Year: 2019

  • Benjamin Graham – The greatest investor in the history

    Benjamin Graham – The greatest investor in the history

    4 min read

    Benjamin Graham - The greatest investor in the history

    Benjamin Graham is widely recognized as the father of value investing.

    He was born as Benjamin Grossbaum on May 9, 1894, in London as the oldest son into a Jewish family.

    When Graham was one year old, his parents, Isaac M. and Dorothy Grossbaum, migrated to the US. They lived in New York, where Isaac began an export-import trade.

    His childhood was really traumatic.

    He was just a nine-year-old boy when his father Isaac died. Graham’s mother Dorothy stayed alone to take care of Benjamin and his two younger brothers, Leon and Victor.

    Fathers death was one just a first in serial of unfortunate events.

    His mother Dorothy stayed to manage the family business but the Bank Panic stole her savings 1907, four years after her husband died.

    The family was dumped to poverty. Almost over the night, they lost everything.

    And finally, the family was forced to move in with her brother.

    But Benjamin Graham didn’t give up. He worked harder on himself.

    He became a really good student. Graham was an excellent student at school. He entered Columbia University on a scholarship.

    He graduated in 1914 as salutatorian of his class at Columbia.

    Salutatorian is an academic title. This honor is known in the United States and the Philippines. This means that Benjamin Graham was the second-highest-ranked graduate of the entire graduating class.

    Frankly, this is the point where the whole story began. Graham was in his 20s when he took a brave and unusual action. But

    this step led him to the fortune.
    Few weeks before his graduation, he got an offer from Columbia University to teach math, English, and Greek and Latin philosophy.

    He refused it. Despite the opportunity to finally have financial security.

    What he did instead?

    Graham joined The Wall Street.

    Early steps

    At first, he was a messenger at the Newburger, Henderson, and Loeb. That was a brokerage company at The Wall Street.
    It was almost a revolution.

    At that time university graduates did not see stockbroking as a professional choice.

    His first job was to write scores on the blackboard.

    But he was an intelligent, smart and with good educational background. The field of his responsibilities rose very soon. The brokerage’s owners gave him to work on financial analyses for the firm.

    After 6 years of working for this brokerage, he became a partner of Newburger, Henderson, and Loeb. It happened in 1920.

    At that time he changed his name, to better suit the Wall Street background.

    And soon, he was earning $50,000 per year. Not bad for 25 years old young man.

    That was not the end of his ambitions. His marvelous mind couldn’t be satisfied with such a position. Six years later, he founded with his colleague Jerome Newman, a ”Graham Newman Co.”

    And they both showed extraordinarily capabilities.

    The first winning

    They implemented some advanced strategies. Their goal was not only to secure their clients’ investments. They provided them a 670% return in a ten years time frame.

    How they did it?

    Well, it was kind of controversy betting.

    It was like this.

    They would bet that some stock price would be going up but at the same time, they were putting the bet that the price of some other stock would be going to fall. It was a simultaneous betting.

    At this way, they could entirely use accessible resources, and not to hold cash positions.

    They were beating leading mutual funds by 40%.

    And it was beginning of one marvelous career.

    Benjamin Graham - The greatest investor in the history 2

    Graham made an extraordinary discovery in 1926.

    That one provided him a leading position in the market. It was so called Northern Pipeline Affair.

    It was all about the Rockefellers and their business. Their Standard Oil was separated into 34 autonomous companies in 1911.

    Wall Street didn’t know anything about their finances. Well, actually, they knew nothing about them.

    Until the Interstate Commerce Commission demanded all pipeline companies to file financial reports.

    Going through these statements, Graham paid attention to one Northern Pipeline Company. In order to have a better view, he traveled to Washington.

    What a surprising revelation was waiting for him.

    The Northern Pipeline was trading at $65 per share. Also, the company owned railroad bonds at $95.

    Graham revealed that the company could issue its assets without the mediators.

    Benjamin Graham - The greatest investor in the history 1Benjamin Graham: The father of value investing

    And he began to purchase the company’s stock, getting 5% of it in 1926.

    And here was the twist.

    Graham demanded owners to issue the access asset to all shareholders stated they were legal owners. He was refused, of course.

    One year later, at the time of the shareholders’ meeting, Graham announced his proposal to his shareholders. He was refused again.

    Benjamin Graham decided to hire a law firm, and tried to find proxies.

    The negotiations with Rockefeller’s Foundation ended without result.

    And spectacularly turnover!

    The greatest winning

    At the beginning of 1928, Graham had got proxies for approximately 37.50% of the company’s shares.

    The new meeting with shareholders held in that year was a turning spot in his career.

    Northern Pipeline had to accept Graham’s election to its board. Moreover, they issued $70 per-share of excess liquid assets to its shareholders.

    Rockefeller invited Graham for a meeting. After that meeting, Rockefeller urged other branches to share excess liquid cash among its legal owners.

    It was a great Graham’s victory!

    The ”Northern Pipeline Affair,” set Benjamin Graham as an excellent analyst and a shareholder protector.

    In 1929, during the Great Depression, Graham Newman Partnership despite the great lost continued to work. They managed to recover their assets, and never lose again.

    Their average annual return was of 17% until 1956.

    But the Great Depression was the great inspiration to Graham too.

    Benjamin Graham’s legacy

    He published his first book, ‘Security Analysis’ in 1934, the first book that dealt with the art of investments.

    Five years after, Graham published his fundamental work, “The Intelligent Investor”. All that time, he had a significant position in the stock market.

    His market play was: buy shares and trade them lesser than the companies liquidation value, which provided him minimum risks.

    Benjamin Graham’s play in the stock market excited many young investors. One of them was Warren Edward Buffett. Also, William J. Ruane, Seth Klarman, Bill Ackman, and Charles H. Brandes also considered themselves to be Graham’s followers.
    They all employed his value investing techniques. And they expanded them to all markets all over the world.

    Benjamin Graham’s masterpieces are “Security Analysis” and “The Intelligent Investor”.

    In “Security Analysis”, he explicitly differentiated between investment and speculation. The subject of his  ‘The Intelligent Investor’, is value investing.

    We are sure you heard about “Benjamin Graham formula”.

    It is published in “The Intelligent Investor”.

    This formula can help the investors to instantly discover if their stocks were priced reasonably.

    Benjamin Graham married thrice.

    His private life is not known well. Graham had at least three sons.

    On September 21, 1976, Graham died in Aix-en-Provence, France, at the age of 82.

    The bottom line

    It really looks so easy to be a great investor. Actually, it isn’t. But it is so easy to be an investor. Even with a little money. 
    And there are no limitations to try it.

    Investing is so simple these days. You can get all the help you need. Also, you may implement some of the algo techniques. Or you can use robo advisors.

    All of them are present in the market to help you to gain your profit. So, why to wait?
    Go! Try your hand!

    Who knows, maybe you, yes, you, you can be the next Benjamin Graham.

    We are sure you are next.

    Don’t waste your money!
    risk disclosure

  • Who Are The Best UK Investors All the Time?

    Who Are The Best UK Investors All the Time?

    The Best UK Investors All the Time
    Finding the best UK investors all the time was a quite difficult job. There are so many incredible investors in the UK. but also some of them even the best made unbelievable failures.  

    Traders Paradise decided to write about the best UK investors from the second part of the XX century.
    Some of them are still active, fortunately.

    The other reason why writing about the best UK investors was a tricky job is that not all of them are widely present in the public. Moreover, the majority of the best UK investors avoid that.

    Anyway, Traders Paradise went all across the internet, examined all articles about them and there is our presentation of the best UK investors. Right in front of you.  

    Maybe some of them could be an inspiration for you. Moreover, you can mirror their investing performances or just get a clue on how to start or improve your investing style.

    Enjoy the reading!

