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Update: November 2010

Dear Reader:

If you are wondering what stocks Stock Trader Dude is looking at, well... I'm not tempted to buy anything. So, that's going to make it difficult to trade... unless I feel confident taking on a short position. Even in relatively good stock market environments I've found that one of the easiest ways for me to lose money is to try and make money.

At the beginning of 2009 I was still hesitant and admittedly missed the run up from the March lows because I didn't want to think about whether the low share prices were justified over a longer-term time frame. If you missed it too - what the heck to do see now that would be attractive? Who's left to bid up the price and why?

A quick look at that turbulent period - that was the time to buy, not now.

S&P 500

index changes jan-may 2009

Let me remind you that the DJIA has spent most of its existence under 1,000. I don't think that the economic environment is any better than the early 1990s when the DJIA was closer to 2000. You can use the S&P 500 index, but my point is the same, the outlook is worse now than it was during the early 80s or early 90s. The time to buy (and I use that term loosely because there are few golden buying opportunities even in good stock markets) is when there's so much pressure from a mania or bubble that almost all boats rise... so you don't have to know anything but prices.

But if you view the stock market as a form of a pyramid scheme you'll be better equipped to understand your odds and how much luck and effort is involved to leap frog ahead of the average group of investors who generally lose over the long-term. In a television interview five years ago or earlier I heard Mark Cuban make a remark about the stock market as a Ponzi or pyramid and it stuck with me... should I listen to myself, or the guy with the billion dollars?

Best of luck,

Stock Trader Dude


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Archive/posts: (Click to see posts from 2005-2010)

CBS foolcast - Wall Street capitalism, gambling, and a house of cards - Myth of the rational market

Stock market survival guide - Stock market romance - Arousing intrigue in the stock market

Explaining the stock market to youngsters - Trading with crowd psychology

The school of vague investing - Develop a winning trading system workshop

Email us to buy this hat!                                                           Funny stock market videos - advice, discussion, tease

How Charles Schwab got rich in the stock business

After graduation, in 1961, Schwab and two friends from Stanford created a monthly newsletter called Investment Indicators, selling one-year subscriptions for $84. Two years later, the under-funded newsletter almost closed. The newsletter needed a marketing push, so I developed a direct mail marketing program to boost circulation.

As the newsletter performed well toward the end of 1963, Schwab launched the Investment Indicators mutual fund in San Francisco. By 1967 the fund had grown to $20 million. Due to regulatory issues in Texas requiring investor reimbursement and the fall of the stock market Schwab wound up $100,00 in debt and had to start over.

Two ventures in the 1970s, a drive-through animal park and Music Expo failed. Schwab: "I learned that for every big success a person has, there must be at least one huge failure."

In 1971, Schwab borrowed $100,000 from his uncle and launched First Commander Corp. as a traditional brokerage. When the fixed commission structure was lifted he became an innovator.

Yeah, but before he could innovate two things made the difference:

1. Selling advice through a newsletter
2. Having a rich uncle

How many people do you think got rich off that newsletter?

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China fireworks: how to make dramatic wealth from the fastest-growing economy in the world
- nothing great, advice too general
- cogo/lfc/yum (fundamentals were promoted/prices haven't done much or are now down)

Becoming Your Own China Stock Guru: The Ultimate Investor's Guide to Profiting from China's Economic Boom
- not really (here's the guide)
Asian godfathers
- nice work, a reminder that the tycoons in Asia generate wealth not by being innovative but by influence, payoffs, and controlling interests in traditional industries.
- get out your history books, that's the way it was done in the US a hundred years ago.
- The great American tycoons from over a hundred years ago. How they got their start and what they did along the way.
- Bribery, influence, and monopolies (that's business)

Don't know why..