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Feb28
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I am down in Houston at an energy conference as I write this. I just returned from touring a Liquid Natural Gas terminal. Amazing, I'll write about it another time. I am going to take my material today from an article written by D. R. Barton in The Oxford Club Mid-Month Communique Volume 19, No. 3 published February 15, 2006.
Mr. Barton has an explanation of Fundamental, Technical and Sentiment analysis that I liked and want to share with you. I quote,
"Well, Fundamental Analysis - in terms of stocks, in particular - is built around determining the present value of a company by predicting its future cash flow. Fundamental analysts use financial statements for historical data and factor in internal influences like new-product development, management make-up and market competitiveness to determine an estimate of how the company will perform in the future.
The fundamental analysis of the futures and currency markets are similar, while focusing more on supply and demand and external factors such as weather and governmental policies.
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Feb27
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Technical trading has come up in various previous posts. I’ve decided to do a series of posts on technical trading to give a better feel of what it is and how it can be used. This will of necessity only touch lightly...
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Feb24
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My good friend Bob wrote that he didn't think it was a good idea to make investment decisions based on today's newspaper. I agree with him. The point I was trying to make was that flow of funds is an...
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Feb23
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Jane J Kim and Jeff D Opdyke wrote a column in today's Wall Street Journal starting on page D1 titled, Individual Investors Shift Assets to Stocks. They write, "Individual investors are moving into the stock market at a stronger clip...
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Feb22
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What is a Discount Broker?A Discount Broker is one who charges much less for a trade than a Full Service Broker. They are able to do this, because they have unbundled the cost of trading from research and portfolio advice...
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Feb21
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What is a full service broker?A full service broker offers investment advice and portfolio management services in addition to transaction execution that discount brokers offer. Because you are receiving advice in addition to trade execution, you pay more for the...
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Feb20
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What is the difference between "Load" and "No Load" funds?Load funds charge an upfront percentage of your investment to compensate the managers for their skill. If you have a three percent load, the fund managers would get 3% of your...
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Feb17
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Bob writes about a Trading Tribe. If I understand his comment, he is seeking an Arthurian society of those involved in trading, a round table if you will. While investing is inevitably about risk and return, the Tribe would focus...
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Feb15
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Bob asks about using an Excel spread sheet to value American Style options. Because American style options can be exercised at any time, he cannot use the Black-Scholes option pricing model. He finds option pricing models expensive to purchase and...
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Bob asks, "Why is it generally more profitable to just sell an option than exercise it?" Remember that the value of an option consists of both Time Value and Intrinsic Value. At expiration, there is no Time Value left, so...
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Feb14
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My friend Bob asked about several option terms in his comment to Option Trading Preparation. I should have defined these terms so I thank him.Option Premium - The amount an option costs per share. Since option contracts are for 100...
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Feb13
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My good friend Bob commented on "Good Company, Bad Investment". He contrasted IBM to Philip Morris (MO). There are some great lessons to be learned from his analysis. First, he took a long term look at both companies to see...
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Feb10
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I am watching my sister's investments while she is doing volunteer medical work in South America for 18 months. She subscribes to an investment newsletter. It has been interesting to read it. Aside from the investment advice it gives, it...
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Feb 9
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A friend reminded me I have been remiss. I should regularly remind readers that this site is meant to be educational. I do not intend to give specific investment advice and no post I write should be construed as such. ...
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Feb 8
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In the strategies I've covered so far, I've talked about buying a call to express a bullish view and buying a put to express a negative view. You can also sell options to express your view on a stock or...
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Feb 7
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If you decide after reading about the risks and the benefits of using options to trade them, what should you do? I recommend the following.First, I would read the educational brochure produced by the CBOE (Chicago Board Options Exchange). It...
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Feb 6
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Last post I wrote to introduce the concept that options and other derivative products are tools. They can be used to increase risk or to decrease risk of a stock or a portfolio. In the pieces on Options Trading Strategy I wrote...
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Feb 3
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I'm going to divert from my series on option trading to answer a question from Devin. Devin asks how to determine if options or other risky strategies fit within your personal risk tolerance.Options and other derivative products (things that derive...
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Feb 2
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What option strategy should you use if you are very bearish (negative) on the market? You could buy a put option.A put option gives you the right to sell a stock at a certain price (the strike price) at during...
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Feb 1
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I've given a basic explanation of options. I've explained about long term options called LEAPS. Now I am going to start a few posts on option strategies. Today I will write about a strategy to use if you are bullish...
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