    Wild markets are like a boomerang.

    If investors have fear or panic there will be a lot of ups and downs in the markets. Or, when the market is volatile investors are frightened and panicked.

    But some investors are different. They can see opportunity where every other see disaster. So, we can say that great and famous investors always have self-discipline and patience. That’s why they are successful.

    Who are the best UK investors?

    And our story will start with the economist that developed his own economic school of thought thanks to his followers.

    John Maynard Keynes

    John Maynard KeynesJohn Maynard Keynes

    He was born on 5 June 1883 in Cambridge into an erudite family. They were open-minded family. His mother was the first female mayor and father was a philosopher and economist.

    Keynes studied mathematics at Cambridge University.

    After finishing, he found a job in the India Office. At the same time, he worked on a dissertation. That secured him a membership at King’s College. He stayed at Indian position till 1908 after which he came back to Cambridge. He joined the treasury at the beginning of World War One. When the war was ended, he issued ‘The Economic Consequences of the Peace’ which became a best-seller.

    Between two World Wars, he earned a very steady amount of money by investing in the financial markets. Also, he continued his theoretical work. His most famous piece ‘The General Theory of Employment, Interest, and Money’ was issued in 1936. Even today, it is the caliber for economic theory all over the world. After that book, it was so easy for Keynes to become a famous economist in the UK and with the most influence. With the beginning of World War Two, he continued to work for the treasury again and became a member of the house of lords.

    John Maynard Keynes built macroeconomics in the 1930s.

    He is largely disregarded now.

    The central idea of this economic school of thought is that government intervention can secure the economy.

    During the Great Depression of the 1930s, economic theory was incapable to explain the circumstances of the dangerous economic collapse.

    Keynes produced a revolution in economic thinking for that time.  

    The stand of Keynes’s theory is the idea that aggregate demand (a theory of total spending in the economy) is driving power in the economy.

    Aggregate demand is the total of spending by households, businesses, and the government.

    Further, Keynes asserted that free markets have no ability to balance mechanisms that direct to full employment.

    Keynesian economists support government intervention through public policies. Governmental intervention can lead to price stability and full employment, state Keynesians.

    During the war, Keynes had a crucial position in the consultations. He is one of the most important figures that developed the post-war global economic order. He had an important role in the devising of the World Bank and the International Monetary Fund.

    Famous John Maynard Keynes died on 21 April 1946.

    Neil Woodford

    The Best UK Investors All the Time 1Neil Woodford is one of the best UK investors

    He was one of the most honored and best-known fund managers in the UK. He was born in March 1960. In 1981 he has a degree from Economics and Agricultural Economics from the University of Exeter.

    More than 26 years he was a central member of the UK equities team at Invesco Perpetual.  He was named a Commander of the Order of the British Empire (CBE) in 2013 for services to the economy.

    As a leader of investments at Invesco Perpetual Woodford managed over £15 billion of assets. In 2014 Neil founded his own fund management firm, Woodford Investment Management LLP.  

    Prior to this, he was the head of UK Equities at Invesco Asset Management Limited and had been its fund manager since 1998. Woodford had worked as a fund manager at Eagle Star since 1987. He was also employed at Woodford Asset Management LLP. 

    Early days

    Woodford began his investment career at the Dominion Insurance Company in 198. He has experience in both corporate finance and fund management.

    He doesn’t like to be a public figure so we can find a little bit of information about his life.  In a rare interview, he said his £10.6bn Woodford Investment Management business now.  If you ask anyone in the UK to identify an investment manager they will point one name: ‘Neil Woodford’.

    The audience in the UK likes to believe that Woodford is their response to US investor Warren Buffet. There is a legend connected to Woodford’s work as an investor.  Britains believe that he is one of only several fund managers in the world who are able to cheat the market and producing long-term returns for investors.

    The truth is that thanks to his knowledge, his investors avoided the dangers of the bursting of the “dotcom” stock market bubble in early 2000. And then proceeded to make money for them.

    Woodford is the private investor’s champion in the UK. Britains like to say he is the man who made Middle England rich.
    ‘I’m not an investment genius,’ he said once. ‘I am just someone who follows a disciplined and rigorous investment approach. If you want to talk investment geniuses, think Anthony Bolton. And, of course, the epitome of genius, Warren Buffett.

    ‘Yes, people have heaped praise on me in the past but they have also not spared me opprobrium. Everybody likes to build people up in this country and then smash them down.’

    In March 2000, financial advisers accused him of ‘intransigence’ over his refusal to acknowledge the potential of technology stocks. Today, it looks like bad luck is following him. But Woodford is street-fighter. He will know how to deal with it.

    UPDATE 12/07/20:

    In October 2019, one of the best UK’s stockpickers ended his multi-billion-pound empire.
    He is known as “Oracle of Oxford” “and was dismissed from his troubled £3.1bn Equity Income fund by its administrators,” wrote BBC.
    But last news tells that Neil Woodford is back in business.
    Woodford announced several days ago he would leave the last two funds he is managing, Income Focus and Woodford Patient Capital. Also, he said he will close all investment management business.

    John Templeton

    The Best UK Investors All the Time 2John Marks Templeton one of the best UK investor

    Sir John Marks Templeton was a UK investor, banker, and fund manager. In 1954, he entered the mutual fund market and created the Templeton Growth Fund. In 1999, Money magazine named him “arguably the greatest global stock picker of the century.”

    He was born on November 29, 1912, in Winchester, Tennessee, United States. Died on July 8, 2008, in Doctor’s Hospital, Nassau, The Bahamas.

    As a pioneer in both financial investment and philanthropy, John Templeton spent a lifetime encouraging open-mindedness. He created the motto for his Foundation, “How little we know, how eager to learn.”  Maybe that the best represents his philosophy both in the financial markets and in his methods of philanthropy.

    He attended Yale University and graduating in 1934 near the top of his class. Also, he graduated with a degree in law in 1936.

    Templeton began his Wall Street career in 1938.

    We can say he created some of the globe’s greatest international investment funds.

    He took the strategy of “buy low, sell high” to a maximum. Templeton was picking nations, industries, and companies popping the bottom. He called it “points of maximum pessimism.”

    In 1939, he borrowed money to buy 100 shares each in 104 companies selling at one dollar per share or less. Among them were 34 companies that were in bankruptcy.

    He turned huge profits from them. Among his chosen 104 companies only 4 were wasted, actually worthless.

    In 1954 he founded the Templeton Growth Fund. With dividends reinvested, each $10,000 invested in the Templeton Growth Fund Class A at its inception would have grown to $2 million.

    In 1992, he sold the Templeton Funds to the Franklin Group. In 1999, Money magazine called him “arguably the greatest global stock picker of the century.”

    Templeton became a billionaire by globally diversifying mutual funds. His Templeton Growth Fund, Ltd. was among the first to invest in Japan in the middle of the 1960s. Templeton also created funds in nuclear energy, chemicals, and electronics. By 1959, Templeton went public, with five funds and more than $66 million under management.

    He refused technical analysis for stock trading, favoring instead to use fundamental analysis.

    ‘You can’t outperform the market if you buy the market’ was one of his favorite sayings. How did he manage to beat it so spectacularly himself?

    Templeton was one of the most generous philanthropists in history. He gave away over $1 billion to charitable causes.

    In 1972 he established the Templeton Prize, which, according to the charitable foundation that he started, is the world’s largest annual award given to an individual. The prize, which rewards those who have “made an exceptional contribution to affirming life’s spiritual dimension”. It is currently £1m and always beats the value of the Nobel Prizes. Winners have included Desmond Tutu, Dalai Lama, Chiara Lubich, Mother Teresa, Lord Jakobovits, King Abdullah of Jordan, Arthur Peacocke, etc.

    Templeton renounced his US citizenship in 1964. He held dual naturalized Bahamian and British citizenship and lived in the Bahamas.

