Another Approach

September 19, 2015

In most businesses money is invested in inventory, equipment, and personnel.   The expectation is that the combination of these components will create a product which will be valued in the marketplace at a dollar figure greater than the total dollars required to cover all associated costs. That difference is profit. It is created by the value added to the raw materials by the ideas and effort of the individuals who comprise the company. This is how a business makes money, and how a market economy grows.

My background is in the retail business with a major east coast department store. In the retail trade, each category of merchandise has a person known as a Buyer who is entrusted with a finite amount of money with which to purchase merchandise. These goods are bought at wholesale prices and used to stock the selling floor. When customers enter the store and purchase those items at regular price, the store makes a predetermined markup (profit percentage) on those goods. When goods are not sold during the normal selling season they are marked down and sold at a lesser price, and a lesser profit percentage.

In order to have money available to buy new goods as the year progresses the Buyer must have sold enough merchandise from previous purchases, to fund the new purchases. This is known as “Open to Buy” (OTB). The idea is to buy merchandise that sells quickly at full price, in order to have that money available to buy more merchandise. If all goes well, those goods will in turn sell quickly, at full price.   Do that repeatedly over a year’s time, and the money appreciates many times by the predetermined profit margin.

Our system functions in a very similar way. Instead of buying men’s crew neck sweaters, or women’s terry cloth robes, we buy equal amounts of selected stocks. We buy these stocks with the expectation that they will be sold quickly at the established profit margin of 20%. These sales fund the purchase of more stocks, which also should appreciate quickly to 20%.   The same money is cycled through the system again and again to appreciate by 20% as many times as possible over a given year.

This is a rather revolutionary concept to many investors. The standard procedure when investing has been to buy stocks that you think will rise in value, and hold those stocks. Ego being what it is, stocks are often held way longer than they should be.   Investors watch them drop, but wait hopefully and anxiously for them to recover, and rise triumphant, and prove the investor was right all along. Too often that recovery never comes. In the retail environment, a smart Buyer will mark down poor performers quickly and sell them at a reduced price in order to return the money invested to the OTB. In our scenario, we don’t wait beyond a 10% drop in value to sell. This limits our losses and frees up dollars for the next months purchases. Conversely, we take our established profit at 20% as soon as it is reached. This returns the profit dollars plus the original investment to the OTB, funding a new round of purchases with another opportunity to earn 20%.

Be Real Careful

September 19, 2015

I am thinking back to the first time the stock market jungle picked me up and slammed me down. Things were at a mini flashpoint at work. A problem turned up in the processing system for our department stores merchandise for women’s shoes. Arm waving and shouting is visible in the ticketing area and I am walking quickly toward it. Wrong pricing has gone onto a portion of the boxed merchandise and now all ticketing must halt until the mistakes are corrected. There is newspaper advertising due to hit the street tomorrow morning and this merchandise must be in the stores. I walk into a verbal firefight. The buyers and their assistants are angry.   The conversation is ugly and profane. Like the pop, pop, pop, of gunfire. It happens somewhere in this vast process every day.

Amid acrimony and recriminations the corrections are made. The flow of goods resumes. I move away across the production floor, pick up the telephone in the center and hit the outside line. Amid the noise and activity, I dial a number that allows me to get live stock market quotations.   It is the late 70’s and there are no electronic brokers. No E-trade’s, no Ameritrade’s. I use my stock broker to place buy and sell orders. The information is being relayed to me by a pleasant recorded female voice. My emotions are a mixture of excitement, disbelief, and kid on Christmas joy. I have just made $50,000 in the stock market.

I am pretty pleased with myself. I have that bullet proof feel. I call my broker and confidently tell him to sell and take the profit. The giddy feeling lasts long into the night. Emboldened by success I find another stock I like. Find it too quickly actually. The next day I call my broker and put the buy order in.   I am playing the penny stocks and it seems easy. Later in the day when there is a break in the activity on the production floor I pick up a phone and call the stock quote number.   This time rather than the noise and chatter of machines receding into insignificance alongside the great triumph of a large profit, they seem to get louder and more frenzied.   I have lost $40,000 of the $50,000 I made the day before. A sinking sick feeling is taking hold. I call my broker and tell him to sell. By the time, he does I only have $8,000 of the original $50,000 remaining.   I should be happy with an $8,000 profit, but I feel ill.

It was at this point in time that I began to think about creating a reliable, easy to use, investment system. I wanted one that was aggressive but also safe as humanly possible.   Now thirty plus years later a prototype of the new system is operational and has been for 2 years. It is not perfect, but the results have been impressive.

The goal is to create an investment system that will produce significant profit percentages, consistently, year after year. Create a money machine. I understand that this sounds too good to be true. I fully realize that it sounds like a pipe dream. But it is real, and the profits are real, and this website was created to allow those who choose to become subscribers a front row seat to the excitement.   An insider’s look at the continued testing and refinement of a stock market investment system that may in fact, be revolutionary.

I welcome you and look forward to sharing the fun and the challenge.

Why Invest?

September 19, 2015

I was a big ears kid who listened well to the adult conversations, a little to the consternation of my aunt. The phrase that always got my attention was attached to one of my uncle’s best friends, as well as a few others. That phrase was “he made a lot of money in the stock market”. Seems my uncle’s friend was a bit of a party guy and wild man growing up.   Shortly after college and the Second World War he took a job as a stock broker. He started coming to dinner parties and advising everyone who would listen to invest in a low priced company with a new product that was going to be revolutionary. Hock the jewelry, sell the car, and buy as much of this stock as you possibly can. He followed his own advice. The company was Polaroid.   He made a small fortune.

I couldn’t get involved in the stock market, but when I was eight years old I found a market that fit my budget and featured assets that increased in value. I began to collect Lincoln Head Cents in the blue tri-fold books I got at the Hobby Shop. The impetus was the fact that my friend’s grandfather had a really fine coin collection in an upstairs room with tall windows and bookshelves on all three sides. As an eight-year-old the windows seemed really tall, let in a phenomenal amount of light, and produced that feeling of a warm comfortable place on rainy dreary days. The main attraction was the coin collection and we boys rarely ventured into this room without Bill’s grandfather. He would open the books and show us pennies worth nickels, and nickels worth dollars. We were wide eyed.

The key factor for my young mind was that there were coins worth more than other coins of the same denomination, based on certain factors. I was never considered good at math, but it was not lost on me that when you had a nickel that was worth ten cents, you had just doubled your money. If you had a nickel that was worth a dollar, or five dollars, or ten dollars, could it possibly get better?

As soon as I got a job and had a few extra dollars I found a stock broker recommended by an experienced investor friend and began to buy and sell penny stocks.   That world was different from the warm well-lighted place with the kindly grandfather. The stock market is a jungle environment. The proper action is often counter-intuitive.   There are experienced investors only too glad to profit from your mistakes. This is how the jungle works.

You must learn to protect yourself in a hostile environment. There are many challenging environments that come to mind. The jungle is one. The sailing ship in the stormy sea is another. The point is the stock market works like a force of nature. You can be swallowed up and lose all your money. You can be blown off course and drift helplessly with a leaking ship.   The market is like the weather. Sometimes it’s sunny, sometimes it’s miserable, sometimes it’s treacherous.