“I measure what’s going on, and I adapt to it. I try to get my ego out of the way. The market is smarter than I am, so I bend.”
- Martin Zweig

I have been in and around the markets for over 40 years, almost 20 of those years as a Stockbroker, registered advisor, and money manager. I have seen investors swindled, bamboozled, conned, and just plain charmed. I have seen bright young men come into the market with brilliant new ideas and shine like stars — until their stars imploded. I’ve seen crotchety old men who had been predicting a market change be proven right — after 20 years of being wrong. Here are some of the biggest mistakes I have personally witnessed that traders and investors make and the reasons (to the best of my knowledge they make them). Everyone myself included is tempted and even succumb to at least one of these mistakes from time to time. Realize what they are and avoid them like the plague.

1. Don’t put too much money in any one idea - because you never know, despite what you may think, the outcome of any particular stock or the market in general. Or as I like to say; no one knows what the future holds – no one! By limiting each investment, you’ll never get hurt so badly that you won’t be able to keep going. I have seen this too many times in my career and think of only two reasons why someone would do this:

• You want to make a big hit — and you don’t want to spend the time to research other possibilities.
• Your broker, friend, or relative intimidates you into buying more than you want.

2. Never invest in something just because you like the story behind it – because a story, by its very nature, is meant to dramatize, not to inform. Why would someone abandon a sensible strategy to buy into a hot story?

• Greed -> You know it violates everything you have learned about investing, but you’re willing to take a flier because the money sounds too good to pass up. If it sounds too good to be true, it probably is!
• Inexperience -> It’s the first time you’ve fallen for a good story, so you don’t understand that good investments don’t always have good stories and good stories are usually just that — stories.

3. Don’t leave money in an investment after it turns south. I have good investment-expert friends who will tell me I’m wrong about this one, but my feeling is that when businesses start to fail, most of them, most of the time, continue in that direction. Why would you keep your money in an investment that goes down instead of up?

• Pride -> You don’t want to admit you made a mistake. So long as you leave the money in the investment, you don’t have to admit you were wrong.
• Foolishness -> The facts proved your theory wrong, but the broker tells you another story that promises a recovery and more profits. You’ve fallen for one story, and now you fall for another.

Think about your experience. Has it been less than satisfying? If so, what are you going to do about it? Blame others? If you are willing to take responsibility, you are going to have to make some changes in your behavior. Admit that you are not smart enough to always have the right stock. When the market proves you wrong by moving against you (i.e., when you hit your exit strategy point), sell your position.

Recognize that you don’t always have the right idea — and the same is true of your adviser(s). Stock pickers blow hot and cold. Even the best ones will be very wrong on a regular basis. If your system is sensible — with no more than 3% of your portfolio risked in any one security and a strict exit strategies, you won’t have to worry about believing the next good story. Train yourself to be reasonable in your expectations. Yes, you will lose money, sometimes, but it will never be so much or so often that you’ll have to worry about it. As the years go by, you’ll get wealthier and wealthier. Not by a huge amount — but by a percentage big enough to make you happy and comfortable when it comes time to slow down and rely more on your passive income.

Enjoy your Memorial Day Weekend!

If there is anything that a man can do well, I say let him do it. Give him a chance.

- Abraham Lincoln

Current World Markets:

• World Markets
• Commodities
• Currencies
• Bonds

trade safe and
have a great day!

Range Projections will
not be available after
June 28, 2013

Make note of the trading tips. Applying the above definitions to some major averages, testing for Key Reversals:

There are no secrets to success. It is the result of preparation, hard work, and learning from failure.

- Colin Powell

Current World Markets:

• World Markets
• Commodities
• Currencies
• Bonds

trade safe and
have a great day!

Range Projections will
not be available after
June 28, 2013

You will notice also that many of the systems as well as approaches I use are fairly simple, if not really simple. Not only the means but the format as well. Asset Allocation has been around for eons I think yet it is so simple, whether you utilize a rotational method, or a systematic method to diversify across asset classes. Equities (US), Equities (Non-US), Real Estate, Income producing assets, Commodities, even currencies.

My view on asset allocation is simply no one knows what tomorrow holds…No one. Therefore if we diversify across a broad spectrum and have an easy means, simple means, that will tell us when to enter when to exit, well then we’ll always be there for the “big moves“.