    Richard Branson

    The Best UK Investors All the Time 3Richard Branson

    Sir Richard Charles Nicholas Branson was born on July 18, 1950, in Surrey, England. He is a UK business magnate, investor, author, and philanthropist. Also, He founded the Virgin Group, which controls more than 400 companies.

    He launched Virgin Records in the early 1970s. It is now the multinational Virgin Group. His early life story is a bit out of the standard. Richard Branson dropped out the school at age 16.

    Branson has dyslexia and had poor academic performance. On his last day at school, his headmaster, Robert Drayson, told him he would either end up in prison or become a millionaire.  In London, Branson started off squatting between 1967 and 1968. He launched his first successful business, a magazine named Student, in 1966.

    The first issue of Student appeared in January 1968, and a year later, Branson’s net worth was estimated at £50,000. Branson started his record business from the church where he ran Student magazine. He interviewed several popular figures of the late 1960s including Mick Jagger and R. D. Laing.  

    Branson advertised popular records in Student, and it was an overnight success.

    Once Branson said, “There is no point in starting your own business unless you do it out of a sense of frustration.”

    Branson eventually started a record shop in Oxford Street in London. In 1971, he was questioned in connection with the selling of records that had been declared export stock. The matter was never brought before a court because Branson agreed to repay any unpaid VAT of 33% and a £70,000 fine.

    His parents re-mortgaged the family home in order to help pay the settlement.

    His entrepreneurial projects started in the music industry and expanded into other sectors, including the space-tourism venture Virgin Galactic, making him a billionaire.

    The Virgin Group reached 35 countries around the world, with nearly 70,000 employees handling affairs in the United Kingdom, the United States, Australia, Canada, Asia, Europe, South Africa, and beyond.

    Branson is also known for his adventurous spirit and sporting achievements.

    Richard Branson ranks eighth among the wealthiest British billionaires by net worth.

    Mike Ashley

    The Best UK Investors All the Time 4Mike Ashley

    A famous investor Wallace Ashley is a British billionaire and investor in the sporting goods market and one of the best UK investors. 
    He entered the field store industry following the acquisition of House of Fraser. He is also the owner of Newcastle United after paying around £135 million to buy the club.

    Ashley turned whistleblower on industry rivals in 2000, handing the Office of Fair Trading evidence of business meetings held by sports retailers to fix the price of football shirts. Ashley attended a meeting at the Cheshire home of David Hughes, the chairman of now-bankrupt rival Allsports. At the meeting, Dave Whelan, the founder of JJB Sports, reportedly told Ashley: “There’s a club in the north, son, and you’re not part of it.”

    On 23 May 2007, Ashley bought Sir John Hall’s 41.6% stake in Newcastle United at one pound per share, for a total cost of £55,342,223 via his company St James Holdings Ltd.

    Under the terms of UK takeover law, having purchased more than 30% of a listed company. And he was obliged to make an offer to buy the remaining shares at the same or a greater price.

    On 31 May, it was announced that the Newcastle board were considering Ashley’s offer.

    On 7 June, it was confirmed that chairman Freddy Shepherd had agreed to sell his 28% share to Ashley, which left Ashley free to take control of the club.

    As of 15 June 2007, Ashley owned a 77.06% stake in Newcastle United, on course to withdraw the club from the stock exchange having surpassed the 75% threshold required.

    The hundred percent acquisition was done in July. Ashley paid around £134 million. He also paid off large sums of debt obtained from the previous administration.

    On 11 May 2016, Newcastle United were relegated for the second time under the ownership of Ashley, after local rivals, Sunderland beat Everton 3–0.

    As of October 2014, Ashley owned an 8.92% stake in Rangers International Football Club (RIFC), the parent company of Scottish football club Rangers. The Scottish Football Association has rejected Ashley’s request to raise his shareholding in RIFC to 29.9%, due to the fact he already owns a large amount of Newcastle United shares, which was seen as a conflict of interest.

    In January 2015, Rangers fans protested against Mike Ashley’s plans to secure a £10 million loan using the club’s stadium as security. All the main Rangers supporter groups have heavily criticized Ashley and expressed major concern and distrust about his nature and purpose of his intentions.

    On 23 June 2017 Ashley sold his entire Rangers shareholding to Club 1872 and Julian Wolhardt.

    Ashley is protective of his private life. He is known to prefer casual dress rather than a suit. He often carries his fundamental business tool of a mobile phone in a plastic carrier bag rather than a briefcase.

    Ashley is a private person, he never attended industry functions or gave interviews.

    He left school at 16.

    Anthony Bolton

    The Best UK Investors All the Time 5Anthony Bolton

    He was born on 7 March 1950.

    Anthony Bolton is one of the UK’s best-known investment fund managers and most successful investors. He had managed the Fidelity Special Situations fund from December 1979 to December 2007.

    Over this 28-year period, the fund achieved annualized growth of 19.5%, far in excess of the 13.5% growth of the wider stock exchange, turning a £1,000 investment into £147,000.  Until April 2014 he managed Fidelity China Special Situations PLC, a London Stock Exchange-listed investment trust.

    He started a career at the age of 29, he was recruited by Fidelity as one of their first London based investment managers. In surveys of professional investors, he is regularly voted the fund manager most respected by his peers.

    Bolton began managing Special Situations (a UK equity OEIC) when he joined Fidelity in 1979 and continued until 2007.

    He managed other funds alongside Special Situations during this time. From November 1985 to December 2002, he managed the Fidelity European Fund (a European equity OEIC). He managed the Fidelity European Growth fund (a European equity SICAV) from 1990 to 2003, Fidelity European Values PLC (a UK-listed investment trust) from 1991 to 2001, and Fidelity Special Values PLC (also a UK-listed investment trust) from 1994 to 2007.

    In 2006 his Special Situations Fund was split.

    The success of the fund had brought in so much money from investors, it had become the UK’s largest open-ended fund (OEIC) and it was feared that the fund was becoming too big to manage successfully.

    The fund was split into the UK and Global Special Situations funds. The Global Fund and the UK fund continuing under Bolton’s stewardship until the end of 2007.  With Bolton’s step back from fund management, many questioned whether the fund could continue to outperform the market in the future. And not without the reason.

    Bolton’s former funds suffered amongst the worst redemptions in 2007.

    Investors withdrew £335m from the Special Situations fund and £508m from Global Special Situations. However, redemptions in both funds slowed significantly in 2008, and in March 2010, at £3 billion, the UK fund is almost back to the same size as when Bolton stepped down.

    When he stopped managing funds in 2007, he took a full-time role in mentoring and developing newer investment managers.
    He still works with Fidelity.

    Nick Leslau

    Nick LeslauNick Leslau

    This famous UK investor was born on 18 August 1959. He is a UK commercial property investor. His wealth is estimated at £350 million.
    Leslau is chairman of Prestbury Investments.  

    He is a 30% shareholder in Prestbury‘s Secure Income REIT which owns properties such as Thorpe Park, Warwick Castle, and Alton Towers. Secure Income REIT also owns 20 private hospitals and 55 Travelodge hotels in the UK.

    Early days

    Leslau left the University of Warwick where he was studying German, studying surveying, and become one of the best UK investors.

    Leslau joined the ground rent company of commodities traders Burford Group. He had completed a degree in estate management at South Bank University and became a chartered surveyor with Burford. At age 23, he became CEO of Burford Estate & Property.

    Wanting to move further into the property, contacted Nigel Wray to engineer a reverse takeover of Wray’s listed company Chartsearch in 1986 for £8 million. They expanded the company into a £1 billion enterprise, buying large parts of Oxford Street and the Trocadero center.

    In 1997, Leslau and Wray set up their own small property company MAYBEAT Limited, which they merged into one of Michael Edelson’s Alternative Investment Market-listed shell companies called Prestbury Group Plc.

