Just In Time For Black Friday and Cyber Monday: Ways to Avoid Identify Theft When Shopping Online

This Thanksgiving weekend, and continuing until Christmas, millions of people will be shopping - both in person and (increasingly) online.

Here are some tips to protect your identity when shopping online:

1. Proactively monitor your information - consider signing up with an identity theft protection service such as IdentityHawk.

2. Avoid using debit cards. If your credit card is stolen, your liability is capped at $50. However, if someone steals your debit card and drains your bank account, you are only liable up to $50 if you catch it within 2 days. Between 2 - 60 days, your liability is $500. After 60 days, your liability is unlimited.

3. Regularly monitor your credit card statements for fraud. Another good idea is to reserve only one credit card for online purchases.

4. Never use a public computer or public Wi-Fi to shop.

5. Don't pay at sites like eBay with wire transfers. Use a credit card.

6. When shopping, don't click on links in an unsolicited email.

7. Be careful when using shortened URLs from sites like Twitter. Make sure they take you to legitimate sites.

8. When buying from sites like eBay, don't use an unfamiliar escrow service without checking them out.

9. Don't buy from unknown websites that rank high on general search engines. Many of these belong to identity thieves and hackers. Instead, try to search for products on known merchant sites (like Amazon.com or Target.com) or on price-comparison sites (like Shopzilla.com or Price Grabber).

"Stock Trading Riches" Spreadsheet

Yesterday, I received an email from a "Stock Trading Riches" reader who had a question about the spreadsheet (it is a free download for people who buy the book, in either format - paperback or kindle).

His spreadsheet question was:

In the "number of shares" column I notice that you are checking for a 10% price change between the current years price and the previous years price. This is ok in Year 1 and Year 2 but in the longer term you are not comparing the current years price to the initial Year 1 price. So what could happen is you could have a steady increase/decrease of less than 10% every year over a number of years (cumulatively > than 10% over a number of years) but none of them will trigger any selling/buying as the price is being compared to the prior year. Was the sheet deliberately designed this way?

My answer was:

What the basic system does in real life is only rebalance if the stock has moved 10% or more from the last time it was rebalanced. So, the spreadsheet should actually not compare the current and previous values, or the current and first. Instead, it should compare the current value with the last value where a rebalance occurred.

I don't know how to do that in Excel. So, I put the 10% check between the current and previous row just in case a value isn't 10% apart. But the best way to use the spreadsheet is to manually exclude prices less than 10%.

So, if the monthly prices were 100, 99, 95, 97, 85,... you would put in 100, 85 in the spreadsheet.

Are Debt Collectors Hounding You? Know Your Rights

During this financial downturn, a lot of people have lost their jobs and are having trouble paying their bills. Many of the businesses they they owe money to will turn their claims over to a debt collection service.

Debt collection agencies specialize in recovering debts. Since they depend on getting people to pay, it is an industry that is ripe for abuse. Many of these agencies employ aggressive individuals with telemarketing skills.

It's important for people to know their rights and debt collection laws. Most states have laws limiting how aggressive collection callers can get.

It's bad enough to receive a call from someone trying to sell you a product, but it's much worse when you are already worried about your finances and expenses. Some of these debt collectors abuse callers by preying on the worry - hounding and abusing people with threats to embarrass them by calling their friends, family, and neighbors.

If you get hounded by an aggressive debt collector, you may want to report it and/or contact an attorney.

The Best Trading Systems Are Beautiful and Simple

The best trading systems are simple and minimally beautiful - at most, they only use a handful of indicators or formulas, and they implement a simple model of the market.

They don't aim to explain market behavior rigorously and precisely like an economist - instead, the model aims at robustness, where it lets you manage your risk appetite and set the odds in your favor.

The purpose is to give you an edge - like the house has in a casino game. It won't win every trade, but it will have a positive expectation where, over time, you can expect to make more money than you lose, thus letting you build your account over time.

If a trader attempts to develop a complex system that could win every trade, then that is a set-up for failure. As systems get more complex, they have more moving parts - which results in unpredictable interactions and bugs that will eventually cause your system to blow up and suffer heavy losses.

With a simple system, your ego may not be satisfied - it will tell you that you are smart enough to come up with something more accurate, so you will lose less trades - but your bottom line account balance will benefit.

Secured Data Sites For Sharing Confidential Financial Data

I'm always interested in specialized niche businesses that are successful by doing one thing really well - something that the general public probably doesn't even realize is a genuine need.

Recently, I came across a specialized business which is related to trading and Wall Street.

