Free Business and Investing E-books

I just came across some great free business and investing e-books on Amazon.com.

Get them Here. You can upload them to almost any device with the Kindle App.

These books caught my attention:

• Apples Are Square
• Kaplan Technical Writing
• MBA Fundamentals Business Writing
• Campus CEO
• Tribal Knowledge: Business Wisdom Brewed from the Grounds of Starbucks Corporate Culture
• Democratizing Innovation
• Money Girl's Smart Moves to Deal with Your Debt

Enjoy your free brew while it lasts!

Written by Michael Bigger. Follow me on Twitter and StockTwits.

So, You Want to Write a Book about Trading?

It’s been a dream, hasn’t it?

I’m excited because I am about thirty days away from publishing my book about creativity, flow, and trading, and I want to share my journey with you.

What got me thinking I could publish a book? I am French Canadian, and I can’t write in English very well, so great writing skills can’t be the answer. Seth Godin answered this question in his book Linchpin: Are You Indispensable? According to Godin, creating and inventing are the most powerful drivers of value creation in a competitive and connected society. Writing is creating, and I find it highly rewarding. Writing makes me a better trader and investor.

This will be the second book I have published. The first one was In Praise of Speculation! It is not for everyone, but this is what Aris David (@fledglingtrader) said about it:

Honestly, I'd pay more than $30 bucks for it (now priced at $3.99). It is a GEM and the value you get out of it will make someone wealthy—if they just appreciate what speculating with safety is.

I use Amazon.com’s Digital Text Platform (DTP) to publish my work globally and instantaneously. My books can be read on most electronic devices such as the Kindle, iPad, BlackBerry, PC, Mac, etc. How cool is that?

Getting back to the book I am currently working on, I completed the rough draft this week and sent out a few copies for review. The first comments I got came from Sean McLaughlin (@chicagosean), who wrote a chapter for the book about the minimalist trader’s mindset. McLaughlin blogs at chicagosean.com and he is a great “person to follow on StockTwits.” Here is what he had to say about the work:

I definitely achieved flow when reading your rough draft...I've just completed it! :)

Great work! I don't really have much to add that you haven't properly covered. I think this work will resonate with many people in your audience.

The world is transitioning from "proprietary" information to shared, or crowd sourced and collaborated information. Your work here is a perfect example of this and hints at the potential. Exciting stuff!

Thanks for including me in the project. If you need anything else from me, don't hesitate to ask.

Best of luck!!

In the next few weeks, I will be posting more about this journey. Stay tuned! If you want to learn about my experience with self-publishing, feel free to ask.

P.S. If you are a blogger, I would be happy to send you a free copy of the material if you promise to write a review (good or bad) about it on your blog. Ping me if you’re interested.

Written by Michael Bigger. Follow me on Twitter and StockTwits.

A Trading Experiment

Recently, I read Something Incredibly Wonderful Happens, Frank Oppenheimer and the World He  Made Up. This is a fabulous book about the life of the famous physicist. It is a book every trader should read. Here is why.

In this book, Frank Oppenheimer discusses the importance of experimentation and play:

"So much time is spent just playing around with no particular end in mind," he wrote. "One sort of mindlessly observes how something works or doesn't work or what its features are, much as I did when, as a child, I used to go around the house with an empty milk bottle pouring a little bit of every chemical, every drug, every spice into the bottle to see what would happen. Of course, nothing happened. I ended up with a sticky grey-brown mess, which I threw out in disgust. Much research ends up with the same amorphous mess and is or should be thrown out only to then start playing around in some other way. But a research physicist gets paid for this 'waste of time' and so do the people who develop exhibits in the Exploratorium. Occasionally though, something incredibly wonderful happens."

. . . He asked his friend Bob Karplus, a physicist at the University of California at Berkeley, if he thought there was anything a young person must learn before it is too late, and Karplus' answer was "play."

Be creative and experiment.

In 2011, you might want to try the following experiment:

In a sandbox account, create a notional neutral (long notional-short notional=0) portfolio of stocks using the best methods you have developed to find long and short candidates. Track the return of the portfolio and see how it performs over time.

As you are running the experiment, ask the following questions:

• Should you rebalance your portfolio at specific intervals of time to account for changes in your selection criteria or changes in the value of each position?
• Can you think of any ways to improve your results?
• Are you learning anything?
• Have you observed anything unusual in how the portfolio is performing?
• Are you generating alpha? If not, why not?

