Books are a great thing, and libraries ahve to be the greatest invention ever! I like historical novels and murder mysteries.
I do a lot of my reasearch on the internet, but I do love to read.
I enjoy reading about finance, economics and history. Two books I can think of at this moment, that are worth reading are:
Bulls by Maggie Mahar
The Price of Excellence by Jacob Neusner
Tuesday, December 30, 2008
Learning the Language
Asset Backed Security is a financial security backed by a loan, lease or receivables against assets other than real estate and mortgage-backed securities.
Mortgage-Backed Security is a security that is backed by a mortgage or collection of mortgages. These securities must also be grouped in one of the top two ratings as determined by an accredited credit rating agency, and usually pay periodic payments that are similar to coupon payments.
When you invest in a mortgage-backed security you are essentially lending money to a home buyer or business. An MBS is a way for a smaller regional bank to lend mortgages to customers without having the assets to cover the loan. Instead, the bank acts as a middleman between the home buyer and the investment markets.
Excerpted from Bob Prechter:
“This type of security is also commonly used to redirect the interest and principal payments from the pool of mortgages to shareholders. These payments can be further broken down into different classes of securities, depending on the riskiness of different mortgages as they are classified under the MBS.
One of the ways that a lot of this real estate debt was financed is very unusual historically, and that is through asset-backed securities. They really came into their own in the decade of the 2000s up until 2007. A lot of people feel that such investment was normal, but it wasn’t. For years and years, housing was built essentially to provide a home for people; in other words, it was a consumption item. But in the 2000s it turned into an investment item for people other than bankers. Wall Street packaged mortgage loans and began selling them as investments to people who didn’t look very hard at what they were buying. And they didn’t feel that they had to because, again, they felt that they were covered, at least with Fannie and Freddie mortgages, by implied guarantees from the federal government.
What’s happened, though, is that the issuance of asset-backed securities has fallen nearly to zero, not far from where it started. This method of financing is abnormal and something that comes along maybe once a century, when financiers get together and figure out a way to dress up and distribute IOUs in a certain investment area. So it is very unlikely that we will be returning to this type of financing anytime soon.”
Mortgage-Backed Security is a security that is backed by a mortgage or collection of mortgages. These securities must also be grouped in one of the top two ratings as determined by an accredited credit rating agency, and usually pay periodic payments that are similar to coupon payments.
When you invest in a mortgage-backed security you are essentially lending money to a home buyer or business. An MBS is a way for a smaller regional bank to lend mortgages to customers without having the assets to cover the loan. Instead, the bank acts as a middleman between the home buyer and the investment markets.
Excerpted from Bob Prechter:
“This type of security is also commonly used to redirect the interest and principal payments from the pool of mortgages to shareholders. These payments can be further broken down into different classes of securities, depending on the riskiness of different mortgages as they are classified under the MBS.
One of the ways that a lot of this real estate debt was financed is very unusual historically, and that is through asset-backed securities. They really came into their own in the decade of the 2000s up until 2007. A lot of people feel that such investment was normal, but it wasn’t. For years and years, housing was built essentially to provide a home for people; in other words, it was a consumption item. But in the 2000s it turned into an investment item for people other than bankers. Wall Street packaged mortgage loans and began selling them as investments to people who didn’t look very hard at what they were buying. And they didn’t feel that they had to because, again, they felt that they were covered, at least with Fannie and Freddie mortgages, by implied guarantees from the federal government.
What’s happened, though, is that the issuance of asset-backed securities has fallen nearly to zero, not far from where it started. This method of financing is abnormal and something that comes along maybe once a century, when financiers get together and figure out a way to dress up and distribute IOUs in a certain investment area. So it is very unlikely that we will be returning to this type of financing anytime soon.”
Friday, December 26, 2008
It is really terrible when people are preyed upon. We are learning more every day that we have to be knowledgeable about investing and savings. In fact, over the weekend, friends showed us an advertisement that offered 5% interest rate. We pondered whether it was legitimate since the going rate is less than 3%. I did not know the answer, neither did Charles or Laura. We all do our best to figure out what is the right thing to do. We have to have some trust to turn our money over, whether it is to a bank or a person.
It is a terrible thing to find that one has been defrauded by a 'Ponzi scheme.' This is an operation that pays returns to investors out of the money paid by subsequent investors rather than from profit. My Dad used to call is ‘robbing Peter to pay Paul’ and now we see that the Social Security has been a pyramid scheme from the beginning.
Those who paid in first received money from those who paid in second — and so on, generation after generation. The government can force people to pay into their Ponzi scheme, Madoff could not. Who is the bigger criminal?
It is a terrible thing to find that one has been defrauded by a 'Ponzi scheme.' This is an operation that pays returns to investors out of the money paid by subsequent investors rather than from profit. My Dad used to call is ‘robbing Peter to pay Paul’ and now we see that the Social Security has been a pyramid scheme from the beginning.
Those who paid in first received money from those who paid in second — and so on, generation after generation. The government can force people to pay into their Ponzi scheme, Madoff could not. Who is the bigger criminal?
Thursday, December 25, 2008
The 5050 Trading Strategy
The 50/50 Trading Strategy is a solid and effective trading plan. It still takes time to learn how to trade well, and trade consistently. The 50/50 Strategy limit the risk of large drawdowns. The most important thing a trader must do is preserve capital. The 50/50 Trading Strategy gives you the best odds, and this is after all, an odds game.
TraderDoc Methodology also says to enter one trade at a time. Get it to break even or profitable and then repeat. Manage the risk, manage yourself and manage the trade.
Success is being ready for opportunity when it comes.
