Folks, I want to take this opportunity to thank you for subscribing to my blog. And I want to give special thanks to those of you who have added your comments, both supportive and contradictory. It’s flattering to know that others think enough about what you have to say to not only welcome it into their mailboxes every week, but to digest and think about it.

This will be my last post for a while—perhaps for quite some time. And, this evening’s broadcast will also be my last for a while as well, as I’m also going to take a sabbatical from my on-line “radio” show. Both of these activities have been labors of love. But they have both consumed considerable time, energy, and thought—resources that I’ve decided to apply exclusively to a couple of other things.

The first is a very exciting, new project whose mission is to promote financial literacy. As most of you who have known me for a while know, this is—and has been—a passion of mine for some time. And, I’m going back to school to acquire some skills in the graphic arts and video field that I can apply to this project. And I’m looking  forward to both the education and the constructive result.

I’m also going to play a more active role in helping my wife, Dianne, with her business. She’s been doing a fantastic job as it is; but it’s time for me to be more actively supportive than I have been. I think this will be fun as well.

So, thanks again for both your interest in my effort to help you be more successful investors, and your indulgence when I’ve occasionally drifted off target to rant a bit.

I’ll keep my Web site open at http://www.financialiteracy.us. The archives for this blog will remain there for anyone to prowl around in and refer to. And, there’s no need to unsubscribe, should you want to know about it when or if I should start back at it again.

Best wishes and so long for a while!

Ellis Current Events, Food for Thought, Fundamental Investment Views, How to Invest, Investment Concepts, NAIC Veterans' Lounge, Stock Market Shams, Successful Investing

This past Saturday’s Wall Street Journal contained an article entitled “‘Hindenburg Omen’ Flashes.” Although it wasn’t offered as tongue in cheek satire, it just has to be! How else can one explain such a respected publication giving space to Wall Street’s equivalent of “Chicken Little”?

For me, the article is priceless, because it so articulately describes the kind of thinking that surrounds the herd and its minions.
Read more…

Ellis Current Events, Food for Thought, Fundamental Investment Views, Investment Concepts, Stock Market Shams

Now comes our Congress, eager to feed the public’s lust for punishing the banks for having done our economy so much damage, and ready to impose a new bunch of regulations on that industry so as to protect the consumer from…. From what?

Here’s what the public really needs protection from:

1. Its own ignorance. This is certainly number one! Had the public been at all intelligent or educated about borrowing, they would have known better than to expect either the government or the lenders to protect them against borrowing beyond their means for homes they couldn’t afford. The first issue is financial literacy, which is sadly lacking in our society, our schools—and especially our Congress to begin with! Read more…

Ellis Current Events, Food for Thought, Stock Market Shams banks, congress, financial literacy, protective legislation, securities industry

Did you ever go to a casino with the idea that you’re going to quit when you’re ahead (or when you’ve lost a certain amount, whichever comes first)? So, you set a figure for each limit and you usually hit the loss limit first. Of course, when you hit the win limit, you rationalize: “My luck has been so good, it would be silly to quit now!” Or, “I’m playing with the house’s money, why not keep on rollin’?”

This is precisely the mindset of most who play the stock market. They set a limit on the high price: “I’ll sell it when it reaches $X.” Or, “The price has gone down to $X, I’d better get out before it goes down any more.” And the results usually are the same. The house, not you, is always the winner.?

---

Reminder: Debut of Take Stock with Ellis Traub on on-line talk radio at 7:30PM. Call in (347) 857-3608 to join in.

---

Read more…

Ellis Food for Thought, Investment Concepts, Stock Market Shams, Successful Investing basic stock investing, companies not stocks, gambling, ownership

The rational price of a stock is the price investors would pay if they were thinking clearly. You can learn all you need to know, and more, in my earlier post that deals with “Rational Value.” So I won’t take the time for that now.

