What You Ought To Know About Buy Low, Sell High, Go Short & Cover

short selling

Continuation from yesterday…….(The Future Of Nasdaq)

Trade #6 (Anticipated): Exit your long position at 4,300 and go short. Anticipated move gain 2,950 points. Anticipated net realized gain up to date 12,780 or 1,675%.

To quickly summarize, our three investment strategies yielded the following returns between November of 1994 and September of 2014.

  • Buy & Hold: 525%
  • Most Likely Outcome (Average): 425%
  • Buy Low, Sell High, Go Short & Cover: 1,675%

What’s more, by the time a bear market of 2014-2017 completes itself, the first two investment strategies should see their ROI slashed to approximately 300% while the Buy Low, Sell High, Go Short & Cover investment strategy should see its return zoom up to approximately 1,900%. A return on investment that is more than six times higher when compared to what others were able to achieve.  Finally putting to rest the question of what general investment strategy is the best.

Is it really possible to achieve this 16% annualized rate of return without taking on any additional risk?

What most people don’t realize about the proposed investment strategy is that it minimizes risk, not increases it. Think about it in the following fashion. What was more risky, remaining fully invested on the Nasdaq at 2000 and 2007 tops or going short when the tops were confirmed?

Contrary to a popular believe it was exponentially more risky to remain net long at both tops for the following reasons. First, the markets were extremely overvalued and speculative at the time, assuring that any future gains would be miniscule.  Second, the risks associated of major declines and even crashes were too great at both tops.  Finally, the Nasdaq’s cyclical composition clearly showed that dangerous sell offs were just ahead.   Just as it does today.

The best part about Buy Low, Sell High, Go Short & Cover is that this investment strategy works on all time frames and on most commonly used financial instruments. For instance, while the Nasdaq example above uses long-term market developments, the same strategy can be applied to daily trading of any individual stock. For as long as the trader knows exactly where they are in the cyclical composition of the underlying security.

How is this different from Long/Short investment strategy?

If you are not familiar, Long/Short investment strategy is most commonly associated with hedge funds and other professional investors who play on both sides of the market. It involves buying long equities that are expected to increase in value and selling short equities that are expected to decrease in value.  And while it might appear similar to Buy Low, Sell High, Go Short & Cover, it is anything but.  Here is why.

To Be Continued Tomorrow………

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What You Ought To Know About Buy Low, Sell High, Go Short & Cover Google

Are Bears Getting Ahead Of Themselves?

daily chart AOctober 2014

10/1/2014 – A big down day with the Dow Jones down 238 points (-1.40%) and the Nasdaq down 72 points (-1.59%). 

The market continues to perform just as anticipated. Click Here. That is not to say that I am incredibly bearish here. Yet, in last nights update to my subscribers I suggested that a big move we saw today was coming. That’s exactly what we got and just like that the Dow is up less than 1% for the year. With the Russell 2000 now in a negative territory and below its key support levels.

So, is this the 5-10% correction everyone was talking about on the way to the Dow 20,000 by the end of the year or is this something more? 

Well, here is what most market participants believe today. S&P 500 to hit 2,050 by year end: Stovall  Of course, if you want to make investment decisions based on seasonality, election year politics and other related stupidity, be my guest. As the saying goes, fool and his money are soon parted.

Yet, today’s market environment is not as simple as saying that we are either in a bull or a bear market. As I have suggested so many times before, the market of 2014-2017 will frustrate both bulls and bears to no end. Just when bears think they have control the market will bounce, retracing most of the gains. And vice versa. If you would be interested in learning exactly what is going on in today’s market and what happens next, please Click Here. 

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. October 1st, 2014 InvestWithAlex.com

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Are Bears Getting Ahead Of Themselves? Google

Investment Grin Of The Day

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Investment Grin Of The Day  Google

Killing Stress

killing stress

Continuation from last week…….

This is a perfect illustration of transforming negative energies that you might have within yourself into something positive.  Unfortunately, since most people move though their days in an unconscious fashion, for most this ability remains dormant. It has to be developed in order to become full available.

For instance, let’s for a second assume that Mary, a single mother of two, has a fairly stressful job as a 911 operator in Los Angeles.  By definition her job is full of STRESS. She deals with constant emergencies, violence, deaths, and people at their worst.  On top of that her boss is about as bad as it gets, making her life at work an absolute nightmare.  Sadly, Mary’s problems don’t end there.  She can barely make ends meet every month and her two boys are trouble makers at school. In fact, not a week goes by where she doesn’t skip a meal or get a call from the schools principal. In other words, Mary’s life is a definition of STRESS.

