Buy and Hold Is Dead E-Book

Thomas H. Kee

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 559

Veröffentlichungsjahr: 2009

Beschreibung

An eye-opening look at how investors can take control of their financial life Buy and Hold Is Dead provides actionable strategies and disciplines, which can be used to earn positive results in any market environment. Money managers rarely outperform the stock market over time, and this has become a sticking point for many people as our uneven economic landscape continues to unfold. This timely guide is designed around a step-by-step educational process in which traders and investors lean how they can protect their wealth and make money regardless of market direction. The goal of Buy and Hold Is Dead is twofold: to dispel old-school investment techniques and to show you how to maximize your returns without sacrificing time or lifestyle and without the use of a money manager. * Identifies the duration of the current economic down cycle and warns of a Greater Depression * Encourages readers to use proactive trading strategies that can protect their wealth and make them money in any market environment * Discusses why investors cannot afford to rely on the selfish guidelines imposed by big brokers and money managers Losing less is never a winning strategy, and this book skillfully addresses why it should not be considered a positive result despite relative market performance.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

Preface

Managing Risk Is Not a Choice, It Is a Requirement

Rule-Based Strategies Are Integral

The Ultimate Goal

Think Outside of the Box

The Comfort Zone Lies Ahead

Acknowledgements

CHAPTER 1 - The Investment Rate

Economics Is All About People

The Relationship Between Market Trends and Economic Cycles

A Leading Indicator

New Money Drives the Market

CHAPTER 2 - Keep It Simple, Sweetheart

An Example: Interest Rates

Don’t Listen to the Noise

Encountering Roadblocks

Back to Economics 101

CHAPTER 3 - Brackish Investors and Their Impending Doom

Predicting the Future

A Bad Idea

The First Line of Defense

Protection from the Mistakes of the Government

Protection from Big Brokers and Money Managers

Brokers Are in It to Make Money!

Don’t Be a Brackish Investor

CHAPTER 4 - Golden Handcuffs

The Path to the Comfort Zone Starts Here

Start with the Basics

Recognize Potential Pitfalls

The Emotional Ties Levied by Big Brokers

CHAPTER 5 - Since When Has Losing Less Become a Winning Strategy?

Diversification Does Not Protect Against Broad Market Declines

Conservative Stocks Fall, Too

Risk Control Is Our Responsibility, Not Theirs

CHAPTER 6 - Redefining Balance

It Is a Lifestyle

Excuses Result in Losses

CHAPTER 7 - Contemporary Darwinism

Natural Selection in Modern Economies

Corporations and Governments Are Different

Adapting to Contemporary Darwinism

CHAPTER 8 - A Proactive Aversion

The First Step Is the Hardest

The Right Lifestyle and Mindset

Proactive Strategies: The Only Ones That Work

Corporate and Government Missteps

Proactive Strategies Control Risk

CHAPTER 9 - Embracing Independence

Proactive Strategies

The Third Major Down Period in U.S. History

Taking Advantage of the Turmoil That Lies Ahead

Just Give Them a Chance

Having the Upper Hand

CHAPTER 10 - Ahead of the Curve

Reshaping and Rebuilding

Boot Camp

Developing Strategy Without the Noise

Cash Is King—Sometimes

Opportunities Abound

CHAPTER 11 - 2009: Return to Parity

Measuring Immediate Demand Ratios

The Return to a Declining Curve

CHAPTER 12 - Personal Balance Sheet

Identify Personal Hazards

Make a List and Check More Than Twice

The Things We Do Wrong Correct Themselves

CHAPTER 13 - Every Day Is a Tuesday

Our Model Works Effectively Every Day

Plan in Advance and Never Diverge from the Plan

Interpreting News Events Is Not Necessary

Turn Missed Opportunities into Realized Gains

Anticipate Market Reactions and Be Right Most of the Time

CHAPTER 14 - The Game Plan

Starting the Analysis

The Tortoise versus the Hare

It Is Not Rocket Science

Keeping It Simple: The Daily Routine

Using Data Points to Make Trading Plans

Developing an Actionable Array

Starting a Personal Journal

CHAPTER 15 - Oscillation Cycles

Technical Analysis Defines Trading Strategies

The Architect of Strategy

Combining the Patterns

CHAPTER 16 - The Golden Sequence

Added Value

CHAPTER 17 - Rule-Based Trading Strategies

Differentiating the Strategies

The Six Proactive Strategies

Strategy 1: Featured Stock of the Day

Strategy 2: Stock of the Week

Strategy 3: Strategic Plan

Strategy 4: Day Trading Strategy

Strategy 5: Swing Trading Strategy

Strategy 6: Lock and Walk Strategy

Pick a Strategy That Fits

CHAPTER 18 - Automated Trading

Trend Tracker

Integrating the Strategy

Using Trend Tracker to Manage Wealth

Benefits of Trend Tracker

The Process of Using Trend Tracker

Keep It Simple with Trend Tracker

CHAPTER 19 - A Greater Depression

Debt Is a Major Issue

What if I Am Wrong?

