| ________________________________________________________________________________ The Contrarian Trader -Since 2005- ______________________________________________________________________________ |
 |  |  |  |
My name is Robert Desmond and I live in New York. I have been trading stocks for more then 20 years. This is the story of my initial experiences with trading and why I have become impassioned with helping to inform the small investor of how the manipulation by Wall Street and Washington is done. I opened my first trading account with Charles Schwab. My first trade was 75 shares of Lojack (LOJN). Although it was a small position it represented my entire net worth at the time. The gratification of having ownership of a company gave me a sense of empowerment and after realizing a profit in that position I became instantly in love with the stock market. Soon after closing my LOJN position I was approached by a full service broker or as he called himself a “Financial Consultant“. His firm is a well known Fortune 500 company. My first trade with him was Micron Technology MU) and I made a profit. Our next trade together did not go so well. He called me one day suggesting I purchase some Deutce Telecom (DT). I new nothing of the company but authorized him to make the purchase. The following day his firm publicly downgraded the Deutch Telecom! Of course I called him and questioned what had happened. He apologized for what he characterized as an “ unfortunate and unforeseen event” From that point on I decided to learn the business of trading. I began reading the Wall Street Journal and books about the stock market as well as books on trading stocks and stock options. Some month later I received another phone call from my broker. He suggested that I buy 3Com. Now I was kind of ticked off. I asked him, had he not read that 3 Com was having troubles and that the near term future was not bright? He replied that his analyst pounding the table on the stock. My instinct prevailed, I said no. He was stunned. Sure enough, a few days later his firm came out and down graded the 3Com.I fired him, my guess in hindsight is that his analyst was pounding the table on 3Com but only because he was laughing hysterically with how big his bonus was going to be from that bait and switch operation. After leaving the full service firm I opened an account with a younger and cheaper discount broker. By this time my trading operation was going well through Schwab but I now considered trading a business rather then a hobby and was concerned about commissions and expenses. New online discount brokers came to the market and undercut Schwab's commissions by half.. I began subscribing to Barons, The Financial Times of London and Investors Business Daily. I read many books on the trading of stocks and equity options. But the book that really changed my life was a book I read called Reminiscences of a Stock Operator. This is my bible. My copy is dog eared and highlighted. I have read it to many times to count. It was one of the very few books that gave you the insight of just how Wall Street operated. Written back in the early 1900’s it was clear that manipulation on Wall Street is a critical factor on Wall Street. So critical in fact that to ignore it meant certain failure but to understand it meant great wealth. My education was further enhanced by attending seminars on charting and technical analysis. But although I had taken control of my future as a trader I would soon realize that even the best traders were, as well as myself were going to learn a very hard lesson. The market takes no prisoners. March of 2000 marked the end of the go go momentum trading era it also signaled an end to the buy and hold era. The downfall of Enron and WorldCom and the subsequent perp walks and convictions of their CEO's, the settlement of charges by Sandy Wyle, CEO of CitiGroup and the testimony of Merrill Lynch Analyst, Henry Blodgett and Solomon Smith Barney Analyst, Jack Grubman I saw the light. I saw how much of a set up it had all been. These faces I had seen dozens of times on CNBC. CNBC was more than happy to be the conduit by which these jokers would be able to manipulate the markets, their leverage? Advertising dollars and access. It was all a lie. For a couple of years CNBC had made an attempt to clean up it's act. But by 2003 when the markets began to rally they were back to their old ways. In addition to CNBC we now have Bulls and Bears on Fox. Joe Battapaglia who CNBC finally pulled off the air as the market was tanking in 2001 was now back on Saturday mornings. You would have through that after the scandals of that followed the 2000 stock market crash that the scandals that Wall Street would have cleaned up its act. The Sarbanes Oxley legislation was after all supposed to govern the way publicly traded companies acted by holding the executive management teams of these companies liable for any inconsistent statements or policies. This legislation is an absolute failure as all it did was to add another layer of expense on to these companies making them less profitable. Ask yourself, with the trillons of dollars in losses has anybody gone to jail for failing to comply with Sarbanes Oxley? Washington's liberal easy money policies gave wall street the green light to embark on a new bubble which was the sub prime and Alt A mortgage scandal. It was in 2005 that my contrarian radar first caught hint that there was going to be a major correction in the stock market. What was it that lead me to believe that the major banks were going to get crushed. It's simple, I was reading an article in 2005 in the Wall Street Journal with regard to The Bankruptcy Reform Act of 2005 which was a major piece of legislation being pushed hard by the Banking Lobby. The major provision that caught my attention was that the banks wanted to make credit card bills exempt for bankruptcy discharge. Remember at that time the economy was strong and robust people were spending employment was below 5% and corporate profits were strong. As a contrarian I had to ask myself what was it that the banks saw coming that until that time the public had not? What the banks had done with that assistance of the Federal Reserve was to underwrite mortgages to everyone and anyone that could breath. What did Wall Street care? After all they would not hold these mortgages they would securitize the mortgages and sell them off to the rest of the world as AAA Rated paper. Credit card applications were coming in pre approved with low interest “teaser” rates. The banks would make every effort for you to be a couple of days late so they could readjust the card holders rate to 25%. It was no big deal at first because another credit card company would send in a pre approval and their own teaser rate and you could just balance transfer from the 25% rate. What the banks saw by 2005 was that there was a game of musical chairs going on in the credit card industry and that at some point the music would stop and that each bank would get there fair share of card holders who were overextended on credit cards, home equity lines of credit and with primary mortgages with teaser rates that in the coming years would soon adjust to much higher rates. By 2007 the secret was out, interest rates were headed higher and people had begun to default. In November 2007 as the S&P 500 neared it's 2000 peak we identified a super cycle double top and went short the Dow Jones Industrial Average using the (DXD) and the NASDAQ using the (QID). We did so at a time when the market had not yet realized that the party was over and these short fund ETFs were out of favor. With the strong down trend in 2008 it made for one of our best years ever. It's not because I am a genius it's because I have learned to question prevailing and conventional wisdom because it is what a privileged few on Wall Street want us to believe so that they may act in selfish ways knowing that the small investor and tax payer would always be their back stop against failure. The thugs on Wall Street have Washington D.C. and the media in their back pockets who do you have in yours? Please join the gang and take advantage for our 14 Day Free Trial Offer. |
I have made a very good living by using my own Contrarian Trading System.TM I keep it simple and I beat the Wall Street crooks at their own game. As a subscriber you will have access to my watch list and my portfolio. I will be providing buy and sell targets. I post when I have executed a trade and at what price. I always us a trailing stop loss order so please don't take a large hit and wait to recover. Take your losses when they are small and “live to play another day“. This is not a day trading system, I am a short to intermediate term trader. I will post on average 10 trades per month. The stock market is like any other market, every once in a while the market will throw a sale. That is why you will note that most of my long trades will be made on down days and my shorts executed on up days. I go the opposite direction of the prevailing sentiment. |
| 14 Day Free Trial Offer |