In Search of the Perfect Investment

Anybody can make money when the market is rising —  as it has of late.

What counts is how you protect what you made when it starts falling, as it might today, for example.

The key to capital preservation is ultra-tight stops. I used to recommend 15%. Investors Business Daily likes 8%. In today’s squirrely market, I’d tend to go with 3% to 4%.  Three things have changed the equation:

1. Market have become more volatile. “Buy and hold” really sucks these days.

2. It’s much cheaper to sell and buy back. Fidelity charges $7.95 for most trades.

3. Most online service offer trailing stops.

Baidu’s earnings are up. Several analysts raised their price targets. How can you go wrong with BIDU and exploding China?

TBT is on again. My friend emails me:

In case you haven’t noticed, TBT is moving higher.  It has crossed its 29 dma.  I’m already in it and added more yesterday.

Here’s his chart:

Here’s my chart:

TBT has been the graveyard of more “smart money” in recent months than any other single ETF or stock on the market. It’s a gamble on the 10-year treasury yield going higher. The Fed Reserve is holding interest rates low to stimulate the economy or something. I don’t recommend fighting the Fed.

We lost the battle on clean natural gas. Our dumb administration prefers dirty coal. Go figure. Cramer likes Peabody Energy (BTU) because it’s big in Australia and exports lots to Asia. That’s good.

I like Patriot Coal (PCX), which hasn’t had a big run, yet.

More on tennis and golf elbow. From a doctor reader,

Here is a better link than that good NY times article. I am a doc and also suffer from lateral epicondylitis. These guys like the theraband. Click here.

Touring Manhattan. Yesterday was gorgeous. I’m on 52nd Street on the 48th floor looking north. I can see Central Park and the east and west sides of Manhattan. I can also see some buildings with better views. Still, this one is pretty spectacular. If you want to know what it costs, you can’t afford it.

This was the motley group awaiting singer Taylor Swift, appearing in about five hours on Dave Letterman.

When I asked who Taylor Swift was, I was told “she is the most famous person in the world.” This is Taylor Swift, courtesy Google Images:

I met Tony at my local bank. He loves to pose. He had the biggest muscles I’ve ever seen. He admitted to working out.

He told me there’s no construction in Manhattan (which is not entirely true), but that the “sewers were always in need of repair.”

He was working on the sewers. He explained to me in gruesome how and why sewers deteriorate.

I don’t think we need to go there this morning. He said he hadn’t seen any alligators down there, yet.

Harry Newton who wonders why he took a tennis lesson from a 30-year old sadist yesterday, who spent the entire hour moving poor Harry from side to side and shouting, “Move.” Poor Harry aches this morning.