The Bull Hunters Guide

Today, we’re going to wrap up our series on stock picking strategies. Over the course of this series, we’ve looked at the stock picking strategies that are most commonly employed to great success by those who’ve been in the investment game for a while. While we recognize that no one strategy is going to produce a winner every time, we thought it was worthwhile to look at these notorious techniques to see what each one had to offer in comparison to the others.

As is fitting for a series like this, the last stock picking strategy we’re going to look at is one that is completely different in every possible way from everything that came before. While up until now, the underlying basis of every strategy we’ve covered has been the principle of fundamental analysis, today we’re going to turn that on its head by looking at technical analysis.

Technical Analysis

Technical analysis is focused almost entirely on the view of the market as a whole, with an eye towards its predictable trends and future prices, rather than the makeup and foundation of any one company. As a result, it’s the most predictive of stock picking methods, and in some ways the most radical. It is not without those who swear by it, though.

Technical analysis asserts that just by looking at the prices on the market, we can learn a lot about where that market is moving, because prices tend to move in trends. Working from the maxim that history tends to repeat itself, technical analysts often invest in those companies that show good trends based on market charts, rather than the intrinsic value of the company behind a stock.

Lookout For Market Movements

For that reason, many decry technical analysis as a stock picking strategy with no long term usage. And indeed it isn’t. That said, it never claimed to be. Because a technical analyst is constantly on the lookout for market movements, he or she tends to spend little time sitting on any one stock for very long. They prefer to soak up the profits (or losses) from rapid movements, and then move on, rather than worry about the long term gains to be had from any one stock.

That wraps up our series on the most popular and arguably effective stock picking strategies. Hopefully by now you’ve learned enough to start developing your own strategies, and that they’ll pay off for you in the long run. Join us next time as we embark on an all new avenue of exploration in the exciting world of stock market investment.

Thank you for hanging around for Bullhunter’s second investment series: Part 1 – 10 of Stock Picking Strategies.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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Hey there. Welcome once again to our series of posts covering some of the most popular and effective methods for selecting stocks. These methods have been documented and compiled over the years, and while they differ dramatically in terms of execution and philosophy, they all share the common element that, depending on who you ask, they work!

While every stock selection is something of a gamble, it’s our hope that by looking at these time-tested strategies, you’ll begin to gleam some idea from them of how winning stocks are usually chosen, and begin to develop your own strategy that will be effective for you.

Beating The Dow

Today, we’re going to look at what is probably one of the simplest methods in all of investing. This method was first presented in a book by Michael Higgins called “Beating the Dow”, and is commonly known as the “Dogs of the Dow” method. Selecting stocks by this method couldn’t be easier. You simply take a look at the top 30 companies with the highest dividend yields, according to the Dow Jones Industrial Average, and then spread your portfolio among the top ten.

That’s really all there is to it. You just check back every so often, perhaps every quarter, and make changes based on what you see, so that your portfolio always accurately reflects the top ten dividend yield stocks at any given time.

Depending On The Dividends

Clearly, this strategy is depending highly on the dividends that you’ll receive from the stocks in question, but it always takes into consideration the future potential of those stocks. The idea is basically that, if a stock is in the Dow top 30, it will typically be a strong stock with enough of a foundation to weather passing storms and eventually return to a position of prominence, whereupon you can sell it for an amazing profit. In the meantime, you just enjoy those dividend yields.

Well, that’s it for now. Told you it was a simple method. Next time, we’re going to wrap this series up by taking a look at the last method on our list: technical analysis. Stay tuned!

See you next week for part 10 of Stock Picking Strategies.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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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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Bullhunter in Melbourne

Well my fellow Bullhunters, I met with the Bullhunter himself in Melbourne the week before last and Sean assures me that the next installment of the Bullhunters Guide will be out by the end of the year and I can promise you it will be well worth the wait.

Sean told me a little about the book so far and it does take time to put all this useful information together in one package for you so just stay tuned. He will be using real trade examples so that you can follow what he has been up to and the way he is formatting it, even the newest of newbies will be able to get it - the stock market that is.


Graduate of the Jamie McIntyre homestudy

I am not writing about the stock market or trading in this post as such, but rather, a little about my journey since becoming a 21st Century Academy homestudy Graduate that culminated in something that I ventured out to do this week.