Along with trading though I like to keep my life simple.  In casual surveys with members and non-members alike I’ve received one comment that both is a compliment and a distraction. The comment:There is just so much on this site, I don’t know where to begin. To start I’ve changed the navigation bar to hopefully reduce some of the redundancy if nothing else. Nothing is missing, the links to your favorite parts are just now within two new headings: EXCHANGE TRADED FUNDS, or INDIVIDUAL STOCK SELECLTION.

Much more simple don’t you agree? Click on Exchange Traded Funds and the following page opens up. Click for full size.

All your favorite links. Individual Stock Selection:

Again the links appear. It all means one extra click but it also reduces some of the clutter. Any questions? Any comments? Forward them along!

Talking Points and How to Be a Socially Responsible Investor:

Crash Proof Your Portfolio (Axel Merk)

Are Market Valuations too High? (Turnkey Analyst)

Examined Rationality (Robert Seawright)

S&P 500 Revenues Disappoint (Dr.Ed’s Blog)

Don’t worry, be happy (Economist)

Mr. Market Sings a Happy Song (Doug Kass)

The New Buyers of ETFs (Wealth Management)

Why the IRS cannot be reformed (Washington Times)

On Whose Research is the Case for Austerity Mistakenly Based? (Jeff Frankels Blog)

Apple is shifting its tax burden (Washington Post)

Bonds Go Their Own Way: Down (Barron’s)

As Job Flow Slows, Americans Get Stuck in Place (Bloomberg)

Federal Rulings Could Make 5 Years Of Non-Judicial Foreclosures Unconstitutional (Mortgage Fraud Investigations )

Bernanke out by August, QE ends, rates up: Crash (MarketWatch)

As rich gain optimism, lawmakers lose economic urgency (Washington Post)

Why Rational People Buy Into Conspiracy Theories (NYT)

7 mistakes to avoid in retirement planning (USA Today)

Celebrating Inequality (NYT)

2013 National Geographic Traveler Photo Contest (Atlantic)

But Wait. Didn’t Yahoo Try a Deal Like This Before? (Dealbook)

Japan’s New Optimism Has Name: Abenomics (NYT)

How to Be a Socially Responsible Investor

have a great day!

Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all.

- Dale Carnegie

Current World Markets:

• World Markets
• Commodities
• Currencies
• Bonds

trade safe and
have a great day!

Range Projections will
not be available after
June 28, 2013

The upgrade contained a new version of .php. The member software utilizes and older version of php. You couldn’t sign-in but I came up with the work around. Just open a new tab or window, go to the home page and lo and behold your signed in. When the original problem was noticed I informed my web host.

They decided to move the site to another server that still had the older version of php. Well it cured the sign-in but created other, more serious problems. Obvious move the site back to the older server. Enter DNS - The Domain Name System, this is what makes the web work.

So now prudenttrader.com had 3 DNS addresses within a very short period of time. If you accessed the site during the redirects then it’s quite possible you’re operating system couldn’t find prudenttrader. And you received a message as such, could not find server. The DNS became very confused. If that is the case with you and you have a windows machine:

Go to Start – Accessories – Command Prompt – before opening right click and run as administrator. Close all browsers and type in ipconfig/flushdns. Then restart the computer. It is quite possible that your wireless router is also confused. Unplug the router, leave alone for about a half hour and start up again. If you have a Mac email me with your software version and I’ll go through the instructions for the Mac.

So problem solved right? No not exactly as one problem gives way to another. I said to myself I have to update the member software to prevent this stuff in the future. So I order the upgrade. Question – do you want us to install for $xxx. Duh! Yes! Knowing I would screw it up if left to my own devices.

Well, when all is said and done half the site’s log-in’s do not work. If you’ve forgotten your password you will have to submit your email and/or username and change your password. That happened to me as I have browsers remember everything. So I changed my password .

It’s been a harrowing experience to say the least. Would be nice if we had a thousand or so members so I could hire a full time IT person to handle all of this for me. I’ve been promised the software install will be working properly by this afternoon. However, its possible some fixes are still in order and I’ll be working over the holiday weekend I guess.

