Archive for the ‘Investment Talking’ Category

Investing Rules for Binary Option Investors

By: ispeculatornew | Date posted: 05.24.2016 (8:23 am)

 

 

Investing in common stocks could sometimes requires lot of time and effort. I recently found a new investing vehicle enabling investors to start with little money and little knowledge; it is called binary options. Banc de Binary is a great resource to understand binary options.

Binary options explained

Binary options are relatively easy to understand. You need to create an account with a broker that will give you access to their investing platform. All options are listed with the expected return if you make a successful trade. You then select an asset and decide if it will go up or down within a defined time frame. The expiry time frame could be a small as 30 seconds and the amount invested could be as small as $1.

Rule #1 know what you trade

Since most binary option expires in a very short time frame, it is crucial to understand what you are trading. Selecting the right type of asset is crucial. You can select assets you understand and know how they will react to events on the stock market. This is the most effective way to invest in binary options. Conducting further research is advised as you don’t want to gamble your money, you would rather invest it.

Rule #2 concentrate on a small basket of assets

If you are trying to trade on everything you can, you will invest, and more likely lose lots of money. Each asset type has their own characteristics and you should rather concentrate on a few of them to thoroughly understand instead of barely know how each asset evolves over time.

Rule #3 plan carefully

Typically, you earn very strong return on your investment while you will lose it all if you are wrong. For example, if you invest $100 in a binary option, you will either complete your trade with $185 in your pocket or $0 if you are wrong. This is why it is important not to invest too much money on a single trade and to know when it is the right time to cash your investment and stop trading. Don’t try to “make up” for a loss trade by taking additional risk on your next one.

One last tip

If you never traded binary options before, a very good idea could be to open a demo account. Most brokers offer you the possibility to open a real account with no money. You can then start making fictitious trades to see how you could be making money with this system. It will allow you get familiar with the platform and how binary option works. You can make your rookie mistakes within the demo platform and get ready for real investments afterwards. By testing your trading aptitudes and strategy, you can see if you could make money in the real world. This is probably the best way to initiate yourself to binary options.

How to Get Better at Trading Binary Options

By: ispeculatornew | Date posted: 04.26.2016 (7:27 am)

Binary options are a bit deceptive. On the surface, it looks like trading options should be relatively easy. After all, you’ve probably heard all about how binary options can do well in any market. You can also pick from a long list of underlying assets too, which is especially helpful for those who already have a background in investing. Therefore, if you haven’t seen any outstanding results yet from your time trading options, it can be easy to get frustrated. Before you give up, though, consider the following ways of getting better at binary options.

Consider Your Broker and Software

binary options, trading binary options, trading options, getting better at binary options

If your broker isn’t pulling their weight, you’re always going to be suffering from poor results when trading binary options. Due to the unique features of this type of trading, brokers are probably more important to those who invest in binaries than any other type of investor.

Likewise, the software brokers provide their clients will play a huge role in their success (or lack therefore).

As such, if you’re currently trading binary options, but not seeing the returns you had expected, it makes sense that you should take a good, hard look at your broker.

Learn More about Your Market

Still, it might not be fair to blame your broker. It could be that your lackluster track record with trading options is because you don’t actually understand the market you’re focusing on. This means not just having a grasp on the underlying asset you favor, but the market you’re doing your trades in. If you haven’t picked both of these yet, that’s definitely the problem.

However, even if you have picked an underlying asset and market to focus on, it might be time to hold off on trading while you study both of them a bit more.

Trade More

Provided that those first two issues are definitely not the problem, you may be surprised that the solution we recommend is to actually make more trades. After all, practice makes perfect. At the moment, if you’re not regularly trading binary options, it’s definitely going to take you a significant amount of time before you begin posting big profits.

How much trading is enough? That will really depend on your budget and schedule. Again, though, the more you practice, the faster you’ll improve.

Fortunately, you can sign up for practice accounts that allow you to trade like the real thing, but without actually putting up any money.

