Of course all of us know very well what is money ... Don't we? It is the Notes and Coins that we carry in our wallets!

Using the Notes and Coins we can buy 'stuff', which is why we think that money (Notes) has value. But does it really? ... Is it not that the Notes/Coins are Paper/Metal which has little intrinsic value by itself? Then how come shops/news-stands are willing to exchange our small pieces of 'paper' (Notes) for something like a Sunday Newspaper that has much more of paper in it? ... Well?

So, what we have here, is a perception of 'additional value' in the paper money that goes much beyond its intrinsic value. This perception is shared by many.

Now let us go back to history a little ... day August 15 (nope ... not referring to independence day of India, but a historic day nevertheless) in year 1971.

On this day President Nixon cancelled convertibility of US dollar into equivalent gold! Often time this is referred to as Nixon Shock. In effect that day forward what we have is "Fiat" system of financial exchange, rather than earlier "Bretton Woods". That day onwards the 'money' lost its implied intrinsic value - or one's ability to convert it into gold - which is perceived to have intrinsic value.

... So ... folks ... Money is merely an illusion ... by definition of "Fiat system" the US Federal Reserve Bank can create any amount of money out of nothing ... Really!   (Click here)

If one needs more evidence of this money-illusion, then witness the rise of 'crypto' currencies like Bitcoin, Litecoin, and Ethereum. These are not backed by 'full-faith-and-credit' of any government or any bank. Instead, the faith placed by the various individuals/entities across the globe creates illusion of value in these currencies!   (Since the advant of NFTs, this perception has expanded to digital assets as well.)

Now the pointers - Search these words in your favorite web-search engine, and see what you get ...
      1) Nixon Shock   2) Fiat Money   3) Money Illusion   4) Modern Money Mechanics

Okay .... maybe that's enough about money ... Since I'm a trader and you're here to get the pointers, let us move on to that topic ...

First thing - Trading is risky.

Anyone who is involved in trading is putting his/her money at risk. S/he can lose all the principal (and if one is doing shorting then one can not only lose the starting principal, but also can suffer loss that is more than starting principal).

Second thing - Trading is not for everyone.

Not everyone can do Trading successfully. It takes a lot of time/effort/interest to find out if you are a 'trader' or not. If you are willing to spend considerable amount of time/effort after this, then you should venture into this else you may be better off doing something different. I like to say "Spend your time before you trade even a single dime".

If you find out that you are a trader, then the amount of time you need to spend goes down considerably. ( These days I spend about 1 hour every trading day doing analysis/trading - That's it. ... But initially I had to spend years. ... To my friends, and co-workers from Zuora, Matterport, Fujitsu, Symantec, Google, FireEye, Thermo Fisher, SGI, Wells Fargo, HotWire, Cisco, HP and SUN ... you know that I have to spend all my time doing ORACLE/Zuora/NetSuite tasks/sprints during the office hours ... So I've found out my own method that will permit me to do, what I got to do, during non-office hours and lunch!! Yes, I've done extreme automation to minimize my time spent after this. )

Third thing - Trade what you understand.

There are several different trading vehicles you can use to trade - Stocks, Bonds, Open Ended Mutual Funds, Close Ended Mutual Funds, Exchange Traded Funds, Commodities, Metals, Currencies (both Fiat and Crypto), Options, Futures, Derivatives ... Each trading vehicle has its own unique characteristic. I'd recommend that you find out what trading vehicle do you understand - and I mean really 'understand'.

I've found out that I don't understand (individual) Stocks, (individual) Bonds, Options, Futures, and Derivatives to trade them successfully!

Why? ... That'e bcause the chart-patterns, (and expirations associated with options) are unsuitable for me to fit into an algorithm, and without an algo there's no back-testing, no automation, nothing. Hence it's a non-starter.

... So ... I only trade what I understand: Open Ended Mutual Funds, Close Ended Mutual Funds, Exchange Traded Funds, Commodities, Metals, and Currencies (both Fiat, and Crypto). ... And I firmly stay away from what I don't understand,. (I've traded individual stocks quite a few times, but trading individual stocks is definitely not my preferred way of making money.)

<< I am writing this update after a few years, since I wrote the above details. This update is as of 11/29/2021. I designed an algoritm to trade individual ADRs/Stocks which I'll put to use starting year 2022. Click here to read the details of algo Fibonacci-ATR. >>

Fundamental Analysis

Generally the analysis that involves going over the fundamentals: the products, the business, the business model, the financial statements, the competitive advantages etc. is termed as fundamental analysis.

Ironically, I've found out that I don't understand the fundamental analysis!

I do not understand the product that many companies produce. Don't get me wrong - I use various products produced by different companies, but I have no real understanding of the product, and various processes that go about in making it. I've worked for Cisco and HP ... but I don't know how to make Routers and Servers. I use product of Exxon and Shell every day ... but nope ... I have no idea of something very basic about the product - which is how many atoms of Carbon, and Hydrogen are needed to make the molecule of hydro-carbon we call Gasoline. ... And coming to my day-job - ORACLE/NetSuite/Zuora/RevPro! ... Yes I do Financials ... I know all too well the profit-loss statement (income statement), the balance-sheet, and the cash flow statement, and various other mandatory Financial Details (10-K, 10-Q) that every publicly traded company must publish for consumption by the public. However, these documents/details do not help me make money. There are folks, generally called as 'investors', who utilize these statements as a part of their analysis. I use something else that I'll describe.