Just last night Mary’s boss went off on her again and threatened her job. Mary is so stressed and fearful of possibly losing her job that she can barely sleep at night. That’s all she thinks about.  What will she do if she losses her job, how will she be able to afford the rent, how will she pay her bills and be able to afford groceries at the same time, will she have to move back to Maine to live with her elderly parents, etc… What’s more, the thoughts above created a number of downward spirals in Mary, leading her to believe that she is an absolute failure.

Internally, Mary’s own thoughts, feelings and emotions grabbed a hold of her internal energy reservoir and converted ALL of it potentiality into pure STRESS. Mary’s entire being now vibrates at STRESS frequency, Mary is STRESS. Her life is a living hell.  Sadly, that is exactly how most people live life to one degree or another. People are unaware of their internal interworking as they spend most of their lives asleep at the switch. A walking, talking, eating and procreating Zombie with a massive ego would be a more appropriate description of how most people go though their entire lives.

Yet, all Mary need to do in order to rectify her situation is to become self aware. As soon as she does and as was suggested earlier in the book, she will gain the ability not only to control her energies, but to transform them into something positive.

As Mary’s STRESS energies reach their pinnacle she should shift into the state of medication and self awareness.  It would extremely helpful if Mary performs Exercise #1 right away and begins to observe her own thoughts, feelings, emotions and energies as an outsider looking in. By doing so she will gain the ability to understand where her STRESS and misery are coming from. Further, by dissociation from such energies she will be able to A. Control them and B. Transform them into something positive.

Control:

As Mary becomes a third point of reference (outsider looking in) she will be able to understand and control her internal energies. For example, she will understand that the STRESS she is dealing with is not real. It is fragment of her imagination and future projections. A fragment that her mind took and then spiraled it into an absolute hell though a series of thoughts, feelings and emotions that have no roots in the real word.

To Be Continued Tomorrow…..(Why Am I Seeing This On A Financial Website?)

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Killing Stress Google

The Future Of Nasdaq

3nasdaq

Continuation from yesterday….(The Secret Behind Timing 2007 Market Top)

That brings us to today. Between March of 2009 and September of 2014 the Nasdaq ran up from 1,200 to about 4,500. Exhibiting all of the signs typically associated with a 5-year cycle. Particularly, the market surged higher for 2 years (2009-2011), rested for one year (2011) and then resumed its surge higher for the next 2 years (2012-2014). This is a typical internal composition of a 5-year cycle.

The only deviation of the cycle thus far is its longevity. As was suggested earlier in the book, 5-year cycles are typically exact, lasting no longer than 5 years +/- 2 months. As of this writing the 2009-2014 cycle has been in development for more than 5.5 years. While unusual, it is not unheard of. For instance, the 1924-1929 5-year cycle lasted 5.5 years as well, leading right into the 1929 stock market crash.

What’s more, many market participants have come to a conclusion that a bear market that started in 2000 has completed itself at the bottom in March of 2009 and that we are now in a full blown secular bull market.  Sadly, nothing could be further from the truth. Since the stock market first started trading in May of 1790 not a single bear lasted 9 years. Once again, a 17-18 year alternating bear/bull cycle is always present. Plus, given today’s extreme overvaluation/speculation levels and macroeconomic issues, it is evident that the stock market is set for some sort of a decline.  Finally and as was mentioned earlier, all secular bear markets tend to complete themselves with a final 2-3 year bear market leg.

This sort of an arrangement gives us a perfect opportunity to illustrate how one should prepare for a bear market by selling at the top and going short. Given the setup above an analyst following the market and following the “Buy Low, Sell High, Go Short & Cover” investment strategy would be watching the market with extreme caution. Ready to sell his net long position and to go short at a moment’s notice.

What would justify such a move? If the Nasdaq breaks below its lower low and continues lower. That would be a first sign that the market has changed gears and shifted into a multiyear bear market.

Trade #6 (Anticipated): Exit your long position at 4,300 and go short. Anticipated move gain 2,950 points. Anticipated net realized gain up to date 12,780 or 1,675%.

To Be Continued………

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The Future Of Nasdaq Google

Robert Shiller Thinks Stocks & Real Estate Are Overpriced

daily chart Sept 30 2014

9/30/2014 – A down day with the Dow Jones down 28 points (0.16%) and the Nasdaq down 12 point (0.28%). 

