The Bull Hunters Guide

I have spoken about many stock market strategies, touching on the DJIA or Dow Jones. We have been over the US stock market and ways to understand how to make money with the correct share strategies. Today I want to talk about one of the outcomes of a successful trade; The Profit and the underlying benefits. In other words: when do you take a profit and where do you put the profits?

Taking Profits When Trading

I haven’t got a more straight answer than this. Decide before you place the trade. How much profit would you be happy to take or make? 20%, 50%, 100%? Then if you reach the target, take it. Cash it in there and then. Don’t hesitate! I will give you a great example of a trade that I didn’t set a profit target on. I bought 90000 options on a stock for 3cents each. That cost me around $2,700. I was happy to take the risk and lose the lot. Yes, hardly a great strategy but the gambler does come out if you don’t plan your trades.

Beware the Gambler

Here’s the strategy I call “The Zero Strategy“. $2,700 of 3 cent shares. The stock went up to over $1.00 and the options became worth around 80cents each. Not bad in 15-16 months. My $2,700 was now $72,000! That’s around 2600% Return On Investment. I didn’t take it though. Why? Well, there were a few reasons. One was that I KNEW the stock would keep going up. And it did. Another 10cents or so.

Down Goes The Stock Market

Then it came down. I’ve still got the stock and it’s worth about $17,000 and still in a pretty good margin. When will I sell it? Probably never! It’s too good a story to tell. It’s priceless! So now, what on earth has this got to do with The Gamblers $18,000 Piano? I only put that in the headline so you’d read this… Just Kidding! I bought some other shares around the same time and here comes the Grand Piano…

The Stock Markets Grand Piano

I bought 2000 shares for $1.59 each. This time there was a plan in place. An ambitious one, but realistic however. A uranium explorer. My friend had 3 Million of these shares and bought them for less than 3 cents. He sold them around 45-50 cents. Work out the profit on that! Absolutely Massive! My plan was to sell these shares at $9.00. They got to $9.06 and I sold them, turning $3,180 into $18,120. Then I proceeded to chip in a bit and buy a Grand Piano for my son who now has won a few competitions and wants to become a Concert Pianist when he grows up.

Where is the price on those shares now? Who cares! The stock market sponsored my Kid and gave me memories to enjoy for years to come. (The shares went on to over $11.00 then dropped very fast to $6.00)

So when do you take your profits? When you have something fun to spend the money with. There are always profits to be made. Just know when to take them home with you.

Sometimes the Bullhunter has to be Bearish.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2007

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Bullhunters Guide

Well Bullhunters… we have come a long way in the short time since the Bullhunters Guide blog started and I wanted to re-cap for you as there have been many new learnings in the understanding of how the US Stock Market works.

Firstly there was the fictional account of Wal-Mart’s founding which showed us how a business is incorporated and the getting of private financing for this to be made possible. Then we discussed how a corporation operates, what its objectives are and what gives shares of stock their value.

The components of the DJIA which is made up of 30 stocks and the understanding that when someone talks about the market being down 50 points they are generally talking about the Dow Jones in particular. The components of the DJIA were created by Charles Dow to simplify market watching.

21st Century Academy Graduates

Sean then came along and posted the wonderful story about Maria and Pierre retiring to the Stock Market. If you missed it, its well worth the read of how two of the 21st Century Academy graduates took on the renting shares strategy from the Jamie McIntyre homestudy program and ran with it. Within 10 months they sold their business and retired to the stock market so now they can work from home. Doing these strategies as you know does not take up a whole lot of time.

More DJIA

We then discussed the components of the DJIA and how some stocks are cyclical and some non-cyclical meaning that the cyclical stocks perform best when the economy is in the early stages of the business cycle and the non-cyclical stocks perform best when the economy is in the later stages of the business cycle. This is a case of needs vs wants.

The opposing investment strategies was about the capital gains and price to earnings ratio in which we learned of just two of the strategies that you can use when investing in the stock market. We also looked at more advanced strategies like trading options. There is so much to know before you even get started with trading.

Have a great week everyone and happy trading to all

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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So today’s little excerpt is about the DJIA Tech Stocks.   Remember when the big thing was to buy tech stocks.  Well lets find out a little more about them here.  If you are new to the Bullhunters Guide blog, I am dissecting the eBook so that we can  understand the workings of the US stock market a little better.  The Bullhunters Guide to the US Stock Market is downloaded hundreds of times every week so get  your free copy now just to your right of this screen so that you have your own copy to read whenever you like.  Let’s continue…

Hewlett Packard, IBM, Intel and Microsoft are the pure tech stocks in the Dow.  AT&T and Verizon are telecommunications companies.  While all of these companies benefit from a strong economy, corporate customers often invest in technology and telecommunications in the period directly before a recession.  This makes tech stocks somewhat counter-cyclical.

Technology stocks are also more individualistic than most stocks.  For example Hewlett Packard (HP) has a strong direct competitor in Dell.  While what’s good for GM is typically good for Ford, HP and Dell go in opposite directions.  The same can be said for Intel and its prime competitor, Advanced Micro Devices (AMD).

