Jared Levy




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Archive for May, 2011

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Jared Levy, Editor, Smart Investing Daily
Friday, 27 May 2011
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jared levyFrom a young age I can remember my father saying, “Those who forget the past are doomed to repeat it.” My father was talking about the wars and mistakes that people and governments make. Those mistakes have thrown many economies and whole countries into turmoil and in the worst of cases caused the deaths of many.

As I get older, I notice that many of us have heard this saying. We try hard to live that way.

A person who doesn’t drink coffee may not know to check how hot it is before he takes a big gulp. He burns his mouth, but that shocking (and painful) experience would make him more cautious and take a smaller sip next time. This memory would most likely last the rest of his life.

You can find examples of this all around you!

Another might be taking a curve at high speed in your car and having to brake violently to avoid an accident. I bet your next trip around that curve would be much slower and more calculated.

Financial markets, on the other hand, are different.

They would have no problem trying to take that turn at a high speed again and again, even if they had crashed before. Recognizing when the market is acting “irresponsible” can make you (or save you) a lot of money.

There are several reasons for this.

Financial Market Amnesia

The stock market has a sort of amnesia. It tends to forget about major catastrophes and serious geopolitical effects that can have a prolonged impact. It also tends to disregard — or at least discount — the impact these past scenarios have when they repeat themselves.

The “Flash Crash” caused complete pandemonium for a day about a year ago. We still don’t have a clear answer to why it happened. Many experts (including me) believe that the flash crash could happen again. There are major flaws in some of the financial trading products (like certain ETFs) but the market doesn’t see them.

Right now, there are a plethora of major market uncertainties around the globe and talk of housing other economic bubbles in China as well as bubbles in commodities that could send stocks sharply lower.

Just recently are we beginning to see some cracks in the market’s foundation, but the market still remains oblivious…

So why doesn’t the stock market “care” about Read more

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posted by admin, May 20, 2011 @ 1:57 am

Believe It or Not, Warren Buffett Might Not Be Right

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jared_levy150x150Many investors look to “gurus” like Warren Buffett for advice and try to mimic their style of investing. I do believe that Buffett offers some excellent core methods, but there are many reasons why “the Buffett Way” may not work for most of us.

In my book Your Options Handbook, I detail several styles and methods of investing. I take you through several scenarios and help you find the most appropriate methods to fit your personality and ability to manage risk.

In today’s complex marketplace, certain methods, like Buffett’s, may look simple, but prove hard and maybe even downright frustrating for the average investor to follow. Here is an excerpt from Chapter 4 in my book:

The Oracle of Omaha Did It, Why Can’t I?

Historically, a large group of stocks (in major companies) have been shown to appreciate over time. Investors like Warren Buffett buy quality companies when they feel they are valuable and hold them indefinitely.

Even though some of the holdings may never appreciate in value in a big way, on average, major market indices have shown positive returns if held for at least 10 years. (Of course, there are m Read more

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posted by admin, May 19, 2011 @ 7:51 pm

Gabe Wisdom Show May 16th

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stock market analysisMany new traders ask, “Does technical analysis really work?” This question is debated by seasoned professionals, too. I want to share with you what I’ve learned over the years.

Generally speaking, most investors fall into two camps when it comes to analyzing stocks: fundamental analysis and technical analysis. Some use a combination of both, which I believe is the best approach, and I’ll explain why.

*Sara wrote a great article on finding the value of a stock.

1. Fundamental analysis examines the health of a company using balance sheet data, revenue projection models and just plain common sense.

A fundamental analyst might say, “I’m buying XYZ because they have little debt, great cash flow and big profit margins, and everyone around the world seems to love their widgets more and more every day.”

Pros

  • Most of us agree with this thinking and can gather the data fairly easily.
  • It is generally a smart practice to invest in a company with sound financials that is witnessing material revenue growth.

Cons

  • The problem with fundamental analysis is that you are still making predictions about the future that may not come true.
  • Fundamental analysis can be a lengthy, complex process.
  • Remember that even if a stock looks financially healthy and is relatively cheap compared to its peers, that doesn’t mean that it will always rise in value. A stock’s price is also determined by the supply and demand of its shares.
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posted by admin, May 10, 2011 @ 2:59 am

Smart Investing Daily – A Chicken’s Story

Jared Levy, Editor, Smart Investing Daily
Tuesday, 10 May 2011
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mediaThere are so many sides to the global food story, but the chicken industry could be a novel all by itself.

It’s a tough sector to understand, let alone invest your hard-earned dollars in. Hopefully this clears the “coop” on our wonderful feathered friend the chicken.

King Chicken

The chicken industry has two basic groups of chickens. “Broilers” (horrible name, I know) are the ones you will find whole or in parts at your supermarket. They are bred to be super large and full of meat; most are Cornish/Plymouth Rock hybrids.

Egg-laying chickens are quite different and are typically White Leghorns (pronounced “leggerns”), Golden Comets and Red Sex Links, among others.

According to the USDA, the U.S. poultry industry (chicken and turkey) is the world’s largest producer and second-largest exporter of poultry meat. We also are a major egg producer.

