Two Stock Trading Examples Using My System

Here are links to two posts where I show the actual buys and sells my system generated for a stock and an exchange traded fund (ETF) that I actually owned (and still do):

Amazon (AMZN) example

India Fund (IFN) example

Carnival of road to financial independence #17

The 17th Carnival of road to financial independence has a lot of good financial and investing blog articles.

Two New Testimonials For My "Stock Trading Riches" Book

 I received some more nice feed back about my book Stock Trading Riches:

"Your book is very good.  I like this approach better than Robert Lichello's A.I.M. I hope you have great success.  There is so much misinformation in the media and in print on investing.  Rebalancing to a constant value is sensible and very simple to do - free from emotion and bias."

Mark H., Dallas, TX


"...It's not a long book. But it is well-edited to "just what you need to know". Puri doesn't give you a bunch of extra crap and promotional hype. He tells you how to implement the system, take it or leave it."

Jake W., Anchorage, AK

Stock Trading Riches, Lichello AIM, and the Money Spinner

My Stock Trading Riches system is based on constant value investing, like Robert Lichello's AIM system and "The Money Spinner". It uses rebalancing at both the individual stock level and the portfolio level to buy low and sell high - without depending on stocks moving in trends or creating chart patterns.

High-End Repo Man

The Wall Street Journal profiled a high-end repo man, who re-possesses private jets, yachts, and other "toys" from over-leveraged rich people.

Chicago Tribune Columnist John Kass

www.chicagotribune.com/news/columnists/ct-met-kass-0319-20100318,0,6381054.column chicagotribune.com Chumbolones ready to cry uncle after latest fleecing Couch-surfing Uncle Feds leaves fiscal mark on Charlie and Cindy Chumbolone John Kass 8:02 PM CDT, March 18, 2010 Any day now, Congress in its wisdom might approve (but not actually vote for) President Barack Obama's gargantuan federal health care entitlement that only costs a trillion dollars (but probably a lot more). So it's the perfect time to remember some folks that many — especially our politicians — have forgotten. The Chumbolones. Charlie and Cindy Chumbolone are typical of most Americans you know. Look in the mirror and you'll recognize them immediately. They work hard, they pay their taxes, they live within their means, they give to their church and volunteer in their community. And they take care of Uncle Feds. Uncle Feds sleeps on the couch in the front room. He doesn't work, but he loves to eat and order pay-per-view movies On Demand, the expensive HD kind. He's lived there so long that the Chumbolone children really can't remember when the fat man first plopped down on their mother's upholstery. Uncle Feds isn't really a relative. He's just, well, Uncle Feds, and he has no intention of leaving. "What's with the meatloaf?" Uncle Feds whines at dinner. "Who can eat this stuff? Roast beef is better, and tastier, too. How about a rib roast? Or veal chops?" The Chumbolones at first were shocked that Uncle Feds would demand expensive cuts of meat. But they gave in to shut him up. Meanwhile, the rest of the family ate macaroni for dinner because money was so tight. "Salads and vegetable medley for you children," Uncle Feds would tell the Chumbolone kids. "You don't want to grow up and get too fat. So pass the bread and that beef. It may not be good for you, but it's certainly good for me, heh, heh, heh." Every week or so, the Chumbolones would sit at the kitchen table to study the bills and their budget, to find out where all their money was going. They were horrified when one day they realized Uncle Feds was eating almost half of everything they made. Meanwhile, the air conditioner in Charlie's car was still broken, but he didn't want to spend the $400 to fix it. "I'll just roll the windows down when it gets hot, just like last year," Charlie told Cindy. And Cindy's feet hurt from standing all day at her job. But she wouldn't go to the podiatrist. "Honey, if you don't have air conditioning in your car, I'm certainly not going to pay for a foot doctor," Cindy said. "I'll just soak my feet in Epsom salts and hot water." The Chumbolones had one unbreakable rule about their budget. They'd purchase something only when they had the money to pay for it. "Remember the trouble we got into with the credit cards?" recalled Cindy. "I never want to see a credit card again." One day the Chumbolones spotted Uncle Feds on the street corner behind a card table, slicing dozens of tasty beef roasts for the neighbors, and handing out other goodies. "Your Uncle Feds is so cool," the neighbors said. "He's the most popular guy in town. He gives us all this stuff for free." Charlie grunted that it wasn't exactly free, but the neighbors didn't like the sound of that. They grumbled that Charlie was selfish and rude. "Where did you get the money to pay for all of this, Uncle Feds?" asked Charlie. "We can't afford it anymore. We've got to start cutting back." The neighbors were horrified at this line of questioning. "Uncle Feds can't afford a cut!" they cried. "What's wrong with you, Charlie? Cut Uncle Feds? Are you stupid or what? He can't afford it!" Later, Uncle Feds caught up with Charlie and Cindy (her feet in a pan of water) at the kitchen table with the bills. "You asked me where I got the money?" said Uncle Feds with a wide grin. "I used your credit cards. You weren't using them. So I used them." He explained it was an honorable tradition he learned as a boy in the nation's Capitol. "It's called 'Deem and Pass,'" he said. "I deemed I wanted your credit cards, and I passed the bills on to you." Uncle Feds laughed and laughed, but the Chumbolones had been so numbed by his appetites that they'd forgotten how to get angry. But the air conditioning in Charlie's car was still broken, and Cindy's feet still hurt, and they couldn't afford stuff for the kids, and still Uncle Feds kept ordering expensive movies On Demand and eating roasts and playing Mr. Popular with the neighbors. So finally, the Chumbolones had enough. They told him he just had to cut his spending and they ordered him to help deal with the financial mess they were in. One night, at dinner, Uncle Feds announced that he'd solved all their financial problems. "I knew you could do it," said Cindy. "How?" asked Charlie. "It's simple," said Uncle Feds. "You need money, and I need money, so I just took out another mortgage on your home!" The Chumbolones were stupefied. "How could you do this to us?" cried Cindy. "What makes you think you could put us deeper in debt!" demanded Charlie. As always, Uncle Feds had an answer. "It's because you're Chumbolones," said Uncle Feds. "And the Chumbolones always pay and pay. Didn't you know that?" jskass@tribune.com Copyright © 2010, Chicago Tribune

