FIGURE 1: POWEROPTIONS WEBLOG
Consider this website review a heads-up. PowerOptions WeBlog (http://blog. poweropt.com) is geared toward options trading and education, but my sense is that PowerOptions WeBlog is a project that is just getting under way and any full assessment of what it has to offer will probably be best accomplished months from now.
So think of this as an opportunity to say you were reading the PowerOptions blog before it was cool, before "everybody" was doing it. And who knows? By following some of the advice provided - including commentary on online trading software, specific options trading strategies, and updates on new options products (such as the new $VIX options) -- you might find yourself too busy counting your earnings to brag about how long you've had PowerOptions bookmarked in your browser).
What does PowerOptions WeBlog provide visitors currently? While I think it remains accurate that the blog is an extension of the PowerOptions service and website (www.poweropt.com), the blog itself includes categories of conversation such as "online stock trading software," "stock option advisory," "stock option investment advice," and "stock option trading news." Click on the first and you'll find articles on trading probability and using spreadsheets for options analysis (a popular approach for some, as our product reviews on options software can attest). "Stock option advisory" yields articles on backtesting and dollar cost averaging, as well as a look at the risks of option trading. Click on "Stock option investment advice" and find out more about "greeks," spread trading, and the perils and opportunities that lie in wait on "triple-witching" days. (And if you don't know what "triple witching" means, then you've got another reason to visit this blog!) "Stock Option Trading News" includes announcements and explanations about such things as the introduction of VIX index options, puts and dividends, and the January effect.
BACK AT THE RANCH
So keep an eye out for PowerOptions WeBlog. In the meanwhile, consider getting to know the people behind the blog at PowerOptions.com. Touting themselves as "the best way to find, compare, analyze, and make money on option investments," PowerOptions is essentially an online newsletter that combines investment and trading alerts with interviews and educational material to provide a fairly comprehensive advisory service. Subscribers and clients get "Strategy Alerts," daily morning updates and weekly alerts, and discounts from the PowerOptions bookstore. Included with a subscription to PowerOptions are a pair of additional newsletters (one geared toward more conservative options trading, the other focused on "investing" with options), the book 7 Steps To Success: Trading Options Online, and other bonus items. PowerOptions also provides a Pdf that outlines not only the entire subscription package, but highlights the different service levels (PowerOptionsPlus, Power-OptionsRT, PowerOptions Essentials). The fact that PowerOptions offers a 14-day free trial (no credit card required) makes it easy for the curious to check out the service and see for themselves if PowerOptions' recommendations will work for them.
I would be remiss not to point out some of the free features at PowerOptions that options traders (and would-be options traders) might find useful. Two such resources stand out, in my opinion. The first is the PowerOptions TipSheet Menu, which includes articles on a variety of options-related topics, ranging from a simple introduction to options to Leaps, collar spreads, rolling out options, researching covered calls, and more. This section also introduces what appears to be PowerOptions' signature options search tool, SmartSearchXL.
The other resource I want to highlight is straightforward, but is just the kind of quick reference that options traders - especially those just learning about options - can benefit from. The "Strategy Help Menu" lists 20 different options strategies that traders will employ depending on market conditions. Covered and naked calls and puts, collars, and combinations are among the options writing strategies that are discussed here. Twelve different spreads are listed and explained in the section about spreads. And not to forget about the put and call purchaser, PowerOptions provides information on how traders can best use these options strategies.
Together, PowerOptions WeBlog and the main PowerOptions website are a solid combination for options traders just beginning to look for informed commentary, sound trading advice, and the kind of strategy suggestions that can take years off of a fledgling option trader's learning curve. Given the surge in popularity of options trading in recent years, it will be worth watching to see how PowerOptions WeBlog continues to develop.
In the meanwhile, there is that free, 14-day trial to PowerOptions advisory and education service - and an interesting wrinkle on the "money-back guarantee" for those who decide to subscribe:
If during any month you do not make at least five times your subscription fee on your options trading, your next month's subscription fee will be free.