    The board consisted of Leslau, Wray, Viscount Astor, John Hodson (the then chief executive of private bank Singer & Friedlander), and Edelson. Over the next two years, it produced a return of 150% on net asset value. Leslau grew its total value to several hundreds of millions of pounds before taking it private in 2004.

    In 1999, Leslau founded an investment vehicle, Edenhawk, collectively with Wray, Archie Norman, and Julian Richer. And once again, they merged the company into an Edelson shell company, Knutsford Plc. The plan was to acquire a retail business to take advantage of the retailing skills of Norman, a former Chairman of Asda, and Richer, who had built up the retail group Richer Sounds.

    Within weeks the value of Knutsford had soared to £1 billion.

    They attracted attention from financial media around the world as potential acquisition targets were touted by the media such as Marks & Spencers and Sainsbury’s. Knutsford concluded a deal with WI Link (which continues to trade successfully).  No one could hope to achieve the dizzy expectations generated by the media in the weeks after flotation.

    Knutsford announced the end of the dot com boom in the UK.

    In February 2001 Leslau set up a private company, Prestbury Investment Holdings, funded by HBOS and Sir Tom Hunter.
    Leslau is now chairman of Prestbury Investments.

    He has sat on many quoted and unquoted company boards including, most recently, Max Property Group Plc, and is a Member of the Bank of England Property Forum.

    Jim Slater

    Jim SlaterJim Slater is one of the best UK investors all the time

    James Derrick Slater was born on 13 March 1929 and died on 18 November 2015). He was a British accountant, investor, and business writer. Slater rose to prominence in the 1970s as a businessman and financier. And one of the best UK investors.
    In 1964, investor Jim Slater acquired control of H Lottery & Co Ltd, a £1.5m public company, which with his business partner Peter Walker they renamed Slater Walker Securities.

    In the 1960s and 1970s, James Slater was one of the top players in the City. He was active in business and investing until his death in 2015.

    Slater was, at the beginning of his career, a chartered accountant and writer. He had a column in the Sunday Telegraph and he was writing under the nickname ‘Capitalist’.  

    Slater Walker Securities was a huge success in the 1960s and early 1970s. But it crashed in the banking crisis of 1974.

    The firm was in connection with acquiring businesses and selling off anything that was considered to be surplus to demands.

    During the secondary banking crisis in 1975, Slater Walker faced financial difficulties and received support from the Bank of England. Slater resigned as chairman in October 1975, because the Singapore Government began to try to extradite him from the UK for alleged offenses by the company in Singapore referring to the alleged misuse of more than £4 million of company funds in share deals. The Singapore government’s attempt to extradite Slater was dismissed by the Chief Metropolitan Magistrate at Horseferry Road Magistrates’ Court in 1977.

    In separate proceedings, following the takeover of the company by the Bank of England, a prosecution was brought against Slater by the Department of Trade alleging 15 counts of offenses under the Companies Act.

    Slater was guilty of the Companies Act offenses and fined £15 per count.

    Fortunately, the court accepted that the offenses were purely technical. Also that Slater didn’t act dishonestly and that there was no question of him having made any personal gain through committing them.

    Finding himself technically bankrupt after the collapse of Slater Walker, Jim Slater invested his residual funds and repaid all of his personal creditors within a few years. And paid with interest.

    Slate came to publicity again as the author of The Zulu Principle.

    That book, and his subsequent Beyond the Zulu Principle in 1996, Slate spread the idea of investing in small-cap stocks, and the use of the PEG ratio to help identify targets.

    Slater did not create the PEG. But he was absolutely responsible for its popularity as a stock-picking tool.

    In order to find a way to help investors to filter the full market to find out which shares are worth looking at, Slater developed the Company Really Essential Financial Statistics products — REFS.

    Be focused on small caps was Slater’s investment style. His famous statement was “Elephants don’t gallop.”

    That explains the idea that big companies cannot double in size, but small ones can. He has also devoted himself to knowledge.

    The website The Motley Fool wrote about Slater:

    “He doesn’t want to know a little about everything, he wants to know everything about a few things. If those few things include a handful of neglected companies, the chances of his making money should be greatly increased.”

    His hobby was chess. Amongst other sponsorships he donated $125,000 to make possible the 1972 World Chess Championship between Bobby Fischer and Boris Spassky in Reykjavík, Iceland, doubling the total prize fund.

    Why these UK investors?

    This is our choice of the best UK investors. Maybe some others have different. Our criteria while we were trying to pick the best UK investors were how do they influence the market, the companies they hold, and moreover, how they were acting when everything gets apart.

    Yes, they show strength, power, but more than anything, they are fighters. They are the best UK investors because they have self-discipline and patience to achieve their goals even when markets play against them.

    They are the winners and hence, they are the best UK investors.

  • Twitter is implementing the new tool

    Twitter is implementing the new tool

    1 min read

    Twitter New Tool for Fake News

    Twitter will launch a new tool for users. The aim of this new tool is to protect users from deceiving by fake news. By using this new tool users will be able to flag inappropriate political content. The reason behind this is the new European Parliament elections that will be held next month.

    With this new tool, Twitter plans to protect voters.

    Twitter is one of three social networks that are under public pressure to take a bigger role in protecting this democratic process. Also, they are asked to help in lowering social and political tensions.

    According to Reuters, the European Commission in its March report on the three tech giants on Tuesday said the companies still fell short of their pledge to curb the spread of fake news.

    “Today, we are further expanding our enforcement capabilities in this area by creating a dedicated reporting feature within the product to allow users to more easily report this content to us,” Twitter said in a blog.

    Twitter users who see a tweet with deceptive news will be able to report them.

    It will be possible by clicking on a drop-down menu. All you have to do is to select “It’s misleading about voting”. After that, you have to pick the option that describes how the tweet is misleading or deceiving. Submit the report to Twitter and voila…

    What is misleading or deceiving information?

    For example, telling voters to vote via a text message, email or phone call, identification requirements, the announced date or time of an election.

    The new Twitter tool will be accessible from April 29 to a week after the May 23-26 European parliament elections.

    But the EU isn’t the lonely place where this tool will be available.

    Twitter will run it in India too.

    The general elections will be held in India on Thursday.

    Previously, Facebook revealed tools designed to clamp down on political involvement ahead of the European Parliament vote scheduled for May.

    From the end of March, political ads have a “paid for by” disclaimer. That tools provide users access to a public database that shows who paid for the ad.

    So, everyone can see who paid, how much and the structure of the visitors according to gender, age or area.
    All information will be cached for seven years.

    Don’t waste your money!

     risk disclosure

  • The quick ratio or acid test ratio

    The quick ratio or acid test ratio

    3 min read

    The quick ratio or acid test ratio 3

    The quick ratio is a liquidity ratio that estimates the strength of a company to pay its current obligations when they come due with only quick assets. It is also called an acid test ratio.

    Quick assets are current assets that you can change to currencies within 90 days or in the short-term.

    In other words, the quick ratio is a measure of how well a company can meet its short-term financial liabilities.
    It is liquidity metric and can be calculated as follows:

    (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities

    The quick ratio can be calculated for quick assets only.

    The quick ratio or acid test ratio

    Let’s explain why sometimes the quick ratio is known as an acid ratio?

    That comes due to the historical use of acid to examine metals for gold. The early miners used it.

    If the metal passes the test, they know it is pure gold. But if the result was opposite and metal was rusting, the gold miners knew there is no value.

    The acid test of investment determines is a company able to instantly change its assets into cash within 90 days.
    So, the acid test ratio is a more traditional variant. The other liquidity metric is a modern one – the current ratio.  

    They are pretty similar but the acid test ratio gives a more precise estimation.

    How is that?

    The acid test includes only the most liquid assets to study.

