Jason Kelly

General

How long have you been blogging?

I've been writing articles for publishing on the internet since 1996, but back then it wasn't called blogging. I had to code the articles in HTML myself and post them as individual pages on my website. Later, I switched to Blogger and after that Wordpress, and people began calling me a blogger and I suddenly had millions of companions.

What got you started blogging?

Writing online was a natural extension from writing books. At first, I wrote for my book reading audience only and saw the internet as a way to stay in closer touch with them. Gradually, the internet audience overtook the book reading audience and for most writers books are now add-on revenue. For me, I make about the same income from online subscription products as I do from books. Ten years ago, onlinerevenue was just 10% of book revenue. What a rapidly changing world!

What is the focus of your blog, i.e. how does it set you apart from the other bloggers out there?

I focus on presenting current market conditions and trading ideas in a language that anybody can understand and enjoy. Most investors studied business with little concern for communication. I studied communication first, and later chose investing as one of my focus areas. I've been told that it makes a difference in the writing tone and quality, and like to think so!

What is it you hope a reader will come away with when they visit your blog?

The feeling that they've found a friend in the wooly world of investing, and that it's not as hard as the industry wants them to think.

Do you like to be edgy in your posts and try and stir up some controversy?

I don't try to be edgy specifically, but strong opinions on current events appear edgy to those who disagree. Edginess is in the eye of the beholder! I'm attacked most when I incorporate political thoughts into my market forecasts, but that's sometimes necessary as in the current bear market where nothing moves stocks more than the latest announcement from Washington.

More than edginess, I'd say relevance is the biggest factor for boosting subscriber acquisition. When Washington is bailing out banks, I will get many new subscribers by writing a strong view of that topic because it's on everybody's mind. If on that day I write about the differences between a 401(k) and a 403(b), my site will be silent as a graveyard.

The key to getting and keep people's interest is constantly scanning the news, then asking and answering the question, "How do we make money from this?"

About The Author

What would you like our readers to know about you?

I came to investing by helping friends and family members manage their retirement accounts, realized there's not a lot to it, saw how much the industry was ripping people off, and decided to help people do it themselves. That's why my book series carries an easy name: The Neatest Little Guides. They are, too.

It’s your blog and you’ve invested so much time into it. Is there a personal connection in your writing to your end users, or do you strictly write what interests you?

I pay close attention to what comes to me via email. I group emails to see what people want to know about, and incorporate those threads into current events. Most often, people are just thinking about what was on TV or radio this morning, so it's not hard to keep up with them, but occasionally there'll be an outlier that's good to pick up on. I especially like information from insiders, and have gathered thousands of them over the years. They are an excellent source of ideas.

In other words, if you find that your readers enjoy specific topics, does that influence what you write about?

Sure. The audience is everything. The art of treating them well is giving them what they want, along with a bonus of something they didn't know they wanted. The reaction, "Huh, I never thought of that" is wonderful to see.

Trading

Do you trade the markets? If so, when did you start to trade?

I started in 1992, made a mint in the tech bubble, thought I knew everything, found out I didn't in the bursting of that bubble, rebuilt myself in the 5-year bull market that followed the bust, and am happy that many of the lessons learned protected me in this current bear.

I prefer buying and holding, but it doesn't work across all environments, obviously. The key to success is flexibility. When I trade, I swing trade. During this bear market, for example, my typical holding period has been a few weeks. I've tried to be long on the upswings and short on the down in the financial sector, oil, and silver.

Trading is exciting and creates the most opportunity to fire opinions back and forth. However, it is not the most profitable approach to the market. The most profitable approach is finding a killer company in its infancy, buying it before it's discovered, and riding it to the moon. That remains my primary focus, and bear markets increase the odds of finding a killer company on sale.

