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January 26, 2005 � Issue #204 | |
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February Workshop Learn to Trade Exchange Traded Funds Feature Article 1 March to The Beat of Your Own Drum, T. Harv Eker
March Workshop How To Develop A Winning Trading System Workshop Trading Tip Data Summary, Housing Bubble or Housing Bull Part VI, By D.R. Barton, Jr.
Feature Secrets of the Masters: Trading Simulation Game. Learn about Position Sizing Through Experimenting. F-r-e-e Online Tutorial Enhance Profits With Careful Exits, by Dr. Chris Anderson
What are Exchange-Traded Funds? They are funds that reflect the big sectors of the market. For example, you can buy a fund that represents the Internet sector of the market and short another that represents the retail sector of the market. And you can do this in seconds, as soon as you spot what the big money is doing. So while big money might take a week to move money around, you can jump in ahead of them and take advantage of money flowing into the sector you�ve just bought. The advantage is huge. Learn six different strategies that allow you to take advantage of what big money is doing and turn it into big money for you.
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March to The Beat of Your Own Drum T.
Harv Eker Editors Note: Throughout the issues you will see certain words with odd spellings, such as Fre-deom and mort-gage. This is because spam filters are likely to block message that contain certain words and this is one solution.
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How To Develop A Winning Trading System That Fits You Workshop Van Tharp has been studying top traders and investors for over 20 years. In his research, he�s learned how the best traders and investors achieve peak performance. All of these traders and investors developed a sound methodology - and one key portion of their success came from doing the right sort of research. To duplicate their success, you must focus on the essential elements of system design while meeting your objectives. Therefore, a critical task of system development is developing sound objectives. After writing two Market Wizard books, Jack Schwager concluded that the most important characteristic of the top traders and investors he interviewed was that they had adopted a trading system to fit them. But to develop a system that fits you, you need to really think about what you want--what are your objectives. It�s not a trivial task. Come to the How to Develop a Winning Trading System Workshop and learn the important elements of system development.
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Trading Tip by D. R. Barton, Jr. Housing Bubble or Housing Bull Part VI: Data Summary We�ve taken a good long look at both sides of the housing bubble (imagine that � someone looking at both sides of an issue�). Today, let�s see if we can draw any meaningful conclusions from our recent journey through data and perceptions on five key issues related to the housing bubble vs. the housing bull: 1. Consumer debt: This is basically money borrowed that is not secured by real estate. Consumer debt is at an all time high and is growing every year and for the last five years has grown at twice the rate of inflation. Interpretation? The average homeowner is leveraged to the hilt. This gives us a situation where there is very little margin for error in terms of household cash flow. 2. Mortgage debt: Unlike previous generations, current home owners are putting less money down and own a smaller percentage of their houses value. This �mortgage debt vs. home equity� ratio is also at an all time high. Interpretation? Still more leverage; people are buying bigger houses with less actual equity invested than ever before. This gives even less margin for error, say in the case of� 3. Interest rates: Because of high demand (real or perceived) for housing, mortgage interest rates have not yet caught up with the rise in general interest rates that the Federal Reserves controls (called, mundanely enough, the Fed Funds Rate). Government sponsored agencies that serve as third party mortgage lenders such as Freddie Mac and Fannie Mae have provided free-flowing funds, keeping mortgage rates down. Interpretation? Homeowners have yet to feel any significant effect of a rising interest rate environment. Demand and the market�s perception of continued demand currently rules the day. 4. Supply. Housing bulls say that supply as a ratio to housing demand, is dropping. Balancing this statement is the fact that housing supply in absolute terms has increased by more than 250 percent over the last decade and a half. Interpretation? There are lots more houses being built. There are also lots more houses being bought per capita. With these data, can we draw any conclusions? The bottom line is that the housing bulls have one strong ally in their corner: housing demand. As long as demand stays strong and growing, we will not likely see the effects of a bubble for a good while. In the �bubble will burst� camp, absolute supply and a huge multi-trillion dollar industry are growing. If demands waver, a big collapse is possible. What could trim housing demand? Here�s a short list: 1. Reduced immigration 2. Mortgage interest rates catching up with increasing supply rates 3. Cash flow issues from consumer debt and mortgage leverage. So for now, in my opinion the seeds of a bubble are sown. Even the venerable Dr. Steve Sjuggerud has turned bearish on some portions of the real estate market. BUT housing demand will continue to drive the residential real estate market for the foreseeable future. Until a triggering mechanism occurs that effect debt loads or one of the other demand risks, I would take great caution in betting against the continued near term rise in real estate. But I believe that a big �pop� will be heard in the not too distant future. One key issue that could help you make housing market investment decisions is the issue of fundament values for housing. How do we determine when housing is fundamentally over-priced or under-priced? We�ll look at one useful way to measure real estate values and draw our final conclusions next week. Until then, great trading!
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Weekly
Feature:
Secret's of The Masters Trading Simulation Game
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This week's F-r-e-e On-Line Tutorial Enhance Profits With Careful Exits By Chris Anderson, PhD Education brought to you in a brand new way. Follow the link below and join us in this fun new way of learning.
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Van Tharp's Most Recent Market Update including the 1-2-3 Model and the Five Star Model. Look for a new update next week. |
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