The business is called Merril DataSite, and they provide Merrill Virtual Data Rooms for capital market / financing functions such as mergers and acquisitions (M&A) activities, business ownership transfers, bankruptcies, restructurings, licensing activities, etc.

Basically, their data sites are useful for any firms that are involved in complex business, financial, and/or legal processes that involve sharing highly confidential documents (such as acquisition due diligence) between groups of financial analysts, lawyers, and / or accountants.

A secure data site process can insure that the documents stay protected from outsiders by limiting access to only authorized individuals, and keeping track of checkouts and revisions.

In an interesting extension of their business, a division of Merrill provides document translation services and language translation services for international clients.

Why I Renamed My Blog To "Stock Market Zen"

Today, I renamed my blog from "Simple Trading System" to "Stock Market Zen" (however, the URL will stay the same).

I did this because I think that "Stock Market Zen" better reflects my philosophy and approach to the stock market and investing.

The old title described my system accurately, but very generically. A lot of trading systems can be simple - but many of them don't rely on concentrating on the present moment, and relying on the last price instead of a moving average or chart.

Saving for Baby

The Author of this post is Cheryl Martinez

My husband and I have started saving up money and it’s actually for a really exciting reason – it turns out we’re expecting our first baby! It was unplanned but it’s fine because we’re both getting up there in our 20s anyway and I knew we’d want to have one soon – my mother’s been bugging me since the day we got married. I love that there are so many cute things to buy but boy are they expensive. I actually went online to look at Reliant Energy options in Argyl to save us some money and we traded in the SUV for something more gas practical. I’ve been picking up extra shifts at the diner, too, so that’s nice and I love that I can help out my family! There’s nothing like being the mother of the house and right now that’s all I’m looking forward to. I feel like if I can help out even a little bit then I’m pulling my weight when it comes to this family and that feels good!

How To Use "Stock Trading Riches"

I hope that my book helps you build a trading system that suits your risk-reward level.

I have exclusively used the basic Stock Trading Riches system on my portfolio for the last 6 years, and I have beaten the S&P 500 over those 6 years:

Year, Me, S&P 500

2005, +13%, +4.91%

2006, +14%, +15.79%

2007, +22%, +5.49%

2008, -40%, -38.49%

2009, +44%, +23.5%

2010, +22%, +13%

My portfolio had a cumulative six-year return of +65.66% vs. +10% for the S&P500.

Of course, my system is flexible and you can use the book's section on rule variations to customize the system. For example, you can increase or decrease the maximum cash percentage at the portfolio level from the basic 30%. You could implement the position growth rule, or the stop loss rule, you could change the rebalance frequency, or experiment with percent triggers.

You can back-test these variations on paper with various stocks and see if they improve the system in ways that make you more comfortable.

Small Online Business That Capitalizes on Tax Code Changes

I like small internet businesses that succeed by finding a simple need, and then filling it.

In this case, because the U.S. tax codes are so complex, and change so much, the website I'm spotlighting (FastForwardAcademy.com) found a need for tax professionals who want to continue their education and become certified in tax preparation.

They dedicated to providing enrolled agent continuing education to help pass certification tests.

FastForwardAcademy provides study guides, practice tests, and other study material for passing the enrolled agent cpe examination to become IRS certified.

Accountants and other tax professionals are willing to study for and pass the ea cpe exam
because the enrolled agent certification will let them stand out from the competition.

The Return of Dividends

When I was a short term trader, dividends did not mean anything to me.

When I switched to long term trading, I not only eliminated stress and reduced expenses, but I started to enjoy seeing the dividends depositing into my account like a cash register. Cha-ching!!

Historically, dividends were a big component in the total return of stocks.

Then, in the 1990's, they became only a small component of the total return, and dividends were out of favor. We were in a raging bull market, and companies were pressured to favor growth over dividends.

Investors were hypnotized by the bubble and said: "Why should companies give out dividends (which were fully taxed) rather than invest that money in growing their market share, buying back stock, or buying the stock of other high-flying companies?"

Then, the Dot Com Crash happened, Bush cut the dividend tax in half, and investors pressured companies to pay out dividends.

Since the market has been choppy for the last decade, dividends have returned to their historical place as a big part of investors' total return.

Small Business Bookkeeping In The Cloud

Most of the "cloud" applications I hear about are aimed at individuals or large companies. Also, the applications tend to be in areas such as sales, marketing, or storage.

But, recently, I read about a company called Outright.com that offers online accounting and bookkeeping software for small businesses.

I think we will see many more small business and financial applications in the cloud because it's a win-win situation for both the vendor and the customer.

