Could you please check out the website www.tradersaccounting.com . What do you think about putting our money in an LLC? Establishing a legal entity or Corporation where we can deduct expenses? Is this LLC more beneficial to day trading (which I don't want to do) or can we use it for longer term trading?
Trader tax reporting is done on Schedule C and Form 4797. But you can only do this if you pass the profit-making intent test and have sufficient trades throughout the year. If you can’t do so IRS hobby-loss rules apple and this sucks because you can only write off a small amount of your losses and none of your expenses.
If you can prove to the IRS that you are trading as a business then you can create an LLC or C corp and show your travel expenses such as going to the 2010 Investment U Conference as a business expense, create retirement plans, etc.
http://www.oxfonline.com/IU/IUConf0809.html
BUT most investors can’t pass the profit-making intent test and the best book out there on the subject is Bob Green’s The Trader Tax Guide:
GET this book and read it cover to cover to educate yourself in this area. Bob is a friend of mine and the most qualified out there teaching the public in this arena. He has great webinars as well for free to get you educated as to how to become a professional trader who trades for a living and reaps the IRS tax benefits. Bob’s the only guy out there you should learn from in this arena.
My second question is can you go a little bit more into how to choose LEAP puts to protect the Gone Fishin Portfolio before bear market down-turns. How to choose the strike price (deep in the money?) Or the expiration date. Wouldn't it be adequate to buy puts on the S&P 500 index and that would be enough OR do you buy puts for each stock index fund?
I Thank you for the opportunity to learn from you!
You could either buy puts on the S&P 500 index ETF or each individual stock index fund ETF. Remember puts ONLY trade on the ETF not an indexed mutual fund. The trick to doing this is to watch the weekly chart for technical weakness. This means you’re looking back many years. My favorite technical indicator is Gecko Software’s BnB indicator. But this will cost you a subscription to their high finance platform and the BnB plugin.
http://www.trackntrade.com/trials/stocks.htm
So if you’re a small
investor it probably isn’t worth the bother.
If you are going to do this don’t forget that I don’t want you risking more than 6% of your portfolio in options!
Make sure your always understand the risks of derivatives; options, futures, or forex…
http://www.tradementors.com/disclaimer.htm
This is an advanced strategy that should only be attempted if you really understand what you’re doing.
WARNING: Also, remember that the GFP is a SET IT AND FORGET IT PORTFOLIO designed to have thing coming up when others are going down so by actively hedging you may inadvertently defeat the purpose of the GFP.
I currently participate in my company's General Employee Stock Purchase Plan. Every pay period 10% of my pay is used to purchase shares of company stock at a 15% discount. I also participate in a 401K plan and have reallocated the distributions to match the core passive portfolio as closely as I can. In your opinion, is the GESPP a wise investment?
My company is a DOW 100 company.
I am interested in purchasing ADR's as mentioned in your Global Investing lesson of the course. I am unsure as to whether this investment falls under the set-it-and-forget-it strategy or whether we are to place trailing stops and treat this as a common stock transaction. If we are to constantly monitor these, what sell criteria should we employ?
I don’t give specific investing advice and can’t speak specifically on your GESPP. BUT I can tell you that we are in a rising stock market and anytime you can buy a great DOW 100 stock at a significant discount with tax shelter that the investor is getting a great deal!
As far as ADRs you definitely DO NOT set and forget them. You trail stops and can also use great technical analysis tools like the BnB indicator above.
http://www.trackntrade.com/trials/stocks.htm
Hands down the BEST source of ADR information is Alex Green’s New Frontier Trader which you can subscribe to at:
http://www.newfrontiertrader.com/
Alex not only recommends ADRs in that newsletter but also tells you where to set stops.
What pre-announce for the earning, merging/acquistion, stock split, & dividend will influence short, intermediate, and long term strategy to enter and exit for profit?
Where is the best source to get this information?