Technical Analysis

Technical analysis generally is the science/art that involves studying the past price/volume patterns to help predict/forecast/guestimate the future direction of the price. And this is what I've found out that I understand. And understand it very well!

The price/volume pattern is based on 5 distinct data points that are available for most securities traded on various US markets. Those data points are Open-High-Low-Close-Volume. ( e.g. Shares of General Electric - ticker GE - each day Open at a certain price, and Close at a certain price. During the day they reach a certain High, and fall to a certain Low. And during the day a certain number of shares get traded i.e. Volume. That's it. These are the data - facts - that I work with. ) I really understand the patterns created by these OHLCV, and these patterns are, what help me make money. So the patterns (on chart), and the logic/programs I've developed are the keys to my success at trading.

A few Pointers. There are several books on Technical Analysis I like.

• Getting Started in Technical Analysis (Jack D. Schwager)
• Technical Analysis, Study Guide (Jack D. Schwager)
• Technical Analysis of the Financial Markets (John J. Murphy)
• Technical Analysis Explained (Martin J. Pring)

It is commonly accepted that market is full of uncertainties. That there is nothing at all that is certain in the market. But is that really so? ... Don't think so!

Certainty #1

The data OHLCV (open/high/low/close/volume) available for securities traded on the market are certain.

Oftentimes we hear that despite various checks-n-balances, despite the best effort of IT (of which I'm a part in my day-job), and despite various SOX compliance requirements, and despite the internal/external audits, a few companies fudge and cook their 'books' (Enrons, Groupons of the world!). So can-we/should-we rely on the financial data various companies publish? .. Maybe ...

How about simple OHLCV? Can we totally rely on them? ... Yes ... Definitely.

Certainty #2

John Pierpont Morgan (1837–1913) once was asked what the market would do that day ... JP Morgan famously replied "It will fluctuate".

So that's another Certainty ... The fluctuation of the market!

No one - not one living or dead sole has ever claimed that market will always go up, or that the market will always go down! In fact, market fluctuation forms the very basis of my trading. I try to buy-low and sell-high, or try to short-high and cover-low.

Certainty #3

Human nature leads to excesses in the market. Excessive euphoria at times, and excessive panic at some other times, and ultimately there is always a resolution of the euphoria, and the panic, and the markets revert to "mean" for the remaining of the times.

In the far-away past and in the recent past we have seen examples of this. Dot-com bubble and bust, Real-Estate bubble and bust, COVID-19 bust and recovery. There are hundreds of sharp/smart folks whose job it is to watch for such euphoria and panic but still so many sharp/smart folks miss these. Why? Simple answer is human nature. It is in our nature to give in to the euphoria and the panic.

This is the third certainty. It is certain that human traders/timers/investors/... will continuously push the markets to overbought condition during times of euphoria and oversold condition during times of panic. Ultimately the human traders/timers/investors/... will overcome the euphoria/panic and then reversion to mean will occur.   This is the cornerstone of my trading.

I perform Breadth Analysis in which I analyze a group of securities as a 'group' by using each component's OHLCV, and if I find the intelligence generated is actionable, then I trade. Here are a few links where I've described some details: Link #1 Link #2.

In addition, I plot 'Heatmaps' of different sectors / market-caps / countries together as a 'group'. Again, if the intelligence I get is actionable, then I trade. Here's link giving a few details of Heatmaps.

Overall, I tend to trade Mutual Funds, and ETFs that are, in-effect, groups of securities, therefore I've extended the analysis to make it a 'group' analysis, instead of focusing on a single security.

I employ following Strategies:

1. Minimize Taxes
   
   I perform bulk of my trading in Tax-Deferred accounts such as IRAs, Rollover IRAs, 401(k)s, and Variable Annuities. This decreases the immediate tax burden, not to mention yearly tax reporting!
   

   I do a day-job (in addition to permanent-job of trading) and file "joint" tax returns with my wife who has a day-job as well. This in effect puts me in higher tax-bracket for Federal Income Tax, as well as California State Income Tax. After both of us stop the day-jobs and retire, the tax-bracket will drastically come down, which is when I will initiate the withdrawals from the tax-deferred accounts, and pay deferred taxes owed from tax-deferred (retirement) accounts, that would be in the lower tax-bracket.
   
   Typically, I execute more than 10k trades per year. Such a high volume of trades in a Taxable Account would result into large tax reporting in Schedule "D" of IRS form 1040. Performing such high volume trading in tax-deferred accounts avoids the burdensome tax-reporting, because the trades in tax-deferred accounts are exempt from tax-reporting.
   