I've read newsletter writers make similar remarks, but this is the first time I've run across a newsletter that puts its money where its mouth is like this. If you're considering an options advisory service, don't deny yourself the opportunity to check out trial offers like the one offered by PowerOptions. Given that performance guarantee, prospective subscribers have even less to lose.-David Penn, Technical Writer
FIGURE 1: FREEMONEYFINANCE.COM
Who was it who said that common wisdom was not so common? I was reading some reviews of a book published some 90-years ago titled The Richest Man In Babylon. Written by George S. Clason and first published back in 1926(!), the book -- subtitled "The success secrets of the ancients" -- contains what has been described as "commonsensical" wisdom on thrift and savings dressed up in a pseudo-Biblical language (hence the richest man "in Babylon"). Here's a taste from a chapter called "Seven cures for a lean purse":
"Confuse not the necessary expenses with thy desires. Each of you, together with your good families, have more desires than your earnings can gratify. Therefore are thy earnings spent to gratify these desires insofar as they will go. Still thou retainest many ungratified desires.
"All men are burdened with more desires than they can gratify. Because of my wealth thinkest thou I may gratify every desire? 'Tis a false idea. There are limits to my time. There are limits to my strength. There are limits to the distances I may travel. There are limits to what I may eat. There are limits to the zest with which I may enjoy."
Those too distracted by a 1920s sense of the language of "ancient Babylon" may have a difficult time wading through the bulrushes of Clason's rhetoric. But do not doubt that a reward lurks between his lines. Clason's book has long been considered a classic (it was most recently reissued in 2004 in paperback) because of the straightforward way ("thinkest thou" and "retainest thou" notwithstanding) that Clason relays a number of basic truths about borrowing and lending, earning, saving, and investing.
Maybe I've been watching too many episodes of The Apprentice TV show (full disclosure: I am reading Donald Trump's The Art Of The Deal for the first time...). Maybe it's because I stayed up late last Saturday night watching the movie Boiler Room -- twice. But in the midst of all the bearishness and negativity in the market in the spring and early summer of 2006, I found myself thinking about other, more pedestrian approaches to wealth-building. Truly, investing is important. There is no good argument against the idea that while an income is necessary to keep food on the table and a roof over your head, the only way to achieve "wealth" is through investment -- principally stock investment (although other forms of investment, such as real estate, will be preferable for some).
But there are habits, disciplines, and methods that stock investors and traders can take advantage of while they are putting money to work in the stock market that will help speed the journey to what money manager Bob Brinker used to refer to as "critical mass": being able to live comfortably off of the proceeds of investment income and never having to work again.
Trolling around the web for more about Clason and his book, I stumbled across the website FreeMoneyFinance.com. Apparently, one day back in October 2005, the host of FreeMoneyFinance.com discovered that he had sold a few books of his own by way of Amazon.com recommendations. One of those recommendations was Clason's The Richest Man In Babylon. This observation led to a reflection on the fundamental value of Clason's work, and the potential impact that the host of FreeMoney Finance.com believed Clason's book could have on the lucky soul who purchased it. In an entry dated October 25, the host wrote on FreeMoney Finance.com under the heading "An almost infinite investment return":
I became very happy for the people who bought the books. I know that if they read and apply the ideas found in these books, they will be much, much, much better off financially. In fact, if they apply the ideas over several years, they will become quite wealthy. So for a few dollars, these people now have the ideas that could help their net worth increase by tens of thousands, hundreds of thousands, or even millions of dollars.
A few months later, FreeMoney-Finance began a series of posts dedicated specifically to the wisdom in The Richest Man In Babylon, and it was while reading through what was in many respects a virtual annotated copy of Clason's book that I began to learn about, and appreciate, all that FreeMoneyFinance provides to those looking to maximize their chances of getting rich.