The best source for this kind of information is Louis Basanese’s Takeover Trader Newsletter:
http://www.oxfonline.com/TOT/TOT0909gen.html?pub=TOT&code=WTOTK906
Lou is awesome at finding takeover rumors to buy into. Just remember that I don’t recommend more than 30% into single stock strategies. The remaining 70% of your savings ear tagged for stocks should be in a core passive index fund strategy of which the GFP is the best example!
I would like to thank you again for answering my questions in the last conference call.
Also again, I was not able to attend it live due to the time difference between the US East Coast and my current location in the middle east, but I read the transcript and listened to the record several times.
btw... Your materials have still not arrived and I am starting to worry where they are. Maybe someone of the IU staff could look into this? Thanx.
Again, thank you for specifying your answers from the last Conference Call. It really was very interesting to listen to/read your take on my questions and it also was very helpful.
And since you offered it in the conference call I would really like to take you up on your offer to forward some informations about the possibilities in the european stock markets to me/us.
Especially recommendations about sources for informations in these markets would be very much appreciated, but I will definitely take whatever informations you can dig up.
I have an account with a very good discount-broker here in
much of the informations, I would according to your course need, I can acquire through their system ( ...of course I would need to have your course first... ), but I will take a look at the idea to convert my account into USD. That might work...
Of course I also trade european stocks on occasion, so maybe I will just create a second account (in USD) for the trades in US. Thanks for this idea and the one about ADR's.
Your tips are really a tremendous help.
Now... I really enjoyed your explanations about the situation with the USD (vs. EUR), but of course, I have a few follow-up questions if you don't mind.
Your insight as a professional in this subject was very educational and interesting, especially your analysis about the actual forces behind currency movements and those forces are absolutely comprehensible as you laid them out for me/us.
Well, I do not want to turn this calls into discussions about currencies, but I was wondering if could clear some contradictions up for me/us. (These contradictions come from other advisors or specialists in comparison to your 3 major forces of currency movements and not from within your explanations...)
I am very interested in commodities (mostly Gold and such...) and listen therefore to some specialists in this field and I think that they have some very good arguments for their theories too. (I attached some files to this mail for clarification, so you would understand where I get my other informations from...)
Again, your explanations of the 3 major forces (and the Big Mac Index) are very clear and logical to me, but why don't some other factors influence currencies?
I find it hard to believe that if a country has a terrible monetary policy it would not influence their currency...
Ok, I see why the unemployment rate might not have a very big impact, but what about
the low interest rates, the credit crisis and thus the bail-out policy, the national and consumer debt... which I think are all straining the USD and essentially devaluate it.
And most importantly of course the monetary policy of the fed!
Since one year ago the monetary base has about doubled and I don't see how this could not have a tremendous influence on the value of the USD.
(see graphic: USD - monetary base.jpg)
Quotes from Jeff Clark - Casey Research:
"The
from $800 billion to $1.7 trillion. This is the largest expansion in history and a staggering
devaluation of the dollar. It means that the
every 1 dollar there was in
Jeff Clark
Quotes from the attached OI Report by Byron King:
"The problem is, money can’t escape the natural law of supply and demand. When there’s to much of it floating around, each dollar is worth that much less relative to the whole."
Byron King
"There is no means of avoiding the final collapse of a boom brought about by credit expansion.
The alternative is only whether the crisis should come sooner as a result of the voluntary
abandonment of further credit expansion... or later as a final and total catastrophe of the
currency system involved."
Ludwig von Mises
Now on the other hand you say:
"I see no valid argument for an ongoing collapsing dollar. This is especially so in my
contrarian view since all I hear is sensationalist garbage about the collapsing dollar
that “experts” say MUST continue collapsing because of fiscal deficits, and so on that
are not directly related to currency values!"
Scott Brown, PhD
So, who's right? You may see how these contradictions are a bit problematic for me.
Are the facts right? Are they interpreted incorrectly? Are they just wrong as you stated
about the "sensationalist garbage"?
In this light your Prognosis/Speculation about the future of the EUR/USD is also very
interesting. You are convinced that the current (short term) trend of the EUR/USD will
soon turn around and start strengthening (contrarian view)...