About 20% of the chicken products produced here in the States are exported, so a weaker U.S. dollar means better prices for chicken farmers here in the U.S.

We eat more poultry than beef or pork alone, but less than all red meat combined, so poultry is a big deal. It’s not only a big deal here, but around the world.

Globally, the average wholesale price of a broiler climbed 29% from 64.4 cents per pound in 2006 to 83 cents at the end of 2010. But something is afoul in the world of chickens.

In a report on April 14, 2011, the USDA said that chicken prices will average about 84 cents for the year. With recent weather catastrophes and continuing changes in demand, that number Read more

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Jared Levy, Editor, Smart Investing Daily
Friday, 06 May 2011
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Precious MetalsUnless you have been hiding under a rock, you probably know that silver has had a major correction over the past week. The precious metal plummeted about 30% from a high of almost $50 an ounce to less than $35 yesterday. This six-day drop is one of the largest since 1983.

Silver has given back just about all of its gains for the past month and some traders are thinking it might be time to get long. But before you run and buy silver, there are a couple things to consider.

Forces That Move Silver

The U.S. Dollar

There are many theories on why this sell-off is happening. Obviously, any real strength or even support in the U.S. dollar will generally be bearish for precious metals like gold and silver. This is mostly because the U.S. holds the largest stockpiles of these metals and they are traded in U.S. dollars globally. Even though gold is more of a recognized currency, they both have sensitivity to changes in the U.S. dollar’s value.

The falling U.S. dollar has recently leveled out. That means we’ve seen a small correction in dollar-denominated commodities and metals overall. Earlier this week, the European and London central banks held their rates steady. The ECB also hinted that they may not raise their rates next month either. This is good news for the U.S. dollar.

The U.S. dollar traded higher late in the day yesterday and sent other dollar-sensitive commodities like oil and even stocks much lower on the day. Oil had its largest percentage drop in three years. If you don’t believe that the dollar is in control here, think again…

For now, it seems that the U.S. dollar will continue to be relatively weak. The rally seems more like a short-term bump rather than a long-term trend. Current Federal Reserve policy puts general downward pressure on the U.S. dollar.

Gold/Silver Ratio

Then there is the historical ratio between gold and silver. A good “average” ratio of gold to silver is about 55, according to many experts. That means 1 oz. of gold should buy 55 oz. of silver. The gold premium is because there is much more silver on this Earth than gold. Even though silver has industrial uses beyond gold, there is a global desire, respect and currency reserve with gold that silver just does not have.

If that ratio gets extremely high, like 100, that means that silver is cheap relative to gold and may Read more

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Jared Levy, Editor, Smart Investing Daily
Thursday, 05 May 2011
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job marketRecently the financial stock market has been slow to react to anything. Events and data that would normally get a big reaction from the markets have had minimal effect. Even the killing of the most wanted man on Earth did little to influence U.S. stocks.

That calm trend may be about to change…

What News Matters for the Financial Stock Market?

All news, economic data and corporate announcements such as earnings reports have some influence on the financial stock market. A successful investor forms opinions about the economy and the companies he or she invests in based on all kinds of news. But an investor also needs to be aware of what news the financial stock market uses.

Think of the market as a telescope looking ahead about four to 12 months. Because of this “forward view,” we use the market as a leading indicator of strength of the economy.

Even though the stock market looks forward, there are checkpoints to make sure it is not getting ahead of itself or that it has gone far enough! The checkpoints are news reports and economic data. If these are not meeting expectations, the markets can correct.

Different news matters at different times. But one major checkpoint may need to really step up the pace, if the financial stock market is going to continue higher.

(Investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Sara Nunnally simplify the stock market for you with our easy-to-understand investment articles.)

The Employment Situation

The unemployment rate, though important, is considered a lagging indicator of economic health. This means that the economy could be improving and the unemployment rate might be slow to respond.

Remember earlier I mentioned that the financial stock market is like a telescope? Well, you can also think of it as a rubber band. When the market moves higher and economic conditions improve, the tension on the band decreases. But when the market has been Read more

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Jared Levy, Editor, Smart Investing Daily
Friday, 29 April 2011
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Jared LevyWe have received a number of emails this week asking about Taipan’s trading services. A couple of readers wanted more information on my service, WaveStrength Options Weekly, so I thought I would take a couple minutes to explain what it is I do.

(You also should know that Taipan offers many different services. They specialize in different markets like commodities, futures options and stocks, but also focus on different risk tolerances and strategies. I encourage you to take a look at all we have to offer.)

A Little About Me

Before all this, my life was very different. I was a member of several stock exchanges, and it was my job to trade options and make lots of money for my company. I had huge monthly costs and even bigger expectations from my bosses to deliver serious results. At every turn, Wall Street’s best and brightest traders were breathing down my neck, waiting for me to make a mistake so they could take my place.

It was my job to make money trading any order that came into my pit. When the public was buying, I was selling and vice-versa. It was a completely different frame of mind than most investors have today. I learned techniques there that cannot be learned anywhere else.

Most people with my skill set usually end up at a hedge fund, brokerage or bank, or on some major trading desk. In my opinion, it is much easier to be a trader and work Read more