WRONG WAY RAYMOND JAMES

This morning on Squawk box, a Raymond James executive who is "bullish" on stocks advises buying the losers; he calls them the flops. It is interesting to see how many ways prognosticators can present the wrong information.

Study after study has shown that when a market turns, one should buy the leadership. Buying the laggards, losers or flops has been a consistently poor strategy. Granted, there are sideways markets where traders do well for a while by buying dips and selling peaks. We are not in a sideways market. The NASDAQ was up 8 days in a row, retreated a little the 9th day and then was up 16 points yesterday.

William O'Neil and others have built stock selection programs almost exclusively around the idea that one should buy leaders. Others, such as James O'Shaugnessy, who have focused on value stock selections still include leadership (relative strength) in their selection techniques.

The stocks on our companion STOCK OF THE WEEK blog have value characteristics and leadership characteristics. We are delighted to help those who ask for assistance in building a diversified portfolio. Readers sometimes write to ask for general stock recommendations. As private individual investors, we cannot make recommendations. We regularly report about stocks we own and about those that we are considering for investment.

Our Stock of the Week blog is an excellent list of stocks. The list has many of the characteristics of successful stocks my family bought 40 or 50 years ago. We believe individuals need to make the final decision about the allocations of their assets. However, managing a portfolio is both art and science. Most investors would do well to seek assistance. However, most investors need to avoid high cost assistance. There are often conflicts of interest involved in the "sale" of securities. Mutual fund fees are often very high. Mutual fund fees may appear to be low but there are often multiple fees and the fees are expressed as a percentage of assets.

Keep in mind, that is easy to do average in the stock market and average in the market will make you rich if you invest modest amounts regularly over 30 or 40 years. It is also important to know that consistently doing one standard deviation better than average is extremely difficult. Furthermore, those that try to hard to do better than average typically take much more risk than average. One can fail miserably when one tries too hard.

The game of golf provides a good analogy. With only a few lessons, one can reach a level of skill that makes the game enjoyable if one is not frustrated that others do so much better. To be a great golfer, one needs superior natural ability and the energy and temperament to try and try again.

To be a good investor, one needs discipline and patience. To be a great investor, one must work and work and work. In all things there are exceptions, perhaps Bobby Jones and John Maynard Keynes illustrate the point. Bobby Jones kept his amateur status because he was busy studying to be a doctor. He played golf for fun. Keynes made great investment decisions from his death bed. He could read the news each morning, make a number of shrewd investments and sleep the rest of the day.

JC Morgan made a negative call on US stocks today. My family is buying all we can.

BUY THE BIG BULL--STOCKS ARE CHEAP RELATIVE TO BONDS, REAL ESTATE AND MONEY MARKET INSTUMENTS!

WRONG WAY RAYMOND JAMES

This morning on Squawk box, a Raymond James executive who is "bullish" on stocks advises buying the losers; he calls them the flops. It is interesting to see how many ways prognosticators can present the wrong information.

Study after study has shown that when a market turns, one should buy the leadership. Buying the laggards, losers or flops has been a consistently poor strategy. Granted, there are sideways markets where traders do well for a while by buying dips and selling peaks. We are not in a sideways market. The NASDAQ was up 8 days in a row, retreated a little the 9th day and then was up 16 points yesterday.

William O'Neil and others have built stock selection programs almost exclusively around the idea that one should buy leaders. Others, such as James O'Shaugnessy, who have focused on value stock selections still include leadership (relative strength) in their selection techniques.

The stocks on our companion STOCK OF THE WEEK blog have value characteristics and leadership characteristics. We are delighted to help those who ask for assistance in building a diversified portfolio. Readers sometimes write to ask for general stock recommendations. As private individual investors, we cannot make recommendations. We regularly report about stocks we own and about those that we are considering for investment.

Our Stock of the Week blog is an excellent list of stocks. The list has many of the characteristics of successful stocks my family bought 40 or 50 years ago. We believe individuals need to make the final decision about the allocations of their assets. However, managing a portfolio is both art and science. Most investors would do well to seek assistance. However, most investors need to avoid high cost assistance. There are often conflicts of interest involved in the "sale" of securities. Mutual fund fees are often very high. Mutual fund fees may appear to be low but there are often multiple fees and the fees are expressed as a percentage of assets.

Keep in mind, that is easy to do average in the stock market and average in the market will make you rich if you invest modest amounts regularly over 30 or 40 years. It is also important to know that consistently doing one standard deviation better than average is extremely difficult. Furthermore, those that try to hard to do better than average typically take much more risk than average. One can fail miserably when one tries too hard.

The game of golf provides a good analogy. With only a few lessons, one can reach a level of skill that makes the game enjoyable if one is not frustrated that others do so much better. To be a great golfer, one needs superior natural ability and the energy and temperament to try and try again.

To be a good investor, one needs discipline and patience. To be a great investor, one must work and work and work. In all things there are exceptions, perhaps Bobby Jones and John Maynard Keynes illustrate the point. Bobby Jones kept his amateur status because he was busy studying to be a doctor. He played golf for fun. Keynes made great investment decisions from his death bed. He could read the news each morning, make a number of shrewd investments and sleep the rest of the day.

JC Morgan made a negative call on US stocks today. My family is buying all we can.

BUY THE BIG BULL--STOCKS ARE CHEAP RELATIVE TO BONDS, REAL ESTATE AND MONEY MARKET INSTUMENTS!

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