Yes, the 6-7 year cycle would support this theory, but with the current monetary situation
in the
After all, the current situation seems to be very unique if you look back a few decades...
Sure, I am just an amateur and it is possible I missed something or don't quite understand
something here yet, but that's why I'm asking you. So, here I am again with a very big order, but I want to really understand this situation and not just skim the surface. Please, if you can, try to explain the situation one more time and
give me your opinion on those other arguments. Thank you very much.
Your help and informations are truly appreciated.
P.S.:
Your introduction into the VIX and the BNB was also VERY interesting
and therefore I have one question concerning the BNB Indicator:
Where can one find this indicator? Which services provide it?
Is it available only through TNT or also through anyone else?
P.P.S: - Administrative stuff...
If you need to, you can of course edit/rephrase my question for your blackboard,
since it is a bit long... again. But try to keep the core questions intact. Thanks.
...
And one more question:
The Oxford Club has a "Global Wealth Preservation Seminar" planned for
November 2010 in Europe/Austria... Do plan to / think about attending?
...
And another one:
Please let me know immediately once you secured that special offer for the
First of all if you have a discount brokerage in
Second send an email to Joyce at Investment U to find out where the heck that course is and if it’s lost get another shipped out to you ASAP.
Third, don’t worry about currencies… I LOVE discussing currencies!
The main thing you want to remember is that currencies change value due to fluctuations in supply and demand. Some factors are direct like the Big Mac Index (Purchasing Power Parity) or changes in relative imports and exports between countries (trend on the current account). Other factors are indirect like unemployment and fiscal budgets. Indirect factors have not been shown to have a statiscally significant effect on changes in Forex rates.
However the people quoting all of the stuff in your questions have never studied currencies at the Ph.D. level as I have and have never done a serious review of the extant research literature in international monetary theory. Not only do they not know the research but they also know you don’t know. So they can blow smoke up your skirt and you wind up completely confused.
When a currency is truly engaged in a “free float” monetary policy is of no use and we see this empirically en top level economic studies in international monetary theory where very few things offer up statistical significance.
However, when hamburgers are EXTREMELY cheap or expensive on one side of a Forex trading pair the long term trend over many years shifts. Same goes with the trend on the current account.
The best way to see what is really going on is to look at a WEEKLY or MONTHLY chart and then drill down to the DAILY chart. For instance notice in this monthly chart how the long term uptrend from 2000 was harshly broken in 2008.
http://www.trackntrade.com/trials/forex.htm
http://www.trackntrade.com/trials/forex.htm
Then notice how we get firm buy and sell signals on the daily chart that are very useful because the EUR/USD forex pair trends very nicely. Right now I can firmly say that the EUR is weakening against the dollar since the daily chart is in a clear downtrend.
It doesn’t matter what the
The clear and present fact as you can see on the daily chart is that the EUR is weakening to the USD. That’s the hardest, clearest, and truest fact…so pay attention to the way the trend changes on the EUR/USD daily chart and you’ll be able to make at least one absolutely certain comment!
Is it because of unemployment…who knows?! Is it because of
The only thing I really know is that two weeks ago the trend on the EUR/USD when from up to down! So now the EUR is weakening to the USD and that is a fact!
Someday in the future the BnB will turn to an up arrow with a confirming upward shift in trend and then I will simple say, “wow, the EUR is now strengthening to the USD!” Because the only hard fact you have is in the how the price actuall moves not what other think it should do. Ironically the price of foreign exchange never cares about anybody’s opinion!
And, I wouldn’t care if Ludwig von Mises or Byron King were to call me “Doctor Dumbo” at their cocktail parties if I were to refuse to engage in their pseudo-intellectual rubbish.
Incidentally, since you seem very interested in Forex I have a free mini course you can subscribe to at:
http://www.futuresforexandoptions.com/
Let me know if I missed any parts of your question. I really enjoy your questions and your European perspective!
Ps. I don't think I will be able to make it to the "Global Wealth Preservation Seminar" planned for
November 2010 in Europe/Austria.
