Category: Trading School

I discovered Adam Hamilton in late 2002 and since have read his weekly essays without fail every week.  I have incorporated his theory on market cycles into my trading strategy.  His research has shown that throughout history markets tend to move in great cycles, long bulls followed by long bears.  These cycles are around 34 years long – resulting in a 17 year up cycle followed by a 17 year down cycle.  Obviously no market goes straight up or down, so within those major cycles are minor counter-cycles to keep everyone on their toes. Our last major up cycle ran from 1982 to 2000.  So, we are now 7 years into the down cycle.  If you entered the market in 2003 – it doesn’t feel like a down cycle.  However, if you bought tech stocks in 2000 you are still down 50%. 

Why am I mentioned this?  Continue reading “Maximizing Your Trading Years”

I received a couple of emails about getting started in the trading game.  Here is some insight into my development and a couple of recommendations.   

My trading career has undergone two distinct phases.  Phase 1 where I made a lot of money, but didn’t get to keep it.  Phase 2 where I am making a lot of money and at least so far being allowed to keep it.  Unfortunately, everyone must pass through Phase 1.  It’s the rites of passage.  The key is to minimize your time in Phase 1.  So, how do you that?

Continue reading “Getting Started in the Trading Game”

Individual investors no longer have to wait on Wall Street’s products to address specific areas of interest.  Low cost brokers and basket trading (the ability to trade, manage and track a group of stocks as one entity) have made it financially feasible and practical to create your own “pseudo-ETF.” 

What are the advantages of basket trading? Continue reading “Basket Trading”

Last Monday shareholders of Phelps Dodge, a member of the Big-Build Out portfolio, received an early Christmas present.  Freeport McMoran placed a bid to buy the company at a 27% premium.  Instantly all shareholders were 27% richer, simultaneously all shorts were 27% poorer.  This was a big news story, so CNBC reporters went to work.  Later on that day, Dennis Gartman was interviewed on CNBC.  Gartman had been betting that cooper’s run was over extended.  Instead of shorting the commodity itself, he choose to short a major cooper producer (Phelps Dodge).  Ouch.

Before that day, I had never heard of Dennis Gartman.  Turns out that he is a well respected and well known trader.  He publishes the Gartman Letter that is a must read among professional traders.  He should be commended for coming on CNBC on a day in which he had taken such a pounding.  So many come on that network- tout their stocks and are never heard from again. Needless to say, he lost mega-bucks on this trade.  He stated that this had turned a good year into a mediocre one.  I was most impressed when he said that he immediately closed his position.  He didn’t try to rationalize the situation.  He cut his losses and moved.

I discussed a similar situation in my article, “Navigating Thru a Trading Fiasco.” I cut bait on Enerplus Resources, a Canadian Income Trust, after the Canadian Government announced a new tax on such entities.  The article generated a nice discussion – see comments to article.

I just ran across Gartman’s Not-So-Simple Rules of Trading.  Each year he updates the list.  I believe this is his latest and greatest.  Here are my favorites: Continue reading “Dennis Gartman’s Not-So-Simple Rules of Trading”