New Geico Commercial - With a Warren Buffett Cameo!

Warren Buffett owns Geico Insurance, and the third richest man in the world makes a cameo appearance as an "Axle Rose - like" rocker: http://www.youtube.com/watch?v=NmcxIokfOiE

Omnivision Technologies (OVTI)

This company is one of Apple's critical suppliers.  They are the only source for the image sensors in the iPod Nano and iPhone 3GS.  One of their image chips is also found in the Blackberry. After the October 2002 recession, the stock shot from $3 to $30 in 12 months.  But, because of a saturated image sensor market, the stock was down to $4 in December. Now the stock is up to $15.76 because analysts are recognizing that they have a leading position at the most important smart phone makers. Wedbush Securities' analyst Betsy Van Hees thinks their sales should be up 18% this fiscal year, and up 22% in fiscal 2011.  She values the shares at $20 ($6 per share cash on hand plus 15 times her earnings forecast of 92 cents per share).

Eyeglasses Revolution

From a business and investment perspective, the most interesting businesses are those that are disrupting their industry by totally destroying the pricing models.

Usually, the talk is about digital delivery pushing the price of bit-based products (e.g. music, information, or movies) towards $0. But, it really becomes interesting when disruption happens in mature industries dealing with physical products.

Here's a stunning example - Zenni Optical. They are destroying the pricing structure for eyeglasses. They can offer a high-quality pair for much less than their competitors can touch. In fact, according to this article on Zenni Optical, they can offer eyeglasses for as low as $8!

They have three advantages:

1. They deal directly over the internet with retail customers, and rely primarily on word of mouth from satisfied customers.

2. They take advantage of a "flat" world and contract out manufacturing to high-quality labs in lower-cost countries.

3. They only carry their own line of frames.

Zenni isn't for everyone. They are not right for people who want designer frames or one hour delivery. Since their labs aren't local, it takes time before your glasses can be delivered.

However, these people are probably not Zenni's targeted demographics. They are going for people who put a priority on good quality, but low priced, eye wear.

This is an example of the free market at its best because they are making money by satisfying a need and helping an under-served market.

We usually think of companies like Google as revolutionizing the world - not a maker of eye glasses. But, while it's true that Zenni isn't changing the whole world, they are probably impacting many individuals - such as a low income student who will now succeed at school because he or she can now afford glasses. Down the road, if this person becomes a doctor or scientist, then society will have benefited.

Trading and Improvisation

Traders and investors can learn a lot from comedy improv and jazz music.

Those fields are like trading, in that you are putting yourself into a chaotic and fluid environment where you have to key off ever-changing data.

Comedians have to react to their fellow improv members, while the jazz musician has to play off the others in the jam session. Traders, of course, have to react to the actions of other market participants - as reflected in price changes.

