Timothy Sykes
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Five stocks under $5 to consider
My core investment strategy of trading strong penny stocks (which earned me 197% last year) has clearly benefited from the overall market's strength of the past few days. While I'm looking at these following five names, I'm not rushing into them just yet. Each has a different story to tell:
Ferro Corp. (NYSE: FOE), a struggling industrial materials maker whose stock price has plummeted in the past six months from the $20s to $1, basically doubled to $2 after the company amended its financing agreement -- meaning its lenders gave it some breathing room.
Continue reading Five stocks under $5 to consider
Seven things investors can learn from Warren Buffett's annual report
It's been exactly one year since the last time Warren Buffett showed off his incredible investment mind in his annual letter to Berkshire Hathaway Inc. (NYSE: BRK.A) shareholders and I dissected it for its greatest lessons.You can read this year's entire 97-page annual report (pdf), or the shorter 23-page letter to shareholders (pdf), or just learn from what I think are some of this year's most important points:
1. While, as has been widely reported, this was Berkshire's worst year, we're only talking a 9.6% drop in book value, which hugely outperformed not only the S&P 500, but just about everyone else with multi-billion dollar businesses, let alone any insurance or investment businesses. Compare to Marsh & McLennan Companies (NYSE: MMC), Blackstone Group (NYSE: BX), Aon Corp (NYSE: AOC) and Willis Group (NYSE: WSH), all of which were hit far worse.
Continue reading Seven things investors can learn from Warren Buffett's annual report
Seven signs you should short sell a stock
These are not the only signs, just a few examples of when to bet against a company, all of which would have worked out great over the past year:1. Right when management admits a massive fraud over many years, Satyam Computer Services (SAY)
2. Companies lie about the health of management: Apple Inc. (NASDAQ: AAPL)
3. Arrogance and greed blinds management to excessive risk-taking: General Electric Co. (NYSE: GE), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Bank of America (NYSE: BAC), General Motors Corp. (NYSE: GM)-pick an over-leveraged financial, any financial...and yes, considering all the messy financial instruments these companies took on, they are all financial stocks.
Continue reading Seven signs you should short sell a stock
Five lessons for investors from Obama's inauguration speech
1. When I Twittered that Obama's speech was just propaganda and that my readers would be better served by focusing on bettering themselves, it inspired a 40+ comment chain on my Facebook profile. The lesson here is that people become very attached to their beliefs, like their stocks, no matter what any naysayer thinks, and many still believe in "quality investments" like Google Inc (NASDAQ: GOOG), General Electric Co. (NYSE: GE) and Goldman Sachs Group (NYSE: GS), each now down more than 50% in just a few months. 2. Propaganda works only for so long before it backfires -- Obama better come through on what he says or it'll be just another case of the "Steve Jobs is fine" rhetoric that has proven false and now taken down Apple Inc. (NASDAQ: AAPL), which has just broken through the key $80 support I talked about recently. That may make it a great technical short for aggressive traders, but not for me; I'm a conservative short selling penny stock day trader.
3. Politics is eerily similar to the stock market, those who inspire and make people the most excited rise to the top.
Continue reading Five lessons for investors from Obama's inauguration speech
Five tips from a trader who earned 197% in 2008
It's been a long time since I wrote here, mainly because I've been busy busting my butt. I was up 197% in 2008, every trade detailed HERE for your learning pleasure, becoming the #1 ranked trader, out of 15,000+ on Covestor.com and growing my blog's monthly income to over $80,000 -- so yes, 2008 was a very very good year for me.
Here are five tips I'd like to pass on to help you in 2009:
1. Be honest and admit mistakes quickly. Too many people in finance these days are having problems fessing up and it not only hurts their reputation. It hurts their business and performance too!
2. Learn from your mistakes---even more important than admitting them, you must take it to the next level and learn, unlike value investors who just keep adding to their losing positions in Bank of America (NYSE: BAC), General Electric Co. (NYSE: GE) and Goldman Sachs Group (NYSE: GS).
t's been a long time since I wrote here, mainly because I've been busy busting my butt. I was up 197% in 2008, every trade detailed HERE for your learning pleasure, becoming the #1 ranked trader, out of 15,000+ on Covestor.com and growing my blog's monthly income to over $80,000 -- so yes, 2008 was a very very good year for me. Here are five tips I'd like to pass on to help you in 2009:
1. Be honest and admit mistakes quickly. Too many people in finance these days are having problems fessing up and it not only hurts their reputation. It hurts their business and performance too!
2. Learn from your mistakes---even more important than admitting them, you must take it to the next level and learn, unlike value investors who just keep adding to their losing positions in Bank of America (NYSE: BAC), General Electric Co. (NYSE: GE) and Goldman Sachs Group (NYSE: GS).