   

2. Minimize Risk
   
   I am risk averse. Whenever money leaves the safety of Money Market and goes into anything that is not Money Market, then that money is at risk. There are ways to control/limit the risk, but there is no way to eliminate it. Therefore, I try to allocate the maximum amount of my assets to Money Market for the maximum amount of time. Only when I see a compelling opportunity I put portion of my money at risk by buying/shorting Open Ended Mutual Fund, Close Ended Mutual Fund, Exchange Traded Fund, Commodity, Metal or Currency. I try to sell/cover the position as soon as I find it logical. (i.e. at a resonable profit, or at a tolerable loss. I use acronym RPTL for this !)
   
   After getting-into a trade, it is imperative that I get-out. In order to hasten the process of getting out, I prefer to use leveraged/volatile products, which by design fluctuate more in price, and more frequently in time, (in short the plot on Y-Axis and X-Axis becomes favorable). Such products help me get-in into risky market, and get-out to safety of money-market relatively quickly.
   

   <<< The Indian Epic Mahabharat has a story of brave/duty-bound Abhimanyu who enters a risky battle-formation (Chakravyuha), without possessing the knowledge/plan of how to get-out of this formation, and in the kill-zone of the Chakravyuha, he gets killed because he lacks the knowledge/plan of getting-out. (I always have a plan to get-out of every trade, before I get-in.) >>>
   
   

3. Buy Low / Sell High   (and Short High / Cover Low)
   
   I continuously try to locate securities that I perceive are OverSold or OverBought, and then I carefully consider buying or shorting them. (I am very wary of short positions, but I do not shun shorting.) If I am unable to locate securities that I perceive are over bought/sold, then I take no action at all. I am happy to maintain the assets in the safety of money market fund as long as a compelling opportunity does not present itself.
   
   
   

Following are the various Techniques / Technical Indicators / Mutual Funds Companies / Brokers / Trading Vehicles I use to perform tactical trading to fulfill the Strategy I described above.

• Fluctuation Trading
  
  I continuously keep on buying open ended mutual funds, and exchange traded funds, in small amounts, and keep on selling each lot purchased at a small/reasonable profit. The buying for mutual funds is automated, and selling is manual. Both buying and selling is automated for exchange traded funds. For mutual funds, I initiate selling only when there is a reasonable profit. For exchange traded funds I use limit-good-till-cancelled orders, and/or bracket-orders. Constant fluctuations of the markets keep on lowering and raising the prices, thus producing small profit per trade. Such small profits for each trade, when aggregated over months, quarters, and years amount to considerable profits. I have not found any reference to this style of trading in the literature I've studied, so I've coined term Fluctuation Trading for this tactic. This tactic is in response to Certainty #2 given above. It also fulfills strategy of 'Buy Low Sell High'. This tactic also allows me keep eliminating risk for the portion of the assets that I keep selling, fulfilling the strategy of 'Minimize Risk'.
  
  To an untrained observer this tactic might appear like dollar-cost-average. However, most definitely this is not dollar-cost-average. Two major differences are: (a) In classical dollar-cost-average, there is no systematic way to sell significant portions or even the entire position to bring back the assets to money market. The so called 'periodic-rebalance' advocated in the dollar-cost-average is far from being an outright sell trade that liquidates the entire postion. In the tactic of Fluctuation Trading, there is a way to keep on selling immediately after a cetain profit is realized. This is quite different that the 'periodic-rebalance' which is done at a certain interval. (b) In classical dollar-cost-average, ever increasing portion of assets are put at risk with passage of time. In Fluctuation Trading, significant portions of the assets are brought back to money market, continuously, thereby eliminating the risk for those particular portions of assets.

  Click button     for the algorithm.

  
  
• Wave Trading
  
  When I find a security that I perceive is oversold (overbought), then I buy (short) in waves. This tactic involves making not just a single buy (short) trade, but to make multiple buy (short) trades for prices that are within a few percentages of each other for that particular security. When it comes time to sell (cover) I do that in waves as well. Once again, I sell (cover) at prices that are within a few percentages of each other. This tactic is able to to capture some of the troughs in the security prices, and some of the peaks in the security prices. In the literature I've studied, I found no reference to this tactic of trading, so I've coined the term Wave Trading for this tactic.
  
  
• Blitz Trading
  
  I've designed this tactic for Exchange Traded Funds - especially for commission-free ETFs. In this tactic, I enter several 'limit-buy-good-till-cancelled' orders every week that are a small percentage point lower than the closing-price. Each order is for a small dollar amount. In the 'coming' week it is in my experience a large number of these orders get filled. Every day I enter the 'limit-sell-good-till-cancelled' orders for those that are filled that is just a small percent higher than the buy-price. Again in my experince large number of these orders also get filled. After I get the 'sell' order filled, I setup the next 'buy' order a small percentage lower than my previous buy-price. And the cycle repeats. Each week-end I adjust the 'limit-buy-good-till-cancelled' orders for those ETFs/ETNs that have gone up to restore my original buy-level. I've deisnged this weekly cycle-thru to target the ETFs/ETNs that are not closely co-related. The net effect of this tactic is to give rapid trades, and rapid profits. Once the buy is completed, I switch over the specific buy trade to 'wave trading' mode. Again, in the literature I've studied, I've not found any reference to this tactic of trading, so I've coined the term Blitz Trading for this tactic.
  

  Click button     for the algorithm.

