Stock of the Day - Update
Jones Soda Co.
Wednesday’s Intra-day Price: JSDA - $19.87

The stock is now up 154% since the original blog analysis!

This is a quick update of a stock that has been covered numerous times over the past 6-7 months on the blog.

Here are the three latest entries:
January 19, 2007
Jones Soda Company JSDA

The fundamental numbers of JSDA are not in the same league as HANS but the chart does catch my attention. If HANS makes another run, JSDA and FIZ may tag along for the ride. If a risk/reward ratio of 3:1 or better develops, I will grab shares and!

52% gain since this post two months ago.

December 18, 2006
Stock Predictions for 2007 - Oh NO!

“JSDA – 10.03, as mentioned last week, Jones is a low priced sister stock of Hansen Natural (HANS) which has potential of a nice move and possible up-trend in 2007. The Ideal entry area is along the 200-d m.a. with shorter term entry points along the 50-d m.a. and above $10.50 on the point and figure chart”

98% gain since this post three months ago.

August 18, 2006
Ten Stocks under $10

“JSDA - 7.80, risky as it tests its 200-d m.a. The sister stock of HANS may have downward pressure if Hansen Natural continues to stumble below its 200-d m.a. Stocks move in packs so be wary if HANS breaks down further”

154% Gain since this post seven months ago

Using industry analysis can play a very important role when looking for quality stocks to place into your portfolio or looking for laggards to sell. As we know, sister stocks travel in groups and 50% to 75% of a stock’s move can be attributed to the industry group itself. Therefore, it is a smart idea to study which groups are the strongest and which groups are falling out of favor.

Looking below, we can see that several Oil & Gas related industry groups are topping the charts along with metal related groups over the past week. They are the groups making the strongest advances over the past five trading days according to the data from IBD. I do gather the majority of my data from the electronic version of Investor’s Business Daily and have been a member since 2001.

When viewing the strongest one week and year-to-date moves, we can see that growth stocks are not leading the market as industrial related industries are making the best gains. Oil, metals, machinery, energy and trucks are populating my screens which tell me that the market is in defensive mode, not offensive and that is why much of my account is in cash (among other reasons).

Top 10 One Week Industry Moves:
Diversified Operations
Metal Ores - Gold/Silver
Oil & Gas - Field Servic
Oil & Gas - US Expl Pro
Utility – Electric Power
Metal Prds - Fasteners
Comml Svcs - Printing
Tobacco
Food – Misc Preparation
Oil & Gas – Drilling

Top 10 Year-to-Date (YTD) Industry Moves:
Oil & Gas - Machinery
Energy - Other
Auto/Truck – Original Eqp
Machinery - Farm
Oil & Gas – US Integrat
Machinery - Constr/Mining
Trucks & Parts – Hvy D
Comml Svcs - Schools
Machinery – Tools & Re
Elec – Parts Distributors

It is also important to follow the weaker industries so you can determine the overall market trends and trade according to the stocks in favor. Several hi-tech growth industries have fallen to the bottom of the pile over the past week and for the year. Multiple computer and internet related industries are leading the market to weakness as retail and finance are not far behind. Of course I can’t forget to mention that the residential building industry has lost its recent steam but seems to be gaining some support near multi-year lows. This could be a buying opportunity area for longer term value investors if support holds.

Bottom 10 One Week Industry Moves:
Bldg - Resident/Comml
Soap & Clng Preparat
Retail – Consumer Elec
Internet - Content
Retail/Whlsle - Jewelry
Retail – Leisure Products
Finance – Investment Bkrs
Telecom - Equipment
Leisure – Hotels & Mot
Bldg - A/C & Heating

Bottom 10 Year-to-Date (YTD) Industry Moves:
Computer – Peripheral Eqp
Computer Sftwr - Desktop
Finance – Investment Mgmt
Retail/Whlsle - Cmptr/Cell
Bldg - Resident/Comml
Finance – Investment Bkrs
Retail – Consumer Elec
Retail – Leisure Products
Medical – Ethical Drugs
Computer-Manufacturers

With nothing on the line, emotions fall to the wayside and you will probably miss the opportunity to learn something about yourself. Trading in the market is essentially learning about yourself and how you react to positive and negative situations. A great speculator once said that the market is an expensive place to find out who you are. However, you will never find out who you are by trading a paper account or virtual portfolio.

Paper trading seems to be the most over emphasized technique offered by market theorists, educational elite, market novices and/or market frauds. While learning the pure basics, I can see why a novice investor may want to paper trade; to see the results of the developing system but I will warn that these results are completely false. The results will not contain the emotional decisions that go along with risking your own cash. Anyone and I mean anyone can paper trade successfully.

It’s simple: place a trade and hope it goes up and if it doesn’t, you have no worries because you can’t lose. Therefore, you are apt to forget about sell stops, position sizing, risk-to-reward ratios and you will never experience the pressures of an up and down market when your position shows a profit or loss. The emotional imbalance that occurs when you really start to lose money is not present. Don’t fool yourself by believing the results of your paper trading or virtual portfolio. These things may give you some confidence in your system but they don’t prove a damn thing in the real world. The real world, specifically the stock market, is run by emotional human beings. People make decisions that are irrational and base their trading decisions on fear and greed. Paper trading lacks fear and greed because there is no gain and no loss; therefore there is no consequence to deal with.

