After running through a bunch of different scans on Stockfetcher my favorite setups for Monday are by a wide margin shorts. Don't miss CHOP. Classic short setup.
So on short watch we have CLNE. I thought I remembered the ticker but I think that was some other "Clean" stock. A lot of these "clean" companies are just pumped up fluff. This one though I looked at the financials and did some scuttle and it is a pretty good company. The chart is very good for a short setup though after such a consecutive run and a red floater candle above the upper bollie. The "Kiss of Death" as Muddy would say.
CLNE short bias.
CHOP short bias. This one looks like it has the most potential for a big drop. Wow! looks nice. Textbook short. China name too.
I always try to look through a bunch of stock scans every night. I have a long list of custom scans on Stockfetcher.com I go through. The way StockFetcher is set up you can scroll over the tickers and a pop-up chart pops up. With the feature I can run down a list very quickly and glance at the charts of dozens and dozens of stocks in no time. I probably look at about 70 or more charts a night. That's including ones I see on StockCharts.com homepage. Sometimes I look through more. Sometimes less. Watches for today are as follows.
Short biased we have LEVY. Surprisingly no one on Twitter is even onto this one. I was short biased yesterday and am very short biased after todays run. If it opens below 15 and goes red I think a good daytrade short is had.
VLTC is short biased. It's up on Icahn news. Doubt this huge run is justified for more or less a media pump of the stock. $20 million market cap and not much on the financials.
Last on the short's list is CAPN. Need to go red on the day.
Long biased is ANAD. It just came off of a nice consolidation.
When people start quiting their job to be a full-time stock trader and valuations look unreal there is going to be a big fall. Those are just a couple of the things that happen in an overvalued bull market. All excessive bull's led by speculation come to a severe fall. The bubble in China is getting out of control and will crash sooner than later. How soon? One can't know for sure. I found the average PE of 8 of the top 10 stocks in the (FXI), the index that tracks the Chinese market. The average was about 50. That would be ridiculous in itself but factor in the variable that a lot of the numbers reported by many of these companies isn't totally clear. What impact will the crash have on the world markets and furthermore the world economy? I'd say dump your FXI very very soon, maybe today. It is best to sell when the valuation is to high.
EDIT: Just two days after this post the Xinhua Index began crashing and was down 77% by March 2008.
stock pursuit
There is this fast food company that is in North Carolina and only North Carolina called Cookout. I've never actually eaten there yet but the place is popular. I was going to drive thru and order but the line at about 7:30 pm was so long I opted for Jack in the Box. This was good but I was disappointed to see only two cars going through Jack's drive through and basically no wait while its competitor was getting all the traffic.
I couldn't find much of anything on the web about them because they are pretty new I think and are only in about a couple dozen cities in North Carolina, mostly around college towns I read. I couldn't find a webpage but I found that they apparently have a niche in serving a variety of menu items like BBQ sandwiches and they stay open late in college towns until 4 am. I highly doubt they are public because I probably would have heard of them and found a ticker or some clue on the web. I wouldn't be surprised if they decided to expand and raise some capital by going public and doing an IPO. I might ask some local management more about the company. Restaurant chains can be fantastic growth stories.
full disclosure: no position in Jack in the Box (JBX)
There is this saying, "A foolish man learns from his mistakes. A wise man learns from other peoples mistakes." Many great investors and intellectual minds have given some great advice. Why not learn from them? These are some of the best books by the greatest investors in my opinion.
"To carry ones eggs in a great number of baskets without having time or opportunity to discover how many have holes in the bottom is the surest way of increasing risk and loss."
-John Maynard Keynes
Focus investing before Buffett. What you can get from this quote is that over-diversifying or even diversifying without having the "opportunity" to do the right analysis is foolish and will hurt returns.
Warren Buffett
Buffett was a student of Benjamin Graham and Graham had a big influence on him as an investor. He always kept Graham's teachings but Phil Fisher and Charlie Munger had a big influence on him later.
Risk comes from not knowing what you're doing.
-Warren Buffett
Paying attention to contemporary theories like beta, volatility, risk of loss are barriers to the investor that knows what they are doing and has a sound thesis for buying a stock. Are so called growth stocks riskier than so called value stocks? What does risk mean? The market is not efficient, just do your damn homework! When Buffett bought The Washington Post you could have sold it to many investors for more than the market price but beta said it was risky. Is buying a $1 for $.60 risky just because the price fluctuates? No!