    It will never examine inventory because it is almost impossible to change inventory into the cash in a short time frame. The company often sell inventory on credit.

    Yes, there are some analysts that add inventory in the ratio, but if it is more liquid than some receivables.
    To show you, let’s assume this information was in the balance sheet of our hypothetical firm:

    The quick ratio or acid test ratio 1

    Let’s apply the first quick ratio formula and the data above. So, we can figure this company acid test ratio:

    ($70,000+$20,000+$50,000) / $105,000 = 1,33

    This means that for every dollar of this company’s current liabilities, it has $1.33 of very liquid assets to satisfy urgent obligations.

    We will not take inventory into consideration. As we said, the company may require months or years to sell inventory.
    Why it matters?

    It is important that a company have sufficient cash to pay accounts, interests when they come to be paid. The higher ratio shows that the company is more financially secure in the short term. The companies with a quick ratio greater than 1.0 are enough capable to meet their short-term obligations.

    Low or decreasing acid- test ratios usually shows that a company is fighting to keep or increase sales.

    Maybe it is paying bills immediately or getting receivables too slowly. Hence, a high or increasing acid-test ratio means that a company has solid growth.

    It is quickly turning receivables into cash and regularly covers its financial obligations. Such a company regularly has active inventory turnover and cash exchange periods.

    However, the acid-test ratio has its possible disadvantages.

    To begin, it provides no data about the level and timing of cash flows. And it is very important because it really defines a company’s ability to pay liabilities to the arranged date.

    Also, the formula assumes that a company would sell its current assets to pay current obligations. That is not always pragmatic.

    But this analysis can give you a solid and quick view of some company’s financial status.

    It is crucial for investors to know if some company are ready to pay its bills and credits.

    Some firms use their long-term assets to produce earnings. But, selling off resources will damage the company. Also, it is a signal to investors that current plans aren’t making enough profits.

    Higher quick ratios are more welcome for the company.

    It confirms there are more quick assets than current liabilities.

    A company with a quick ratio of 1 indicates that quick assets are equal to current assets. This also shows that the company could pay off its current debts and not to sell any long-term assets.

    An acid ratio of 2 indicates that the company has twice more quick assets than current liabilities.

    And you can see how does it work. When the ratio increases, the liquidity of the company increases too.

    This is a good sign for investors. Well, this is an even better sign for creditors. You know, creditors want to know they will be paid back on time.

    One example more.

    Let’s assume some company is asking for a loan. The bank asks a complete balance sheet so it can calculate the quick ratio. Company’s balance sheet carries the following accounts:

    table

    The bank can count quick ratio like this.

    ($20,000+$7,000+$2,000) / $21,000 = 1,38

    As you can see the company’s quick ratio is 1.38. This means that the company can pay off all of the current contracts with quick assets. And moreover,  it will have some quick assets left over.

    For investors, it’s good news, too.

    Don’t waste your money!
    risk disclosure

  • Why Recession 10 Years Later? We Have Not Learned The Lesson!

    Why Recession 10 Years Later? We Have Not Learned The Lesson!

    Recession 10 Years Later? We Have Not Learned The Lesson!Economic experts and academics agree that there is a real possibility of the US facing a recession by the end of 2020, but how well is the US prepared for it?

    By Gorica Gligorijevic

    Why recession again, how is possible that we didn’t learn the lesson? April 30th will mark the 10th anniversary of Chrysler’s bankruptcy, one of the victims of the Great Recession of 2008/09.
    This recession was started by the largest bankruptcy in history, by the fall of the Lehman Brothers. Which showed, along with the dot-com recession before it, that the excesses of Wall Street can cause severe economic downturns with global repercussions.

    Wall Street was to be blamed for the software stock and housing bubble which brought the US and global economies to their knees.

    Ten years later we are still wondering whether the US and the rest of the world are prepared for another recession.

    And these worries look more pressing with the Fed’s yield curve study’s February 2019 update upping the odds for recession from 14% to 50%.

    In the past couple of years many prominent economists, such as Paul Krugman, have been warning that the US regulators are ill-prepared for the next recession and that their response to the previous one was ill-suited.

    Such voices of concern are now joined by the Economic Policy Institute, Washington, D.C. based think-tank, in a recent report authored by Josh Bivens, the EPI’s director of research.

    Why recession ten years later

    In June of this year recovery from the Great Recession will enter into the 120th month of economic expansion in the US. That way equaling the previous longest period of economic expansion which started in March of 1991. This record-setting is making people wonder when will the next recession hit?

    Bivens state and many other experts agree, that there are real chances for it to happen by the end of 2020.

    With Fed’s also upping their projection of chances one has to ask themselves are the US ready to tackle the next recession?

    While most people think that the next recession will trigger a suboptimal response from policymakers, because of too high public debt and loo low-interest rates, it ain’t so. Though no person can successfully predict a recession, everyone can see their root causes. And the common theme is the fall of the aggregate demand, i.e. a decrease of the economy-wide spending relative to the production capacities.

    EPI’s report goes to show that there are very little risks of the fiscal contraction causing the next recession.

    And due to last year’s tax cuts, which are fiscal expansion measures, this is a no brainer. But that does not remove the risk of monetary contractionary policies, which could be triggered by vanning effects of Trump’s tax cuts, and is evident from the interest rates hikes in recent years.

    Criticism of economic inequality in the US

    EPI’s report can be read as a stern criticism of economic inequality in America, as it exposes direct connection of policymaker’s preference to aid large financial institutions and unwillingness to enact fiscal expansionary policies as a response to the economic downturn.

    Simply put economic inequality and the austerity measures worsen the recession dynamics which are driven by the fall of the aggregate demand.

    Bivens says that Fed’s interest rates hikes have given to regulators sense of normalcy, but robbed them of sense of urgency to provide recovery for all Americans and not just the Wall Street.

    Low- and middle-income households spend a higher percentage of income than rich households, but also have a much higher propensity for spending. With the growing economic inequality being most visible in the stagnating wages of low and middle-income workers, the aggregate demand they could generate is limited, thus putting a severe limit on the recovery from a future recession, as the speed of recovery is depending upon the ability to spend.

    But, according to Bivens, it’s not just household spending inability which will impede the future recovery.

    “A key lesson from the Great Recession is that fiscal policy is the most effective tool for aiding recovery,” he said.

    And for most of the recent recovery, the US government was very shy of the fiscal stimulus out of fears of the level of public debt. When the Fed Chair, Ben Bernanke, took unprecedented action in severely cutting interest rates he sent a very loud message to policymakers that they must do more by providing sustained fiscal stimulus.

    With the recent bipartisan support to declaring the US public debt as a single greatest national security risk, the US economy looks less than ill-prepared for answering to the next recession.

    Update 8/10/19

    Traders-Paradise recently got this email from Andy Kearns, Content Analyst in LendEDU:
    “Quite recently, our team conducted a nationally-representative survey of Americans to gauge their sentiment towards the situation of an economic recession. I believe our findings on how the risk of a recession might change consumer spending and investing habits could be an interesting addition for your readers on this page…You have my permission to use anything from the report that you liked.”
    Thank you, Mr. Kearns.
    So, here you, our readers, will find interactive graphs and charts that display the answers to their survey questions. Also included is an Analysis of Results section so consumers can better understand their findings.

    Here is a link to the full report:

     

  • Top Stocks to Buy And Hold Forever

    Top Stocks to Buy And Hold Forever

    4 min read

    Top Stocks to buy 2019 and Hold Forever
    So many people asked us what are the top stocks to buy in 2019.

    It is on a daily base.

    So, we will try to answer. This to all of you want to know and don’t have time to evaluate them.
    We don’t want your one-time appearance here, we would like to build a real relationship and confidence.

    This the article for you who want to enter the stock market this year.