While Robert Shiller is too smart to argue with CNBC talking heads about how overvalued both the stock and real estate markets are, you have got to read between the lines. Particularly, when he says things such as “The stock market is overpriced, bubble city, due for a correction, etc…”.

If he wasn’t trying to be so “politically correct”, he would simply say that both markets are due for a massive corrections. Thus far, my real estate prediction is playing out exactly as predicted….although a little bit slower Real Estate Collapse 2.0 Why, How & When

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 30th, 2014 InvestWithAlex.com

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Robert Shiller Thinks Stocks & Real Estate Are Overpriced  Google

Investment Grin Of The Day

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Investment Grin Of The Day Google

The Secret Behind Timing 2007 Market Top

2002 nasdaq

Continuation from yesterday…….What You Ought To Know About Shorting Nasdaq In March Of 2000

This simple strategy would have allowed investors to cover their short positions and go long shortly after the bottom was reached.

Trade #3: Cover your short position at 1,350 in October of 2002 and go long.  Move realized gain 3,400. Net realized gain up to date 7,430 or 931%.

What followed was a 5 year bull market represented by an exact 5 year cycle. Lasting between October 10th, 2002 and October 11th, 2007. Once again, any analyst familiar with the work above would have known two things. First, once the five year cycle was over the market was likely to start its next bear leg down. Second, this bear leg would represent a “Mid-Cycle Panic” discussed earlier or the fastest moving decline of the entire 2000-2017 bear market.

In other words, such an analyst should have been looking for a market reversal as soon as October of 2007. Ready to liquidate his or her long position and to go short. Such a confirmation arrived in early January of 2008 when the Nasdaq broke below both its lower low and a rising trend line. Once the confirmation was received a long position should have been liquidated and a short position should have been established.

Trade #4: Exit your long position at 2,550 in January of 2008 and go short at the same time. Move realized gain 1,200. Net realized gain up to date 8,630 or 1,100%.

As expected, the market proceeded to collapse between October of 2007 and March of 2009. When the mid cycle panic ended most indices had lost in excess of 50%. The Nasdaq bottomed on March 9th at 1,265. An analyst familiar with the cyclical composition of the market would have known that “Mid-Cycle Panics” do not last longer than two years. In addition, given the extent of the decline on the Dow and due to a number of powerful cycles arriving in early March of 2009, it would have been a good guess that the market was about to bottom.  As such, a bottom of some sort should have been anticipated in the first half of 2009.

The first signs of a reversal occurred in late March and early April of 2009 when the Nasdaq both broke above a down slopping trend line and set a higher high. Suggesting a trend reversal. A short position should have been covered at the time and a log position should have been established.

Trade #5:  Cover your short position at 1,350 in April of 2009 and go long at the same time. Move realized gain 1,200. Net realized gain up to date 9,830 or 1,265%.

To Be Continued Tomorrow……

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The Secret Behind Timing 2007 Market Top Google

Warren Buffett Is Getting Out….Crash Coming?

daily chart Sept 29 2014

9/29/2014 – A down day with the Dow Jones down 42 points (-0.25%) and the Nasdaq down 6 points (-0.14%).

A number of important articles below that I hope illustrate to you exactly where we are and what’s coming up next.

If you would be interested in having a good laugh at the expense of mainstream financial media who wouldn’t be able to analyze a dishwasher lease if it hit them in the face, let alone tell you what’s going on in the stock market….take a look.

Nice try, but there is one big problem. At previous market tops in 2000 and 2007 both Greenspan and Bernanke had the ability to not only to cut interest rates from a relatively high base, but to introduce QE. Jannet Yellen doesn’t have any ammunition left with interest rates at net ZERO and QE still pumping. In other words, once a bear market of 2014-2017 kicks into high gear Janet Yellen is f$#*ed.

As the article indicates, a number of Billionaires, including Warren Buffett, are dumping some serious stock. The question is……why? What most people don’t realize about Warren Buffett is that he has impeccable timing abilities. In fact, its one thing that most WB experts miss in their analysis. To become a Billionaire you got to have perfect timing and I think Mr. Buffett is right on time….again.

I hope you can put 2 and 2 together? 

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 29th, 2014 InvestWithAlex.com

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Warren Buffett Is Getting Out….Crash Coming? Google

Investment Grin Of The Day

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Investment Grin Of The Day Google