Manage Your Money Better

Be honest with yourself: are you currently seeing small profits because so much of your returns get mitigated by big losses? If that’s the case, you need to start managing your money better. Lower your monthly budget so you’re forced to make better decisions and can’t keep funding your investing when it’s clear you need to take a breather.

You can get help with this from a spouse or pick a friend to be your accountability partner. Tell them what your monthly budget is and then make sure you follow up with them regularly about your current status.

Until you’re able to manage your finances and stick to a budget, none of these other tips will do much for you. In fact, they may simply contribute to a situation that ends up costing you dearly.

Getting better at binary options is something that could take years. However, the financial rewards are worth it. If you’re currently trading binary options but know you could do better, apply the above advice to your situation and expect results.

For more information:

https://www.facebook.com/onetwotrade

https://twitter.com/OneTwoTrad

 

 

Four Power Tips for Making Smart Investments

By: ispeculatornew | Date posted: 04.20.2016 (3:44 pm)

 

Investors are in the business of using money to make more money. Investors are not concerned with capital preservation (of course, they don’t want to lose money); rather, investors are more interested in capital multiplication. However, to double, triple, quadruple, or grow your trading capital, you’ll need to step out of the comfort zone of making conservative investments to the not-so-comfortable zone of making speculative investments.

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Many people are scared of making speculative investments because they are afraid of taking on risks. However, you can still take on speculative investments without fears if you have diversified the investments in your portfolio. Diversification simply means that you should not put all of your investments eggs in the same basket. This article seeks to explore four simple things every investor could do in order to have a diversified but balanced portfolio.

Variety is the spice of life

To start with, a diversified investment portfolio is a portfolio that has different kinds of investments. If you put all of your money in stocks and the stock market crashes; you’ll lose all of your investment – many people had that experience during the 2008 global financial crisis. Now, gold is the best performing commodity in the market. It has 17% gains in the YTD and many investors are putting all of their money into gold – it is highly risky because they could lose everything if gold crashes.

A diversified portfolio should have a mix of stocks, bonds, real estate, speculative plays, international investments, and cash. In broad terms, you should have a mix of conservative and speculative investments.

Conservative investments include mutual funds, stocks of blue-chip companies, and precious metals among others. Binary options is a good way to start investing in speculative plays that could deliver exponential returns on investments – you should look for a recommended binary options broker. You might also want to learn more about futures and options as other type of speculative plays that promises massive returns.

Asset allocation should take proper planning

In diversifying your investments, you should also figure out a way to determine how much money you should put in your different investments. Asset allocation is the concept that ensures that your portfolio is weighed and balanced with different kind of investments. You’ll find many rules about asset allocation – some experts will suggest that you subtract your age from 100 and put the remaining percentage in stocks and bonds.

One of the commonest asset allocation rules you’ll find in the market will suggest that you invest between 25% and 50% of your money in stocks, 5% in bonds, 10% in REITSs, 10% in real estate, and the rest in other speculative plays.

However, I think asset allocation should basically be between allocating money between speculative investments and conservative investments.  I suggest that that you should subtract your age from 100 – put your age in conservative assets and put the rest in speculative assets. You can also check Finpari Broker Review to get started on speculative trades and investments

Diversify within the same category

Smart investors diversify their investments between different assets class and they go further to diversify the investment within the same asset class. It is good to diversify between stocks, bonds, binary options, precious metals, mutual funds, and real estate among others. However, you should also endeavor to diversify within the same asset.

For instance, while buying stocks, you should buy a mix of tech stocks, bluechips, financials, industrials, and healthcares stocks among others – of course, you should understand the business of the underlying company before you buy the stock. However, if you don’t have deep pockets, diversifying within the same category could cost you a lot of money in the form of transaction costs & fees.

However, you might want to consider “index” funds, EFTS, and mutual funds as a means to diversify within an asset class. Nonetheless, it is important that you conduct extensive due diligence, examine the past performances of a fund, and gather insight into its future performances before you put your money into any fund or before you commit your money to any money manager.