Written by Michael Bigger. Follow me on Twitter and StockTwits.

99 Percent of Traders Are Missing Out

If you are a non-blogging trader you are missing out big time.

Seth Godin and Tom Peters explain the importance of blogging for everyone, including traders, in this one-minute video:

Did you hear what Seth said about metacognition? In a nutshell, blogging compels traders to sharpen their trading thesis by thinking it out loud.

On the Internet, a trader’s home base is a blog. Look at it as your Internet real estate, your home turf.

How do you get started in building your thinking-out-loud platform? Start simply. Write without worrying about what will resonate with your audience. Heck, you won’t have an audience at the beginning, so who cares? If in doubt, view your blog as a scrapbook where you collect ideas, insights, hunches, and everything else you dream up. See my post about the importance of writing everything down.

If you're so inclined, step it up a notch by writing about topics other traders might find helpful. Being helpful will attract a small crowd. You now have an audience. Congratulations! The Internet works magic that way. Everyone is a genius at least five minutes a day, including you. Capture these brilliant moments and share them with this new found audience.

I started my own blogging venture by writing financial stuff for my kids. The initial posts were mediocre at best, but so what? Eventually, I got better at it, and some traders reached out to me by commenting on the posts or by retweeting them on StockTwits and Twitter. I have been learning what resonates with like-minded traders, and I have nudged my writing in that direction. I followed the Internet lead, stepped up my game, and cranked out better posts. I now blog at biggercapital.com and on the StockTwits network at thisisbigger.com. Not bad for a French Canadian who can barely speak English!

Get out there and broadcast your insights to the world. Cool?

Written by Michael Bigger. Follow me on Twitter and StockTwits.

Great Spread Trading Posts from Dynamic Hedge

I finally caught up on all the great blog material that accumulated in my Google Reader over the last few weeks. While emptying the queue, I came across some informative spread trading posts written by Dynamic Hedge.

Since we announced that we have been working on an educational product about spread trading, many traders have approached us to learn more about it. If you have an interest in learning about spread trading download our free e-book titled Coolest Financial Tools and we will notify you when the product becomes available (the download icon is located on the right side of the landing page).

In the meantime, there is plenty to learn about spread trading from these Dynamic Hedge posts:

• GDX – GLD Volatility Play
• Know When To Walk Away
• Cotton Spread — Volatility Porn
• Gdx – Gld Spread — Flat
• Wrong Move, Smart Guy

Enjoy!

Written by Michael Bigger. Follow me on Twitter and StockTwits.

What Howard Said at Le Web

Howard Lindzon gave a great presentation about StockTwits, entrepreneurship, and opportunities in finance at the Le Web conference held in Paris a few weeks ago. I agree wholeheartedly with Lindzon’s view that many vertical niches in the financial space are untapped. Lindzon delivered great advice to entrepreneurs wanting to exploit them. He concluded his presentation by emphasizing the importance of finding market "slivers," attacking them, and remaining focused on the simple stuff.

Google the following terms and you will get an idea of what Howard means by "slivers":

• Stock Twitter
• Minimalist trading
• Traders and creative flow

Yes, they are tiny today (StockTwits, not so tiny). However, tiny in a market that is globally connected could be big and very profitable, especially if this wealth creation trend persists.

This is the time to claim your stake!

Happy Holidays!

Written by Michael Bigger. Follow me on Twitter and StockTwits.

The Pitfall of Feeling Like a King

Last weekend I updated my wealth spreadsheet and I felt like a king. It reminded me of days when as a teenager selling knickknacks on the street of La Tuque I would go home at night counting my bounty countless times, even smelling it. Hey, money smells better than the local paper mill.

For capitalists money is a way to keep score and man does it feel good when the magic Excel grand total cell updates to a new all time high.

My excitement lasted a brief moment though as I reminisced about how different I felt during the bear market of 2007 and 2008.

In late 2008, I went kiteboarding with a very successful friend of mine who told me before we hit the liquid for a sick session that he had suffered major losses in his investment portfolio. He was considering going back to work to refill his money tank. Ouch!

Our investment portfolio suffered as well. However, following the sage advice of Shelby Davis, I bought stocks with both hands.

“Bear markets make people a lot of money; they just don’t know it at the time.”

–Shelby Davis

The action I took then drove the magic Excel cell all the way to a new all time high. For investors, it is the actions taken then that are making money now.