  
  
  
• Technical Indicators
  
  
  1. McClellan Oscillator   (Developed by: Sherman and Marian McClellan)
     
  2. Breadth Thrust   (Developed by: Martin Zweig)
     
  3. Disha - Sanskrit word for Direction. I've developed this indicator myself. Its algorithm/code is unpublished/proprietary   (Developed by: Salil V Gangal)
     
  4. DigBheda - Sanskrit word for Divergence. I've developed this indicator myself. Its algorithm/code is unpublished/proprietary.   (Developed by: Salil V Gangal)
     
  5. CCI - Commodity Channel Index   (Developed by: Donald Lambert)
     
  6. PZO - Price Zone Oscillator   (Developed by: Walid Khalil and David Steckler)
     
  7. CMO - Chande Momentum Oscillator   (Developed by: Dr. Tushar Chande)
     
  8. Delta MO - Difference in Momentum   (Developed by: Various Developers)
     
  9. Cutler RSI - Relative Strength Index   (Developed by: J. Welles Wilder, Modified by: Cutler)
     
     
• Mutual Fund Companies
  
  
  1. ProFunds.   I trade Mutual Funds offered by Pro with their own in-house service.
     
  2. Rydex (Guggenheim).   I trade Mutual Funds offered by Rydex with their own in-house service.
     
     
• Brokers
  
  
  1. TD Ameritrade

     I use TD Ameritrade to trade ETFs. I trade ETFs from DireXion, ProShares, iShares, PowerShares, Van Eck, State Street (SPDR), etc.
     
     The REST-APIs offered by TD Ameritrade are extremely well documented, and I've utilized these to automate my algorithmic trading.
     
     The trading platform "Think-or-swim" offered by TD Ameritrade is gorgeous, and it's a pleasure to trade-with, look-at, and customize. (You will find screen-grabs of this platform elsewhere on my site.)
     
     I also use TD Ameritrade for buying/holding Structured Notes, Structured CDs (aka Market Linked Notes, Market Linked CDs) and brokered CDs. I have a long-running working relationship with one of the brokers at TD Amerirade who takes my orders for these products. I do not trade, the Structured Notes and the Brokered CDs. I just buy these and let them go till maturity or let them get called-in
     
     

  2. Fidelity

     I use Fidelity Brokerage to trade ETFs. Trading platform - Active Trader Pro - is very functionaal, and customizable.
     In addition to ETFs, I trade all the Fidelity Mutual Funds.
     Fido has good selection of Brokered CDs. I use ladders of brokered CDs from time to time.
     
     

  3. Jefferson National

     At Jefferson National I trade ProFunds, and RydexFunds in Variable Annuity as sub-accounts. (Nationwide has taken over Jefferson National.)
     
     Jefferson National's web-site is quite suitable for automation using Selenium.
     
     

  4. Binance.US

     I started using Binance for Crypto trading in 2021. Binance.US offers REST APIs to automate the trading.
     
     Click here to see the prerequisite I undertook, and then click here to see the actual execution of API trade-entry.
     
     
     

• Mutual Funds (Close End and Open End) / Exchange Traded Funds / Exchanged Traded Notes
  
  
  1. ProFunds : I trade most of the Mutual Funds offered by ProFunds.
     
  2. Rydex SGI : I trade most of the Mutual Funds offered by Rydex.
     
     
  3. DireXion ( I trade many of the Short / Long ETFs offered by DireXion. )
            From time to time I get order filled at Unfair-Market-Value for some of these, especially during before-market-hours.
     
  4. Bank of Montreal ( I trade many of the Short / Long ETNs offered by BMO. )
            From time to time I get order filled at Unfair-Market-Value for some of these, especially during before-market-hours.
     
  5. UBS ( I trade many of the Short / Long ETNs called as Etracks offered by UBS. )
            From time to time I get order filled at Unfair-Market-Value for some of these, especially during before-market-hours.
     
  6. ProShares ( I trade many of the Short / Long ETFs offered by ProShares. )
            From time to time I get order filled at Unfair-Market-Value for some of these, especially during before-market-hours.
     
     
  7. PowerShares ( I trade many of the ETFs offered by PowerShares. )
     
  8. iShares ( I trade many of the ETFs offered by iShares. )
     
  9. Vanguard ( I trade many the ETFs offered by Vanguard. )
     
  10. Global X ( I trade many the ETFs offered by Global X. )
      
  11. FocusShares ( I trade many the ETFs offered by FocusShares. )
      
  12. Van Eck ( I trade a few ETFs offered by Van Eck. )
      
  13. State Street ( I trade a few ETFs offered by State Street. )
      
  14. Wisdom Tree ( I trade a few ETFs offered by Wisdom Tree. )
      
  15. Claymore ( I trade a few ETFs offered by Claymore. )
      
  
  
  
  
• Crypto Currency based Trusts (this update is as of Jan 2021)
  
  
  1. Bitwise 10 Crypto Index Fund : I started trading this 'trust' starting January 2021.
     

I'll spend time learning, before I'll trade even a single dime.

