Page 12 The Shoreline August 2007
One of the problems with The Shoreline
is that the thing has to be filled up every
month. And I feel guilty (and you should
too) over the fact that we leave 90% of the
burden to too few unsung heroes - Bill
White, Carolyn Rife, Bob Ruggiero, etc.
(Not to demean all the other staff members
who work hard and conscientiously —
except me).
Accordingly, I am going to give you
the benefit of some of my 83 years of
accumulated wisdom or, if you prefer,
folly.
I have always been a gambler and
although I have been to many casinos I
doubt that I have dropped a grand total
of ten or twenty bucks in all of them
combined. Nor have I ever bought a
lottery ticket. Stated simply, I don't do
sucker odds.
My casino is the stock market and the
commodity markets. And while the
money is important (very important),
in my old age it is mostly the thrill of
outsmarting the big boys, or maybe rolling
the dice with them when they have a hot
hand. One consistent hot hand is held
by Warren Buffet, a true great man in a
world too short of greats. He makes money
for the sole purpose of giving it away to
those who need it most. He has learned
Stock Market 101
By Dicey Reeves
the secret of true happiness: do what you
love, make a difference in the world. He
lives as simply as you and me. His one
luxury is trading in his old junker for a
new Cadillac a few years ago.
Here, then, are “Dicey's" (long ago my
then five-year-old granddaughter wrote
me as "Grandpa Dicey" and because my
kids know of my gambling proclivities, it
stuck) rules for the stock market.
1. Never use a broker for advice. There
are good ones but they are rarer than nuns
at a Madorma concert.
2. Use only deep discount brokers for
trades. Think about this. Instead of giving
a big brokerage house $200 or more you
can give somebody like Scottrade $7 for
a $50,000 trade and a definitely better
execution. Use limit orders. If you don't
get an execution today, you'll probably
get a better one tomorrow.
3. Marry your computer. It will give
you the best advice in the world, mostly
for free and it won't nag you to take out
the trash.
4. Trust - but verify - your gut instincts.
Gut doesn't mean emotion. It means
knowledge, experience, reading the tape,
timing.
5. Do your homework, a favorite phrase
of another of my heroes, Jim Cramer of
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Mad Money on CNBC. Cramer is best of
the best and by his own admission, he is
wrong almost as often as right. But, like
the casinos, less than a 10% edge can
make you rich.
6. Probably the most important rule is
look for arcane, sophisticated trades that
scare the pants off the average investor.
It is precisely this fear that makes taking
money away from the other guy like
taking candy from a baby. This fear is well
justified. Trading things like commodities,
puts and calls and the like can wipe out
a fortune in the blink of an eyelash. But
if you can put in the time and effort my
experience has told me that it is actually
safer than my long-ago misplaced trust
in brokers and Buy and Hold.
I don't want this to go on like a long,
tedious sermon, so I'll close with three
more last advices:
1. Look into visiting with Bogue Bankers,
the PKS Ladies Investment Club. They've
beat the market consistently and had fun
doing it.
2. Watch Mad Money (if you can get by
Cramer's nutty antics) on CNBC every
weekday, 6 and 11.
3. And, some advice only for the very
few with cast-iron stomachs and a lot
of discipline, those who can lose a few
grand without losing sleep and without
becoming compulsive, and most of all,
without committing capital they can't
afford to lose. Look into stock options.
Here's one example. Eighty percent of all
options expire worthless. Them's good
odds. While a broker is persuading some
poor sap to buy, say, ten options on a stock,
his boss or firm is probably selling those
same options. Guess what? At the end
of 30, 60, 90 days, or whatever, he's got
your money in his pocket, plus the large
commission he's earned (?) from you.
If you can handle it, learn how to trade
puts and calls and, perhaps commodities,
especially if, in your earlier life, you
gained some special knowledge of cattle,
cotton, sugar, gold, silver or any of scores
of other things the world needs and uses.
Some day, probably sooner than later,
something else is going to happen to
shake up the world. Wouldn't it be nice
to be sitting on some gold futures? Or to
have a ton of orange juice if and when an
early hard frost hits?
The opportunities are few and the
risks are as great as those on the road to
Baghdad. But if you can learn to gamble
with house odds, you'll win more often
than lose.
Look for the September Issue Coming Soon!