Category Archives: strategy

What do the stock advisors invest in?

Have you ever wondered what your stock advisor invests in? Do they actually invest themselves in what they recommend to you?

I used to have this nagging feeling that I’m being conned by my stock picking advisor. Even though he was probably trying his best to do his job right and he is actually a certified advisor and works for a large respectable company in the field.

I suppose I’m not the typical investor who agrees to what the expert in the nice suite and tie tell them. I am constantly dissatisfied, in a general sense, not just when it comes to picking individual stocks to invest in… I always want to understand the reasoning behind decisions taken regarding my financial health, let alone my physical health.

My advisor was kind enough to let me in to his thinking process and I discovered that he has a very simplistic choosing system to build my portfolio. He asked me some questions and decided on the right mix of stocks to bonds according to his understanding of my risk tolerance at the time. I was young, single and had a lot of spare income.

He actually never picked single stocks for me, he picked mutual funds and he did that according to their variance in price! He simply sorted the list of all mutual funds and took the top ones – the ones that vary in price the least in several major categories.

After he had the full percentage of the account invested in those, he switched to the bonds portion of my account and started buying bonds in a similar way, picking some of his favorites in each major category according to their variance.

Now, I’m sure this is a responsible and professional way of building a portfolio but I would never recommend anyone do it themselves.

This was a long time ago and I got frustrated when the stock market was booming at 1995 and 1996 and my account barely moved up while at other times, when the market slowed but still was moving up, I was losing money!

I was earning a lot of money comparatively to my spendings at the time and I wanted to enjoy life. I was a student and lived in a shared apartment with 2 other students. I also studied to be a skipper and when that was done and I received my skipper’s license I knew what to do with the money. I bought a beautiful 30 feet sail boat, sailed to Herzlia’s marina and lived there in the boat. Ah, the life!

That’s how I ended my first phase of learning about the stock market.

Later, in one of my endless trips to the USA as the CEO and owner of my start-up I had a stop over in London’s airport and I went to the bookstore. I love reading books, be them airplane novels or some dry analytical subject. So there I was, I had 3 hours to my next flight and I was browsing the book shelves. Adjusting to the British English was nice, It was pretty similar to the American English that I was used to, but different enough to make it a kind of curiosity. It made me nostalgic, in high school we actually studied according to the British English spelling and I saw words like colour and litre winking at me and telling me this is the correct spelling here :)

Actually litre is not only spelled differently in the USA, it is actually a different measuring system altogether.

But I digress, I wanted to write about the book that caught my eye at the airport, it was actually a series of books, the Motley Fool books. Let me mention that this is in 1998, before Amazon and Google and the commercialization of the Internet, actually it was 3 years before that, in 1995, but it was still mostly non commercial. I bought there “The Motley Fool investment guide” and “The Motley Fool Rule Breaker, Rule Maker”.

These were fascinating books and I learned a lot from them. I also learned that investing is a tricky business and that there are many different styles of investing. Many well known wisdoms are actually very stupid when you check them out and other ideas are either flat out wrong.

After reading these books I had information overload and experienced ‘Analysis Paralysis’. I had to organize the ideas I learned and I wanted to test them out in the real world but I didn’t have any money. I started what’s called “virtual” trading. It was tedious and not as exciting as earning or losing real money and I lost interest after a few weeks.

A few years later, around 2005 my wife, Anat found an evening course about self trading stocks in the american stock market, it was called and it was taught by Kobi Eldar who just returned from a sabatical in the USA where he worked in the field. We drove once a week in the evening to a two and a half hours lecture with some computer practice. It was slowww and tedious, perhaps I was too advanced for this course but I did learn some new stuff, like technical analysis and day trading.

I never succeeded in day trading. I lost money too fast for my account to tolerate.

What I did learn from Koby was in his advanced course on options. This was much more interesting and in it I learned the basics of options and some of the advanced material regarding options.

We, Anat and I flew to the Money Show in Las Vegas with Kobi Eldar and some other students of him. It was a lot of fun and we went to different lectures during the three days there and we also gambled at the casinos.

As usual, I bought a lot of books there. The one that I learned the most from is The Volatility Course by Fontanills, George A. and Gentile, Tom. I was really impressed by the professional lecture by Mr. Fontanills and bought the heavy book. It wasn’t the easiest read and I had to really try some of the things he teaches there for myself before they really stuck and until today, I know I only use a small part of what I read of in that book.

Fast forward to the present, and I use a combination of ideas from several different books, courses, lectures and some of my own. I am quite happy with what I’ve got at the moment. I follow this flow chart I created and you can download for your self for free here.

For a detailed explanation of the different parts, subscribe to the totally free mini course on this trading system.

It is a low frequency system that needs your attention once a week for a few minutes. You can always use it more frequently but it is not necessary. Actually it is not recommended! When I over-trade, I lose money more often than I make a profit.

It took me time to discover my right rhythm and I’m happy I found it at last.

Welcome to my new blog here at

Hey! I’m so excited, hope you’re too :)
I have so much to give you and if you want to learn about me, why I’m a stock market geek ;) and why I’m doing it and what the hell is my story… just go and read all about me here.

In this blog you will learn about some highly profitable trading and investment systems which require low maintenance. If you’re like me, you’re probably disappointed with many false promises and unreasonable systems. Well, this time it’s different, here you will learn about tried and true systems and I will discuss all the advantages and drawbacks of each method I use. Oh, and by the way, I only discuss systems I personally use.