    Well, you know, Warren Buffett’s personal holding season is “forever” and look how is he.

    Having that on our minds, here’s a summary of 5 stocks to buy and hold forever.

    We understand, investing is difficult. Developing a portfolio of top stocks to buy is tricky even for economic experts.

    There are still stocks to buy, don’t be worried. Moreover, they can give you really nice returns.

    • Johnson & Johnson (JNJ)

    Top Stocks to buy 2019 and Hold Forever 1Image Johnson & Johnson (JNJ) chart: source Yahoo Finance

    Everyone needs their products. They will forever have something to sell,  to us or the rest of the world. So why we, while buying their product, wouldn’t have an income?

    List of Johnson & Johnson brands is so long.

    J&J is a company with a long history.  All can identify their best brands. For example, Johnson’s Baby Shampoo or Baby Powder.

    It is founded the 1800s in New Jersey and since then Johnson & Johnson has extended its brands. Today,  you can find Johnson & Johnson brands all over the world. From your bathrooms to your doctor cabinet.

    The medicines, surgical products or healthcare solutions will never disappear. J&J has a really big portfolio.

    No one should think even a second when it comes to investing in such a company. They have products, for example, cancer drugs that will produce good growth now and in the future.

    The company is investing the robotic surgical opportunities gravely, in February announced that it’s buying robotic surgery firm Auris Health for $3.4 billion.

    J&J annual yield on the dividend is 2.60% and has an 8.46% gain per year.

    It is really among top stocks.

    • Boeing Company (BA)

    Top Stocks to buy 2019 and Hold Forever 2

    Image Boeing company chart: source Yahoo Finance

    This company had hard March this year. After the fatal crash of Ethiopian Airlines, its shares fell down.

    The company took the problems with their jet seriously and experts are working on new software.

    On the beginning of the March this year their shares were worth $446, but now they are about $400. The stock could jump when their 737 Max types are on the sky again.

    It is a very steady company. Their F-15 fighters are extremely valued.

    Boeing arranged a selling of those fighters with US Air Force over the next 5 years for $8 billion.

    The company raises the quarterly dividend yield for 2.6%.

    Boeing announced a quarterly dividend of $2.055 per share which is $8.22 per year. This is a 20.2% rise from the previous dividend of $1.71.

    The annual yield on the dividend is 2.6%.

    • Colgate-Palmolive (CL)

    Top Stocks to buy 2019 and Hold Forever 3

    Image Colgate-Palmolive chart: source Yahoo Finance

    Why do we add Colgate here while everyone knows that this company recorded some suspicious inclinations in spending? Yes, we know that shareholders didn’t like that. That’s is changed as the company decided to make an important decrease in the costs. The advantages of that effort could last decades.

    Their brands are among most buying products. For example, their toothpaste, or soap (of course Palmolive soaps), and manual toothbrush, and other pharmaceutical products for dentists.

    The company is selling its products in more than 200 countries. Colgate-Palmolive includes two product sections:

    ersonal, oral, and home care is one; and the second is pet nutrition.

    It is a leader in the global oral care market.

    Also, it is a leader in pet nutrition products for dogs and cats.

    They’re all made by Colgate-Palmolive Company.

    The company declared a dividend yield on 2.50% and the year-to-date gain of 16%.

    Well, some can say Colgate is high-risk stock but with the big potential returns.

    • Alphabet (GOOGL, GOOG)

    Google

    Image Alphabet Inc. chart: source Yahoo Finance

    Alphabet Inc declared $12.77 per share for the last quartal.

    It looks that Alphabet is the revenue growth provider. Revenue grew 21.5% to $39.28 billion in the fourth quartal.

    It is for sure one of the stocks which you have to buy and hold forever.

    This tech titan is Google parent company.

    Alphabet Class A and C shares have grown 15.5% and 15.4%, over the one-year period April 18. The S&P 500, including dividends, is up 9.4% over the same time frame.

    Yes, the quarter’s reported earnings will be negatively influenced by a 1.5 billion euro (about $1.7 billion) penalty required by the European Commission in March.

    The European Commission claimed that Google demonstrated anticompetitive methods linked to deals it had with Adsense for Search associates.

    Well, the company is prepared to appeal, so investors may be sure that the penalty will be lower.

    Google’s revenue grew quick.

    The cost of sales would increase in the fourth quarter, forced by higher sales and projected content purchase costs at YouTube.

    There are also, Fiber high-speed internet industry, and its Verily life science.

    We all can see the changes because Alphabet’s self-driving vehicle tech branch Waymo recently start being monetized.

    • The Walt Disney Company (DIS)

    Disney

    Image The Walt Disney Company (DIS) chart: source Yahoo Finance

    Disney is the globe’s greatest media. They have movie studios, television networks.

    Assets controlled by Disney add Disney Animation Studios, Pixar, Marvel, Star Wars, the ABC network, the Disney Channel.

    Disney is close to finalizing an arrangement to take 21st Century Fox. That will combine the 20th Century Fox film studio, National Geographic, and a mixture of other media assets. But not the Fox News.

    Disney has Disney Plus streaming service.

    In the first half of April,  it revealed the price, shows, and movies. Everything planned to overcome Netflix as a rival.

    In 2018, Disney launched ESPN+, their streaming service, and in the time frame of five months had more than a million subscribers.

    And don’t forget, Disney owns Hulu. Disney plans for its three platforms to be separate subscriptions, but it’s likely to connect them at a discount.

    In the moment of writing this article, we are two days out from the release of Avengers: Endgame.

    Predictions about how much money it will bring to Disney are fantastic.

    THR – the range of $200-$250 million.

    Deadline – passing $260 million, and maybe $300 million marks. ComicBook.com – prediction gathered from 3 analytics, $300 million.

    Impressive.

    Disney’s stock has jumped 13.6% in just five trading days in April. They will not look back now. Disney is a market sweetheart.

    Not bad for an old player.

    It is a good investment and one of the top stocks for sure.

    Don’t waste your money!

     risk disclosure



  • Robinhood order flow income rose thanks to HFT firms

    Robinhood order flow income rose thanks to HFT firms

    2 min read

    Robinhood order flow income rose thanks to HFT firms
    It looks still strange to engage HFT firms in order to increase order flow income. The skepticism is great. Also the criticism.

    But the facts are that Robinhood’s order flow income rose 227% in 2018, thanks to HFT firms.

    And this is a standard offer among Wall Street brokers such as E*Trade or TD Ameritrade.

    What Robinhood did?

    It engaged HFT firms to increase order flow.

    Payment for order flow is still unknown and strange to the majority.

    And somehow they read that kind of market presence as the immoral.

    Traders Paradise wrote about HFT firms and strategies already.

    But, let’s see what Robinhood did.

    The popular millennial stock-trading app earned $69 million in order routing income in 2018. According to a survey from Alphacution Research, it three times more than the company made in 2017.

    Payment for order flow is a standard offer among Wall Street brokers.

    When employs HFT firm, the company is expecting more flow through its platform and it has it.

    Robinhood app is very popular among the millennials.

    The millennials like high-tech. And they will adopt any new product or gadget that can help them and make easier to buy anything.

    When we all adopted the internet, didn’t we have the same idea on our minds? To make communication easier, to provide ourselves better access to everything.

    So, where the problem is now?

    High-frequency trading is called ”dark-pool” because of the absence of regulation.

    Traditional traders are opponents. They say that these millisecond trades are against Wall Street and everything that is present on the markets for decades.

    Actually, it is not.

    High-frequency trading is based on traditional trading strategies. The main difference is the time of performance. The journey from the moment when trader see the opportunity and the moment the trader place the order is shorter. HFT algos will need millisecond while the traditional way would require much more.

    Yes, it is still unknown for the majority of how this HFTs work.