I joined the 21stCA in April 2006 and I had just received this big box containing I think it is around 16 DVD’s, a workbook and a whole lot of other bits and pieces. It is loaded with information and strategies in regards to share strategies and property investing - and just on that note, did you know that you could potentially make around $35,000 tax free dollars every year with an investment property! Aside from that, there are free tickets for the 4 Day Education for Life seminar, Internet and Business Mastery seminar, Property seminars and the list goes on.

The Internet seminar was the first on my list so I attended and got to meet some very successful Internet Marketer’s who had such an impact on me that my time here is due to that seminar. Then I attended the 4 Day seminar and meeting like-minded people got the ball rolling for me to source out some personal development. We all know that your wealth matches your knowledge and mindset so I got working on mine and have not stopped.

My time spent online allows me to meet some very interesting people from all over the world and getting involved in forums and social network sites like Facebook, is where I learned about the Free Hugs Day event being held worldwide on Monday September 10th 2007. It prompted me to think back to Jamie McIntyre’s words when he talks at the seminar about mindset and that giving and receiving are reciprocal. It is a natural law. So because I have received so much abundance in the way of good friends in this last year, I wanted to do something to help others and make a difference.

So I attended the Free Hugs day with a friend and it was an awesome day. Let me tell you though, that there were times when it felt like ages that I was holding up the sign and no-one would approach me. The reason I am telling you this is not to impress you, but to impress upon you that once you start on this journey of reprogramming the way you think, there are many doors that can open up for you if you let them and when they do, be ready. That is the key.

Not everyone can go out and give hugs in a public place to complete strangers, and I am not suggesting that it is for everyone, but there are other ways that you can give back for the abundance that you receive. Whether it be in the form of material acquisitions or an inner awareness, being grateful for what you have will only increase your abundance.

So that is just a little more about me that you may not have known. I wish you all well with your trading and what the future holds for you.

To Your Success

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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I am going straight into another excerpt from The Bullhunters Guide to the US Stock Market today discussing the renting shares or more commonly known as the Covered Calls strategy.


Covered Calls - Renting Shares

Say your Grandma left you 10,000 shares of Microsoft. You held it for a few years and the stock basically did nothing. Microsoft doesn’t pay a very good dividend so you consider selling some of the stock to get some cash. But instead your broker recommends that you write covered calls. You say… What…

By writing a call you are selling an option on your stock. An option gives its owner the right, but not the obligation, to take action. In the case of calls, it gives the holder of an option contract the right to buy 100 shares of Microsoft at $30.00 per share any time between now and November.

Just as with stocks, you don’t really sell an option contract directly to another investor, but instead to a market or specialist. He then sells the contracts to individual investors who want them. Of course there is a spread between the bid and ask of an options contract as well.

Keeping with the Microsoft example, you could sell the contract mentioned above with a strike price of $30, expiration in November for $0.05 a share. Since each contract is for 100 shares, this would equal $5. That’s not a lot of money so you decide to sell 100 contracts, which covers all $10,000 of your shares (100 contracts*100 shares each). In this case you get $500 no matter what. Microsoft’s current stock price is $28.37 but if it reaches $30 or more, your contracts will probably be exercised. This means that you will be obligated to sell all 10,000 shares for $30 each - even if they reach $35, $50 or $100 per share. If instead the stock stays around $28.37, goes down or goes up but not to $30, the options you sold will go unexercised. In this case, you will keep the $500 and all of your shares.

When you write calls for which you own the underlying stock, they are said to be covered calls. In this example you owned 10,000 shares of Microsoft so you could write 100 covered call contracts. If the contracts were exercised, you had the stock to sell.

A more aggressive (and very dangerous) strategy is writing naked calls which is when you sell contracts for the stocks that you don’t have. If the contracts get exercised, it’s up to you to go out in the open market and buy the stock.


Trading for Cashflow

In the above excerpt, remember that Sean wrote the eBook last year so the prices and months that he mentions is because of this reason. This is only a brief summary of the renting shares strategy and it is a great one to use when you are trading for cashflow. Remember that with any new strategy that you take on , it is wise to paper trade for a minimum of three months until you get the hang of how it all works.

Many of you requested that Sean put some real live renting share trades in his next eBook as you are eager to learn the strategy. This Sharelord® strategy will be discussed in more detail in the next installment to the Bullhunters Guide. I trust that the articles here are of use for you in your endeavour to master the US stock market.

To Your Success

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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