1. I'll estimate how much time I can spend during office hours, and non-office hours for trading. Having enough time to dedicate for trading is crucial. ( I do 8 hours of hard-work every day to earn money, ... so ... am I willing/able to spend some more time, to manage wisely what I've earned in those 8 hours of hard-work? )
   
   
2. I'll find out the right trading vehicle - something that I really understand.
   
   
3. I'll go thru policies, rules, facilities offered by various brokers and pick one (or many) that are suitable for me. I must consider carefully the commission, fees, user-interface, securities offered, trading-hours, order-types offered by the brokers. (I must bear in mind that user-interface is very important for me. This will be my gateway to the broker for managing my orders, my portfolio, my transaction-history, my statements. Therefore, I must ensure that user-interface offered by the broker I choose is friendly-enough for me. I must avoid brokers that have user-unfriendly interface.)
   
   
4. I'll carefully analyze my tax-bracket, and estimate the taxes, and the tax reporting I'll incur because of trading, if I want to trade in regular (taxable) account.   Longer the Form 1099-B, longer becomes the "Schedule D", and perhaps higher becomes the time/efforts one has to spend to prepare tax returns.
   
   
5. I'll understand the risks involved in trading. In general, the risk involved in shorting is more than risk involved in simply going long. In theory, for a long position the worst loss I can suffer is the entire principal I put into the long position. In theory, for a short position the worst loss I can suffer is infinite. (Not just the starting principal of short position, but it can be more than that as well).
   
   
6. I'll perform hypothetical trades using fictional money for a very very long time.   If I am finding that my hypothetical trades are profitable significant number of times (e.g. 80% of trades over a month), and I am successfully limiting my losses for those trades that are not profitable (e.g. the other 20% of trades), so that at the end of the period my hypothetical profit is quite significant - which is well worth my time/effort, then and only then, I'll consider starting trading with real money.
   
   
7. I'll avoid the notion, that I can learn only if my real money is at risk.   I'll not give-in to urge to conduct experiment with real money, by using a free broker (e.g. 'Robinhood'), while pretending that since I'm learning, it's fine if I lose a little bit of real money.   ( If I seriously believe that risking real money, and perhaps losing some is acceptable, in order to learn, then I need to consider would it be acceptable for a trainee-pilot to believe that s/he can learn how to fly a plane, only if s/he places lives of passengers at risk? And since s/he is just learning how to fly a plane, it's acceptable if s/he loses lives of a few passengers!   I need to ask myself: Will I be willing to board a plane of such a trainee-pilot? *smile* )
   
   
8. I'll not cut short my learning/analyzing time. It takes a lot of patience, a lot of efforts, a lot of time to explore if I can be a successful trader or not. Also, even after spending a lot of time, and lot of effort to explore, there is absolutely no assurance that I'll ultimately find out that I can be a successful trader. So I ought to think this thru carefully ... do I really want to do 'trading' or would I be better off spending my time doing something else *smile*? (I've attended school for 10 years, and then college for 2 years, and then engineering college for 4 years, which totals 16 years of studying. I had no idea if studying all that arithmetic, geography, history, grammar, FORTRAN, COBOL, Pascal etc. for sixteen years will make me capable of earning my livelihood, but I did spend sixteen years never-the-less to find out!     ...   So   ...   am I able/willing to spend few years to learn/analyze "trading" in order to find out if I can earn my livelihood by trading?)
   
   

Finally ... a disclaimer: I am a Business System Analyst and a Programmer. I do Business related tasks in IT department for a living. ( I plan to do only trading for a living, but I'm not at that stage - yet. ) I have no formal education in trading or financial/retirement planning. I am not licensed to offer any legal/tax/financial advice to anyone. Whatever I've written here are my views/opinions, and none of this should be taken as advice.

Here is an anecdote where I ignored the fundamentals toally, and focussed only on chart pattern, and yet earned profits.

Most of the times, I do not trade stocks, but on rare occassions, when I do, I always focus only on the chart patterns, which I understand exceptionally well. And I ignore the fundamentals. Once I traded stock that goes by ticker MRVL. As usual, I focussed on chart and ignored the fundamentals . I ignored fundamentals to the extent that I didn't even bother to check the name of the company whose stock I was trading!     While trading looking at the ticker MRVL I guessed that it must be Marvel Comics that I was trading. I traded MRVL a few times, and each trade was profitable.

... Afterwards merely out of curiosity I looked-up the company that's indicated by ticker MRVL, and found that actually it is the Marvell Semiconducators, not Marvel Comics! *smile* So I had traded the stock profitably by concentrating only on chart pattern of MRVL, without the need to know even the very basic fundamental information like which company I was trading !! *smile*

Beware of all of the following things. I do not believe in any of these, and I would strongly caution my relatives/friends about this.

• Asset Allocation / Diversification
  
  Roughly this goes something like: You should allocate 60% of your asset to domestic equities, 30% to foreign equities, 5% to Real Estate and 5% to Gold. Based on my analysis I've found this to be a rather risky thing to do. ... I know lots of Financial Advisors have huge amount of Statistical Data to ... err prove that this is the best thing after sliced bread *smile* ... But I do not subscribe to this theory! To the proponents of Asset Allocation, my question is why 60%+30%+5%+5%? Why not 61%+29%+5%+5% or some other combination?
  