    Honestly, most of us will never reveal how the dishwasher works. But it isn’t the reason not to use it. Right?

    We have one simple question.

    Are high-frequency trading influenced based on who is paying the most?

    Opponents of HFT say that it can produce big market swings.

    Also, that HFT may result with an advantage for institutional investors.

    Yes, engaging some HFT firm will cost you money. But, as far as we remember, only very rich houses had a dishwasher when it entered the scene. Today, it is almost impossible to find a house without it.

    Even better, smaller retail investors may have benefits.

    How?

    HFT brings liquidity to the market.

    High-frequency trading grows the market intensity and liquidity and reduces volatility.

    And, there are also ordinances that require brokers to execute trades at the best price for the traders.

    Considering the Robinhood’s increasing in income, well we have to say it isn’t so big as some the opponents want to say.
    Also, HFT firms didn’t record such a big increase in order-routing income. For instance, TD Ameritrade had a 43% growth in this sector in one year.

    And one note for the opponents of HFT.

    HFT is not a trading strategy. It is the practice of advanced technology that plays traditional trading strategies. The particular trading strategies need to be evaluated rather than HFT as such.

    Hence, any strategy that has a conflicting influence on market integrity or enables market abuse, has to be are completely reviewed.

    And to quote our post HFT STRATEGIES – THE TIPS AND SECRETS: “Technology by itself is without morality. The people are those who can add it to high-tech.”

    Don’t waste your money!

    risk disclosure

  • HFT Strategies – The Tips and Secrets

    HFT Strategies – The Tips and Secrets

    3 min read

    HFT strategies - the tips and secrets
    HFT uses practically basic and simple strategies. High-frequency trading is not about implementing the strategy, it is all about speed of execution and flexibility.

    Well, the main strategy of HFT is to run faster than others. Of course, the principles of high-frequency trading (HFT) firms are secrecy, strategy, and speed.

    Algo trading is linked with the execution of trade orders. But HFT refers to the implementation of proprietary trading strategies.

    High-frequency trading consists of a variety of AT.

    Yes, both enable traders and investors to speed up the response on market data.

    The society of market participants using HFT is extremely mixed.

    There is a crowd of various organizations with various business forms that use HFT and there are many hybrid models.

    For example, some brokers and exchanges are utilizing HFT systems. So, in the estimation of HFT, it is essential to consider a practical perspective.

    It doesn’t matter if HFT is just an add-on technology to realize trading strategies.

    Liquidity providing is one of the HFT strategies.

    HFT strategies - the tips and secrets 1
    Well, the most frequent HFT strategies are to serve as a liquidity provider.

    How does HTF provide it?

    HFT liquidity providers have two primary reservoirs: when they provide markets with the liquidity they pocket the spread between the bid and ask limits. Also, there is a trading income by granting discounts or lowered transaction fees. The aim is to increase market quality and attractiveness.

    HFT firms will never discover their ways of acting. The significant experts linked with HFT are undercover. Well, this is not quite true. Maybe we could say they want to be in front of the public eyes less than others.

    Those firms operate with various strategies to trade and earn money. The strategies are often many kinds of arbitrage. For example, volatility arbitrage, or index arbitrage.

    HFT employs software that is incredibly fast. They have access to all market data and can make connections with minimum latency.

    HFT firms regularly use own money, own technology and a number of special strategies to produce profits.
    There are numerous strategies applied by traders to earn money for their firms.

    Even the controversial strategies.

    For example, HFT firms may trade from both parties.

    Hence, they can place orders to sell using a limit order above the market price. Also, they can place the buy order a little bit below the market price.

    And, voila! There is a profit for them. The difference between the two prices. They are market makers. All these transactions are very fast, in a millisecond by using algorithms and robust computers.

    Spread capturing as HFT strategy

    HFT strategies - the tips and secrets 2
    HFT firms are liquidity providers. They profit from the spread between the bid and ask prices.

    How?

    They are buying and selling securities all the time.

    With each trade, they receive the spread between the price at which shareholders buy contracts and the other at which they can sell contracts.

    Rebate driven strategies

    The liquidity provision strategies are developed on particular stimulus systems.

    In order to encourage liquidity providers, some trading venues use unsymmetric pricing. They charge a lower fee or give a rebate for market makers or passive trading.

    Why?

    Such traders bring liquidity to the market.

    On the other side, for more aggressive tradings they charge a higher fee. Why? Such traders remove liquidity from the market.

    An unsymmetric fee arrangement aims to boost liquidity provision.

    Point is: traders supplying liquidity earn their profits from the market spread. Fee discounts or rebates stimulate a market‘s liquidity.  

    On this way, those markets look promising comparing to their rivals.

    Arbitrage

    Chances to perform arbitrage strategies generally survive only for fractions of a second.

    But computers mission is to examine the markets in a millisecond. That feature causes the arbitrage to become the main strategy employed by HFTs.

    To conduct arbitrage HFT use the same method as traditional traders. But they use an algorithm to profit from short-lived differences between securities. The other types of arbitrage are not restricted to HFT and such, they are not the subject of this post.

    Latency arbitrage

    The latency arbitrage is the ability of HFTs to recognize new market information before other market participants even get it.

    The latency arbitrage uses direct data feeds and co-located servers to short the reaction time. Latency arbitrageurs profit from speed power. Such market participants can reduce the prices at which other traders are able to trade. That’s why you can find them under the name of predatory.

    Liquidity detection

    HFTs try to recognize the patterns other traders leave and adjust their actions accord to them. The focus of liquidity detectors is large orders.

    Liquidity detectors are getting information about algorithmic traders is usually called sniffing out the other algos.

    The bottom line

    HFT is not a trading strategy. It is the usage of advanced technology that performs traditional trading strategies. The individual trading strategies need to be assessed rather than HFT as such.

    HFT should never be banned. It would be contrary to market efficiency. High-frequency trading contributes to market liquidity and to the ability of the price creation.

    However, any strategies that have a contradictory influence on market integrity or enable market abuse, has to be are completely reviewed.

    This is particularly important for HFT. If anyone believes this technology promotes the implementation of abusing strategies, moreover, makes them more profitable and creates unfair circumstances on the market, should check the other participants too.

    Our confidence in technology is huge, but we are very cautious when it comes to the people.  

    Technology by itself is without morality. The people are those who can add it to high-tech.   

    Fortunately, we, ordinary people, don’t have any access to HFT.

    Don’t waste your money!

    risk disclosure

  • Where to Invest – Know How to Find

    Where to Invest – Know How to Find

    3 min read

    Where to Invest - Know How to Findby Gorica Gligorijevic

    OK, you think it is time to start investing! But before you dive into that world you have to know several things. Very important things.

    This article is not about where or how to invest. It is all about how to find what is necessary to do before you decide to invest and where to invest.

    We need to know more about how should we invest our money.

    Most of the time we do so without any research. That is completely wrong!

    Who even try to find some information about investing was overwhelmed by the tens of thousands of stocks, bonds, mutual funds, etc out there.

    You must be so scared of all the options. And you may give up.

    But keeping all your money in a savings account can take you on the wrong side.

    Nobody starts out as a specialist. Even the best investors were in your shoes.

    For the start, you must consider two questions.

    The first one is, where should you begin.

    And second, how to begin.

    First comes first.

    Where to begin.

    You may read different financial websites.

    As a financial site, Traders Paradise,  research all the time, collecting information from different sources. We have our tops, it is so natural.

    But we would like to share with you some free websites.

    The best-of-the-best that can provide you the education and news.

    We can tell you to read us, but you already do that, indeed.

    The best information about where to start investing we found on Cabot Wealth Network that includes a lot of free information. Their education section has valuable data about Stock Market Analysis, Market Timing, Selling Stocks, Technical Analysis and plenty of others.

    The site Investopedia is a very good source too.