Balance risks with expected returns

The main reason you are being advised to diversify your investments is that diversification spreads out your exposure and it reduces your risk in any single market sector. However, diversification should be a tool for reducing risk but not a tool for locking yourself in an investment prison. There’s no point in putting all of your money in conservative investments without making speculative plays.

One of the mistakes that investors make is that they forget that the risks and rewards are blood brothers – low risk investments yield low rewards, medium-risk investments bring medium rewards, and high-risk investments often deliver high rewards. When diversifying your portfolio, pay attention to how much risk you are willing to take and buy up investment vehicles accordingly.

 

Should You Lock Your Mortgage?

By: ispeculatornew | Date posted: 04.20.2016 (5:06 am)

Everyday, there is something to say about the economy. Since the 2008 market crunch everybody has their take on what is going to happen next. It has created a huge point of interest.

At the end of 2015, the FED raised their daily interest rate for the first time since the beginning of the crisis back in 2008. Even though, it was a small increase, it was enough to put several financial journalists and financial analysts in their seats to write some forecasts on their laptops (it’s funny to think that they don’t need to find a financial topic to write about… they are given by the 6pm news 😉 ). Now we are told that we should consider locking in our mortgage rates.

Interest rates don’t rise overnight

I don’t know if it’s because we are overloaded by information, or because the media business model is not very lucrative so they try to become more sensational, but I don’t see how interest rates could suddenly increase by 5%!

In fact, with global economy going sideways, resources prices going up and down each day, the FED eyes all macro-economic data and will proceed with caution. During the latest meeting in March, they decided to keep rates where they are until they see strong sign of economic growth. Therefore, we will more likely see another raise of the short term interest rate by the end of 2016, but don’t expect an important raise by any means.

So should you lock-in your mortgage rate?

We will all have someone around coming back with the stories of the high interest rate period of the 80’s and claim that we could see the prime rate at 7% in no time.

The thing is that you probably won’t pay your mortgage off over the next 5 years (if you will, then perhaps it’s a different game). And over the life of your mortgage (25 to 30 years), it has always been advantageous financially to keep a variable mortgage rate, (provided you can still sleep at night!)

You can probably lock in your fixed rate home loan rate for 5 years at 4.00% right now. However, if you stay with a variable rate, you are paying between 2.25 and 2.75%. So, worst case scenario: you are still paying 1.25% less than a 5 year fixed mortgage rate.

Therefore, if you are about to lock your mortgage rate at 4.00%, I have a prudent suggestion for you:

Calculate your payment at 4% and make this payment on your variable rate mortgage (that is currently much lower). You will then create a buffer and pay off your mortgage faster. You will protect yourself from a rate increase while benefiting from the lowest rate on the market.

Finally, the best move you can do is always the one that will make you sleep well at night. If you keep your variable rate and can’t stop worry about it, maybe you should consider to lock in your rate.

 

Stocks I Follow (2016 Update)

By: ispeculatornew | Date posted: 04.20.2016 (3:00 am)

$CTRPIt has been some time since I was able to do a proper update to the list of stocks that I follow. Over the past 12-18 months, I was able to add a few names that either become public or were the result of spin-offs from my existing universe. Hopefully this also frees me up a bit to look at some names that have been suggested in recent weeks.

Public Companies

IAC Interactive (IAC): No real change here apart from the ticker changing from IACI to IAC

Removing Some Foreign Names: I’m still working very hard on finding reliable ways to stay up-to-date on the Chinese web companies. Not only is there an incredible opportunity in the 2nd biggest web market in the world but a lot of these companies do seem to be working on expanding their global presence and will collide with stocks that I follow. That being said, some of the names I’m getting nowhere with and will remove (at least for now from my universe). Why remove names? Over the past 2 years I’ve been mostly adding names but that also means I follow news, earnings, management calls, etc. The more stocks I follow, the less attention I can give to each one. If I’m not even close to being able to trade a name and can’t see that changing anytime soon, time to take it off. Today I will be removing:

Ctrip.com International Ltd (CTRP)
Yandex NV (YNDX)
Youku Tudou Inc (YOKU)

$uberPrivate Companies

Oh, this list is a painful one for me to look at in a way. So much missed opportunity in the fact that I can’t (realistically) invest into these companies. Obviously, more than ever, I’d love to be able to trade Uber, Airbnb, Dropbox and Snapchat. The sad part in a way is that this list remains basically unchanged. Companies such as Uber and Airbnb are huge and a few years ago they would have been on a clear path to turn public. But a very liquid private market as well as an uncertain

Here is my updated list:

Adobe Systems Inc (ADBE)
Alibaba Group Holding Ltd (BABA)
Alphabet Inc (GOOG)
Amazon.com Inc (AMZN)
Apple Inc (AAPL)
Baidu Inc (BIDU)
BlackBerry Ltd (BBRY)
Blue Nile Inc (NILE)
Box Inc (BOX)
Demand Media Inc (DMD)
DHI Group Inc (DHX)
eBay Inc (EBAY)
Etsy Inc (ETSY)
Expedia Inc (EXPE)
Facebook Inc (FB)
Fitbit Inc (FIT)
Glu Mobile Inc (GLUU)
Groupon Inc (GRPN)
IAC/InterActiveCorp (IAC)
King Digital Entertainment Plc (KING)
LinkedIn Corp (LNKD)
Match Group Inc (MTCH)

Microsoft Corp (MSFT)
Monster Worldwide Inc (MWW)
Netflix Inc (NFLX)
Oracle Corp (ORCL)
Pandora Media Inc (P)
PayPal Holdings Inc (PYPL)
Priceline Group Inc/The (PCLN)
QuinStreet Inc (QNST)
Rackspace Hosting Inc (RAX)
Rosetta Stone Inc (RST)
salesforce.com inc (CRM)
Square Inc (SQ)

Travelzoo Inc (TZOO)
TripAdvisor Inc (TRIP)
Twitter Inc (TWTR)
WebMD Health Corp (WBMD)
XO Group Inc (XOXO)
Yahoo! Inc (YHOO)
Yelp Inc (YELP)
Zendesk Inc (ZEN)
Zillow Group Inc (Z)
Zynga Inc (ZNGA)

Dropbox
AirBNB
Uber
Pinterest
Snapchat
GoDaddy

One Way To Play The Current Market Crisis

By: ispeculatornew | Date posted: 01.21.2016 (6:44 am)

$MCDFair to say that the market has made things interesting to start 2016 and there are certainly real concerns about not only the market but the fundamentals involved for these companies especially with the prices of commodities, impact of China, etc. When crisis strikes, great opportunities rise as the number of investors making “irrational” moves increases. This seems to be a great time to find bargain stocks and finding a quality dividend stock at 20-30% less than its price from a few weeks ago is certainly very attractive.

I personally think one potentially interesting way to play this is to look at consumer cyclicals sector where I personally noticed quite a few stocks that are trading at significant dividend yields.

You will notice that there are several very known names in there including:

Staples (SPLS)
Ford Motor (F)
General Motors (GM)
Six Flags Entertainment (SIX)
Macy’s (M)
Viacom (VIA)
Darden Restaurants (DRI)
Best Buy Co (BBY)
Nordstrom (JWN)
Toyota Motor (TM)
Abercrombie & Fitch (ANF)
McDonald’s (MCD)

I’d personally likely go for the clothing and restaurant names rather than media for example where there is a deep transformation going on. These are mostly offline companies but for online shopping consumers could head to http://www.cost.co.uk for example. I’d stay away from companies (such as Best Buy and Staples) that are directly competing with online giants as it’s unclear how that future will play out. Why? My main concern is that there are many industries that are being drastically changed by the technology sector. When you think about shopping for electronics, books, media, transportation and so many more, you can think about the “traditional” players and how quickly their world is being transformed. Best Buy, Barnes & Nobles, traditional media companies and taxis are facing a very uncertain future and while it’s easy to say they should adapt to this new reality, that is far from easy. Many have failed and are out of business while others like the New York Times are adapting as fast as they can to survive in this new world.

