Why do I always have the sense that TV stock recommendations are loaded? And never in my favor.*
This might be some curse cast on me. But is it a coincidence that most TV stock “recommendations” come from people who sell advisory products? You might say I’m being too harsh, ‘these are professionals!’ (I say, “Yeah, well, how’s that going for you?”)
Heck, it’s my money. Don’t I have an obligation and commitment to protect it–myself?
Not losing any money is goal one. That’s what Warren Buffett says. Also Phil Town. Robert Kiyosaki and Donald Trump say the same thing. (You might not be a fan, but they support my big point.)
Shouldn’t we listen to people who make A LOT of money? Or should we dumb-out to contract-players on TV?
Ok smarty pants Rob, you’re thinking. What makes you better? Smarter? More knowledgeable than the pros?
Well, let me share a few things. You decide.
My sources include: Motley Fool, Phil Town’s “Rule One” calculations, Investors Business Daily, calculations of underlying volatility, option price-stock correlation and time, and; a good RealTime charting system. Today, I’m very happy with Thinkorswim. I test these–daily and weekly–for their reliability. These are numbers, not opinions or as the trading industry likes to say, “views.”
I use my metrics in a unified process to check volatility (eg, highest in the short- and long-term) and medium-term/low beta stocks. There are other things, too. This gets you seeing. I use IBD’s SRM ranking. I check the options price/stock ratio. There’s a series of 10 year activity that gives me metrics on the future price. My strategy is to seek value + income which can be reinvested. If I see a company with lots of “green” lights, I may buy and trade its issues. PERIOD.
This is not the easiest way to invest. It takes time. I’ve invested (lots of) money in my own education. And what I have, now, is in way to stack the deck… in my favor. I set bold objectives. I put (professional?) pressure on myself for weekly results. While I cannot control the market any better than those people on TV, I know where I’m going. I guess the idea of having a strategy is important to me. I like putting the odds in my favor for a change.
And that is an outcome I have yet to hear offered on TV.
I want less noise; so I zoom in to a longer term chart, rather than cling to the one-minute chart. Again, strategy is important to me, so statements like “I am long/short… such and such” are meanless. As is, “such and such looks strong/weak here, so…” or “I am recommending to my clients that…” These are rarely strategies. These are tactics. And if you look at most of them, their big moves have already occured.
Let me be clear. I am not a day trader. I run a company or two of my own. So this is not a career. I just hate indescriminate and costly use of my money. So I avoid it like the plague.
Others agree with me. Bloomberg’s Barry Ritholtz is on my side. But then, he is one of those rare folks who explain why he feels the way he does, citing research to do so. A handful of others do this, too. Emerging markets leader, Mark Mobius. Motley Fool’s Tom Gardner. My friend Dodge Dorland–former President of the NYSSA (New York’s CFA Institute Chapter) and partner in Landor Capital Management.) They base decisions on research backed with objective decision-making. This breeds confidence in their own decisions. Not false certainty, or worse, hope.
Simply put, It is my profitable pleasure to be in the company of smart and wise individuals who know their minds. And keep their heads.
You might want to do this, too.
* This just occurred to me recently. CNBC was touting GT Advanced Tech (GTAT). I was following Invensense, Inc. (INVN). CNBC’s flopped. My homework will turn out ok. Their homework was, apparently, eaten by “the dog.”