"There seems to be some perverse human characteristic that likes to make easy things difficult. The academic world, if anything, has actually backed away from the teaching of value investing over the last 30 years. It's likely to continue that way. Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham & Dodd will continue to prosper."
-Warren E. Buffett from speech at Columbia Business School 1984
This is from an essay by Warren Buffett in response to disproving the efficient market theory. He showed the market beating results of all the students of Ben Graham and proved that it is no coincidence. I really recommend that speech "The Super Investors of Graham and Doddsville." Excerpts are all over the Internet. It is in this book The Intelligent Investor
"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."
-Warren Buffett
Armed with a contrarian view an investor who finds real value in stocks others are scared to own will do well. Fear and greed cloud investing judgement and will always be around to be taken advantage of.
The stock market is a no-called-strike game. You don't have to swing at everything--you can wait for your pitch.
I think this is a great quote not only for professional investors but for the individual investor. The individual investor can sit on a bunch of cash or not invest much in an over-valued market. They aren't always invested like fund managers who have to be as well as diversified. If a small investor sees an opportunity they can put as much as they please into a stock. I think this also applies to buying great companies at great prices, what Buffett loves to do. Sure you can get a good price every year or so in some great companies but it may take some big bad news or a slip-up by the company to get that great long-term price.
"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact."
The competitive landscape and how businesses live doesn't have mercy on great managers. Don't put to much faith in management to help a poor company. To much else is involved. This is a little off the topic of the quote but management can be underestimated and can do powerful things to companies. Just look at Apple Computer and how it has changed over the last 6 year.
"At some point in its life, almost every stock is a bargain; at another time, it will be expensive. Although there are good and bad companies, there is no such thing as a good stock; there are only good stock prices, which come and go. "
-Jason Zweig
Exploiting the inefficient market works. One can't get to attached to the stock price. It is just a price. The value is what one should concentrate on and understand how the market gets greedy and gives a bad price and how it gets fearful and gives a good price.
Benjamin Graham
"Confronted with the challenge to distill the secret of sound investment into three words, we venture the motto: Margin of Safety."
-Benjamin Graham
Calculating intrinsic value of a stock and company is not precise so if you can allow for some discrepancy you will do fine. It also means that even if you are right a margin of safety will increase ones returns and is a sound strategy. It definitely applied to his net quick liquidation stock portfolio he held but to other investments as well. Would you rather pay $10,000 for a $10,000 car or $6,600?
"The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgment."
-Ben Graham
"In the short term the market is a voting machine, in the long-term it is a weighing machine."
-Ben Graham
The market is not efficient, eventually the true value of a company will be reflected by the stock price. I have actually struggled with this idea that the business fundamentals have to be reflected by the stock price over a year or so. I think this quote applies to the lifetime of a stock and company but stocks are a reflection of the future discounted to the present. Yes, eventually the stock price will catch up to value with a buyout or say a huge panic induced fall or a bankrupt companies shares trading for 0 but years can pass until then. This quote also reinforces the psychology behind stock prices and that fear can be exploited if you look into it.
This leads into the next quote by Peter Lynch
"Stockpicking is both an art and a science, but too much of either is a dangerous thing. A person infatuated with measurement, who has his head stuck in the sands of the balance sheets, is not likely to succeed. If you could tell the future from a balance sheet, then mathematicians and accountants would be the richest people in the world by now."
-Peter Lynch
You have to understand the dynamic environment of business and economics and understand how to invest and at the right prices. You have to take everything into account but not every ratio, analysis, possible short-coming is the end all. Experience and knowing WHAT math to put the most emphasis on is the most important part of investing in stocks.
"Investment is most intelligent when it is most businesslike"
A stock I found lately using Graham's techniques was Eternal Tech only it isn't a cigar butt, rather it is growing and the fundamentals are good. Since first mentioned the company it is up 30%. Some other companies I've noticed lately but need a closer look at are a small pharmacy, Nyer Medical Group Inc. (NYER), Emerson Radio Corp. (MSN), Abatix Corp. (ABIX.PK).
The larger ones that look interesting are J. Crew Group, Inc. (JCG), Limited Brands Inc. (LTD) which has has a dividend yield of 2.5% at 11 times earnings. I am going to see if there is any more value than meets the eye with an enterprise value/free cash flow ratio. They just divested some of the crappier teen apparel segments, are cutting costs and should focus more on Victoria's Secret and Bath and Body Works.
and not the originals. Some of the books I plan on reading soon are the Original version of 
and Peter Lynch's first book 
. I only read 
.
.
