Daily Investment Interpretations

January 24, 2011

2011-1-24 (Monday Night): The indices powered ahead today.  The NASDAQ Composite soared 28.01 points (1.04%) to 2,717.55. The Dow was up 108.68 points (1.04%) to  11,980.52, while the S&P 500 added 7.49 points (0.58%) to close at: 1,290.84. Oil closed down at $87.72 a barrel, and Gold ended at $1,334. The VIX dropped 0.82 at  to end at 17.65.
    As reassuring as today's action may seem, professional investors are in an amber- or red-alert mode. The divergence between the Dow, which keeps hitting new two-year highs, and the NASDAQ, which hasn't recovered its January 11th peak, are striking. Storm warnings are posted on this blue-sky day. I've remained in cash today.
An Update on TopStock Portfolios' The Daily Decision Stock Trade Service      
    On January 10th and January 11th, I recounted the claims made for TopStock Portfolios' trade-a-day stock trading service. They were spectacular. In a prior incarnation, TopStock Portfolios' trading director had managed to double his clients' money in two months. However, at that time, there wasn't yet much of a track record for the new one-a-day stock trading service. Now, the first month's performance has been posted, and they're even more spectacular. The dates, and entry and exit prices are listed for the trades, so it's easy to check the authenticity of the claims. (Of course, the period from December 15th to January 15th has been one of rising stock prices, but this stock trading service trades both long and short.)  The service showed a compound gain over the month of 1.677111048... 67.7%. If a portfolio grew by 67.7% a month, how much would it gain annually? Brace yourself!... a factor of 495-to-1! Unfortunately, it's not quite this lucrative. These stocks typically have to be held for several days, so the gains must be divided by the maximum number of stocks that must be held at any one time. From what I could determine, the maximum number of stocks in play at any one time was seven, from January 14th to January 19th. Yesterday, there were only two invested stocks. This means that at least five-sevenths of the portfolio was sitting in cash  One way around this would be to sell portions of previously recommended stocks to raise cash to buy new stock recommendations, so that one's money is always fully invested.
    Also, these numbers presumably don't include stock trading commissions. For some of the major brokerage firms such as Vanguard, Fidelity, Ameritrade, etc., the trading fee is on the order of $7 to $8 for any number of shares traded. The lowest priced brokerage service I've found, Interactive Brokers, charges $1.00 for the first 100 shares and a share for each additional share. 
    These prices put trading costs down in the noise level. 
    Can we really hundred-fold our money in a year? I don't know, but I'm willing to risk a little money trying it. (One advantage to a scheme that grows your money very quickly is that you can trade investment time for investment risk. A dollar 100-folded every year would become $1,000,000 by the end of the third year.)  
The Daily Decision Stock Trade investment advisory service has an introductory price of $350 for the first year ($700 a year after that).
     Stock market futures are flat tonight.