Another factor to consider when buying is the impact of a very strong dollar. An international presence is always a positive and provides additional diversification but I would say a strong US presence isn’t terrible these days either and will offer less resistance when converting those revenues (and profits) back to US dollars. Just look at this 3 year chart for US dollar index and you’ll see what I mean. This explains why so many companies are reporting currency impact as a major negative in their earnings.

DXY

While online shopping for clothing and food delivery is certainly growing and happening, I’d say we seem much further away from companies such as Macy’s being disrupted.

Do you hold any of these names? Here is the full list:

SymbolNameIndustryDividend Yield (TTM)
IGTInternational Game TechGambling8.8
PSOPearsonPublishing7.94
LVSLas Vegas SandsResorts & Casinos6.71
GEFGreifPackaging & Containers6.33
FUNCedar FairLeisure6.05
MATMattelLeisure5.92
GMEGameStopSpecialty Retail5.62
TIMETimePublishing5.5
TUPTupperware BrandsPackaging & Containers5.42
SPLSStaplesSpecialty Retail5.32
GESGuess?Apparel Stores5.16
WYNNWynn ResortsResorts & Casinos5.14
RGCRegal EntertainmentMedia - Diversified5.04
FFord MotorAuto Manufacturers5.01
SEASSeaWorld EntertainmentLeisure4.8
GMGeneral MotorsAuto Manufacturers4.67
MDPMeredithPublishing4.63
MDCM D C HoldingsResidential Construction4.61
IPInternational PaperPackaging & Containers4.5
SIXSix Flags EntertainmentLeisure4.44
DINDineEquityRestaurants4.31
COHCoachLuxury Goods4.3
GPSGapApparel Stores3.96
VIABViacomMedia - Diversified3.84
AMCAMC Entertainment HldgsMedia - Diversified3.82
TRIThomson ReutersPublishing3.81
PKGPackaging of AmericaPackaging & Containers3.76
KSSKohl'sDepartment Stores3.74
MMacy'sDepartment Stores3.68
VIAViacomMedia - Diversified3.61
SONSonoco ProductsPackaging & Containers3.59
DRIDarden RestaurantsRestaurants3.57
AEOAmerican Eagle OutfittersApparel Stores3.49
DSWDSWApparel Stores3.48
CBRLCracker Barrel OldRestaurants3.48
BKEBuckleApparel Stores3.46
WRKWestRockPackaging & Containers3.4
BBYBest Buy CoSpecialty Retail3.39
CNKCinemark HoldingsMedia - Diversified3.29
JWNNordstromDepartment Stores3.26
LEGLeggett & PlattHome Furnishings & Fixtures3.26
TMToyota MotorAuto Manufacturers3.23
CATOCatoApparel Stores3.22
KARKAR Auction ServicesSpecialty Retail3.2
GPCGenuine PartsSpecialty Retail3.14
ANFAbercrombie & FitchApparel Stores3.13
JCIJohnson ControlsAuto Parts3.08
HOGHarley-DavidsonRecreational Vehicles3.07
CHSChico's FASApparel Stores3.06
MCDMcDonald'sRestaurants2.99
HSNIHSNSpecialty Retail2.95
OMCOmnicom GroupAdvertising Agencies2.87
JW.BJohn Wiley & SonsPublishing2.87
WWEWorld Wrestling EnterMedia - Diversified2.86
JW.AJohn Wiley & SonsPublishing2.85
TGNATegnaBroadcasting - TV2.83
PAGPenske Automotive GroupAuto & Truck Dealerships2.8
RENXRELXPublishing2.8
DNKNDunkin Brands GroupRestaurants2.8
MINIMobile MiniPackaging & Containers2.74
WSMWilliams-SonomaSpecialty Retail2.74
PIIPolaris IndustriesRecreational Vehicles2.68
TVPTTravelport WorldwideLeisure2.66
MGAMagna InternationalAuto Parts2.62
LUXLuxottica GroupApparel Stores2.61
YUMYum BrandsRestaurants2.59
ALSNAllison TransmissionAuto Parts2.57
WYNWyndham WorldwideLodging2.57
BMSBemis CoPackaging & Containers2.54
EATBrinker InternationalRestaurants2.53
HASHasbroLeisure2.51
HRBH&R BlockPersonal Services2.51
HOTStarwood Hotels & ResortsLodging2.51

