Another Day. Another Rap on the Knuckles.

This investing/trading stuff ain’t easy. Worse, I traded today without plan, too anxious to explore a new account I had set up and incurred two loses I should have handled better. But the net for the day was 53 beeps, which is decent money.

By temperament, I’m an “investor”, and I scoff at the Motley Fool’s pretense that they are “long-term” investors. 3-5 years is a very short holding-period for a bond investor, which is the market I prefer. But the easy money there is gone. So I’m having to poke around in the equity casinos to see what might be worth buying. Not much, frankly. Most of it is the over-priced, over-bought trash that Motley Fool pimps to the unsuspecting. For sure, their “recommended” stocks tend to have decent balance sheets. But almost none of them are currently profitable, nor are they expected to become so in the next three years. Instead, they just have “a story”, and stories don’t spend too well at the grocery store or gas pump

Of the six positions I put on, 2 were exploratory trades that worked well in the early part of the session, but should have been pulled off once the mood of the day changed from bear to bull. OTOH, the bear portion of the day’s session let me get in at advantageous prices on the other four positions (which I do intend to hold until selling them makes better sense). One, in fact, was a fill on a ridiculous low-ball offer on a tool company I admire. So lose some; win some.

Historically, stocks have offered an average gain of about 10%. Since the 2009 bottom, they’ve been offering more than that due to the Fed/Treasury cartel goosing assets prices --all classes-- with a tsunami of free money. Now --surprise, surprise-- all that counterfeiting is causing runaway inflation at a rate not seen in 40 years. Meanwhile, the US has hollowed out its manufacturing base, as well as attacked and invaded another dozen counties. So the expected, forward-rate of return on equities is likely to mean-revert to something closer to what Buffet thinks stocks should offer, namely about 8% per year (i.e., earnings growth, the div, plus a risk prem).

There are roughly 250 market days per year. If an 8% yearly gain is hoped for, then one’s daily average gain can be a modest 4 bps, right? and anything in excess of that can be “banked” in reserve for the inevitable days when profits are hard to come by.

Every broker has their strengths and weaknessness, and each investor has different means, needs, and goals. Right now, ETrade has the best bond search engine, but Fidelity is the better place to execute. Schwab has a good scanner for preferreds and offers very decent fills, as does Firstrade (who doesn’t charge a commish for OTC stocks, unlike its competitors). In its day, IB was a good place to trade futures and a superior place to buy/sell bonds, because they gave customers direct access to their network of desks. These days, their platform for “active traders” is clunky, though not as awful as Schwab’s or ETrade’s. But the best of the bunch is TD’s Think or Swim platform which facilitates entering orders off the chart or the DOM.

Why would an “investor” need --or want-- to use a trading platform? Because every price advantage that can be gained through shrewd order entry translates to higher profits. For sure, sometimes, maybe even most times, trying to be clever with limit orders results in no better a fill than a market order would get. But I don’t like dealing with stale prices or having to refresh the quote. With a DOM displayed, you see the order queue and are reacting to live prices.…


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