  Also the asset allocation proponents claim that as one gets close to retirement, a slow shift from stock to bonds should happen. Something roughly like 15 years out 10% to bonds, 10 years out 20%, 5 years out 30%, at retirement 40%, 5 years into retirement 50% and so on ... Again this kind of "rough", "rule-of-thumb" approach appears quite slip-shod. This does not take into account the family history / medical condition, financial responsibilities at all! (In Gangal family we have many members with a very long life-span, so it's important to pay close attention to potentially how long the assets will be needed based on one's family history.) It also is based on assumption that bonds are relatively safer than stocks. ( As of now - SEP-2010 - we have not had a bond bubble ... but wait till we have it, and then maybe the Asset Allocation will be altered ... But what happens to the folks who already are 'married' to their current Asset Allocation / Diversification plan? *smile* )
  
  The financial markets have opened up across the world, and previously trading in places/assets/currencies that was beyond the reach of common (wo)man, is quite easy these days. In earlier times it was impractical for common (wo)man to trade in markets such as (say) Vietnam or Chile or Turkey or Israel. It was quite impractical for common (wo)man to trade in commodities such as (say) Crude Oil, Corn, Lithium, Uranium. It was not realistic for common (wo)man to trade in currencies such as (Brazilian) Real, (Russian) Ruble, (Indian) Rupee, (Chinese) Renminbi, (South African) Rand. Now access to all of these trading vehicles is very easy, therefore the previous constrained asset classes like Domestic, Foreign, Real-Estate and Gold are so ... last-century!
  
  Apparently, the primary idea behind asset allocation and diversification is that one of the asset class (Domestic, Foreign, Real Estate or Gold) must perform well enough if the others don't, so the folks following Asset Allocation should do well. The flaw in this of course is what if all these asset classes are not doing well? Another flaw - assuming that one of the classes must do well, why not do 25% allocation to each of these classes? ... There are quite a few flaws in Asset Allocation beyond what I've written here ...
  
  Using statistics, one can nearly prove anything. President Harry Truman's quote is "Give me a one handed Economist. All my economists say 'on one hand' and then 'but on the order hand'". *smile* ... When it comes to your money it's not useful to find out that 'Oh .. in this case, the statistics has gone the other way'. It is best to do your own analysis/research, instead of depending upon someone else's.
  
  Warren Buffett's quote is notable in this regard "Diversification is protection against ignorance". Starting with asset allocation / diversification may be all right, but as one gains knowledge/experience, one ought to grow out of it. (Perhaps asset allocation can give one 'average' returns.   However, in school/job one strives to be above average ... so there's no reason to adapt the defetist attitute, and accept 'average' in financial life.)
  
  
  
• Dollar Cost Average with Periodic Rebalance
  
  Roughly this goes something like: You should slowly buy mutual funds by (say) putting $100 or $200 or some such amount, every month on a certain day. or maybe every pay-period without paying any attention to market conditions. Every so often, say each quarter or couple of quarters or a year, you should 'rebalance' your portfolio to get the percentages described above in 'asset allocation' back. I find this quite questionable.
  
  First - I believe that everyone should pay careful attention to market condition, and only if s/he finds the conditions to be favorable, only then put the money at risk. Putting ones money at risk month after month without paying attention to market condition, I believe, is imprudent.

  Typical recommendation is that just keep on buying an index fund like S&P 500. The justification offered is that when one buys a basket of stocks, there are stocks in this basket that are very oversold which get bought. Therefore, over period one keeps on accumulating such oversold stocks that should, eventually rise !!   ( ... Well this recommendation of course ignores to mention that the very same basket also includes stocks that are overbought and are outrageously priced, therefore one tends to even buy such outrageously overpriced stocks, and such overpriced/overbought stocks also are accumulated over time, which eventually should fall !!   )
  

  Second - What makes one pay-period an optimum time for putting ones money at risk? Does it mean that for those who get their wages paid every 14 days (every 2 weeks), that's the optimum period to buy, however, for those who get their wages paid every 15/16 days (twice a month), that's the optimum period to buy?! ... Nah ... that does not sound logical on the face of it!
  

  If I were to give an analogy for the dollar-cost-average, then I'd say putting money at risk without paying any attention to the market conditions, is like playing 'Russian Roulette' with your money! You have no idea if you're firing an empty chamber or a live round. You have no idea if the market is overbought or not, and you're jumping into the market despite it. Not once, not twice, but all the time! ( Now imagine a player playing 'Russian Roulette' all the time. How long s/he is going to last? )
  

  Next - What makes one quarter or two quarters or one year an optimum period for "rebalance"? What is so special about 3/6/12 month period? Why not rebalance every 5 months or every 11 months or some other number of months? Is it because 1 quarter / 6 months / 1 year is sort of convenient to remember or that's what your broker offers? Does it mean that what's convenient to remember or what's offered by the broker ought to be what's optimum for your financial portfolio? ( There are quite a few calendar reminder services these days that are free. Almost every email client e.g. Outlook, Thunderbird comes with facility of setting reminders, so it should not be too hard to set 5 month / 11 month or any other periodic reminder! *smile*)
  
  
  
• Buy and Hold is better than Trading
  
  Roughly this goes something like: You should plan to buy and hold for a long time. Over the long term generally the market goes up, so if you are buying and holding then you stand to gain. Commonly the long-term is agreed to be 10 years or more! Also the argument against trading goes something like this - To successfully trade you got be right not once - but twice. First time when you buy - and - second time when you sell. It is impossible for anyone to keep being right when buying and when selling.
  