Final Thoughts

APPENDIX - A Real-Life Example

About the Author

Index

Copyright © 2010 by Thomas H. Kee. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Library of Congress Cataloging-in-Publication Data:

Kee, Thomas H.

Buy and hold is dead : how to make money and control risk in any market / Thomas H. Kee.

p. cm.

Includes index.

eISBN : 978-0-470-55387-9

1. Portfolio management. 2. Risk management. 3. Investments. I. Title.

HG4529.5.K44 2010

332.6-dc22

2009021632

To Christie, who always helps me find my Comfort Zone.

Preface

The Comfort Zone

A Lifestyle for Today’s Investor

Managing risk is something most investors are not used to. Money managers and brokers tell us to just add more, stay invested at all times, and they tell us we will make money over time if we do. During the past 10 years, we have learned that advice cannot be trusted. In fact, all major averages are negative over a ten-year span. Buy and hold investors have gotten nowhere, but behind. Not only has “buy and hold” failed, but given the current and future economic environment, this pattern is likely to continue for many years. For now, buy and hold is dead.

This book will detail the current and future economic conditions facing the world using a demand-side analysis. This is a proprietary study. Although it is revealing of cyclical trends and therefore an integral tool to actionable policies, most investors will gather one universal truth. We all must control our risk because the economic weakness is not over.

Professional traders and investors do this every day. They specialize in risk control. Using rule-based trading strategies, they can limit their losses and maximize their returns regardless of market direction or economic conditions.

Unfortunately, most normal investors have not been able to accomplish the same. Most do not have time. Instead, they rely on managers who are in the business of collecting fees and staying invested at all times. Not only does that create a conflict of interest, but that old-school approach has cost the investing public trillions of dollars in recent years.

Managing Risk Is Not a Choice, It Is a Requirement

Everyone needs to manage risk, but that presents obvious problems to normal investors. With a conscious understanding of the limitations normal investors have, I have developed a strategy that anyone can use to gain an edge over institutional investors. I am going to reveal rule-based strategies that can be used today to help manage risk and realize opportunity without sacrificing time or lifestyle. Normal investors will no longer sit at the mercy of their mutual fund or money managers, and take blow after blow from the market. Instead, by leveraging the nimble reflexivity of non-institutional investors, I have produced a strategy that gives normal investors an edge. The playing field has changed, and from this point forward, smaller investors have the upper hand.

However, no one said investing was easy. It is tough sometimes. Thankfully, most of the time it is much harder than it has to be. We have all been brainwashed by big brokerage firms, and it is time that someone stood up and was heard. In fact, most people should be screaming at the top of their lungs. Brokerage firms care more about generating fees than they care about your wealth. Once we all realize that, we will all take the time to learn how to do it ourselves. I am going to lay out the plan, give you specific strategies, and point you in the right direction, but you need to want to move forward. Stop being a pawn in the game immediately and stay ahead of the curve from now on.

This book is a catalyst to financial independence. You cannot rely on your money manager to protect your wealth. This is a responsibility we all must assume for ourselves. The collapse of 2008 has proven that already. Therefore, the next step is to move forward with wealth preservation in mind. That is the reason I have written this book. I want you to know that you can do better than your money managers and make money in a volatile market, and I am going to show you how to do it.

The market, by which I mean the U.S. stock market, offers everyone unique opportunities to make money all the time regardless of market conditions. All we need to do is recognize them. Rationally, sometimes that is easier said than done. However, that overused phrase doesn’t apply all the time, either. In fact, I dispel many similar myths in this book, and I will point you in a direction so that you can embrace the volatile conditions of today, and the oscillating market cycles of tomorrow, with ease. I will introduce you to the Investment Rate model, which is a combination of tools that will help you protect your wealth and realize opportunities for the rest of your life. If you are reading this book as a result of your distress given the market declines of 2008, after my strategies are revealed you may consider the pain of 2008 to be a most valuable blessing. From here, you will find the way to a better lifestyle, something that can be embraced forever. The lasting impact of my strategies will change the way you approach your investments in the market, in real estate, or in private business by allowing you to grow without exposing yourself to the risk of loss such as you may have experienced in 2008.