For the vendor, they save on the costs of packaging and distributing their software, as well as customer support issues due to installations and customers with different versions of the software.

For small business customers, they don't have to deal with installation, hardware, and operating system requirements. They will always have access to the latest versions and patches. Finally, they can depend on the vendor for security, backups, etc. which would consume a lot of resources at a small company.

"Stock Trading Riches" is now available in Kindle format on Amazon.com

My book "Stock Trading Riches" is now available in Kindle format on Amazon.com.

Since this is a new format, it's priced for now at $2.99.

They did a good job in the conversion - I saw that the stock tables and programming scripts display well, and the links are click-able.

You don't need to own a Kindle to buy this edition. You can download free readers for PC's, Mac's, iPads, etc.

People Can Make Money In Any Market

People can find a way to make money in any market - bull, bear, or trend-less.

For example, I have averaged 8%/year in the stock market from 2005 - 2010, a time when the index and most funds lost money. How was I able to do this? Because I had a good trading system, and the discipline to stick with it.

Similarly, most people have written off the housing market the last few years, but there are people who have made money. They had the flexibility to adapt to a changing marketplace. For example, successful real estate investors in places like San Diego switched from outbidding for properties and flipping them to patiently scooping up foreclosures in San Diego, fixing them, and then renting them out or selling them for a reasonable rate of return.

How To Understand My Method for Trading Stocks

I made a break-through when I shifted my mind-set from digital thinking to analog.

A digital system has two values (i.e. yes or no), while an analog system has a range of values. For example, a computer memory bit can only be off or on, but your oven can be set to a range of temperatures.

Normally, we trade digitally. After we buy a stock, we either hold it or sell it. So, for the trade to make us money, we only have one chance to buy the stock correctly, and then one chance to sell it correctly.

My Stock Trading Riches system is analog. After you initially buy into each stock, fund, or ETF, the constant value rebalancing formula automatically uses feedback to adjust each position (once a year under the basic rules) - buying and selling portions of your holdings. It works like a self-correcting gyro control in a torpedo.

At the portfolio level, the system uses constant ratio rebalancing to add new positions whenever excess cash builds up.

As a result, we are never trying to predict where the market it going. We profit from volatility while having a robust portfolio that can tolerate a few companies going bankrupt. No single company puts the portfolio at risk.

Successful Websites Have A Specific Focus

The web has matured to where it is really hard to successfully create a general site for the masses.

Instead, successful websites today are opportunistic - they spot a specific need and fill it. The whole design is focused around this goal.

One successful site with a clever focus is the website for Blue Sky Scrubs, which make http://www.blueskyscrubs.com/categories/Scrubs/Scrubs-for-Women/.

Because Blue Sky Scrubs keeps its merchandise selection simple and specialized, their website is clutter-free, well organized, and easy to navigate.

It becomes a snap for visitors to look up whatever types of scrubs clothing they are interested in.

Bought two small cap stocks: APKT and JOBS

On Monday, I bought two small cap stocks: ACME Packet (APKT) and 51Job (JOBS).

As I mention in the market cap section of my book, I try to balance my portfolio across market caps, since companies in the different caps have different risk / reward profiles, and the caps themselves follow different cycles.

APKT specializes in session border controllers (SBCs), which provide control and security at the edges of IP networks that carry voice, video, and multimedia traffic.

This is a fast growing company, but volatile stock with quartely fluctuations. The stock was up 104% in 2010, but I bought it now because it fell 50% after it missed it's third quarter estimate (due to a large order slipping into the fourth quarter).

I don't mind volatility, of course, since I will manage the position through my stock trading riches system.

51Job, based in Shanghai, is the human resources market leader in China. They provide recruiting, payroll processing, and training to companies across 25 cities in China. The stock fell into the $40's after a peak of $70. They have $10/share in cash. According to small cap guru Jim Oberweis, the stock trades for 15 times his 2012 earnings estimate, and has expected earnings growth of 55%.

When Buying A Stock, Invest in Management

The Oct. 10 issue of Forbes had an interview with billionaire growth fund manager Ron Baron.

He listed 4 criteria for investing in a new company. He said many others look at the first three, so the fourth one is especially important:

1. The business must have growth opportunities.

2. The business must be appropriately financed.

3. There should be a competitive advantage (i.e. barrier to others from competing with them).

4. There needs to be a trustworthy leader that inspires people to follow them - who will invest in the business, even if it hurts the short term bottom line.

The example he gave was Ralph Lauren. His European franchisee was doing poorly, and Lauren realized that Europe was the next big market. He had to pay such a high price to acquire the franchisee, that it diluted the stock. In the long run, however, the move paid off.