  I find the above to be ridiculous. Why? ... Well allow me to explain. The long term is commonly agreed upon as "10 years or more". Question is why? Could it be 9 years 11 months and 29 days? What exactly is the significance of that extra 1 day? ... If the proponents of buy-n-hold are unable/unwilling to explain the significance of 1 day, then the reasoning behind buy-n-hold fails. On the other hand if they agree that ... hey no big deal ... long term can be 9 years 11 month and 29 days. Then let us go back one more day ... Can the long term be 9 years 11 months and 28 days? What is the significance of extra 2 days? *smile* ... And so on.
  
  The fact is, any long-term is made up of a series of short-terms back-to-back. One cannot be right in the long-term if one is wrong in a series of short-terms! Therefore 'being right' in a series of short-terms, is essential to being right in the long-term.
  
  Also one needs to carefully consider the fact that proponents of 'buy-n-hold' claim that over the long term the market generally goes up. What if you find yourself in the non-general period where the market has actually gone down rather than up? Are you expected then to buy some more and hold some more, and hope that another 10 years will get you into that mythical general period? *smile*
  
  Finally - coming to the tired point - To successfully trade you got to be right not just once - but twice - once when you buy and next when you sell! ... Well ... If the proponents of the buy-n-hold literally mean that only activity they advocate is that of buying - that there is no selling ever, then it would make the mathematical probability of being wrong for buy-n-hold to one, just the first time when action of buying takes place. On the other hand if the buy-n-hold involves selling as well - no matter when - then of course the mathematical probability of being wrong increases for the buy-n-holders to two - which is exactly the same as it is for the traders! No? *smile*
  
  
  
• Advice offered by Financial Advisors
  
  Do you know who is a Financial Advisor? Do you know what kind of education/exams s/he takes before s/he becomes licensed to offer financial advice? Do you know what is the compensation structure the Financial Advisors get?
  
  Before hiring staff in IT, there is a review of the Resume of the candidate. Do you know what is the equivalent of the resume for the Financial Advisor? Nope? ... Perhaps you should! ... It is called as "Form ADV". (Look it up if you're interested. SEC - Securities & Exchange Commission - has some details about checking out the brokers and advisors.)   There is a thorough interview process for a candidate before hiring him/her in IT. Phone screen, on-site interviews, maybe even written exams. ... So do you conduct interviews of the Financial Advisors before hiring them to give you advice, and manage your assets? ... No? Why not? ( AARP - American Association of Retired Persons - has a questionnaire for the Financial Advisors .. Look it up if you want!) Often times employer checks references of candidates using references provided by the candidate or using sites like LinkedIn. Do you do any reference checking, any check for negative reporting for the broker/advisor you are considering? NO??? ... I guess you must! ... FINRA offers free access to "brokercheck" where there are listing(s) of any negative reports of the brokers/advisors made in any of the states where the broker/advisor is licensed to operate.
  
  FINRA ( Financial Industry Regulatory Authority ) a self-regulated organization is responsible for conducting various examinations for the (so called) Financial Professionals. These exams are given numbers such as Series "6", Series "9" etc. They essentially are a multiple choice questions examinations. I have gone over some of the course material, and it is my impression that these courses and the exams cannot prepare anyone to take on the challenge of advising you. Your financial situation, financial goals, tax situation, risk-taking ability, family responsibility, future earning capability is unique. Trying to fit you in some 'category' (most likely by your age) and advising you based on this category is, in my opinion, a dis-service. I have interacted with quite a few financial advisors - and almost always my experience is that they know quite a few financial terms and use them judiciously enough *smile*, however they are not well-read, well-informed. They are hardly aware of the vast number of products available in financial services, and neither are they willing to thoroughly understand your unique situation, before venturing into the difficult area of offering you advice. An advice that potentially will decide your financial future! Generally the Financial Advisors have a set of products that they are supposed to sell, and their advice is geared towards selling these products. Nothing more.
  
  Most advisors will get their fees whether or not you make money. ( Indian mythology has it that Valmiki's family was eager to enjoy the loot he got by committing crimes. His family was not willing to take any part of the sins he committed to get the loot. *smile* ) ... Find an advisor who is not merely eager to take part of your assets as fees, but is also ready to suffer with you any losses you might incur as a result of the advice s/he gives you.
  
  
  
• Guarantee offered by Insurance Companies for Fixed Annuities
  
  Many Insurance companies offer guarantee of a certain income, guarantee of a certain % of interest for the Fixed Annuities. All the publicly traded insurance companies such as State Farm, All State, New York Life, Lincoln National are 'for-profit' companies. It is their Fiduciary obligation to look after the interest of their shareholders. People who buy Fixed Annuities for these insurance companies are merely the policy holders, not the shareholders!
  
