Yogi Berra once quipped; “You should only buy stocks when they are going higher. If they are not going higher then don’t buy them.” This funny comment is the quintessential problem in all markets. How does one know when something is selling at a low price, so they can buy it and then sell it to someone else at a higher price? In this article, I will show you a path that is not based upon a trading method, but upon the process of executing your method.

What Successful Companies Do To Minimize Errors

Some very large and famous corporations have employed a management philosophy known as Six Sigma. Six Sigma is a philosophy of perfection, or a striving for a lack of defects. It is about process performance, the steps being “Define ? Measure ? Analyze ? Improve - Control.”

Its name is derived from the sixth deviation from the standard, a statistical concept. In plain English this means that for every 1 million products or services delivered by the corporation, only 3.4 of these one million would be defective.

Consider how important such reliability is in the case of a company that analyses blood samples on behalf of doctors needing information for their patients. How could doctors prescribe for their patients, if the sample analyses comes back showing the patients have diabetes or leukemia, when in fact they don’t?

Can Six Sigma Be Applied to Trading?

Over the years I have developed a model for my own trading based on Six Sigma, which evolved out of the need to bring the different aspects of trading into a cohesive unit.

I called the model, Fusion Trading.® This model helped me immensely, because it took all the divergent aspects of trading such as

* When to enter,
* When to exit,
* How many contracts,
* Where to put stops,
* What happens if this happens,
* What happens if this doesn’t happen,
* Which time frame should I trade,
* Which news should I listen to, which research analyst is right,

…and dozens more elements that had a bearing on my trade, but which I didn’t know how to integrate.

This model gave me a method to pattern trading efficiently into my mind so as to produce clarity.

A 10-Part Model for Trading Success

To understand the model, I will use an analogy of driving a car to illustrate the model’s principles. The simpler it is to understand, the more likely the trader will grasp it and implement it on the subconscious level. Unfortunately, because the model appears so simple, many people don’t believe it will work, or won’t have the faith to persist in the personalization of the model, which is a vitally necessary step for each trader to undertake. To these skeptics, I ask the question; is driving a car simple? Is it not possible, after gaining some experience, that driving becomes so automatic that one can reach one’s destination without ever thinking consciously about using the brake or gas pedals along the way?

The Fusion Trading Model® requires the integration or fusion of the following, ten components. To help you remember each component, I have labeled them the Six M’s and the 4 P’s. So learn to mind your M’s and P’s.

1. Mindset: Mindset is both the conscious attitude and autonomous responsiveness that characterizes the trader’s performance ability. Having the correct trading habits is number one in terms of order of priority for success. A trader will succeed or fail, i.e. live or die by his habit patterns.
2. Mission: Mission is the trader’s objective, or expectations that he will derive from his trading. These are written down strategies and goals, so that there can be no question as to what the trader’s intentions are. It is just like knowing where you intend to travel to so you can buy the ticket or prepare the journey.
3. Money: Money, is gasoline, it is the fuel that is required to move the car from point A to point B. The more gasoline that is available, the further the car can travel. Money is the fuel or resource that makes trading possible. Sufficient quantities of funds are necessary to provide the trader with a cushion or protection against adverse conditions which are inevitable.
4. Market: Chosing a market to trade is like making a selection of the appropriate vehicle for the journey. Depending on the vehicle, it will be either easier or more difficult to reach one’s destination. For example, trading stocks might grow one’s capital by 10% or 12% per annum, but trading Forex may offer a faster or higher growth because of the larger leverage. This is like driving a sports car instead of an off road vehicle. Sports cars are faster, and some say more dangerous to drive, while SUVs’ are able to go off road and traverse ground conditions that are impossible for a Ferrari.
5. Method: Different vehicles require different methods of driving ability and skills. Some cars require stick shift gears while others can be driven using automatic transmissions. Buying stocks requires a different method than trading Forex. Methods must be matched to the market in question.
6. Management: No car can be driven properly without taking into account the rules of the road or the unexpected events that can happen on a journey. Traders, just like drivers, have to be a road conscious. They have to stop at red lights and allow pedestrians to cross instead of trying to knock them over. Traders have to move out of the market if the conditions are wrong. Just as a driver might have to make a stop over during violent stormy conditions for his own safety. In a similar fashion, a trader must know how to navigate a market move that is going in the opposite direction to what was anticipated.
7. Preparation: Before you go on a journey, you need to map it out. You need to fuel the car, buy a compass or program your navigation system. You need to pack your bags and decide upfront what clothing and supplies you will need, both along the way, and when you reach your destination. In terms of the Fusion Trading Model?, a trader should always prepare his trades before taking them so that he can know exactly what to expect and what to do if certain parameters or circumstances present themselves.
8. Practice: The more often you make the same journey, the better you will be equipped to deal with the inevitable setbacks along the way. If you need to refuel or stop for lunch, it is helpful to know where the closest gas station or restaurant is. If you have traveled the road before, your confidence and efficiency in completing the journey will not be diminished. Practice is the constant and repetitive integration of each one of the components of the Fusion Model?, so that it operates as a single unified system.
9. Persistence: The more you do something the easier it gets. Some famous people have said, the more they practice, the luckier they get. I believe that it is important to practice so that you will be ready for opportunity when it comes. But we all have to persist in our practice, and be sure that we are practicing the right methods. Wrong practice can be harmful to our trading methodology.
10. Passion: Every trader must find his or her own passion. Passion is the “for the love of it!” Trading requires practice, preparation and persistence. Passion supplies the personal fuel to keep going when the going gets tough.