FINANCE MOST FUNDAMENTAL
The host of FreeMoneyFinance remains anonymous. In a capsule review written by BusinessWeek, the editors identified him as a "41-year-old Michigan man who works in marketing" -- which narrows the list of potential authors down to a few hundred, perhaps. But the website suffers nothing from this anonymity. The site is roughly structured like a blog, with a few posts added every day on a range of personal finance topics. Most recently, FreeMoneyFinance opined on "Four common retirement blind spots," "Five alternatives to high cable bills," and "Seven reasons why not to retire." Little of what readers will come across at FreeMoneyFinance will come across as earth-shattering - arguably everything that is said there has been said, frequently, elsewhere.
But for a one-stop shop of personal finance advice, FreeMoneyFinance is hard to beat -- both because it is easy to search through the various topics (there is a "Categories" list on the right side of the webpage) to find the issue of interest, as well as because the writing is clear and impersonal in a way that only blogs can be. Some advice may be most easily pursued when it comes across authoritatively, in a "thou shalt not" type of way. Personal finance gurus like Suze Orman have made a career out of telling people, essentially, how stupid they are for not managing their money better. FreeMoneyFinance's approach is far more comradely, as the anonymous author shares his own adventures and misadventures in the world of personal finance (for example, "Great buy at Costco," and "The cost of a pet is $48,000").
I mentioned a "Categories" list. As of this writing, FreeMoneyFinance has about 67 "categories" in its list. "Topics" is probably the more accurate word insofar as the categories aren't departments or sections of the website. Instead, the list functions as an index so that people can zoom in to the specific question or topic in personal finance that they are curious about. These "categories" include topics such as taxes, real estate, budgeting, debt, and insurance. Looking for something even more exacting or esoteric? FreeMoneyFinance also lists categories like "The Bible and money," "Money crimes," and "Kids and money."
The Categories list is part of a roster of links on the right side of the website. Below it are links to access the FreeMoneyFinance archives (going back to September 2005), a list of posts specifically about investing ("Investment posts"), a list of more than 70 other personal finance/money blogs, a list of five "nonmoney" blogs (three of which are related to evangelical Christianity, for those interested in the nexus of money and religion), a list of website sponsors and links to a few previous reviews or mentions of FreeMoneyFinance in the financial media.
Above the "Categories" List are a set of "Recent posts" and "Recent comments" links to let website visitors know what the website host has been writing about most recently as well as what discussions are getting the most buzz.
FreeMoneyFinance may or may not be the sort of website you'd visit every day. True, you could find yourself caught up in a debate in a discussion/comments thread and become a regular contributor to FreeMoneyFinance. But for most readers of Technical Analysis of STOCKS & COMMODITIES, FreeMoneyFinance will be a destination for the occasional, targeted visit, to discover what the website calls in one post "Seven hot 401(k) trends" or to check up on what new (or good but forgotten) books on personal finance have been reviewed or recommended. Then there's always the ever-present FreeMoneyFinance humor, encapsulated in posts with titles like "How to lower your investment returns: Use a broker."
But most important, even an infrequent stop by FreeMoneyFinance will help most of us who weren't raised on the sort of Depression-era maxims and shibboleths we unanimously revere in our parents and grandparents. The 1970s was more than just a malaise, "Me Decade" of bad fashion and, ahem, underappreciated music. As many observers, including the ever-astute author of Money Of The Mind, James Grant, have pointed out, the inflation of the 1970s helped instill a new set of values in babyboomers and their children: a preference for immediate gratification, for buying-now-and-paying-later (with inflated dollars), and a wholesale embrace of indebtedness that, if a recent cover story in the Sunday New York Times Magazine is any indication, continues to this very day. In its own small way, FreeMoneyFinance helps those of us who've grown up (or raised our children) near the precipice of financial incoherence to begin to take the first steps away from the ledge toward surer ground.--David Penn, Technical WriterFreeMoneyFinance.com
Return to Table of Contents
Originally published in the August 2006 issue of Technical Analysis of STOCKS & COMMODITIES magazine.
All rights reserved. © Copyright 2006, Technical Analysis, Inc.