  Insurance companies can go bankrupt. (Remember the insurance company AIG that US Government bailed out?) If any such insurance company were to go bankrupt, then the guarantee offered by such a company is of course null and void!
  
  Another major factor about the so called "guarantee" is that it always is accompanied by the wording like "the guarantee is subject to the claim paying ability of the issuer". This wording literally means that if the Insurance company is unable to pay, then also the so called "guarantee" is null and void!
  
  When someone purchases a Fixed Annuity, then the money s/he pays to purchase the annuity ceases to be her/his. The ownership of the money, passes to the insurance company that issues the Fixed Annuity. This implies that any creditor/claimant/plaintiff of the Insurance Company can and will seek to settle the credit/claim using the money owned by the Insurance Company that includes all the assets that the Fixed Annuity owner has paid to the Insurance Company. "Caveat Emptor" is very important in this situation. Typically when one buys a Fixed Annuity, s/he essentially is merely buying a 'promise' that the Insurance Company will pay the policy holder a certain amount of money, month after month, year after year, as long as s/he is alive! To me this sort of deal sounds far too good to be true! *smile*
  
  (BTW there is usually a stark difference between a Fixed Annuity, and a Variable Annuity. Variable Annuity generally has no "guarantee" associated with it. The policy holder continues to retain the ownership of any money s/he has put in a Variable Annuity, and no creditor/claimant/plaintiff of Insurance Company has access to any assets held in the Variable Annuity. Assets in Variable Annuity are maintained in a separate account. The assets in such separate accounts are never intermingled with the assets of the company that issues the Variable Annuity. If the Insurance Company were to go bankrupt then IRS, Creditors, Claimant, Plaintiffs etc. can and will go after the assets owned by the Insurance Company itself to settle any of their claims, however they cannot touch assets that the Insurance Company 'maintains' in separate accounts for the Variable Annuities! The Variable Annuity I use is issued by Jefferson National, where there is provision to trade annuity versions of several ProFunds, RydexFund, and DireXionFunds without any holding-period restrictions and without any early-redemption-fees. Jeff Nat charges a mere $20 per month for the Variable Annuity. I've given comparison I made for the Variable Annuities from trading/expense perspective at this link.)
  
  

I gave the links to resources that I use earlier. I'm giving those links once again for quick reference:

1. Mutual Fund Companies
   
2. Brokers
   
3. Mutual Funds / Exchange Traded Funds
   

Others than the above, material given at the following links may be helpful ... ( all of which is free ... )

1. Introduction to Technical Analysis.

   This course requires 'Adobe Flash'. It gives useful information about Fundamental vs Techincal Analysis, and gives details of Price/Time, Volume, Patterns, Indicators etc.

2. Webinars (IB).

   There are lots of useful Webinars (recorded/live) available at this link. The contents keep changings as new Webinars are added ...

3. Order Types (IB)..

   The material at this link provides details of various order types available at Interactive Brokers ... Market Orders, Limit Orders, Stop Orders, Bracket Orders etc.

4. Order Types (Fido)..

   The material at this link provides details of various order types available at Fidelity ... Market Orders, Limit Orders, Conditional Orders, etc.

5. Circuit Breakers.

   To implement rule 80B of SEC, the DJIA levels at which market pauses/closes are set every quarter, and published at this link.

6. Vanguard ETFs.

   Material about Vanguard's ETFs.

7. America's 'Comeback'.

   Interview with David Walker, who was the head of GAO ( Government Accountability Office ) from 1998 thru 2008.

   
   
8. Federal Reserve.

   US Federal Reserve was established on December 23, 1923 when President Woodrow Wilson signed Federal Reserve Act into the law, and by November 16, 1914 the Federal Reserver started the operation via 12 branches. Another significant change occured in 1935 when by the "Banking Act" the Federal Open Market Committee (FOMC) was formed as a seperate legal entity. Over the years we have had notable Chair-men/women viz. Paul Volcker, Alan Greenspan, Ben Bernanke, Janet Yellen, and Jerome Powell. (Personally I consider the Chairperson of FOMC to be the most powerful individual on the planet, rather than the POTUS.)
   
   Federal Reserve branch in St. Louis Missouri has massive database of various different economic data, and it is made available via web   FRED   (Federal Reserve Economic Data) for free.
   
   Notably the Federal Reserve provides Excel Add-in for reading the data. The API page has documentation about accessing the data. I use Excel Add-in as well as Paython/Pandas DataReader.
   
   

9. SEC (Securities and Exchange Commission) links.
   
   SEC was established by the United States Congress in 1934 as an independent, quasi-judicial regulatory agency to regulate the securities markets, protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. SEC has the power to make various regulations and to have them enforced as well. There is a very very large amount of material available at SEC including the Mutual Fund / Exchange Trades Funds Prospectus, and various Company filings. All of which is available for free at EDGAR (Electronic Data Gathering, Analysis, and Retrieval system).
   
   Links to few of the useful material are given below:

   1. Trade Execution: What Every Investor Should Know.
   2. Trade Execution: Rules Your Brokerage Firm Must Follow.
   3. Trading Halts and Delays.
   4. ETFs.
   5. Market Indexes.
   6. Variable Annuity.
   7. Links to topics.