Continue reading Five tips from a trader who earned 197% in 2008
An interview with a blogger who made $70,000 last month: Me!
A little while back, I sat down and asked a few questions of $30,000/month blogger John Chow in this post and it was a big hit. Few people realize there was so much money to be made from blogging.A few months later, everything's changed: John Chow isn't reporting his monthly numbers anymore and even if he was, my personal blog, TimothySykes.com, would be blowing him away as just the other day, I detailed in this post how my little blog earned $70,000 in August.
Yes, you read that correctly, I might write for AOL and TradingMarkets.com, but I'm also an internet entrepreneur and judging from my blog's monetary growth -- $15,000 in May, $25,000 in June (both estimated since the figures weren't bragworthy), $45,000 in July (see detailed breakdown here) and of course August's blowout month which is made even more impressive considering I took a trip to Japan for the last 10 days of the month (see itinerary here), I'm succeeding rather nicely.
So, in honor of my religion -- Judaism (at Passover we ask ourselves four questions) -- I asked myself the four questions that matter most about what's worked and what hasn't. Obviously I'm biased, but I'll try to be as brutally honest as possible, as usual.
Q: Timothy, to what do you attribute your blog's astounding ability to make money even as traffic growth has flatlined somewhat?
A: Good question (and I must say you're looking rather handsome as you write this). I'd say No. 1 it's not holding anything back. Brutal honesty. With a lot of joking around/sarcasm. In a word: real.
I have no long one page sales sheets nor overly technical posts. It's all about writing from the heart -- whether some/many take offense or not. Considering I've been a profitable stock trader for the vast majority of my decade-long career, my experience and knowledge is worth something...especially considering that 90% of traders lose money!
Continue reading An interview with a blogger who made $70,000 last month: Me!
Why I wouldn't touch any of these financial monstrosities
Thinking about picking up some shares of "venerable financial institutions" like Lehman Brothers Holdings (NYSE: LEH), Merrill Lynch & Co. (NYSE: MER), Citigroup Inc (NYSE: C) and Washington Mutual Co (NYSE: WM)? Think again.
As Bill Miller of Legg Mason Value Trust has learned the hard way, just because a stock looks like it's undervalued doesn't mean it won't keep getting more undervalued. Especially when there's the risk of an all-out catastrophe a la Bear Stearns thanks to these companies' incestuous affair with leverage.
Take Lehman in particular, it's trying desperately to raise capital, by any means necessary, but can it go to the multi-trillion hedge fund industry? No. Hedge funds have trillions because they're smart. They know at this point that Lehman is a longshot. So, Lehman must negotiate with smallish foreign countries that are trying to get some good old American power and even there it's getting rejected!
That's just sad.
Continue reading Why I wouldn't touch any of these financial monstrosities
The latest round of stocks to buy and to avoid
No matter what any CEO, analyst, "guru", "market expert", strategist, fund manager, trader or message board poster says (few show all their trades and investments like me, nor are they up 60% in 2008, see details here), never try to catch a falling knife. Before I list all the current ones, I really have to pound it into your heads that buying these things in hugely uncertain -- and possibly disastrous -- times like these is not only dangerous, it's just plain irresponsible.
Here are some current falling knives:
- General Electric Co. (NYSE: GE)
- General Motors Corp (NYSE: GM)
- Citigroup Inc (NYSE: C)
- Merrill Lynch & Co Inc (NYSE: MER)
- Washington Mutual Inc (NYSE: WM)
- Bank of America (NYSE: BAC)
- American International Group Inc (NYSE: AIG)
Now, I don't want to hear those "I'm a long-term investor in blue-chip stocks" and "these are quality companies trading at discount prices"-type comments. While it's possible these stocks will bounce, the risk-reward ratio is downright awful here, just as its been for the past several months (as I've been warning in posts like this and this).
Continue reading The latest round of stocks to buy and to avoid
Why you must learn short selling to survive this market
Don't know where the market is headed? Some people think a full blown crash is possible; some believe this is a good time to buy while others just don't know what to believe. Well, I just don't care and neither should you.
Because if you're like me, you've learned to take everything one high percentage profit trade at a time, whether you're betting on higher or lower prices. That's right, I'm talking about easy individual market inefficiencies like THIS.
As for the markets a whole, it's the same pathetic guessing game it'll always be, filled with plenty of "gurus" with polished-sounding theories where only a few truly brilliant hedge fund managers guess correctly with the rest of us just trying not to pull a Bill Miller (look foolish).
Because if you're like me, you've learned to take everything one high percentage profit trade at a time, whether you're betting on higher or lower prices. That's right, I'm talking about easy individual market inefficiencies like THIS.
