Category: MarketClub Techniques, Tips & Talk

Good Monday Morning Everyone!

Well the Super Bowl was last night and
I think the better team won with hard work,
commitment, and an AMAZING D-FENCE!

Now I'm not a Giants, or a Pats fan, but I do
like the Super Bowl. Last nights game was
a pretty good game and I'm happy to see Eli
and the Giants defy all and win. But my best
friend Jon asked me last night about trading and
what I thought would be a Super Bowl stock for this year.

We got into a good discussion about some of the
big movers last year (CROX, HANS, and a few
others)...and what could be this years Super Bowl
stock so he can "get rich quick".

I told him "to be honest...I HAVE NO IDEA! No one
really does. The market has so much going on right
now, that some are saying that Bank of America
could be this years winner solely on their Sub-Prime
positions! Some are saying that shorting the financial
sector is where the moves are made because there's
still a lot to write down. There may be a penny stock
out of Canada thats ready to discover the water to
crude formula!"

Then I addressed his "get rich quick" comment:

"Jon", I told him, "you're my best friend, you were the
best man at my wedding, you'll be my god father to
my next child, but if you ask me something that stupid
again I'll never talk to you again." He was shocked!

He didn't understand why he couldn't get rich trading
and take an easy trade and buy himself a new Corvette!

The next 2 hours were spent explaining that 100% of all
traders lose money at some point or another. 100% of
traders second guess their trades, get ticked about
a bad trade, and dwell too long on what could have been.

At the end of the second half the game was no longer
important to him. He was more interested in what is
realistic trading goals. I told him, "if you make 10%
every year, you're a winner. He said, "WHAT??!?!?
You're a pretty good trader, a smart enough guy,
and you're around smart traders and all you think is
good is 10%??"

The reality is, that I think he finally learned, that trading
is not the lottery. You won't make a million dollars
in 1 trade, you'll probably lose money, and trading is
HARD!

We stopped talking the 3rd quarter as I think the
beers were getting to him, but at the start of the 4th
he came back and said, "ok what do I have to
do to get 10% returns." I told him there is no easy way
but the best way is to spend some time learning
about different trading styles, methods, and money
management skills.

"Jon" I told him, "it took me 3 years of reading and
studying before I found what I liked to trade, how
I felt comfortable trading, and what NOT to do. All
that changed when I had access to VIDEO education
via INO TV." He's never been much of a reading fan,
as he's much more of an auditory learner, with really
not much time to sit and read. So I told him that
INO TV will be a great way to learn BEFORE he makes
his first trade.

With all the money being lost on a DAILY basis, the least
he, or ANY trader, can do is expand their own knowledge
base. It's never killed anyone to learn about something.
I've never watched a seminar and said to myself "I didn't
learn a single thing from that". You pick up info all the time
and can either apply or reject what you've learned.

Have a GREAT trading week and check out INO TV today
because if Jon can do it...you can to.

Learn more about INO TV HERE

"Today this market is increasingly dominated by one player. Together Microsoft and Yahoo can offer a competitive choice."
Statement from Microsoft, Inc.

That's the official line from Microsoft in its quest to acquire Yahoo.

Sad to say we had to pass on this deal. We couldn't get the bank to go along with it. Microsoft on the other hand does not need a bank, as it is in a lot better shape than most of the nation's banks.

OK, so we all know who the big 800 pound gorilla in this game and that's Google. But, does anybody remember the name "Altavista"? Well Altavista used to be the 800 pound gorilla and the search engine du jour. What happened to Alta Vista was that it was taken over by the metrics of the web, where nothing is forever. Could Google be far behind?

The big question is, can Microsoft and Yahoo equal Google? If this hostile bid ever is finalized, it's going to be very interesting to watch the implementation of two very different cultures. Is Yahoo with all its Yahooligans going to stay Yahoo? Or, is a decidedly less cool northern neighbor Microsoft going to kill off any further web innovation at Yahoo?

Also, as I write this blog, the market has voted to punish, and push down Microsoft shares. We would not be surprised to see Microsoft shares dropped even further from current levels. Currently, we're trading around the $30.50-area.

Rest assured that this weekend most of the financial press will be writing about the potential marriage of Microsoft and Yahoo.