As one of the largest companies in the world, Microsoft is often the creator of cycles.  Every time ‘Mr. Softy’ (as it is known on Wall Street thanks to its MSFT ticker symbol) releases a new operating system, millions  of businesses must upgrade.  This alone causes a bullish tech cycle, with many business and individuals  purchasing new computers and other hardware.

So as we can see from this little excerpt, the tech stocks perform best when the economy is in the later stages of the business cycle which are the predictable cycles of economic activity that repeat over time. The five stages of the business cycle are growth, peak, recession, bottom (or trough), and recovery.  They would be great on your watchlist even if you don’t trade them to give you some idea of how the market is performing.

Let me know how this is helping you by leaving me a comment.  Yes you have to register and it only takes less than a minute to do.   As I mentioned in the last post, I was happy to hear form supporters of the Bullhunter blog by emailing me and leaving me messages to say that we are providing some good information here.

Sean Rasmussen has been working on the next instalment of the Bullhunters Guide and you have been waiting patiently for it.  In it he will discuss the renting shares strategy that Jamie McIntyre teaches in the 21st Century Academy homestudy and how to apply it to the US stock market.

To Your Success

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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Thank you to all those readers that have sent me emails and left me messages showing  their support.  It’s great to be in good company and you may have noticed that you can vote for this blog by clicking on the Feed the Bull icon further down the page to help us reach more readers with this information.

I will keep charging through The Bullhunters Guide to the US Stock Market  as we get into the DJIA Consumer Cyclicals and Non-Cyclicals today.   Here we go with another excerpt…

These stocks are easy to understand becasue most of us are intimately familiar with them.  It only makes sense that Disney, Home Depot, McDonalds and Wal-Mart would do best when the economy was strong and therefore their customers had more money to spend.

Of these stocks the two retailers are on the opposite ends of the cyclical spectrum.  Home Depot is the most cyclical with its business tied directy to the housing market.  As a discount retailer Wal-Mart is the least cyclical of this bunch.  Although it loses business during a recession it also gains customers who have previously shopped at pricier venues.

The consumer cyclicals ae dependent on a strong economy because consumers use discretionary income to purchase their power saws, Wrangler jeans, Big Macs and Disneyland tickets.  If people have less money to spend they can do without these things.  But can they do without drugs or  how about Deoderant or Soda or Cigarettes?  No… these are things that people have to buy whether they like it or not which is why these companies are called consumer non-cyclicals.

Our spending habits are what drives the cyclicals and non-cyclicals in the Dow Jones.  We cannot do without our Coca-Cola or cigarettes as they both have an addictive hold on some.  Coca-Cola even does well in times of a recession and cigarettes would still be able to be found even in the event of a nuclear holocaust.  Personal hygiene products just go without saying.  When you are next out buying your consumables, I wonder whether you will cast your mind back to this article and perhaps put the company you are purchasing from on your watchlist.  Interesting thought. 

The Bullhunters Guide to the US Stock Market continues to have 100’s of downloads every week so get your copy now and have it altogether for your own personal reading. 

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007 

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Hello Fellow Bullhunters

I hope you all got to read Seans post yesterday regarding the success of a couple of graduates of the 21st Century Academy homestudy.  I personally know Maria and Pierre and I have to say that they are a great example of what you can achieve when you put yourself into action and go after your dreams.  Congratulations again on your retirement from your day job and now making a living from trading.

I don’t know about you but I am certainly getting more out of The Bull Hunters Guide to the US Stock Market by breaking it down into small chunks and analysing it.  It’s becoming clearer to me each time I write a post and bringing it all together.  Let’s continue…

The Dow financials are cyclicals as well, but they don’t always follow the same cycle as the industrials.  American Express is the most cyclical of this group.  It performs best when the economy is strong and thus consumer spending is strong.

Citigroup and JP Morgan Chase are the most closely related of the stocks in this group as they are both money center banks.  Banks do well when there is a positive disparity between short-term interest rates and long term interest rates, also known as a normal yield curve.  When long-term rates are lower than short-term rates there is an inverted yield curve which is a nightmare for the banks.  The factors influencing the movements of interest rates are beyond the scope of this book but suffice to say that the inverted yield curves are predictors of oncoming recession and therefore money center banks perform best when the economic future looks strong.

American International Group (AIG) is an insurance company.  It benefits from a strong economy because it invests its assets in the financial markets.  But it is the least predictable of the financials because major events like Hurricane Katrina can have a disproportionate impact on insurers.

Market conditions are dependant on many variables so it is wise to determine the value of a stock and then follow your trading system making use of technical analysis to find your entry and exit points.  Remember that a strong economy is when the financials perform the best.  We cannot predict when natural disasters are going to happen or any disaster for that matter that will have an affect on the stock market at any given time.  Writing put options is one way of protecting yourself if you happen to be new to trading and it’s always wise to start with paper trading until you are confident to put your real money into the market.

Yours in prosperity

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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