June 2006

I was just browsing over at StockCharts.com and noticed on their Point & Figure (P&F) charts, they have quite a few sizes available…

  • Tiny
  • Small
  • Medium
  • Large
  • Huge
  • Wide
  • Very Wide
  • Super Wide
  • Mega
  • Super Mega
  • Giga

Now that’s impressive. Not that many websites give their customers that many options. I tried out Giga – I can see how you might want that if you need to see EVERY LAST PIXEL.

It’s time.? A project that I’ve been working on extensively for weeks, probably to the great annoyance of the lady of the house, is finally at a point where I’m ready to share my work and begin testing the idea in a semi-public forum.? The working title for this project is the Uberman’s Portfolio, inspired by the infamous Uberman’s Sleep Schedule in that it never sleeps and because of the many late nights spent building the?gears and levers that make it all?possible.? Also, the acronym is UP, which is where I hope my equity will be when all is said and done.


Ever wondered how or where to open up an IRA for trading things other than stocks, such as futures and forex?? Consider a custodial trust?company that can approve various types of trading accounts for an IRA setup.? I think as long as the broker can prove that there are automatic safeguards in place that prevent the account ever going into debit such that you owe money, then it can be approved.? This is why margin accounts are allowed because most have automatic margin call procedures that prevent you from ever losing more than the amount in your account.

Here are a few:

Entrust Administration

Equity Trust Co.

Millennium Trust Company

I don’t have any knowledge of these firms to recommend?one and there may be more, but these are the few I’ve heard of.

By opening a FXTrade account at Oanda, which costs you nothing, has no obligations to trade and no minimum deposit, they pay 4.7% interest on USD deposits compounded daily.? Four point SEVEN just to have your money sit there.? I don’t think there is a savings account at any bank that can match that while giving you the option to invest in alternative currencies. The only better rate with no minimum on www.bankrate.com?was OneUnited Bank at 4.91%.? So for a trading account 4.7% is?very attractive.

How Index Investing Harms Your Portfolio

I read about this a few months ago in the book Just One Thing?where Rob Arnott contributed a chapter and it really stuck out as a useful piece of info.

Now for the other point of view and more supporting arguments with charts.

If you’re looking to invest in CDs or a similar fixed income investment, consider loaning out part of your money at Prosper.com. You can invest in small amounts, start to get a pretty big boost to your yield, pay low fees (well, the borrower pays the fees), and get it all done with minimal hassle (everything can be done from a web browser).

You can take a larger chunk of money and lend it out in small amounts to many different people — the diversification should help with the risk that a person walks out on their debt. I believe all the loans are in 3 year repayment periods, so you’ll probably want to diversify across people as well as begin to ladder the loan over time.

Some obvious advice: focus on those with high credit ratings and a reasonable way to pay back the loan; don’t treat this like a charity and give money to the person who “deserves” it. Factor in expected defaults when calculating the return you’re willing to lend at.

Need to calculate the implied volatility of an at-the-money option on the fly and you left your Nobel laureates at home?? Not a problem…

IV = 40 x p / SQRT(t)

where p is the price of the option (as a % of the underlying) and t is trading days until expiration.

That’s all.? Forget all the complications of the million dollar formula as this gives you all you need.? However, it only works at-the-money, but then again so does Black-Scholes.

So what if the price is between strikes so there is no at-the-money?? Well here is another spiffy formula:

CM = 1.04 – 0.04 * R

where R is the ratio of the more expensive to least expensive options that are nearest to the money.? Just multiply your option price p above by CM and there you have it: the price converted to the at-the-money equivalent.


We discussed at our 2nd Tasgall meeting two two articles, one from Fortune and another by Dr. Fahlenbrach, regarding whether Founder-CEOs could serve as a first-pass filter for determining whether a stock is a potential long-term buy. Based on Fahlenbrach’s research, it appears that Founder-CEOs make up approximately 10-15% of the overall market. Thus, using Founder-CEOs as a first-pass filter to limit the number of stocks up for long-term investment consideration is a potentially effective tool, although it’s clear that additional filters would also need to be employed before making an investment in a company. (more…)

Crestmont Research has put together an excellent resource called the Stock Market Matrix. It shows how the long-term buy-and-hold approach would have worked for every holding period of the last 100 years.

Take a look. There are a lot of other good resources on their website too. I highly recommend looking at the Excel spreadsheets they put together with the historical interest rate yield curve graphed over time.

The general consensus is that the markets and/or economy will do well once the Fed stops raising rates…