The Ecosystem Play Update ($AAPL, $AMZN, $FB, $GOOG, $MSFT)

By: ispeculatornew | Date posted: 03.16.2015 (3:00 am)

Last night I saw a very interesting video about the main ecosystems which got me thinking. It’s a quick view if you have a few minutes:

Then this morning I decided I’d write a bit more and started looking back for my previous posts about the ecosystem play. My first post about it seems to have been posted 2 years ago to the day. In that article, and many others that followed, I argued that the ecosystem companies will dominate the tech space and that as technology enters our daily lives, they will become incredibly powerful. I’ve said multiple times that owning all of them would be a smart play. Some of you would be surprised to learn that since then I only took significant stakes in Apple Inc (AAPL) and Facebook (FB). Those have obviously been the right picks:

AAPL Chart

AAPL data by YCharts

Apple and Facebook are actually the only 2 names that have outperformed the Nasdaq Index (qqq). And to this day, I remain very hesitant about buying either Amazon (AMZN) or Google (GOOG). What am I waiting for? I’m not exactly sure. Both remain at least as dominant as they were and I have little doubt that their ecosystems will continue to gain ground. So what’s the problem?

It’s All About Focus

If I ask you what these companies are about (leaving Microsoft aside for now), I’d have an easy time describing that for 2 companies:

Apple: Building and expanding its current ecosystem that starts from the iPhone but is quickly expanding its reach both in terms of hardware and software (Apple Pay, HealthKit, HomeKit, etc). Apple is about producing the best phones, tablets, smart watches, and is increasingly moving into the luxury arena. Apple has generally been good about building a core infrastructure (think app store, Health Kit, Home Kit) and letting developers and companies build content and hardware around those.

Facebook is all about connecting people and has been doing so for over a billion people on its main Facebook platform. As the younger generation has moved towards platforms, Facebook bought the most powerful of those, Instagram and also is the dominant player in terms of messenging services with both Facebook Messenger and WhatsApp. Facebook is about connecting users with friends and family but also with brands which has been an incredible source of profit.

It becomes more difficult for the 2 others:

Google continues to be the dominant search service in the world even though its search market share has declined mostly because of its lost Mozilla deal. Google is also behind the dominant mobile O/S and while the high end users are almost exclusively with Apple, Android remains the dominant player when looking at pure user numbers. The main problem though is that it’s not exactly clear how that will work out as more mobile players such as Xiaomi and Samsung attempt to move away from the “pure” Google services powered Android. Google is also attempting to offer its own fiber service (Google Fiber), working on a wireless internet service, offers online storage, builds its own devices, cars, drones, has a shipping service, etc.  It’s unclear to me which of these activities are core, which will be 10 years from now and what type of business Google will be a decade from now.

Amazon is even more difficult for me to understand. It’s first layer of being the everything store is incredibly powerful and through building (by very far) the top online commerce and distribution chain, Amazon has set itself up to command a large part of the growing online commerce and successfully compete with the likes of Walmart (WMT), Best Buy, etc. That being said, Amazon is hardly focused on that part alone. It has also been vocal about its ambitions to move into very different industries ranging from online groceries to building tablets, phones, buying a gaming video website, producing tv shows and movies, its own streaming service, etc. For most of those efforts, you could see logical reasons behind those moves (such as the threat of a smaller presence in a mostly mobile world) but I think it’s rather clear that building a phone from scratch and spending billions of dollars into a product that ended up being a major flop is a big reason to be worried about Amazon.