By integrating these 10 steps into one cohesive model of trading, one will be in the best possible zone for success. Since there is no such thing as a “holy grail” method, one should strive for excellence by employing all the building blocks of a competent trading model. Thus, if one is properly prepared and can execute diligently each and every time one takes a trade, one can be deliberately employing a Six Sigma style methodology to one’s trading.

Posted: February 21st, 2008 under Investing, Stocks.
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Despite the explosion in foreclosed residential properties in Idaho, the state’s commercial real estate holds steady and is anticipated to continue to grow during 2008.

An experienced financial planner, John Hancock saw Idaho’s strong commercial real estate market as an investment opportunity. Since he had never invested in out-of-state real estate, he enrolled in Trump University’s Real Estate Investor’s Training Program to learn the skills he needed to select the right properties for short- and long-term investments. Trump University’s training and support and his financial planning skills helped Hancock net over $50,000 in his first commercial property deals.

“As the son of a successful real estate investor, I knew wisely investing in property could lead to early retirement,” Hancock said. “I had prospered in equity, but was finding it difficult to exact a positive monthly cash flow from my current properties, so I turned to the Trump University Real Estate Investor’s Training Program for help.” With Trump University’s guidance, Hancock learned to research markets analytically, look for and evaluate properties and how to contact agents. He also received guidance on interviewing agents and developing other needed resources. Within just three weeks of completing the coursework, Hancock was ready to apply the lessons learned, with the first step being to find other investors.

“When John came to us, he was already a savvy financial planner. But with the skills and training he received from Trump University, he was able to round out his personal investment portfolio with real estate,” said Josef Katz, Vice President of Marketing for Trump University. “Using the skills he learned in our Real Estate Investor’s Training Program, John knew exactly what to look for when he went to Boise to investigate its commercial real estate market and was able to orchestrate a financially sound deal.”

Hancock found Boise’s commercial market strong and growing with excellent rent-to-price ratios. “I found the property I wanted to invest in, made the decision to move forward with a partner, and netted $15,000 on that first deal without investing a dime,” said Hancock.

Now a licensed California real estate agent, Hancock has gone on to purchase and resell a seven-unit condominium property at one-week’s net gain of $14,000..

Due to Hancock’s great success in the Idaho real estate market, he has become the California sponsor of radio spots promoting Idaho real estate development and will be featured on upcoming Trump University Real Estate Investor’s Training Program tele-seminars.

Posted: February 21st, 2008 under Investing, Real Estate.
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The Solar industry’s annual gathering of power project developers, equity investors, lenders, venture capitalists and other key players, the 3rd annual “Solar Power Finance & Investment Summit,” produced by Infocast, will be held in San Diego, April 7-9.

The event will offer insights on the entire spectrum of the industry, from individual project development to corporate capital strategies.

Due to the overwhelming success of the previous Summits and with the extension of the renewable energy tax credit through the end of 2008, the enthusiasm for solar power is greater than ever. Major new developments in 2008 in the industry have prompted Infocast to include a day focused solely on solar company financing. Infocast has secured major industry players from Khosla Ventures, Kleiner Perkins Caufield & Byers, Morgan Stanley, Akeena Solar and many more for this event.

The Summit will bring together the Solar industry’s leading utility scale and commercial/industrial rooftop project developers, investors, lenders, solar technology companies, venture capitalist and other key industry players to discuss cutting edge developments in Solar power finance and investment, as well as the various challenges and prospects for 2008 and beyond.

