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Tuesday, April 22, 2008

Keeping Things In Perspective

INVESTOR'S DAILY EDGE UNPLUGGED
ABOUT IDE FAQS ARCHIVES PRODUCTS CONTACT US WHITELIST US  
IN THIS ISSUE  
Keeping Things In Perspective
Don’t Tip Your Hand to the Market Makers
MEET THE TEAM
  MaryEllen Tribby
Publisher
  Jedd Canty
Business Director
  Nicole Reynolds
Marketing
  Jon Herring
Editor
ANALIST/EDITORIAL CONTRIBUTORS
  Charles Delvalle
  Andrew M. Gordon
  Dr. Russell McDougal
D.D.S.
  Rick Pendergraft
Tuesday, April 22, 2008
   
  Keeping Things In Perspective  
 

 

Rick Pendergraft

I hope you don’t mind, but I have decided to step back from my usual writing.  The everyday ups and downs of the stock market and the economy are my main focus, but there was something that happened over the weekend that caused me to step back and take another look at things.

Friday evening, I received a phone call from a good friend of mine, Dave Goodman.  I have known Dave for almost 13 years now.  My wife and I first got to know Dave from our many trips to Key West where he played at the Hog’s Breath for almost 20 years.  Dave is a very talented singer/songwriter.

I had left Dave a message earlier in the day asking what his schedule was for the weekend.  I was hoping to catch up with him to see one of his gigs.  When Dave called me back, he dropped some devastating news on me.  His stepson Adam had just passed away.

Adam was the son of Dave’s wife, Kathryn Verner-Goodman, and Frank Verner.  He was only 22 years old, but had been battling cystic fibrosis since he was eight.  I knew Adam was very sick and had been in Jackson Memorial Hospital for several weeks.  They were hoping to get him healthy enough so that he could undergo a lung transplant.  After some extensive testing and some improvement with antibiotics, things turned the wrong way and Adam lost his battle with this dreaded disease.

I have to be honest, I only met Adam one time.  It was at one of Dave’s gigs at a tiki bar here in South Florida.  This was about seven months ago, and at the time I had no idea he was even sick.  He was laughing, smiling, singing along with the music and playing with his little sister Amanda as if nothing was wrong.  Little did I know.

As the father of three boys myself, I can’t imagine the horror of burying my own child.

The Adam Verner Benefit fund has been established to help offset the medical expenses.  They have raised a fair amount already, but not nearly enough to cover all the expenses and that is why they need your help.

This is not a sanctioned non-profit organization, so you aren’t allowed to write-off the contribution.  However, it is the family’s intent to start a foundation in Adam’s name once all the medical expenses are paid.  So anything contributed is greatly appreciated and will go a long way in easing the pain.

More importantly, anything collected above and beyond the medical expenses will go towards a foundation that will help the children and the families that suffer from cystic fibrosis and other debilitating childhood diseases.  You can find out more about Adam, cystic fibrosis, and the fund at the following website. www.adamcf.com

If I can help raise some money for a friend and help battle cystic fibrosis, that’s great.  But at the same time, I want to remind IDE readers how precious life really is.  

Sometimes we get caught up in our own everyday lives and we forget about those that are suffering.  We forget about how precious life really is.  We take for granted our next breath, our next day, or even the next year.  When things like this happen to me, my friends, or even when I read about them, it always causes me to step back and re-evaluate my own life.  Whether or not you make a contribution to the fund is up to you.  Regardless, I only hope that reading this article will cause you to pause in your life to recognize how precious and short life really is.

I want to leave you with two quotes.  One is from my favorite coach, the other one is from my favorite book.

Learn as if you were going to live forever.
Live as if you were going to die tomorrow

John Wooden

Don't be dismayed at goodbyes.
A farewell is necessary before you can meet again.
And meeting again, after moments or lifetimes,
 is certain for those who are friends.

Richard Bach, Illusions

My point is that sometimes it takes an event like Adam passing away to remind me/us to not get so wound up about things.  If you want to get emotionally fired up, use it as a positive.  Use the energy to raise money for a worthy cause or to lend a helping hand to a friend or neighbor.

Good luck and good trading,

Rick

P.S. To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com.

 

INTERNAL ENDORSEMENT

Just this Once

BELIEVE THE HYPE!

 It was the email that shocked the investment world.

One noted investment authority told his readers to take seven huge stock market gains on one daySEVEN HUGE WINNERS on one day that ranged from 526% to 102%... seven, and on stocks… not options.

But that was just the beginning! It now looks to be setting up to happen again this year, too.

That’s why you must check out the whole story right here.

  Don't Tip Your Hand to the Market Makers  
 

Jon Herring

 

KM in Colorado, wrote in to ask a question that might be on your mind. And the answer could potentially save you a lot of money...

I have heard that it’s not a good idea to “put your stops in the market” by entering them with your broker. Why does it matter? And is there another way to track your stops? I definitely don’t have the time to calculate stop losses and trailing stops on all of my positions every few days.

The reason you don’t want to enter your stop loss points with your broker is because in most cases, the market makers and specialists can see those stops. That would be akin to going into a negotiation to sell your house and telling the buyer ahead of time what your lowest acceptable price is. Not exactly the information you want to reveal.

One of the ways market makers get paid is on the spread between the bid and ask prices. The higher the volume of shares traded, the more times the market maker can collect this spread. If the market makers can see a group of stops set below the current price, and the volume is light enough for the market maker to push the price around, they will move the price enough to trigger those stops.

A couple of months ago, I was watching the trading in a stock that I own where the volume is fairly light. For several weeks, the stock traded in the $2.50 to $2.75 range, and it never dropped below $2.45. Then one day – around lunch, when the volume was particularly light – the price dropped immediately to $2.05 and the volume spiked by about a 200,000 shares.

What happened? Someone had their stops entered in the market, and the opportunistic market maker used the lull in volume to drive the price down just long enough to trigger those stops and pick up the shares. About a minute later, the stock was trading near $2.50 again. I know this is what happened, because I was reading an investment newsletter and the guy who got stopped out wrote in to complain that he lost almost $100,000 that day. Ouch!

So, how do you track your stop losses and trailing stops without the market makers and specialists being able to see them? I use an online service called Trade Stops developed by Richard Smith, PhD., a former contributor to Investor’s Daily Edge. Trade Stops lets you set numerous different alerts – ranging from trailing stops and stop losses, to percentage and dollar gain stops – for your entire portfolio. When your pre-set sell or buy point is triggered, you receive an email alert.

It’s very simple. No need to keep track of closing prices and calculate your stops... no need to “tip your hand” to unscrupulous market makers... and no more excuses for not selling when you should.

Good Investing,

John Herring

P.S.  To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com.

INTERNAL ENDORSEMENT

Stock Market Shocker: How a Bunch of

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Keep reading to learn how you
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