Think Small Banks For Big Profits

By: Tim Melvin

The banking industry avoided the attention of activists, for the most part, as the industry was still recovering from the financial crisis and the regulatory outlook was very uncertain.

Buyers were unwilling to step up to the plate, absent some clarity of what the future would like from a regulatory point of view. But according to a recent Harvard Law School forum, that is all about to change.

A post from William Sweet, partner and head of the Financial Institutions Regulation and Enforcement Group at Skadden, Arps, Slate, Meagher & Flom LLP stated that, “with resolution of some of these uncertainties, and some improvement in the bank M&A environment (which is becoming more active among smaller community banking institutions), banking organizations can expect greater attention from activist investors.

This could be a real boon for investors in the smaller community banks and thrifts. In a presentation at the recent Value Investing Congress in Las Vegas, Richard Lashley of activist investing firm PL Capital pointed out that industry fundamentals have almost returned to pre-crisis levels, but the stock prices of the smaller banks are still very cheap when compared to tangible book value. Continue reading "Think Small Banks For Big Profits"

How Not To Be A Patsy During Earnings Season

By: Tim Melvin

There is an old poker proverb that has been quoted by everyone from Warren Buffett and Marty to Whitman to Amarillo Slim and Whispering Saul that applies to trading around earnings season.

If you have been at the table for a few minutes and have not yet figured out who the patsy is, get up and leave. You are the patsy in the game. Every earnings season there's dewy-eyed traders rushing out to beat the market and pile up a fat stack of profits trading stocks and options based in earnings reports.

Everyone thinks the game is winnable and there will be boasts of great winners and successful trades over the next six weeks or so. You will not hear much discussion of the losers -- but then again you will probably never meet a losing poker player in your lifetime either.

The odds are stacked against the patsy in a very big way, especially those using options to make bets. Stop to consider for a moment exactly what you are trading in earnings season. The patsy is making a bet on a guess on how much the Wall Street analyst's community guess was off in either direction. Continue reading "How Not To Be A Patsy During Earnings Season"

How You Can Take Your Trading To an Olympic Level

The average trader always has money on the mind.  Money,money, money.  A couple more points.  A sexy balance sheet.

That's also why they're average. The best of the best aren’t thinking about money at all. Let's use an analogy to prove this point.

What happens to an Olympian who's always looking up at the scoreboard or clock? They lose the puck, fall behind another skier, or miss their landing. What happens to the Olympian who is focused on improving their game, making the right pass, hitting the right turn, and nailing their landing? They win.

This is no different than trading. Money is the byproduct. We all know that. But focusing on the byproduct doesn't get you any closer to it. To take your trading to an Olympian level, you must remove yourself from the bottom line and focus on what makes you better. If you can't do that, go liquidate your brokerage account. You shouldn’t be trading. Continue reading "How You Can Take Your Trading To an Olympic Level"

14 Cannabis Stocks To Watch In 2014

By Alan Brochstein, The 420 Investor

The green rush is here.

More than 20 states have approved marijuana use for medicinal purposes and Colorado and Washington are opening up the plant for recreational use. Marijuana companies rose more than 50 percent in 2013 and opened 2014 with a bang, rising almost 150 percent in just three weeks.

This list gives an overview of publicly traded marijuana stocks worth over 50 million, including hydroponic companies, vaporizer producers and research houses for medicinal purposes.

Medbox - Medbox (OTC: MDBX) rose from $23 to $93 in a matter of five trading sessions, with the peak on January 8. This is a great example of uninformed investors pouring their money into a hot name. The company makes automated dispensing solutions for medications, including marijuana. Medbox has the largest market capitalization of cannabis focused stocks, close to 1.2 billion. It also does not file with the SEC. Continue reading "14 Cannabis Stocks To Watch In 2014"

Will These 3 Laggard Stocks Outperform In 2014?

By Tim Melvin

The best performing stocks in the S&P 500 in the past year have been Netflix, Micron Technology, Best Buy, Delta Airlines and Constellation Brands.

The interesting thing about these stocks is that as investors came into the year, they were not on anyone's list of top performers or even likely winners. Most of them were on the worst performing list for 2012 and with the exception of Netflix, there was very little market buzz or chatter about any of these stocks.

The rest of the top ten performers include names like Pitney Bowes and Boston Scientific, whose very existence was being questioned by many as 2013 began. Continue reading "Will These 3 Laggard Stocks Outperform In 2014?"