Please If you find a link or something that does not work please let me know ASAP so it can be fixed. Here’s to a great second half with zero problems 

 Weekend Talking Points and How to escape education’s death valley:

The market freak-out over Japan today was premature (Quartz)

Jonathan Miller: Home Supply Limited by Americans Lacking Equity to Sell (Bloomberg)

4 Market Risks Worth Worrying About (iShares)

Five words from Bernanke have Wall Street running scared (Quartz)

Giving the bulls the benefit of the doubt (Humble Student)

Steve Jobs’ Dream Device Has Arrived (Slate)

Bernanke to Congress: I’m Not the Problem. You Are. (The Fiscal Times)

Dread, Foreboding and Fear (Robert Seawright)

The Mirage that is Financial Literacy (money&markets)

The Smart Money Is Still Bullish (Barron’s)

Why Spotting Bubbles Is So Much Harder Than You Think (Fool)

Nocera: Tim Cook’s reality distortion field (NYT)

Dudley Says Decision on Taper Will Require 3-4 Months (Bloomberg)

10 Novels That Are More Action-Packed Than Most Summer Movies (io9)

Let’s do it my way (Economist)

Why Investors Fail (Motley Fool)

Stocks are for the young and the restless (MarketWatch)

Teens, Social Media, and Privacy (Pew Internet)

Investing in Gold: Does It Stack Up? (Knowledge at Wharton)

Teens are tired of Facebook ‘drama,’ find refuge on Twitter and elsewhere, says Pew (The Verge)

Ken Robinson: How to escape education’s death valley

Have an enjoyable weekend!

Click picture below for a full sized image:

As I’m sure all of you are aware, my youngest daughter graduated Boston University this past weekend. It was a weekend full of fun and exciting events.

Friday an awards ceremony for which my daughter received two; one for linguistics and one for French (Double major).  Later on that afternoon; a Champagne reception for the entire graduating class.

Saturday the actual graduation for her school and department; BU College of Arts and Sciences, linguistics and romance languages department. More food and drink. Saturday evening dinner, then an evening with the Boston Pops Orchestra at Boston Symphony Hall, an outstanding tribute to Marvin Hamlisch.

Sunday the full university graduation with Wendy Kopp, founder and board chair of Teach for America. Most popular amongst the students and attendees was an honorary degree for Morgan Freeman. As Wendy Kopp stated in her address Morgan Freeman is a big supporter of her efforts, mostly in his native Mississippi. Unfortunately the weather turned cloudy, windy, and cold .

My daughter will be staying at the University working for Events and Conferences until early June when she’ll come home for a few weeks prior to her summer adventure. Monday we moved a good deal of her goods home. Another trip will be required for the final move.

Oh to be 21 again

Not much to add on the cycles project but here’s the spreadsheet since we started in April:

The current watch list from last Friday can be accessed HERE!

 Talking Points and How Jim Koch Keeps the Samuel Adams Brand Fresh:

Strange But Untrue and Other Facts That Don’t Matter (Macro Man)

Dynamic Duo: Why Leon Cooperman and Steve Einhorn think this bull market still has legs (Barron’s)

Did the Price of Gold Just Form a Bottom? (24/7 Wall St)

Boom or Bubble? (The New Yorker)

Future’s so bright we have to wear shades (USA Today)

Markets are on a crazy, sugar-fuelled journey (Telegraph)

This Time, Gold Bugs May Have a Point (Barron’s)

How Benjamin Graham Revolutionized Shareholder Activism (Echoes)

Overbought? Maybe not (MarketWatch)

The Hubris Of The Bulls (Alhambra)

How to buy happiness (LAT)

ECRI’s Weekly Leading Indicator Declines Advisor Perspectives (Advisor Perspectives)

Not In Kansas Anymore (John Hussman)

Telling the Truth on Fees, Warts and All (NYT)

Goldman Sachs Wins Even When Muzzled by the Feds (Bloomberg)

Making your financial adviser measure up (MarketWatch)

The Tragic Beauty of Google+ (Time)

Why Precious Metals are Taking a Pasting (Moneybeat)

Congrats, Grad! Was It Worth It? (National Review)

A Small Part of the Brain, and Its Profound Effects (NYT)

Are Cyclicals Ready to Rally? (Barron’s)

Notes From the London Value Investor Conference 2013: Marks, Price, Montier & More (Market Folly)

How Jim Koch Keeps the Samuel Adams Brand Fresh

have a great day!