I have a few questions relating to your “Share BuyBack Investing Strategy” from Lesson 2 – Value Investing. First of all I was able to find a site that had a list of companies that are either announcing a buyback plan, or they are in the process of “adds to prior plan” or over a 1 or 2 year period. Do suggest any guidelines we must stick to here? For example do they have to be recently announced, or is it still alright if they are in a process of buybacks? How far back in time can we go? You say to then determine management’s motivation as either “undervaluation” or “best use of money”. Where exactly do we find this information? Is it mentioned somewhere in their guidance report? Next you want us to get the book to market ratios. Could you please demonstrate an example of this on a stock so I can be sure of the procedure? And finally you mention to sort prospects by company size, the smaller the better, but no less than 300 million market cap. What would be your recommended ceiling, the highest market cap we could look at? This is a great course, thank you very much, it’s a bit of a challenge, so I hope you are able to clear up these areas of confusion for me. Many thanks, Kaaren.
Hi Kaaren, the best place to get information on share buybacks once you find the share buyback programs and associated stock symbol is at
Remember you want to identify newsreleases where the excetives feel:
1) the stock is undervalued and
2) the repurchase is the best use of the money.
Of course, you’ll often find the same information with a google.com search so always try their first.
Then you can find the rest of the financials at http://finance.yahoo.com/ and http://www.marketwatch.com/ by plugging in the stock symbol.
And, yes this is definitely detective work but if single stock investing were easy the fund managers would be beating the averages but the majority don’t! On the other hand if Warren Buffet himself says you can do it if you apply yourself…then you can!
I am pleased you like the course... I wrote it to help!
Scott: My question is: If the dollar begins to gain some strength and the Feds raise interest rates 1% or 1.5% in the first quarter of 2010, what should the best investments be in and what to get out of to have your money grow for the next five years ...stocks, bonds, money market or funds or a combination of all and what percentage?
The general rule is that when interest rates move upward bonds yields drop and after severe stock market crashes it’s best to buy stocks and commodities move with a mind of their own. The Gone Fishing Portfolio is designed to counterbalance these three forces such that you can set up the portfolio and forget it. That’s why I recommend 70% in the Gone Fishing Portfolio.
After the crash of 1987 Warren Buffet bought extensively for three years up to 1990. He is buying extensively now. Stocks are a very wise approach in this current undervalued market looking out for five years I would expect stellar returns to both the GFP and individual stock investing strategies.
Dr. Brown, are any of these "investment" systems, or programs that are being promoted by the Oxford Club website worth their fees? There are so many that are being promoted that it could be confusing and frustrating. Their ad copy of course, are all tantalizing. Do we just ignore them?
I love this question…you’ve got me sitting here laughing out loud.
Believe me when I tell you, “I KNOW!” I can tell you that it can be overwhelming. However, this semester I performed an academic study with Prof. Eric Powers (Ph.D. finance, MIT) and Prof José Cao (Ph.D. economics, Cornell) to see if the newsletters really do pack a punch for the buck.
We looked at the Insider Alert by Alex Green. Honestly, my hypothesis was that Alex couldn’t beat the market. Boy was I WRONG...
We found average returns over 28% jaw dropping percentage points!
However, you have to use financial wisdom in deciding if you can afford these premium services. If you have a small portfolio under say $30,000 dollars you will find it hard to recoup the cost. If on the other hand you have a large portfolio over $100,000 then I recommend the VIP lifetime Oxford Club membership because you get all the newsletter in the Oxford Club for life for one single fee…as Kevin Long in membership services but it’s something like $5,000 or $6,000 which is actually a phenomenal deal if you have a large enough portfolio you are managing yourself.
Also, I STRONGLY RECOMMEND attending the 2010 Investment U conference because you WILL meet wealth investors in the Oxford Club who ARE extracting high returns with our newsletters. Through those friendships you can get a clear idea of how to proceed from other Oxford Club members.
Here’s the link for the conference:
Have a VERY Merry Christmas and I will catch up with everybody in January of next year!
-Scott