Rule-Based Strategies Are Integral

For you the investor, it is time to start moving forward. However, forward is not one-directional. Opportunities surface when the market goes up, and when the market goes down. Your prospects are only limited by your own obstacles. Fortunately, those impediments can be overcome, and showing you how is my mission. I am going to offer strategies that work in both up and down markets, that adjust by themselves, and that keep you on the right side of the curve at all times. More important, though, I am also going to reveal a refined approach to market strategy that removes your personal limitations and allows you to take advantage of opportunities whenever they arise. Included here is a model for wealth management, and risk control, too.

This book should be of interest to all investors, whether in the stock market, real estate, or personal business. The investment strategies I offer in this book have kept my clients on the right path through thick and thin, and they can do the same for you. My clients include government officials, businessmen, doctors, lawyers, professors, hedge fund managers, investment advisors, independent investors, managers, retirees, and employees from all industries, from many parts of the world.

My clients have found solace in my process. I make current and ongoing investment decisions easier. This goes a long way in down markets, but the process works when the market trends higher as well. The quantum of solace that I am able to offer to my clients reverberates through their lives. It transcends mere investing and it betters lifestyles. I will provide that same leadership to you. It will impact your quality of life as well.

Do you hesitate to proceed, unwilling to embark on a complex discussion of economic and investment theory? If so, I understand. Therefore, I will also keep it simple. In that way you will have a clear understanding of current and future economic trends. Knowing the direction of the market in advance will aid you with your investment decisions going forward. Most important, you will end with a complete understanding of the proactive investment strategy best suited for you. Everyone can do this. Proactive strategies incorporate risk controls that protect your investments from loss, provide opportunities at all times, and are the direct catalyst to profitability and the preservation of your wealth. These strategies work regardless of market direction and in any economic environment, and I’ll explain how. You just need to take the first step by reading this book. From there, everything else will fall into place.

The Ultimate Goal

My ultimate objective is to bring you to the comfort zone. This is a place where your investments no longer negatively affect your emotional state. This is where market woes no longer stifle your personal life. This is a place where you will be comfortable with yourself, your decisions, and your direction. Ultimately, this will help you live a better life, and that should be your personal goal. This can be achieved when you become secure with your decisions and comfortable with your investment choices. Therefore, my goal is to provide you with that opportunity.

To reach the comfort zone, you will need to embrace change. You will need to extract and employ the innovative ideas and strategies that I will teach you. However, not all of these have been accepted by the mainstream investment community yet. I assume that they will be at some point, but to many my approach will be different than anything they have found before. This may not be easy for you, but important decisions never are. Without a doubt, the market has already told us that we need to make these decisions, and this book makes them much easier. Aspiring to reach the comfort zone is in itself a life-changing decision. Thanks to the declines in 2008, you might also recognize the need to change your investment strategy for the first time too.

Warren Bennis, founding Chairman of the Leadership Institute at the University of Southern California, has noted, “Innovation by definition will not be accepted at first. It takes repeated attempts, endless demonstrations, and monotonous rehearsals before innovation can be accepted and internalized. . . . ” I believe that the disciplined approach associated with the strategies I offer is the cornerstone of investment success. The results of my innovative approach have been extremely rewarding to my clients already.

Peter Drucker may have said it best. This renowned author and professor explained, “Innovation is . . . the act that endows resources with a new capacity to create wealth.” That is exactly what I do. Through this book I will empower your current resources to create wealth going forward and make money in a volatile market.

Think Outside of the Box

Are you still unsure about employing concepts that are not yet widely accepted? Consider then the fame of Deepak Chopra, named recently as one of the top 100 icons of the current era, according to Time magazine.

Deepak Chopra is considered an innovator and a leader in the field of mind-body medicine. He has transformed the meaning of health by incorporating the best of Western medicine with natural healing traditions from the East. In essence, he has changed the art of healing with innovations that were strongly resisted when first introduced in the West, but which are now widely accepted by educated persons across the globe.

Deepak Chopra teaches a system of healing and preventive medicine that dates back 5,000 years. Originating in India, Ayurvedic medicine is now popular in many social circles because it helps balance mind, body, and soul. It is the science of life.

The popularity of this science is based on its ultimate objective. His Perfect Health Course can help free people from disease, aging, and death. This sounds like a far-reaching goal, but he has already indisputably proven that it works. Our elite are believers in his system right now, and the masses are starting to recognize its healing power every day. The root of this power lies within ourselves. In fact, in order to liberate ourselves from sickness or pain, we need to tap into our awareness and bring our lives into balance.

