Category: Trading School

My trading strategy is fairly simple.  I identify a dominate theme and then buy leading stocks in that theme.  This has worked quite well for me over the years.  Back in the good old days it was the Internet and stocks like AOL (TWX), CMGI (CMGI), Cisco (CSCO), Intel (INTC) and Microsoft (MSFT).  Over the past three years, it has been industrialization of the emerging markets.  This led to the formation of my Big Build-Out (BBO) portfolio and stocks like Companhia Vale do Rio Doce (RIO), Souther Copper (PCU) and BHP Billiton (BHP). 

Most recently I have formed The Big Spend (TBS) portfolio to capitalize on the new wealth being created in the emerging markets.  The thinking being that people in the emerging markets are no different than ones in the developed markets – money burns holes in their pockets too and must be spent.  Stocks like Apple (AAPL), Nokia (NOK) and MasterCard (MA) form the nucleus of the TBS portfolio.

This strategy also keeps me away from themes where I can’t identify a driving catalyst.  Continue reading “Homebuilders Rallying: How Could This Be? Part II”

Three or four years ago I owned a gold mining stock that was acquired.  Since the transaction wasn’t going to be completed for a number of months, I sold the stock a few days later.   I vaguely remembered from the internet boom days that the greatest upside was on the merger announcement.  So, I figured that the gold stock would react in the same manner – its upside would be capped by the offer. 

Continue reading “Mergers: Sit Back and Relax”

My regular readers may have noticed that I have become bullish in areas other than commodities.  The Merrill Lynch report on Key Trends in the Chinese Economy really impacted my thinking.  As wages rise in the industrializing emerging markets, it is perfectly reasonable that consumption of consumer goods will increase. Therein is the opportunity.   Over the past two months, I have been building a new portfolio called The Big Spend.  To date it includes: Apple, Nokia, Research in Motion, MasterCard and as of yesterday Sony.  I am considering adding China Mobile.  This sector will only get hotter as signified by yesterday’s private equity deal  where Alltel was bought out for $27.5 billion.
 

Continue reading “Traders Must Evolve with the Market”