As for the markets a whole, it's the same pathetic guessing game it'll always be, filled with plenty of "gurus" with polished-sounding theories where only a few truly brilliant hedge fund managers guess correctly with the rest of us just trying not to pull a Bill Miller (look foolish).
Continue reading Why you must learn short selling to survive this market
How I'm going to make smallcap stocks less scary
Judging from previous articles like this, can you guess what I'm going to write about? By now I think you should know my core beliefs-while everyone and their mother is covering the wheeling and dealings of hugely important corporations hence efficient stocks like Google Inc (NASDAQ: GOOG), Yahoo Inc (NASDAQ: YHOO) and Microsoft Corp (NASDAQ: MSFT), my blog's readers and I are having much more fun profiting from trading mostly short selling...well actually all short selling-smaller infinitely more inefficiently priced companies like GRO, PTEK and STXX, all of which were "pumped up" by various temporary catalysts.
For Agria Corp (NYSE: GRO), it was message board hype, PokerTek Inc (NASDAQ: PTEK) had a combination of message board hype, rumors and press coverage and South Texas Oil Co (NASDAQ: STXX) got a stock promoter mention, and now that those temporary catalysts have come and gone, all three have reversed hard off their highs. And mind you, while many pumps are accomplished on the infinitely ore sketchy OTCBB and Pink Sheet exchanges, all three of these companies are trades on more reputable markets like the NYSE and NASDAQ. And yes, I profited solidly on all three, increasing my yearly gain to around 40%.
Now I'm looking at stocks like Source Interlink (NASDAQ: SORC) as a potential short, which is up on insider buying, a catalyst I don't respect, but since there's not enough space for me to cover all the details of exactly what I look for here--it's about chart patterns, price action and volume. Today, I am doing a special Friday the 13th marathon episode of my LiveStock show. To the untrained eye, I know these small stocks seem scary, but maybe after this journey, I can help you better understand them.
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
For Agria Corp (NYSE: GRO), it was message board hype, PokerTek Inc (NASDAQ: PTEK) had a combination of message board hype, rumors and press coverage and South Texas Oil Co (NASDAQ: STXX) got a stock promoter mention, and now that those temporary catalysts have come and gone, all three have reversed hard off their highs. And mind you, while many pumps are accomplished on the infinitely ore sketchy OTCBB and Pink Sheet exchanges, all three of these companies are trades on more reputable markets like the NYSE and NASDAQ. And yes, I profited solidly on all three, increasing my yearly gain to around 40%.
Now I'm looking at stocks like Source Interlink (NASDAQ: SORC) as a potential short, which is up on insider buying, a catalyst I don't respect, but since there's not enough space for me to cover all the details of exactly what I look for here--it's about chart patterns, price action and volume. Today, I am doing a special Friday the 13th marathon episode of my LiveStock show. To the untrained eye, I know these small stocks seem scary, but maybe after this journey, I can help you better understand them.
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
Two key lessons I've learned over the years
As I wrote in this article, there's no way you should be buying Apple Inc. (NASDAQ: AAPL) stock right now. Yes, it could break out to new highs, but until it actually does, it's just a triple-top chart pattern and considering we're talking about a measly 7% gain from here to the break-out level, just wait until it breaches $203 and does so convincingly. After all, if it's meant to fulfill the $300 prophecy as foretold by the oracles (aka market cheerleaders), you'll still have plenty of room to profit, just without all the risk. Yup, even with fundamentally sound companies, it's crucial that you consider technical analysis to your investments, as Google Inc. (NASDAQ: GOOG) shareholders learned the hard way after its perfect triple-top back above $700 (a top I called to short based on -- what else? -- technical analysis!).
Even though those are the stocks about which I get most email, they aren't the ones I want to write about today -- because the stocks I like are the ones I talk about in my new internet TV show LiveStock:
(Contact me with any stock market questions you'd like answered on live broadcasts every Friday from 1-2PM which you can view HERE) have been influenced by some kind of temporary catalyst, whether it's an analyst or newsletter recommendation, message board hype, or stock promoter spam. After that's gone, all you have left are struggling small-cap companies looking to raise capital. It's ugly.
Even though those are the stocks about which I get most email, they aren't the ones I want to write about today -- because the stocks I like are the ones I talk about in my new internet TV show LiveStock:
(Contact me with any stock market questions you'd like answered on live broadcasts every Friday from 1-2PM which you can view HERE) have been influenced by some kind of temporary catalyst, whether it's an analyst or newsletter recommendation, message board hype, or stock promoter spam. After that's gone, all you have left are struggling small-cap companies looking to raise capital. It's ugly.