It is BIG NEWS!!!

There's no doubt about it, Google is the big Kahuna in the world of online advertising. But all this could change pretty quickly for Google, and here's why.

If you're not familiar with affiliate marketing, then you really don't know how Google makes its money in the trenches. Google shares revenues with thousands, if not millions of partnering web sites. Google advertising matches advertisers to web sites or searched words. This is what it does best and it does it very well.

It also pays the web site owners for this privilege. Any other company who decides on a similar course of action will also have to pay the website owners more for this same privilege.

Here's how I see it, if Microsoft decides to pay more than Google to appear on an affiliates website, then that money will have to come out of the fees it receives from its advertising income. In Google's last earnings period, it said that payouts to affiliates were an ever increasing cost of doing business.

Rest assured capitalism is alive and well and every affiliate, no matter how big or small practices it. Affiliates have no loyalty to Google, they will switch in a New York minute to whoever pays them the most money to be on their website. This in my opinion represents an "achilles heel" in the long run for Google.

Google is going to find it increasingly more expensive and difficult to retain its affiliates. If I were Microsoft, I would come in with killer deals and a greater share of the marketing pie for every affiliate web site that Google has a relationship with.

As for Google's stock, we expected that the potential re-emegence of a very real competitor will erode the big profit margins that Google has enjoyed in the past few years.

The Chinese have a saying that goes like this. "May you live in interesting times." Never has this been more true than today.

We expect that this historical battle between Google and Microsoft will be one to remember and one that will be analyzed at business schools around the world for years to come.

It's going to be interesting.

Have great weekend,

Adam Hewison,
President, INO.com.

I have recently been reading a blog written by a registered investment advisor and affiliate of Abraham Bedick Capital located in Fort Lauderdale, Florida. Andrew Abraham has been tinkering in the financial arena since 1990, has spoken at numerous investment conferences and provides commentary and analysis for various financial publications. His blog, Abraham Bedick Capital Management posts various trading tips as well as specific analysis of international and domestic markets. Worth a look for sure.

Thought you might like his post in November regarding asset allocation, it reminds me of one of Adam's "10 Golden Rules Of Trading," wouldn't you say?

What Asset Allocation Can Do For You?

Asset Allocation simply means distributing your money across various investment avenues in order that the poor performance of any one avenue or asset does not jeopardizes the entire investment plan and yearly return. Asset Allocation is one of the basic premises of having an investment plan. As basic of an idea, it is one of the rarest traits in a financial plan. Would you even consider getting on a plane without a flight plan and the pilot not knowing where he is going? It is an obvious answer.

Many times I have encountered investors that feel that they are well diversified. They feel that they fulfilled the premise of asset allocation with stocks, bonds,cash and a little real estate. They would own some Large Cap or Blue Chips, some mid caps,small caps and a sprinkling of some international shares or funds.

However, when you diversify across assets you give yourself a lot of leeway to counter market uncertainties. When the stock markets is progressing well, one probably cannot appreciate the importance of asset allocation. In fact, you may even feel that asset allocation is a hindrance when having all money in equities seems to be a smarter way to ride the stock market rally. It usually takes an adversity (such as a sharp fall in stock markets) to fully appreciate that having more than just stocks and bonds in your portfolio can be a big bonus.

The advantage of having different assets in the portfolio is that a decline in any one asset can be partially offset with the presence of other assets. Many times different assets react differently to the same set of factors.

This brings me to my plan on how to expand one's asset allocation... In many inflationary periods ( such as now) Managed Futures have excelled and propelled a portfolio. All one has to do is look at the price of oil. How much has it gone up? What about Gold?

How much of an allocation one should you own' is a little tricky, because it will vary from investor to investor and their risk profile. Depending on the exact plan such as money management, correlation and risk per trade different levels of volatility can be experienced. In inflationary times commodities trend upwards and in deflationary times commodity prices fall and trend downwards. I am not a proponent of one trading these vehicles themselves but rather in a managed account or fund. The volatility and leverage can be great. At a minimum one should consider managed futures for at least 5% of their portfolio.

These are very uncertain times and one owes themselves to be aware that they need to think outside the box and look to assist in protecting their investment portfolios.

Courtesy of Andrew Abraham of Abraham Bedick Capital Management