Candy's Trader Commandments:
1) Honor Thy Stops
2) Thou Shall Know Where Thine Stop Goes Before Entering
3) Thou Shall Not Covet Crappy Stocks
4) Thou Shall Know Thyself
5) Thou Shall Not Bear False Witness To Support and Resistance
6) Thou Shall Not Draw Trendlines In Vain (Trend Master Series CD will teach this)
7) Thou Shall Not Commit Naked Calls
8) Thou Shall Not Covet Thy Neighbor's Picks, Let Thou Analyze Them Thoroughly Thineself
9) Honor Thine Indicators
10) Thou Shall Protect Capital and Profit. (See #1)
TraderDoc Methodology also says to enter one trade at a time. Get it to break even or profitable and then repeat. Manage the risk, manage yourself and manage the trade.
Success is being ready for opportunity when it comes.
Candy's Trader Commandments:
1) Honor Thy Stops
2) Thou Shall Know Where Thine Stop Goes Before Entering
3) Thou Shall Not Covet Crappy Stocks
4) Thou Shall Know Thyself
5) Thou Shall Not Bear False Witness To Support and Resistance
6) Thou Shall Not Draw Trendlines In Vain (Trend Master Series CD will teach this)
7) Thou Shall Not Commit Naked Calls
8) Thou Shall Not Covet Thy Neighbor's Picks, Let Thou Analyze Them Thoroughly Thineself
9) Honor Thine Indicators
10) Thou Shall Protect Capital and Profit. (See #1)
ADX DMI with Dr. Charles B Schaap
What is ADXcellence?
ADXcellence™ is a trend trading system developed by Dr. Charles B. Schaap (TraderDoc) and introduced in his book, ADXcellence (StockMarketStore.com). The system is based on the ADX (and DMI) indicator which measures trend strength and direction. ADXcellence™ seeks to trade the strongest trends, thereby minimizing risk and achieving greater profits in a shorter period of time. (Read the Table of Contents by clicking here.) ADX/ Directional Movement Index (DMI)
What is ADX? Click here for a chart showing ADX/ DMI profit opportunity.
ADX is the Average Directional Movement Index which was created in by J. Welles Wilder. ADX is usually plotted in a chart window along with two DMI (Directional Movement Indicator) lines. ADX is mainly used to quantify trend strength. However, the unique combination of indicator lines also gives a visual representation of trend direction, momentum, and volatility.
How Does It Work?
In his book, ADXcellence, Dr. Schaap presents new concepts for using ADX/DMI for trading the strongest trends (power trends). The book gives six well-defined strategies with detailed setups for trading power trends. Why use ADX? ADX tells us when the trend is strong and worth trading; it also tells us when the trend is too weak. The DMI lines give us a simple way to know when to be long and when to be short.
Is ADXcellence for Me? Read Book Reviews. Click Here
ADX is a indicator found on most charting programs, and it is used by many professional traders. Dr. Schaap’s book presents the material in an easy to understand way, and beginners can also learn the material quickly. Advanced traders will find ADXcellence™ to be a great addition to their trading toolbox. It can be used as a stand alone system or combine with other approaches. ADXcellence™ works well for stocks, options, futures, and currencies.
Average Directional Movement Index
How Do I Learn More?
The book is comprehensive, and you will have the tools you need after reading the material and studying the examples. This website posts educational charts for traders to study. For more information, you can email Dr. Schaap at Schaap5050@yahoo.com.
Buy the book now!
Learn everything about ADX, the Average Directional Movement Index
Contact Candy Schaap TraderDoc5050@yahoo.com You can purchase the book from www.stockmarketstore.com or Amazon.com Sign up for the Journal for Excellence in Trading right here.
ADXcellence™ is a trend trading system developed by Dr. Charles B. Schaap (TraderDoc) and introduced in his book, ADXcellence (StockMarketStore.com). The system is based on the ADX (and DMI) indicator which measures trend strength and direction. ADXcellence™ seeks to trade the strongest trends, thereby minimizing risk and achieving greater profits in a shorter period of time. (Read the Table of Contents by clicking here.) ADX/ Directional Movement Index (DMI)
What is ADX? Click here for a chart showing ADX/ DMI profit opportunity.
ADX is the Average Directional Movement Index which was created in by J. Welles Wilder. ADX is usually plotted in a chart window along with two DMI (Directional Movement Indicator) lines. ADX is mainly used to quantify trend strength. However, the unique combination of indicator lines also gives a visual representation of trend direction, momentum, and volatility.
How Does It Work?
In his book, ADXcellence, Dr. Schaap presents new concepts for using ADX/DMI for trading the strongest trends (power trends). The book gives six well-defined strategies with detailed setups for trading power trends. Why use ADX? ADX tells us when the trend is strong and worth trading; it also tells us when the trend is too weak. The DMI lines give us a simple way to know when to be long and when to be short.
Is ADXcellence for Me? Read Book Reviews. Click Here
ADX is a indicator found on most charting programs, and it is used by many professional traders. Dr. Schaap’s book presents the material in an easy to understand way, and beginners can also learn the material quickly. Advanced traders will find ADXcellence™ to be a great addition to their trading toolbox. It can be used as a stand alone system or combine with other approaches. ADXcellence™ works well for stocks, options, futures, and currencies.
Average Directional Movement Index
How Do I Learn More?
The book is comprehensive, and you will have the tools you need after reading the material and studying the examples. This website posts educational charts for traders to study. For more information, you can email Dr. Schaap at Schaap5050@yahoo.com.
Buy the book now!
Learn everything about ADX, the Average Directional Movement Index
Contact Candy Schaap TraderDoc5050@yahoo.com You can purchase the book from www.stockmarketstore.com or Amazon.com Sign up for the Journal for Excellence in Trading right here.
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