Is The Ecosystem Play Still Attractive?

I’m less of a believer in the overall ecosystem play (as in owning all 5 of these names) as I was a few years ago and I think the main thing I will be tracking going forward is the company’s focus. Companies that try to do “everything” are not only much more difficult to value but I would also argue unlikely to succeed against smaller, more nimble operations that have clear focus. Apple is now moving into a product category with rumors about many others coming (such as cars) so I will certainly track the company’s focus but I think it’s safe to say that Apple and Facebook remain my top picks going forward as ecosystem plays. I’ll likely write a more complete, separate post about Microsoft in the near future as that company has been going through a very interesting transition in the past few months.

What are your thoughts on the ecosystem play? Would you agree that Apple and Facebook are the two clear picks as of right now? 

Disclosure: Long Apple (AAPL) and Facebook (FB)

Should I Short The Nasdaq($QQQ) ?

By: ispeculatornew | Date posted: 10.27.2014 (3:00 am)

qqqAs an investor, I believe in a few basic principles that guide my overall strategy. Most of my investments are concentrated into 2 key elements:

-My diversified, passive investing ETF portfolio
My Ultimate Sustainable dividend portfolio

Both of those are highly diversified and I can sleep without any problems even if we do see another big market crash.

Another sector of my investments that is starting to worry me a bit more however is my technology stock investments. I’m not as worried about my long & short tech stock picks because they are “long & short” and thus would not be expected to do better or worse no matter what the market turns into. However we not get to the “problem”. I have my longer term speculative picks which are a growing part of my investments. I have made 1 in each of the past 3 years:

2012: Facebook (FB)
2013: Apple (AAPL)
2014: TripAdvisor (TRIP)

Not only are they very significant investments from the start but the first two have done extremely well. I have no intention of selling in the near future and will likely make more such picks.

Why Are My Long Term Speculative Picks All “Tech-Related”?

The main reasons are of course that I believe that is where I have the best understanding of the companies, the environment and can make the best “picks” The big danger of course is that as will happen with other sectors, the tech stocks will most certainly go through another bubble. For technology stocks, it’s very easy to remember the last one where many dot com stocks did not even make it. I’m not sure I want to have 20-30% or more of my assets so vulnerable when something like that happens.

Solution = Shorting The Nasdaq?

By selling an ETF that tracks the Nasdaq Index, I would certainly be better protected if such an event occurs but there is of course the downside that I’d be paying to borrow the ETF. Also, if ever my stock pick returns are mainly due to the overall market, those returns will basically be “zero”. I’ll be long names that have gained big but shorting an index that has done the same. I decided to look at charts for the 3 names to see how they’ve done in comparison to QQQ:

ycharts_chart

ycharts_chart (1)

ycharts_chart (2)

It’s still very early to tell on TRIP but clearly the other 2 would have done extremely well even if I had those shorts.

What My Portfolio “Could” Look Like

Instead of owning $100K of tech stock names for examples outright. I could own:

-$100K of Tech stock names
-Short 100$K of the Nasdaq (through a short on QQQ)

This would make my strategy “cash neutral” more or less and would allow me to invest it in a more diversified manner.

I started considering this after hearing that many tech venture capitalists have such a strategy in place to limit their exposure to the sector since they generally have a significant portion of their savings invested in their own funds.

Any Thoughts?

I’d love to hear your thoughts on the subject. I’ll certainly be looking into the cost of such a strategy (basically how much the borrow on QQQ typically goes for). You could argue that QQQ is not the ideal hedge since holding a “internet stock” ETF would have more correlation but I fear the cost of such a “perfect” hedge would outweigh the additional benefits.

Time To Buy My Own Bitcoins

By: ispeculatornew | Date posted: 07.31.2014 (3:52 am)
$BTCAhhh, I guess it’s a bit strange for me to make this move right? I have been focused mainly on passive income so owning stuff like physical gold does not really fit into that criteria. I do also have my shorter term long & short stocks that have done well.