Changing people’s minds about long-held beliefs was necessary for Deepak Chopra to gain Western acceptance of his teaching. I aspire to a similar goal in the field of investment strategy.

In fact, some of these same principles apply to our investments. The Perfect Health of our portfolios also lies within. Emotional balance is required. Liberating ourselves from the sickness and disease that flare up regularly in our portfolios is critical. Poor investment strategies often cause our investments to decline and that in turn troubles our minds and burdens our lifestyle. These losses hurt our pocketbook, and that affects our psychological approach toward new investments in a meaningful way. Eventually, that could also have a negative impact upon investment performance. Understandably, that happened to many people in 2008. It may have happened to you. In this book I will teach you to deal comfortably with the occasional losses that even the best portfolios will suffer. In some cases, I will show you how to avoid these altogether too. This is my goal. I will take you to the comfort zone, and that path starts with recognition.

The Comfort Zone Lies Ahead

You will not be alone. Thus far, many investors have already taken the steps to get there. Many elite investors have been using my system for a long time. My work is regularly published through various media channels, I have been featured in Barron’s, I write an article for MarketWatch every month, and I was nicknamed the Grim Reaper by Erin Burnett on CNBC for predicting the demise of our stock market in the middle of 2007. Reuters provides my Economic and Market Analysis to its institutional clients every day, and I operate a website that serves my broad audience. These and other Tier 1 clients have already realized the value of my simple, yet effective approach and they have embraced my strategies.

Now my path leads to you. In the chapters that follow, you too will learn how to understand current economic and stock market cycles, how to anticipate future economic and stock market cycles, and how to position yourself so that your investments never become a burden again. You will gain a comprehensive understanding of the proactive trading strategies that I use regularly. One or more of these strategies will be immediately actionable for you, too. They integrate both risk control and opportunity in a methodical, structured, and easy-to-follow design that can be used at all times. They will empower you to invest successfully, no matter what the economy or stock market may seem to be suggesting.

Your journey to the comfort zone is about to begin.

Thomas Kee

PO Box 922

La Jolla, CA 92038

Acknowledgments

Economics is all about people. Without knowing that, I would never be in the position I am today. Thank you, Mr. Wingate. Also, in fond memory, thank you, Jack Frager. You and Tom McMullen started me on my path. This book would have never been possible without each of you.

In addition, uniquely, I would like to thank everyone who believes that the current way is always the best way. My innovation would never be possible without you. You have driven me to think outside of the box, you have driven me to believe that the impossible is possible, and you have given me something we like to call Tommyland. Life is a little different here. Believe me, it is possible!

CHAPTER 1

The Investment Rate

The Investment Rate is the core of all of my analysis, and it is the catalyst for all of my trading strategies, too. It influences everything we do. Given the sweeping importance of this tool, I will start our discussion on how to make money in a volatile market by explaining the origins and properties of this tool and then build from that foundation as we move forward. Although proof of the Investment Rate is important, the discovery process itself is equally important as it reveals the simplicity of this model. Therefore, I think it is important to address this first. So, let’s begin.

Economics Is All About People

My empirical journey to the land of economics did not begin with a Harvard MBA, or a doctorate from MIT. My drive to be the economist and independent market strategist I am today started another way. In fact, I confess that economics bored me in college. Although my grades were at the top of my class, I could barely stay awake during lectures. Initially, all of it seemed boring. The study of economics came easily to me, but the thought of applying those tools in the real world cast me from the science at that time. I was extremely social, and crunching numbers in a small office while surrounded by my intellectual peers seemed like the last thing I wanted to do. I was studying the works of Karl Marx, Thomas Malthus, and John Maynard Keynes, to name a few. The chairman of the Federal Reserve was Alan Greenspan, but he was not any different from the rest of them in my eyes. They were all bookworms; they were all number crunchers; and they all seemed to accept a lifestyle that did not interest me. Although I respected these intellects, I also feared the life that awaited me if I chose their path.

Without question, I was not a bookworm. Economics was just second nature to me. The number crunchers who were my peers in school had to work a little harder to achieve the same marks, but they did well and seemed satisfied with their results. Unfortunately, I was not satisfied with mine. Instead, to become satisfied I had to push myself in a different way. I did not need to study as much, but I needed to find motivation somehow. My peers already had it. Grades motivated them. However, because good grades came easily to me, that was not enough. There had to be something more, I thought, but I was not seeing it then. Every day my frustration grew, and I distanced myself from the science that I now find so compelling.