    It is an invaluable source for definitions of financial terms. This site has tutorials and articles broken down for beginners. And all is free. Investopedia is a great site even for professional traders.

    Don’t give up when you see their long long sentences, they are hiding very valuable data inside.

    Among free websites, Traders Paradise highly recommends the Motley Fool. Don’t be foolish! Their name is just a good cover. These fellows are all market.

    They are excellent no matter if you are seeking to make your own analysis, or like the help of an experienced specialist. The Motley Fool is ready for you.

    Yes, you have to pay some of their services, but that could be a genuine opportunity for you, a beginner.
    Traders Paradise wants to recommend one site more. It is AAII Investor Classroom: www.aaii.com/classroom. But it isn’t free.

    It bears many lessons. They are treating everything from the risk management to the dividend stocks evaluation. The cost to join is $29 per year.

    If you want to start investing, you should analyze the characteristics of a company in order to evaluate its value.

    Where to Invest - Know How to Find 1
    That is security analysis. You have to check a company’s financial documents and financial circumstance, its management, and rival advantage. Of course, you would like to identify its rivals and markets.
    Why is this important?

    The technical analysis finds that all the major parts of a business are reflected in the price of the stock. Technical analysis examines the market supply and demand.  It is an effort to recognize where a stock’s price will go in the future.

    Amongst sites needing paid subscriptions, we recommend Investor’s Business Daily eTables, Zacks, and

    American Association of Individual Investors (AAII). They are really helpful.

    For example, Zack’s does expect membership. If you want to get to the spicy material.

    Well, surprise, surprise!

    The membership is free. You can devote three minutes to sign up. You will have an in-depth review of both stocks and funds. Moreover, you will have access to many free reports that will help you.

    And you have to read books.

    Where to Invest - Know How to Find 2
    There are thousands of various books about investing. One of them is everlasting and evergreen “The Intelligent Investor” by Benjamin Graham.  

    You can find a lot of respective books out there. You can adopt the main ideas from these books because they touch any market over the globe. Well you know,  many questions are the same to all worldwide investment. The macroeconomic indicators, asset allocations, and currency risks are the same all over the world.

    Investors are overwhelmed with information. Everything is trying to catch your attention. From press releases to SEC filings, for example. Yes, it’s always helpful to be informed.  But how to isolate the good information from the uproar.

    Press releases usually neglect bad information. They are adjusted on the good news. Analysts have spectacularly prejudices. At the same time, the official statements are tricky to be used, actually, they are not useful because of their vocabulary.

    So, where to look for information before you start investing?

    Corporate websites include information about a company. From financial statements to annual reports and surveys.

    When you are seeking the financial information they can be easier to navigate.

    What you have to look for?

    First of all, financial statements.

    Of course, you would like to take a look company’s presentation. Remember, never neglect this.
    Company presentations can give you an important summary of the past result. Also, the predictions for the following years.

    Company press releases can hold a treasure of information about progress and financial fulfillment.
    Find their investor contacts. They can be an important source for investors. But always keep in your mind who is paying them.

    Securities analysts can be an excellent reservoir of information for investors. Buy-side analysts are a better reservoir because they are not so biased. Analyst reports can be found in places including:

    You can find analysts reports among stockbrokers.

    Also, among companies.

    Some companies offer analyst research to potential investors.

    Find some broker with the fiduciary obligation.

    A fiduciary relationship is where one person (fiduciary) undertakes to act for another, placing his or her interests ahead of their own.

    We will give you a quote from the legislative site:

    “Fiduciary obligations refer to the duty to avoid conflict, the duty to not make a profit, and the duty not to gain a personal benefit or a benefit for a third party, without the consent of the principal.”

    But most of the necessary things you have to do by yourself.

    You have to examine your needs and goals.

    It’s worth to think about what you actually desire from your investments. Take your time. If you know your goals, your risk tolerance, you are on a good path.

    Estimate how long you can invest.

    Consider about how quickly you need to get your money back.

    Or just let a robo-advisor invest your money for you.

    Don’t waste your money!
    risk disclosure



  • Trading Forex at the Weekend Gaps

    Trading Forex at the Weekend Gaps

    3 min read

    Trading Forex at the weekend gaps is a growing field of investment. Forex weekend trading hours have extended away the traditional trading week.

    Forex trading the weekend gaps are becoming popular because of trader’s expecting Sunday’s opening price to return to Friday’s closing price.

    There is a mistake that you can’t trade over the weekends.

    So,  you surely can trade online at the weekend. To be honest, weekend trading in currency, stocks, CFDs, and futures is increasing fast.

    Actually, the forex market is opened during the weekend.

    How Trading Forex at the weekend gaps is possible if we know that the forex market is working 24/5?

    Well, it is decentralized. And technically the forex market is open 24/7. It is true that the majority of dealers close transactions on the weekend. For retail traders close at around 5 p.m. EST on Friday and open around 5 p.m. EST on Sunday.

    And we can see a gap during the forex open time only when the price movement is great because of some news.

    But gaps are quite obvious in the forex market when the market is closed over weekends.

    How does it come?

    The market prices are moving over the weekend. You can not stop the currency transaction. For retail traders, the price isn’t the same on Friday when the market closes trades and on a Sunday afternoon when it opens.  

    If the price is higher on Sunday, we have a gap up. But we will have a gap down if it opens lower than the Friday afternoon price.

    Trading Forex at the weekend gaps is very familiar to forex traders. It is a very often use strategy. Why is that?

    Well, the Forex market is, in fact, open 24/7. Yes, trading ends on Friday and can be opened on Sunday evening.

    But so many things can influence the currency price movement over the weekend. So, when traders are trading at weekend gaps, they are expecting the opening price will hit the closing price.

    The gap traders believe that the price will continually fulfill the gap. Really? In fact, it constantly does. But it isn’t feasible always.

    That’s why some traders make losses. Some gaps are tradable some are not.

    For example, we recognize four varieties of gaps.

    Breakaway gap

    The breakaway gap regularly rises a new trend.

    The price frequently develops out of the consolidation phase. Moves up or down with powerful momentum. What leave behind is the gap.  

    Some crucial, breaking events may cause movement. That new trend isn’t always tradable. Breakaway gaps happen at the end of the price pattern. They indicate that the new trend is starting.

    Trading Forex at the Weekend GapsThe breakaway gap

    Exhaustion gap

    Exhaustion gap occurs close to the end of a price pattern. It indicates a definitive try to reach new highs or lows. Usually, it comes after a sudden move. It has an unnatural rise in volume and then turns strongly. Also, you have to know that it comes after some news or reports. For example, after the earnings announcement. That is the period when trading activity increase. Traders are closing their big positions. That causes an obvious reversal. You can find the exhaustion gaps no matter if it is an up or down trend.

    Trading Forex at the Weekend Gaps 1The exhaustion gap

    Common gap

    It simply represents a space where the price shows a gap.

    They are gaps seen on a price chart and they are very common and the most generally traded.

    Also, they regularly arrive late Sunday and early Monday market openings.

    They are suitable for short-term intra-day trading. You should look for a common gap around Sunday midnight and trade those Forex gaps at that time.

    Trading Forex at the Weekend Gaps 2The Common gap

    Runaway gap

    Runaway gaps mark trend continuing. A runaway gap is fairly one of the most secure ways to trade. Particularly if you combine them with other price tools.  

    A runaway gap happens when the price is gapping into the course of the trend. When the trend is strong you may see them.
    Runaway gaps regularly work inside a trend.

    Traders need to recognize the gap before they find the potential increase in price. This means that runaway gaps are traded after the action.

    The bottom line

    The gaps can give a lot of news about market moving.

    Trading at the weekend gaps is risky.

    But you can use the information produced by a price gap to develop a complex trading plan. It can be helpful with other trading ideas.

     risk disclosure