Buying Bitcoins Fits None of My Investing Strategies

I guess you could say that it’s either:
a) A wild gamble
b) A “fun” bet
There’s probably a bit of both but I’m also incredibly interested in the technology and know a lot of different people that are believing in it increasingly and making bigger bets. Just take a look at the industries that is starting to form around bitcoins:
BTC

What is Bitcoin?

In case you have not heard, Bitcoin is a “digital” currency. Find out more at Bitcoin.com
One of the massive benefits of such a currency is that in theory (and in practice), there are no fees involved in sending money in BTC, no matter where you’re sending it, etc. There are fees when converting BTC to other currencies, but you could get paid in BTC for work done, use part of it to send to friends in another country, buy a computer from Dell and more, all without either party having to pay any fees. That bypasses many intermediates from the financial industry that would normally charge fees in each step.
There are also other reasons why a currency that does not rely on a government could make sense. Just look at countries where inflation is high or will eventually become high or where exchange rates are manipulated. Just yesterday, we more or less got confirmation that Argentina will default on
There is a great video that discusses Bitcoin, its use, flaws and benefits that was posted by Fred Wilson:

What’s Next?

Unfortunately, buying and holding Bitcoins is not exactly simple at this point. There are many types of wallets, many ways to buy the Bitcoins, etc. I’m currently looking into all of those and hope to do my first trade at some point in August.
I don’t intend on buying a big amount but will simply be buying a small amount every month and will see how that goes.
I’d be curious to know if any of you have purchased Bitcoins?

Investing In Tech Stocks? You Need To Know This

By: ispeculatornew | Date posted: 06.30.2014 (3:00 am)
ycharts_chartOnce again, my live long & short tech trades have been fairly stable and I don’t have space to open new ones. You can see how they’re all doing here, the portfolio remains up 19% or so… hopefully I can get more action going next week! If you are investing in internet stocks and follow this blog, you surely know about my theory on the ecosystem plays. It is a cornerstone of how I’m investing, especially my more important, longer term plays. It basically explains why I think owning a combination of Apple (AAPL), Google (GOOG), Amazon (AMZN), Microsoft (MSFT) and Facebook (FB) is a winning long-term strategy.
I do not completely exclude tech stocks that don’t fit into the ecosystem criteria but I do feel like it’s important to analyze such stocks in the context of the ecosystems.
Case #1:  Netflix (NFLX) is a good example that has a perfect setup to actually profit from the growth of these ecosystems. It was able to create a fairly unique product (especially now that it has started its own content) that makes it a “must-have” on the other ecosystems. That ends up meaning Netflix is actually profiting from the growth of these players. It will be extremely difficult for other players to provide alternatives to Netflix.
Case #2:  Music: One of the reasons why I’ve been so bearish on companies such as Pandora (P) and Spotify despite loving them as a consumer is because of the dynamics involved. Ecosystem players view music as a critical way to keep consumers in their ecosystem. That explains why Amazon just launched its own streaming service, why Apple purchased Beats (in addition to iTunes), Google has Google Play, etc. The result? Insane level of competitions that will not only make it difficult for these companies to own the market but also will make it very difficult to get negotiating power with music labels, etc.
Case #3: Online Storage: When Steve Jobs was trying to convince Dropbox to sell itself to Apple, he told them that they should do it because storage was a feature. Again, ecosystem players are willing to drive margins near 0 because they see this as a way to keep users inside their ecosystem. Google Drive and Apple’s upcoming drive hav both announced price cuts while Microsoft announced that Office365 subscribers would get 1TB free!! Google’s Drive for work will now give “unlimited” storage. That is where we’re quickly going towards. If Microsoft charges $6.95 for 1TB of space and Microsoft Office, how will Dropbox get away with charging $20 for 200GB?

It’s All About Context

I personally think it’s critical for anyone investing in tech to consider any investment in context of what this company or market means in the context of the ecosystem theory.
Disclaimer: Long Apple (AAPL), Facebook (FB), Microsoft (MSFT), Netflix (NFLX) and short Pandora (P)