Continue reading Two key lessons I've learned over the years
For low priced stocks, focus on the pumps
As I wrote a few weeks ago, traders and fans of low priced stocks should ignore fallen blue chips like Ford Motor Co (NYSE: F) and Sirius Satellite Radio (NASDAQ: SIRI) and focus more on smaller volatile stocks like China Precisions Steel Inc (NASDAQ: CPSL) and Solarfun Power Holdings (NASDAQ: SOLF). Not just because fallen blue chip stocks are all about guessing major business trends and the time lags involved with pricing those into their stocks -- good luck with that -- but because these lesser known plays offer much more predictability due to their speculative nature. Earnings, profit margins, product potential is all well and good for long-term investors in higher-priced names, but here in the gutter of the stock market (also known as penny stock land), those variables are highly irrelevant to predicting hourly, daily and even weekly price swings. Down here it's all about self fulfilling prophecies, pumping and message board hype.
Take for example, Middlebrook Pharmaceuticals (NASDAQ: MBRK), mercilessly pumped by TheStreet.com's Adam Feuerstein for the past several months as a takeover candidate, as his sources indicate bidders in the $6 to $8 range. Now he might be right -- not that it's going to matter to the SEC -- and while he certainly can't compete with CNBC, in terms of effectiveness, his credibility and frequent teasing have predictably pumped this stock up a solid 20-30% so far.
Continue reading For low priced stocks, focus on the pumps
Dress up your portfolio with this apparel stock (TRLG)
I know, I know, with the economy sputtering, why would you ever want to be invested in an apparel company that produces expensive jeans? Let alone have it recommended by a typically short-selling trader like me! But before I tell you the name of this stock that despite the obvious economic problems -- strong oil, weak housing and the dollar, mounting foreclosure, etc -- is sitting right near all-time highs, looking to break out, let's do a quick rundown of its competitors in the apparel retail space. There's Polo Ralph Lauren Corp (NYSE: RL) and Lululemon Athletica (NASDAQ: LULU), which after substantial runups and crushing drops off their highs, have been trying to find their footing. Then there are steady downtrenders Under Armour Inc (NYSE: UA), American Eagle Outfitters (NYSE: AEO), Pacific Sunwear of California (NASDAQ: PSUN), Liz Claiborne Inc. (NYSE: LIZ) and Bebe Stores (NASDAQ: BEBE). And last but certainly not least, the stock-that's-gone-absolutely-nowhere-for-the-past-six-years-meaning-its-been-useless-for-both-longs-and-shorts The Gap Inc (NYSE: GPS).
Continue reading Dress up your portfolio with this apparel stock (TRLG)
Step aside popular stocks, it's time for smaller more volatile plays
Forget about overwhelmingly random stock market noise and small daily percentage moves exemplified by the likes of all the most popular names such as Yahoo! Inc (Nasdaq: YHOO), Citigroup Inc (NYSE: C), Pfizer Inc (NYSE: PFE), Google Inc (Nasdaq: GOOG) and Apple Inc (Nasdaq: AAPL). Don't be fooled by the all-too-frequent daily commentary-those stocks are really only good for long-term investors and the few truly professional traders out there.If you're neither, focus more on market inefficiencies because not only are they more predictable, but they're ideal for smaller investors and traders thanks to their illiquidity. Meaning the market offers up these high profit probability opportunities that the big boys can't and won't take advantage of-they're strictly for us little guys.
I'm talking about price moves created by the quirks of the finance industry itself-namely the media circus, stock promoters and hype that influence the great derided microcap market. For example, when a CNBC reporter inadvertently suckers amateurs by pumping a penny stock (good short selling opportunity as the stock is now down 50% in a month) or when a stock promoter is paid to hype a stock (another one down 50%+ in one month since).
Continue reading Step aside popular stocks, it's time for smaller more volatile plays
Why LDK Solar (LDK) is not a buy
LDK Solar Co. (NYSE: LDK) is one strange solar stock. Yesterday, on a day when other solar companies like Solarfun Power Holdings (NASDAQ: SOLF), Canadian Solar Inc (NASDAQ: CSIQ), First Solar Inc (NASDAQ: FSLR) and JA Solar Holdings (NASDAQ: JASO) were all strong and despite earnings coming in at the high end of expectations and guidance solidly ahead of estimates, their stock was down. Not only was it down, but it also tried rebounding, only to fail. Not good at all for the bull case.
Experience has taught me to respect the price action the day after earnings. So when I see LDK trying to break out of a now 5-month old range, pretty much between $30 and $40 -- yes it was up to $50 in January and $20 in March, but those are outliers -- this is a very bearish sign. It's so bearish that I suspect that unless solar plays really heat up again, this stock will need many more weeks or months to break $40, and even then, it's got a ton of resistance all over the place due to bitter buyers in at much higher prices who will be looking to cut their losses.
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