We should all know by now that emotions are tied to our decisions in the markets so we can only get accurate results through actual trading. Learn to ignore the talking heads on TV that claim they are up over 1000% trading a fake account. What really makes me laugh is the person that sets up a virtual trading scenario and then allows each participant to trade $500,000 or more in their account. If you are going to trade a fake account, at least keep it authentic so you can try to learn something within the scope of reality; potentially money management.

I setup one virtual trading competition a few years back and I only allowed each participant to start with $10,000, a reasonable amount, an amount that most people start trading with. Traders are undercapitalized with $10,000 but most people start trading with this amount. The competition was fun but it was not real for me or the others. I didn’t care what risks I took and I never had a problem pulling the trigger which does happen in real life. I did try to keep my trades in line with my real life account but it varied slightly. I witnessed other traders making 20 trades per day or 20-50 trades per week. This is not real because the commissions alone, even with a discount broker will wipe you out (we weren’t day trading in this competition). I did allow margin but I saw investors abusing the fake power of leverage in their virtual account, again, playing the game for fun instead of learning something valuable.

Professors and the like teach theories while investors actually do the trading! Why would I waste my time playing for fake money when I can learn and do for real? If you want to test a system, open an account with real money, even a minimal amount and give it a try. Make sure you use enough money to allow emotions to be attached to your decisions. Without the emotional attachment, you are cheating yourself and your potential results.

This article was originally written by me back in 2005 under a title: Trade for Real

I updated the article to my current beliefs and renamed it after some excellent advice from Copyblogger during a recent exercise: Headline Remix Madness – Part Two

“WE SIMPLY CANNOT sustain an economy based on innovation unless our citizens are educated in math, science and engineering,” said Microsoft Chairman Bill Gates, who recommended that the nation double its graduates by 2015. Gates testified on U.S. competitiveness before a Senate committee Wednesday on Capitol Hill.

I travel and write on a popular forum started by the author of Rich Dad Poor Dad, Robert Kiyosaki, and I can’t believe the vast amount of ignorance towards basic education (and higher education). Many people of the forum believe that math, science and engineering are worthless in today’s society and argue that business is the “way to go”. They argue that they don’t need a public education or a college education to succeed and actually want to do away with advanced mathematics and science because they “don’t use them in the real world”. One guy actually said that schools should offer classes in critical thinking and common sense instead of advanced math and science. Really? I guess he will just invent the next microchip or vaccine using common sense while walking down the street. Last time I checked, mathematics is the sharpest tool for developing a critically thinking mind.

Too many of these people complain (or place blame) that society and the government wasted their time in school. Maybe so but I attended public school and graduated with a degree from college and never blamed anyone for wasted time because if I did waste anything; it was my own fault.

You don’t need a college or even high school degree to become wealthy and successful but the country and human evolution needs educated people that can fuel the growth of the economy. Maybe some of these ignorant people just can’t see past their own false beliefs and fall prey to an author that continues to sell fear to make his own fortune. It’s easy to place blame on others for your own faults in life but remember that only you can change your path in life; educate yourself!

If it wasn’t for people that have acquired this advanced knowledge, some Rich Dad followers wouldn’t be writing on their computers on the World Wide Web by using a wireless router on a broadband connection while watching HDTV on a 60” flat panel LCD. They seem to forget that technology advances society and business can only succeed, grow and increase revenue by taking advantage of these technologies.

How can our society advance technologies if we eliminate the basic subjects in schools? We can’t have 100% business people and 0% intellects and inventors. Only so many people can run successful businesses if the country lacks intelligent minds that increase and develop future technologies. And education is the only way to develop these minds in the fields of MATH, SCIENCE and ENGINEERING.

Too many people on the RichDad forums talk down to these subjects and completely miss the point of human evolution. Without technology – you and I have NOTHING!

What is technology?

Technology is a broad concept that deals with a species’ usage and knowledge of tools and crafts, and how it affects a species’ ability to control and adapt to its environment. In human society, it is a consequence of science and engineering, although several technological advances predate the two concepts.

Technology has affected society and its surroundings in a number of ways. In many societies, technology has helped develop more advanced economies (including today’s global economy) and has allowed the rise of a leisure class.

We use technology to control the world in which we live. Technology is people using knowledge, tools, and systems to make their lives easier and better. People use technology to improve their ability to do work and increase wealth.

Bottom line: I enjoyed the original book Rich Dad Poor Dad but I feel that Robert Kiyosaki’s latest books and herd of sheep are feeding on fear and false pretenses. I have argued in these forums that the same people who argue against basic education also make numerous spelling and grammatical mistakes in their writings. I pointed this out and they explained that they don’t have the time to check their spelling. Maybe they didn’t learn how to use a spell check (a simple technology) or they are just too lazy to care. Either way, I wouldn’t want to do business with them. Our education system could use a makeover but eliminating math, science and engineering would be devastating. The lack of promoting these subjects is already hurting us around the world.

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