What should we be doing now? The way I go about answering this question is to flip Davis’ statement on its head:

Bull markets lose people a lot of money; they just don’t know it at the time.

I guess this explains why I recently tweeted this —@biggercapital: I will probably be miserable for the next two years. All I want to do is sell $$

Feeling like a king makes me real nervous. I never make money one or two years down the road when I feel like that.

Are you feeling the effect of the magic Excel grand total cell?

Written by Michael Bigger. Follow me on Twitter and StockTwits.

Trading the GLD-GDX Spread After The Last Fed Announcement

On the morning of November 2, before the open, we bid $6 for the 4*GLD-9*GDX spread. The spread had closed at about $10 the night before, but we didn’t want to be too aggressive before the Fed announcement later in the day. We felt there might be an opportunity to buy the spread for less than $10 after the announcement. The spread traded close to $10 for most of the day, and we decided to leave the $6 bid in before the announcement.

What happened after the announcement surprised us. Gold sold off, but the price of the spread declined because GDX did not sell off as much as gold. Typically, the spread price will decline with a significant increase in gold, not when gold sells off. At about 2:55 PM, we bought the spread for $5.90. We immediately offered it at $11 and were lifted less than an hour later for more than a $5 gain per spread—not a bad profit for such a short turnaround.

Written by Norm Winer. Follow me on twitter and StockTwits

Sharpening Your Trading Edge

But when the world gets more challenging—scarce resources, predators, parasites—you need to innovate.

-Steven Johnson

Don’t you feel that as a trader, the world we live in gets more challenging every single day? Of course it does. When you and I trade one stock with an opposite view on its outlook, you are trying to take a dollar away from my wallet. And I am trying to do the same to you, faithful readers.

Recently, I wrote The Best time to be a Trader is Now! In the comment section of that post, BC was quick to point out:

I guess I'm missing something here. All this stuff is available to everyone. Hedge fund risk adjusted returns have fallen in last 10 years, not risen. The first statement I'm sure you can debate. But how do you answer the 2nd statement. It's a fact, not opinion.

I mean you've really talked with traders who tell you it's easier to trade now as opposed to 10 years ago? That there's lower hanging fruit now vs then.

I answered:

It is a competitive world and the fruit will always be harder to get if you stand still. But the technology is getting better, and more affordable, and more accessible. Great traders adapt. If you follow this path—using these new technologies and are willing to create, experiment, and invent—heck yes! It is so much easier to concoct recipes that will bring down the fruit from high up in the tree.

The point I make is that to counterattack unrelenting predators, you must create and innovate. If you stand still, the crocodiles lurking underneath the bushes are going to eat you alive. They are going to take it all away from you.

Winners innovate! Innovators create.

Contrary to popular belief, trading is a craft. Like an artisan who develops a craft over a lifetime, it requires a discipline to be exercised daily.

-Mike Bellafiore

Written by Michael Bigger. Follow me on Twitter and StockTwits.

The Lost Art of Spread Trading

I am repeating this story one more time…

When I traded single stock derivatives at D.E. Shaw, observing my boss trade S&P options fascinated me. He made money consistently though he took very little risk. He was a trading magician. He knew his options market, especially the S&P, and he knew how to trade spreads. He constantly traded in and out, squeezing juice out of the lemon. The lemon never ran out of juice! It was a wonderful thing—a winning trading method.

He started his career trading options for O’Connor & Associates, then worked for Swiss Bank before joining D.E. Shaw. All of them are/were great trading houses.
Most of the best traders I have met trade spreads. They spread different options, stocks versus stocks, indices, stocks against indices, etc. The number of combinations is endless.

The StockTwits stream is populated with one-dimensional, plain vanilla trading stories. Shouldn’t we step up our trading game a bit? I am still waiting for the day someone posts a chart on the stream displaying a two stock combo ratio. Let’s go!

Start looking at the trading world from an exchange of at least two securities. I buy this, and I sell that against it. You might not execute the transaction on these terms, but doing this exercise will help you in the following ways:

• It forces you to look at the economics of both legs.
• A spread removes some of the market noise from the equation.
• You will have a better basis for comparison and analysis.
• It will make you think and open up new areas for exploration.
• It will allow you to understand the word “hedge” in hedge fund.

Does this make sense to you? Did you learn anything?

If you are interested in learning more about spread trading please ping me. We are working on something cool for you.

Written by Michael Bigger. Follow me on Twitter and StockTwits.