Improvisation is not simply reacting from the gut or the wild idea that pops into your head. Good improv is where you pull out a pattern from your past experiences and adapt it to the present conditions.

For traders, this involves having a few patterns or bread-and-butter indicators that form a basic trading system. Your system should not be over-fitted so that it tries to have rules for every possible market condition.

Instead, it needs to be simple, solid, and robust - so you can use it as a framework to make real-time trading decisions.

Rodeo and Simplicity

As a symbol of simplicity, I'd like to talk about the Houston Rodeo.

Surprisingly, tickets are getting snapped up long before the rodeo itself. It seems like it is such a popular event relative to the ticket supply, that now is the time to get RodeoHouston tickets.

By the time the rodeo starts, people will probably be turning to scalpers and ticket brokers.

I have too many work and family obligations but, if I could, I would like to attend the rodeo, because it's fun and exciting.

It's like going into a time machine, and getting to experience the Old West. A simpler time, where you get to see hard work, and craftsmen who have honed their skills.

I hope a lot of families and regular working class people get to buy tickets before the brokers sell them at markups to celebrities and the wealthy. This event is like the circus - one of the few live events you can bring your family to and the kids will be entertained instead of bored.

I especially would like to see the bull riding competition - I think it is very challenging, and that the cowboys in that event have a lot of guts.

Zen, Simplicity, and Stock Trading

Stock Trading Riches teaches my trading system, which I am very passionate and proud of. It reflects principles from zen, Taoism, jazz improvisation, simplicity, and minimalism. It allows anyone, no matter what their level of financial experience, to take charge of their investments. Not only does it make money, but it feels like a form of meditation.

Tax Carnival #66

Check out the 66th Tax Carnival - it has a good collection of tax-related blog posts.

My Simple Three-Step Solution For Healthcare in the United States

Instead of the bloated, complex healthcare plan they're debating in Congress, I have a cheap, simple, and elegant three-part solution:

1. A universal catastrophic healthcare insurance plan - basically, we extend Medicare to everyone under 65 with a large deductible - i.e. $15k to $20k.

It will be no-frills: no payments to providers, etc. On April 15, anyone who went over the deductible in the previous year would file a claim, submit all bills as proof (whether paid by them or insurance), and receive a check.

Importantly, the deductible will automatically be adjusted each year by the rate of medical inflation. It can only be overridden by 60 votes in the Senate. That way the medical establishment can't raise prices and make everyone qualify for reimbursement.

People can cover the amount before deductible through health savings accounts and private insurance.

The idea is that the deductible should be high enough that it won't cost the government much, but it will reduce insurance rates, and make insurance more widely available - because insurance companies know their payments are capped.


2. An insurance company that is allowed to sell insurance in any one state can automatically sell insurance in any other state. This, along with the high deductible government policy, will make insurance affordable and available to more people, including those with existing conditions - without any government micro managing and mandates.


3. Require drug companies to set 4 price levels on each drug. The Social Security Administration knows how much money you made in the previous year so, accordingly, they will mail you a card with your price level on it. Alternatively, pharmacies can have access to an online database which reveals every family's price level (but not actual income). Anyone not showing a card and/or refusing to let the pharmacy look up their level will be charged the most expensive level.

The government will not have authority to micro manage (i.e. set prices or mandate the difference between levels). Market forces will do that. If one company, for example, set all 4 levels the same, another drug company could lower their level 1 price and raise their level 4 price to compensate, and steal away the lower income customers.

This is an elegant way to subsidize the poor's access to drugs, directly with 100% efficiency - without the money flowing into Washington first and getting skimmed off by lobbyists.

I know that Libertarians won't like steps 1 and 3 - but the fact is that modern society wants subsidized care. That's why I'm a "Simplicist" instead of Libertarian. If the majority want the government to do more than Libertarians want, that is reality - but, then we need to make "small and simple" the core values.

If we make simplicity priority 1, and use a little creativity, I believe we can meet society's needs with a government much smaller and less intrusive than it is today.

Earth's Days Shortened Because of Chilean Earthquake

Amazingly, according to NASA scientists, the Chilean Earthquake will have an effect, however small, on all of us on Earth - as well as our future descendants. Because of Chile's location on Earth and that it was the 7th strongest earthquake in recorded history, the quake knocked the Earth off its "figure axis" by 3 inches.    As a result, days on Earth will now be 1.26 milliseconds shorter.

Carnival of Money Stories for March 1, 2010

The latest edition of the Carnival of Money Stories features links to a lot of great blog articles on money and finance.

Check it out and enjoy!