Show me a trader who started in the 1974 bear market and show me an investor who bought Wal-Mart stock, and I'll show you the winner in a heartbeat. Wal-Mart stock gained 316,000% in the 30 years from 1974 to 2004. That turned $10,000 into $31.6 million, thanks to Wal-Mart's steadily growing business and nine 2-for-1 stock splits. Making a few bucks in a three-week move is nice, but nothing compared to what's possible with a big fish.

Wal-Mart's still at it, by the way. It generated sales of $405 billion in 2008, a full 3% of America's gross national product. In every one of the past 15 years, it's grown sales, cash flow, and earnings per share -- and is projected to do so again this year. Its stock GAINED 20% in 2008. Recession? What recession?

What is your favorite instrument to trade (stocks, options, forex, futures, bonds, etc.)

Stocks and leveraged ETFs.

What is your favorite strategy to trade?

Buying oversold and shorting overbought based on moving averages, MACD, and RSI.

What time frame do you like to trade?

Weeks to months.

For someone new coming into the markets, what steps would you recommend they use to get started?

Start with a small amount of real money, like $500. Try turning it into $1,000 and then back into $500. You'll be surprised that shrinking it back down is just as hard as growing it, and that's a powerful lesson. There are no good or bad markets, there is only fluctuation. Any movement is potentially profitable and potentially hazardous. Let the media make opinions; you just make money.

Don't bother with paper trading because you won't feel it in your bones. Use real money to learn, and learn on your own. Nothing will teach you better than the gain or loss of your own real money, and the eventual acceptance that what you think you know has little to do with what happens.

What is the biggest stumbling block you see for most beginner traders, i.e. where do you see them making the biggest mistakes?

Overconfidence in theories and poor portfolio management. They read something that says stocks rise in winter and fall in summer -- with plenty of data to support it -- put their entire nest egg in the market on November 1, watch it fall all winter, then go short on May 1 and watch the market rise as their account shrinks, and say to their friends the whole time that studies show the market should have risen and then should have fallen.

But, it didn't.

Knowing and accepting that the market can do anything it wants, that it's constantly rewriting its own historical data, and that being rich is more important than being right is something that, sadly, most of us can't get through our thick skulls until we pay our pound of flesh.

In today’s trading environment, where do you see the biggest opportunities for traders?

Leveraged ETFs. I offer a handy ETF Trading Cluster sheet at http://tinyurl.com/7qnxdb.

What do you see in store for the markets in 09?

If a turnaround, when do you see that happening?

I don't care much about the time, more about the levels. I think we have a date with the S&P 500 at 500 -- easy to remember. The 500 at 500. Things are never precise, so I'll begin scaling in as we edge down close to 500 and keep scaling in if we pass it on the downside. A reasonable parameter is to average in between 600 and 400.

If it goes to 100, I'll start a poultry farm. I already wrote the business plan.

Do you use technical analysis?

Yes, with a focus on moving averages, MACD, and RSI. I've found that those three consolidate the many different TA inputs into a digestible nugget. Other people like stochastics, Elliott Waves, Bollinger Bands, Keltner Channels, and dozens of other indicators. To me, though, TA is a case of less being more and the three measurements I cited almost always say the same thing as the mass of other indicators tallied and balanced. Getting to the same answer in a tenth of the time is my goal, and MA, MACD, and RSI generally do it for me.

It's not that hard, really. What's the trend? That's all you're asking. In almost every moment, you're looking for a breakout, a breakdown, or a continuation. The one of those three that jumps out at first glance is almost always correct, and more time spent pulling your hair out analyzing chart after chart after chart is an exercise in second-guessing. Spend less time creating doubt and more time creating ideas, and your trading is likely to improve.

My grandfather was one of the best sources of investing and trading advice for me. One of the first things he taught was that this whole game is about finding things, not making them. Twenty quick first glances at 20 possible ideas is time better spent than one long, agonizing, second-guessing, hair-pulling analysis of just one of them.

Don't make things what they're not. Instead, find what you need. It's almost always out there somewhere, and if it's not, wait until it is.