I plan to add in the near future to this web site an automatic service of stock filter based on one of the best systems I know – double bottom divergence in MACD-H. It will be ready by the end of this year – 2013.

Candlestick.js project on github

Candlestick.js beautiful stock charts in HTML5 canvas, free and open source

Searching the web for a nice tool to display stock charts left me with the conclusion I need to start this myself.

The other libraries for this were not exactly what I wanted so this new github project is the result of that.

The demo page will be up soon. I wanted to let you know that it is out there as I know others need this for their web site too.

The project is very simple, you only need the main Candlestick.js file – the rest is for the demo around it.

Here are the steps to use it:

  1. Include the js file in your html page in the <head> section like this:
    <script src="Candlestick.js"></script>
  2. Add a canvas element where you want the chart to appear in the document body:
    <canvas id="myChart" width="600" height="400"></canvas>
  3. you need to have a data file for the stock you want to display in the format of yahoo’s finance site, go to pick the ticker you want and click on “Historical Prices” then download your file using the link at the bottom called “Download to Spreadsheet”, put this file on your web server.
  4. call the js function that actually draws the chart:
    var options = {
      title: 'The title for the chart'
      , indicators : [
        ['EMA', 'c', 26]
        , ['SMA', 'c', 200]
    $.get("theHistoryFileFromYahooFinance.txt",function(data) {
      Candlestick("myChart",data, options);

Here is a picture of the demo chart as of right now.

Candlestick.js project on github


Is it a good time to buy AAPL?

Looking at a recent chart of Apple inc. or AAPL you can some interesting divergence patterns. Divergence on the weekly charts make high probability low risk trades.

Here is the chart with some colorful lines drawn on it for this post.


First the red line from April to September of 2012 where the stock price went from a peak of about 630 down to 530 and back up even higher to 690. at the same time the MACD-Histogram which is the black bar graph below went from a higher value in April to a lower local high value in September. This is what’s called a “Double top divergence” and signaled the down trend afterwards.

Now look at the green area where the stock price goes down in a fairly orderly manner with new local lows up until April 2013. At the same time the MACD-Histogram does not behave in a similar way, it actually goes up! this is a divergence, but no double bottom yet.

In the blue area, where the stock looks like it traces a ball bouncing off a floor at 390, the MACD-H goes from slightly negative to mainly being in the positive side in June and July.

This is a weaker signal but still it is a signal to the up side.

I entered a trade 10 days ago, it went like this:

Buy 4 AAPL mini call with 330 strike (deep in the money) and January 2015 expiration (lots of time) this cost me 92.50 per share and the stock was trading at 398.

Since mini options are for 10 stocks each, I paid $3700.

My plan is to wait for the stock to go up and the options will follow. When the stock goes up 10% and the options go up more than 30%, I will sell 3 contracts and take out my risk for the 4th contract – it will be like free money!

Then I will sell “covered calls” on this one contract to squeeze more money as I wait for it to go up even further.

An interesting situation will arise if the stock goes up and I may enter a put option or maybe several.

I promise to update!

Ami Heines

Home made list of stocks March 2013

Once a month I filter stocks according to Joel Greenblatt’s Magic Formula. In his book, “The little book that beats the market” he explains the reasoning behind a simple yet powerful stock filter.
He claims the system is a very good starting point for investing in stocks and explains how to generate a similar ranked list of stocks.
Here is my interpretation of the system with some tweaks.

1. Open and click on “Stock screener”
2. Set the filter criteria:

  • Market cap min: 45M
  • Return on assets (TTM)(%) – minimum = 0.05
  • P/E ratio – minimum = 0.5
  • Average Volume min 50000

3. To get all 3845 stocks out to a spreadsheet I cheat!

  • I use Google Chrome as the browser, the following is specific for this browser.
  • ctrl+shift+i – to open the developer tools
  • I click on the magnifying glass button at the bottom of the window to inspect an element on the page
  • I click on the “Show rows” select box
  • At the HTML code in the developer tools I click the small triangle to open the details
  • In the line “30” I Double click the first 30 and change it to 4000 I close the developer tools
  • I now select the “30” in the regular page, this will actually send a request to google’s system with “4000” as the limit.
  • Now I do ctrl+a to select the whole page, ctrl+c to copy and switch to a plain text editor and paste
  • The plain text editor helps filter out images and other fancy unimportant stuff from the web page
  • Now I copy from the text editor to a spreadsheet and clean the rows above the main table.

4. In the spreadsheet, I do the ranking and some more filtering

  • Sort by ROA (descending order), remove all stcoks with – as ROA (they don’t have assets?!
  • Add column titled: ROA rank and type 1,2 and drag down all the way to the end to complete the ranking
  • Sort by P/E (ascending)
  • Delete rows with lower than 0.5 P/E and type 1,2 and drag down all the way to the end
  • Add column “sum rank” and in it add the two ranks
  • Sort by sum rank, ascending and add final rank, type 1,2 and drag down.
  • Lastly, I like adding a percentile to the rank – I look at the total number of tickers left and divide the rank by the total number of tickers and present it as a percent.

sometimes I filter out stocks with “ADR” in their name, these are foreign stocks
I need to also filter out financial and utilities – that’s what the book says.
Here is the list for March 2013