Chroma Investing

Value Investing for beginning & small time investors and the value investing strategies of Graham & Klarman

Exit Zareba Systems (ZRBA) Special Situation for Small Timers

On Monday August 17th I opened a new position in Zareba Systems (ZRBA). It was what I consider a terrific investment for a small time investor. I bought 249 shares at $3.80 with commission my cost basis was $951.51. The plan was to wait until the reverse split and sell for $5.20/share. Yesterday, Zareba Systems decided not to go private,or more importantly to me, not do a reverse split. The wierd part is this where I am supposed to tell you how this kind of thing happens with microcaps. The price should have dropped today. But it didn’t. It went up, which is why I noticed that something was going on.

WB Trading More Cheap Online brokerage with fees

MB Trading is another brokerage company with which I have no experience. I picked up their name from the same Motley Fool discussion thread as Zecco. Let’s see if this sounds familiar. $4.95 per trade for up to 10,000 shares. $30/ year for IRA fees. What is that these companies have with separating you from your retirement money.

Zecco Cheap online brokerage with IRA Fees

I have not used Zecco. I heard about them on the Motley Fool forums. I don’t have any first hand experience, which will be the case moving forward. If you have $25,000 to open an account you can get 10 free trades/ month. But that is beyond our threshold for small time investors. For small time investors it is $4.50/trade. Cheaper than Tradeking.

Think or Swim – Good Prices for Penny Stock brokerage

Think or Swim is the online brokerage company I currently use for a Roth IRA i have, that I mostly trade Penny stocks in. So far they are the cheapest I can find. They have a dual fee structure that is well suited to investing in penny stocks, but doesn’t sacrifice alot on non penny stocks. You can pay $.015/share with a $5 minimum which works for larger priced stocks that you cannot afford a large purchase anyway. Or, you can pay a flat rate of $9.95 /trade for up to 5000 shares.

Tradeking cheap all around online broker

I will start with Tradeking because it was my first brokerage company. Why? $4.95 flat trading for one. Charles Schwab, the two buck chuck of the online brokerage companies is $12.95 for accounts with less than a million dollars. No kidding. The kind of discount brokers charges $12.95 for you small timers. I haven’t checked on the price he charges for big clients.

Closed Position in Facet Biotech (FACT) a former Net Net Stock sort of

This is sort of a cheat. I purchased my shares of Facet Bitoech before launching this blog. It does highlight a few ways that I have diverged from the true religion of value investing, while still being a believer. What? I know and I haven’t even started drinking yet.

I purchased 200 shares of FACT on 4/23 at $8.95/share. It looked to me to be a pseudo Net Net stock. What does that mean? It means that when I bought FACT its liquidation value was slightly higher than I bought it for, but it didn’t have a traditional track record or characteristics of a true Net net stock, like a good revenue stream. It was also a spin-off of the drug development operations of PDL Biopharma, doing double duty for me.

Chroma Investing Portfolio One Month Update

Since this is a new blog we will feature the only time that we will do a one month portfolio review.

On August 4th 2009 the S&P closed at 1002.72. I purchased VaxGen (VXGN) for .54. Today the S&P closed at 1003.24 and VXGN closed at.61. That would be a 12.9% increase in one month for VXGN or an annualized rate of 155%. During the same time the S & P 500 gained less than .005%. For a relative gain to the S&P of 154%. Really! Likewise on August 17 the S&P closed at 979.73. I purchased the special situation stock of Zareba systems (ZRBA) for 3.80/share. At close today ZRBA sold at 4.08/share. 7.37 % in 17 days. The S&P 500 from Sept. 17 today is up 2.34%. ZRBA is up over 5% relative to the S&P 500 in the same period or over 100% annualized.

Best Online Brokers for Small Time Investors

Over the next few days I am going to highlight what I consider the best online brokers for the beginning investor or for someone who doesn’t have a lot to invest. I make this distinction for several reasons.

First, that is the focus of this blog, is small time or beginning investors.

Second, the needs of someone with out a $100,000 to invest are very different than someone who is bathing in assets.

Third, brokers treat people with more money differently than the rest of us. Red headed step child is the phrase that comes to mind.

Fourth, Online brokers are cheaper, so I have excluded them. As we have learned in the last year. Most investment advice is worth the paper you wipe it with. Brokers are salesman not analysts, which is an even better reason not to get investment advice from them.

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