Attendees will hear:

• Developers of Commercial, Industrial and Utility scale projects offer their perspective on the current market
• Investors discuss criteria for evaluating and investing in solar projects
• Lenders detail terms and structures for project financing
• Discussions of monetization strategies and deal structures

An in-depth workshop, “Solar Power Project Finance,” precedes the Summit. The workshop will provide the attendees with step-by-step instructions on how to successfully structure and finance solar projects in today’s marketplace.

Posted: February 17th, 2008 under Finance, Investing.
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Urbi Desarrollos Urbanos S.A.B. de C.V. (”Urbi”), the leading housing developer in Mexico, announced today that it has formed a joint venture with PREI(R) (Prudential Real Estate Investors) to develop housing projects. Urbi and PREI, acting on behalf of institutional investors in its Mexico residential real estate strategy, could invest up to US$1 billion over the next five years.

This investment arrangement will strengthen the execution of Urbi’s strategic plan for 2007-2011, with the goal of joint participation by Urbi and PREI in investment projects for real estate developments; including, among others, the acquisition of land, and the urbanization, infrastructure and the construction of homes, particularly for Urbi’s business lines related to the articulation of macro projects and the city licensee manager program.

According to the venture, Urbi will have the option to present co-investment opportunities to PREI for the acquisition and development of real estate projects. The opportunities must meet certain agreed upon requirements. Urbi will be responsible for identifying the land, presenting the projects, obtaining the permits and performing the urbanization and the construction of the homes. PREI will provide the resources for the acquisition of the land.

Roberto Ordorica, head of PREI-Latin America, said, “Mexico’s housing sector, continues to provide attractive investment opportunities. Accordingly, we are enthusiastic about the prospects of forming this partnership to expand our presence in this market. Since entering the market in 2002, we have continued to look for new opportunities and we believe the Urbi’s partnership will provide our investors with the potential to yield a positive outcome. Notably, we have been impressed with URBI’s growth plan, expertise, execution capabilities and URBI’s overall approach towards the business.”

Cuauhtemoc Perez, Urbi’s CEO, stated: “This agreement is part of a series of funding alternatives that we have deployed, such as our recent equity placement, to ensure adequate liquidity levels that provide us with the flexibility to take advantage of strategic business opportunities without compromising the required resources for the day-to-day operation of our company. Through this agreement, we generate a project funding option, which complements our solid balance sheet and our own internal cash flow generation.”

And he added: “PREI is a real partner in this venture, who has adapted itself to the nature and cycles inherent to our business and recognizes the risks, as well as valuing our skills and expertise in the sector. Furthermore, PREI is a leading global ally in its field with wide experience in the financial markets, which strengthens Urbi’s value chain.”

The financial structure of the investment projects is the same that Urbi uses for the selection of projects that finances and executes with its own working capital; this allows the company to achieve the targeted return on equity. The participants of the real estate trust assume the risk of the execution of the project and the funding of the project.

Urbi will pay 0.5% of the MX$3,500 million (approximately US$323m) on the first phase of the scheme, as a safety deposit. Additionally it will present a standby letter of credit for US$10 million to guarantee that it will develop the project as indicated.

Urbi and PREI initiated this venture with five projects in the metropolitan areas of Tijuana, Guadalajara and Chihuahua, with an initial investment of MX$1,161 million (approximately US$107m).

Finally, Selene Avalos, Urbi’s CFO, pointed out: “We are very optimistic with this agreement because it offers us an option to swiftly take advantage of the business opportunities that the current economic situation could present. Furthermore, this scheme fits with our company’s land reserve development strategy. As we have mentioned thanks to Urbi’s participation in the urban planning and development process of the cities with the local authorities, it has the opportunity to acquire -through quiet option schemes- land which it is not incorporated yet into the city development. This grants us the adequate time to identify, evaluate and plan the development of the real estate projects, capturing the value generated. Thus, we count with a pipeline of projects in different maturation stages where we can integrate public and private investment, under innovative schemes, such as this agreement with PREI.”

Commenting on Urbi’s estimated growth, Avalos added: “As we pointed out during the equity placement process, we have strengthened our strategic plan and, so anticipate that we will increase Urbi’s annual net income by 2.5 times between 2007-2011, instead of the initial estimate of 2 times.”

Urbi Desarrollos Urbanos S.A.B. de C.V. (MSE: URBI*) is one of the leading companies in the housing sector in Mexico and the largest developer in the northern states, a region with one of the highest growth rates. Additionally, it has a growing presence in the country’s metropolitan areas. In its 26 years of operations, Urbi has developed over 240,000 homes, and has always conducted its business with a strong emphasis on financial performance, making it one of the most profitable companies in the sector. Urbi has a unique and replicable business model supported by UrbiNet, its state-of-the-art IT platform.

Posted: February 1st, 2008 under Investing.
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