I have spent countless hours figuring out how to determine when to buy and sell stocks.
This is called market timing.
Most savvy investors don’t think much of market timing. People like Warren Buffet, probably one of the richest men on Planet Earth, believe you should buy a stock, throw it in a drawer and forget about it for twenty years.
On Jan 21, 1999, when Amazon was riding high, I predicted it would fall to less than twenty-five bucks. You can read my column in the archives of Vue Weekly. Here it is at my website.
A month ago Amazon was around $10. A knowledgeable trader — who realized how the stock was sliding — could have turned ten thousand into a hundred thousand by aggressively selling short.
Naw. Despite my bravado, I had no real confidence in my ability to pick a loser or a winner and press my bet. Besides, I predicted gold would go up when the market went down. I was wrong about that.
I bought Cisco a year ago. The stock slipped from around $60 to about $10. Any knowledgeable trader who realized the stock was in for a long slide, could have turned ten thousand into a hundred thousand by aggressively selling short.
Like thousands of other investors, I had no way of reading the future. People who read the future are usually lucky or have inside information. In poker games great players can read the other gamblers. They rely on tells, giveaway signs such as those by Uncle Jack who always coughs when he has an inside straight. Or Aunt Bee, who frowns when she has two aces. Tells tell you a lot.
But how do you tell when a stock is going to crash? What are the warning signs? The market indicators? Could a true tell be higher hemlines? Beavers building bigger dams? CEOs hiring more corporate jets? Could an Ouija board help? Are interest rates a sure predictor of market trends?
None of these are dependable barometers of how companies are faring.
I think the secret is to follow James Kevern.
He is a repo man who works for Daybreak. He finds deadbeats who are not paying their monthly auto installments and grabs their vehicles. In the parlance of his trade, he pops cars using high tech tools and good old-fashioned skullduggery. All perfectly legal…after owners miss one-too-many payments. Vehicle repo is a growth industry. A car is stolen nationwide every 26 seconds in America. But one is popped every 8 seconds.
According to the Wall Street Journal, Mr. Kevern — who hangs out in Silicon Valley — has been busy hitting employee lots such as at Cisco Systems.
Think about it. The new breed of corporate executive demands immediate gratification and what could be a better trophy than a Lexus SUV? Hot shot MBAs leverage themselves blind buying hot cars.
Here is the tell to making a fortune. Shakers of hot industries buy new cars. Everything is great until the economy suffers a reversal. Then their stock options vaporize and they are left holding the bag. An empty money bag and worthless stock options. A key (car key that is) that something has gone very wrong is when Mr. Kevern pops employees’ vehicles.
Heh-heh. I’ve hit the mother lode of tells to find troubled companies. By discovering them, I could sell short and make millions.
Resolved. I will locate troubled companies by making friends with guys like Mr. Kevern. Repo guys who can ID the companies that are falling apart by evaluating their employees’ parking lot inventory.
Of course, you may not want to sell short. You may want to buy companies on the way up. So how do you identify those? Simple. Make friends with the guys in the shipping department of the company you are thinking of investing in. If they are shipping increased orders, that means business is great and headed North. When business is great for a company, usually its stock will soar.
I wish I had thought of that but the tip comes from my second cousin who is a very sharp fund manager.
There you go — inside information anyone can figure out without having to know the CEO. All you have to know are the guys and gals who work in the trenches.
Maybe it’s this kind of approach that helps people pick stocks, such as Christopher and Banks, that go up 9,000 percent in five years.
Like so many schemes I have hatched, the above philosophy is slightly flawed. Suppose someone was going to repossess my SUV. I’d sneak it onto another parking lot that a very successful company owned. No doubt guys such as Mr. Kevern are onto this trick and it would not take him long to “pop” my vehicle. If you saw him grab my SUV, you might assume the company that owned that parking lot was going bust. If you sold that company short you’d go broke.
And, maybe shipping clerks in a “successful” business are robbing it blind by mailing all its inventory to a ring of crooks. So if you identified a dramatic increase in shipping activity and invested in the company, it could go broke, having had all of its inventory “stolen” by its own employees with the aid of the post office.
Maybe the secret is to invest in yourself. A nice car. A great home. Holidays.
Of course you might die broke.
Which brings us to the final question for today — what’s the point of dying rich? Not much. If you want to read a terrific essay about this, check out Anna Quindlen’s Villanova commencement address.
Click one of the above to see some of my work.
You can buy one of my novels here. If you
can't afford it, write me a funny
note and I'll send you a PDF
of the novel.
Rather than beg one million people to donate a dollar each, I'd like one billionaire (or two or even three) to simply give me a million buck$. You know who you are.