This value is very useful when dealing with good quality companies whose operations have been consistently healthy and whose value has grown predictably. With it, you can tell when the stock of that company is selling at, above, or below a reasonable price. Needless to say, the ability to place a specific and absolute value on a share of stock makes the whole process of long-term investing less of a gamble and more of a business—which is precisely what it ought to be. Read more…

Ellis Investment Concepts, NAIC Veterans' Lounge, Stock Market Shams, Successful Investing index, long-term investing, rational market, rational value, S&P500, the herd

Yesterday (May 19th), the Dow Jones Index (the sum of the market prices of one share of 30 mostly venerable blue-chip companies, adjusted daily for splits and stock dividends) spurted more than $235. Our local newspaper, beneath the header, “India’s Market Soars,” spent its allocated two-paragraphs discussing the unprecedented surge in India’s stock market the day before. However, the banner headline on the front page of the financial section screamed “Stocks Jump on renewed optimism for housing, banks.” And the lead reported, “Reassuring news about housing and banking on Monday convinced investors to return to the stock market.”

Hello! This morning, reporting a $29.35 decline in the Dow, the header over the explanatory two paragraphs read, “Housing fall drags stocks.” And, the leading explanation was “…the surprise drop in construction and a cautious outlook from retailer Home Depot pared gains in energy and utility stocks.”

A typical chronicle of two exciting days of the herd’s decision-making!

Read more…

s Food for Thought, Fundamental Investment Views, Stock Market Shams betting, Dow Jones, gambling on the stock market, market, news reports, newspaper reports, playing the market, securities industry, short-term, the herd, traders

Not long ago, after seeing one more newspaper article praising the virtues of The Stock Market Game, I yanked my gun off the rack and fired yet another salvo at what I consider to be a terrible influence on our children.

The article probably mentioned that the program teaches our kids such things as short selling and using margin to leverage their hypothetical portfolios so as to help them better manage their pretend-$100K and increase the kids’ chances of beating their competitors. I view these things to be about on the same level as teaching them about the pass line on the craps table!

Nevertheless, in response to a comment on that post, I suggested that it might be time for me to quit complaining, talk to the folks who run it, and see if they might be receptive to some suggestions to perfect it. …and then I did it.

Read more…

s Food for Thought, Stock Market Shams angry, children, financial literacy, gambling, investing, investment education, kids, school, securities industry, SMG, stock market game

One of my big harangues has been that the securities industry benefits from the public’s perception that betting on the movement of the stock market is what investing is all about. And, they have nurtured that belief since it all began because they make their money from both the buyers and the sellers every time there’s a transaction. The more transactions, the better—for them. Doesn’t this put the brokers at odds with the people they’re supposed to serve?

Admittedly, there will always be people who get a rush from gambling—looking for the big killing with the odds against them. But for most of us who want to invest to build up our assets and not risk losing our money, don’t you think it would be better if we rewarded the brokerages by giving them a fractional percent of the value of our portfolios annually for their services? Might they not start working harder to increase the value of our holdings instead of just wanting us to trade?

This is a great time to make some changes that could justify our building some confidence in that industry. What do you think?

s Food for Thought, Stock Market Shams brokers, commissions, compensation, conflict of interest, fee-based compensation, long-term investing, trading, transaction-based compensation

This is a pet peeve of mine.

Consider this: The securities industry supports and finances this “education” effort. Altruism? I think not!

In whose best interest is it for your kids to grow up believing “investing” is betting on the stock market – that it’s a great and exciting game and you can make a killing playing it? Certainly this is not something your kids ought to be taught! Read more…

s Stock Market Shams children, education, financial literacy, kids, schools, stock market, stock market game, very little risk

Bernard Madoff has taken the American reputation for excess to a dizzying new height. Where the previous world’s record for financial skullduggery was claimed by a Frenchman who made world headlines for his 5 billion euro disaster, our overachieving hustler moved the decimal over one point to $50 billion and counting.

How could Madoff have escaped notice for so long and managed to fool so many astute clients and financial mavens over nearly a lifetime? It was simply because he wasn’t greedy. Read more…

s Stock Market Shams Add new tag, Madoff, Ponzi, scam, stock market, too good