your moves with the benefit of hindsight. This is doubly true for trades in which you lost money. You need to be honest with yourself and identify any mistakes you may have made so you can correct them in the future. I'm going to go one better and periodically make one of my trade analyses public on this blog in (cue music and deep-voiced announcer: duh, Duh, DUH!) Anatomy of a Trade.

Earlier this year I was itching to buy something--not a good place to be mentally. I'd been watching RIO since mid-February as it traced out a cup with handle pattern. (The cup is formed from November '07 through February; the handle builds in March.)

On April 7^th, the stock broke above it's 37.37 buy point and I took my position. However, the stock fell back below the buy point and traced out what would become a handle of the handle. You could also view the consolidation from March through the second week of April as a cup with handle pattern in its own right. (Click the above chart for a larger, annotated version.)

Mistake: I let my emotions get the better of me and sold the position on April 14^th for a 6% loss. The faded breakout undercut my confidence in the trade. Had I noticed that the selling was on very light volume, I may have had more confidence to hold.

Of course, I was quite annoyed when the stock promptly broke resistance at 37 after I sold out. However, I got another buy opportunity when the stock retreated to 37 and found support there. In How to Make Money in Stocks, William O'Neil says that many stocks provide just such a secondary buy opportunity after a breakout.

Finally, I sold the position for an 11% gain in about two weeks. Typically, my target gains are 20%, but in a weak market I'm happy with 10-15%. This turned out to be a good choice as the stock experienced a week of heavy selling and is now trading below 37 again.

Lessons learned:

If was unhappy with the failed breakout on April 14^th I should have immediately sold it.
If I was going to hold it, I should have paid closer attention to the volume action.
Don't be so quick to buy as a stock is breaking out. Odds are you'll get another chance. Often, you'll also have the added confidence of proven support by the base pattern as you buy off the bounce in a post-breakout retreat.

Opinions, news and blog roundup - 2008-06-03

2008-06-04T02:23:06-04:00

Here are some good stock-related news articles and blog posts from the past week that you won't want to miss.

SmartMoney's 2008 Broker Survey - The latest installment of SmartMoney's annual look at the ball bearings of the investing world. (Hat tip to Jim at Blueprint for Financial Prosperity where I first saw this)
How to Write Your Very Own Investment Policy Statement at All Financial Matters - Someone somewhere told me once that you're 75% more likely to accomplish a goal that you write down. I have no idea if that's true, but it sounds good. Either way, it probably doesn't hurt to write down your investment strategy.
Time to Sniff Out Juicy Dividends by Ben Stein - I often don't completely agree with Mr. Stein, but he continues to be one of the financial "experts" I whose articles I enjoy reading. In his most recent musings, he provides some good ideas for getting the most of high dividend yields while the market is suppressing stock prices.
Fed is "Attentive" to Falling Dollar's Impact on Inflation from Investor's Business Daily - Okay, Bernanke is starting to see the light, but is he gonna do anything about it? On second thought, maybe we ought not let him....
Why emerging-market growth isn't always good for investors from The Economist - One of the leading economics journals argues convincingly that it can actually be harder to earn money in fast-growing markets. Hmm, gotta remind a couple of my friends to get out of Chinese stocks (again...).

Feel free to post links to any other stock and market-related articles you found interesting this week.