Chart Reading

As an investor you will desire to check out any equity before you purchase it. Many investors travel to Morningstar that is one of the largest suppliers of common monetary fund information in the world. It is assumed that their information is correct. After all that is what you are paying for.

Recently the second (Securities and Exchange Commission) called them on the carpet for not correcting an mistake within a sensible clip (whatever that is according to the SEC). Everyone do mistakes and this was no large deal.

It looks that when you went to their land site and drew up a chart or asked for statistics on Rock Canyon Top Flight common monetary monetary monetary fund it failed to advise the possible buyer that the fund had issued a very large dividend of approximately 25% and the NAV (Net Asset Value) dropped from $15 to $11 to reflect the $4.00 dividend.

It looks that when you inquire for a chart of this fund on MarketWatch, Yahoo, TheStreet or Bloomberg that they only post the NAV and do not make any accommodation for the dividend or capital additions distributions. When you look at the chart it looks like the monetary fund drop out of bed. Because I look at so many charts I knew immediately that this was a statistical distribution and not some calamity. To be certain it is very simple to name the monetary monetary fund to verify this.

Every fund that brands dividend and capital additions statistical distributions usually makes so in December, some in November and very few at other modern times during the year.

Some nitpicker called the second and made a ailment about Morningstar. Not that I am a large fan of them (in fact I believe their reports are worthless) they get their terms information from other beginnings such as as the above. If you are not familiar with the demand of common finances to disburse their net income before twelvemonth end you might be fooled when you see the terms suddenly drop.

This is of import for possible investors. I admonish everyone to get a chart of at least a 1 twelvemonth public presentation of any common monetary fund before purchasing it. It is better to travel back to twelvemonth 2000 to see if the monetary fund manager was able to maintain from losing money during the last 4 years. Almost none of them could so they speak about how they did better than the S&P500 Index which had a huge loss. Don't fall for that one.

Once again I admonish that any purchase should have got an issue plan. One of the basic regulations of investment is never to lose a batch if you are wrong. Small losings will not destroy your portfolio, but large losings can destroy your retirement. Set your loss bounds and lodge with it. For some it might be 5%, others 10% Oregon more, but have got an issue strategy or you will travel broke.

The secret of the stock market that Wall Street makes not desire you to cognize is that success in the market is not buying it is selling.

Buying New Issues

Has your broker been calling you recently with the "great opportunity" to get in on a new Initial Public Offering? With friends like that you don't need any enemies.

I don't care how good this new stock offering sounds. The chances it will stay even or go up are about 1 in 3 and I don't want to play those odds with my money.

Most of the new IPOs these days are from the technology sector. That is where the romance and big money has been, but the NASDAQ topped out on March 10 this year. It is a good idea to take a look at what has happened to these new offerings since that time.

The S&P500 Index has dropped only 3% since March 10 while the NASDAQ Composite has fallen 43%. Here are a couple of numbers you will want to remember for the rest of your life if you have any interest in the stock market. Sixty percent of the move in any stock is due to the category or sector it is in. Twenty percent of a stock price is due to the overall market movement and 20% is caused by the quality of the company itself. You can immediately recognize that even if you have bought the best stock it has only a 1 in 5 chance of going up if the other 2 factors are not working for you. Since March 10 the New Issues Index is down 67%.

With all the major market indexes in the sewer there is little hope for ever finding one of those new issues that comes out at $10 and runs up to $200. Those days are gone forever - at least in the technology field. The NASDAQ has a better chance of going to 1500 before it ever goes back to 5000.

For the next year, maybe longer, we are going to see the number of new issues dry up and almost disappear. And there are many other good reasons other than the overall market. In a new issue you have no idea how the company will perform. Will management make its projected goals? Is there any possibility of a profit? You have no track record for their price performance. Will the stock price trend up or down? The more of these unknowns you throw into the mix the less chance there is that the stock will go up.

Last year we had a raging bull charging through fences and tearing everything up and we all loved it. All we had to do was follow the bull. The bear has taken his place and is ruining the landscape. And you know what bears do in the woods. Be careful where you step - or put your money.

Cash

How many people went to a cash position this week? There is no question that this market has scared the bajebers out of many investors, me included. Fortunately, I started going to cash some time ago, but I did give back a substantial amount of my profit.

Your broker never wants you to be in cash. You might take it out or invest it in something else. "Don't worry, the market always comes back." Yes, and pigs can fly. Fund managers are even worse. Because I recommend selling out temporarily and going to cash does not mean I don't have a long-term program. It means I don't want to participate in a down market. CASH IS A POSITION. It is the same as owning Vanguard Index 500 when the market is going up and being in a Money Market Fund earning interest while the market is going down, but not losing your principle. Make sense?

Brokers will tell you over and over that you cannot "time the market". WRONG. Just because they are not smart enough to do it does not mean it cannot be done. I have been doing it for years and have never been caught in a bear market. Even the Federal Reserve Board published a paper saying that "market timing" works. There are timing programs or services that can be bought that are very simple and easy to understand. To protect your retirement funds you must have this in place.

In my column last week I called the market a Stealth Bear. It looks like it has come out of its den. You don't want to be around when the bear is running loose. It can hurt you.

During this past few weeks we have seen some tech stocks lose 80, 90% of their value, but how about good ole Proctor & Gamble dropping 30% in one day? That is a stock held in a high percentage of retirement portfolios and hundreds, if not thousands, of mutual funds. It is going to be a long time before we see new highs in the Nasdaq Composite and the reason is very simple. There are people and fund managers who own many stocks that they would like to sell to get "even". Know anyone like that? This effectively puts a cap on any resurgence back to the top.

I have no idea if the market is going to go lower, but the tendency is toward more selling, not buying. This is a good time to have a position called CASH.

Investment Capital Gains

Have you bought any common finances this twelvemonth or late last twelvemonth while the market was doing its skyrocket thing? Last twelvemonth it was hard to lose money. This twelvemonth it have got been easy.

You should be calling your common monetary fund (they all have 800 numbers) to happen out if and when they be after to pay their capital additions and dividends. You might state to yourself, they won't be paying anything this twelvemonth because the monetary fund is selling for less now than it did at the beginning of the year. Think again. It is very likely that the common monetary fund manager took net income on many high circulars that he bought cheap last year. According to the manner finances are put up those net income are taxable to holders of the common monetary monetary monetary fund and not to the fund itself.

It is possible you bought a fund at $40 per share that is now selling at $30 per share and be hit with a 25% capital additions statistical distribution of $10. On paper you now have got a $10 per share loss and a tax measure based on the $10 per share distribution. That is adding injury to insult.

With this as a possible scenario it might be prudent to sell your monetary fund for less than you paid for it. You should work the numbers with your accountant to see if this mightiness reduce your tax bill. But you have got to make it now. You can't wait until after the common monetary fund declares its capital additions distribution. This is especially true if you have got purchased any high technical school or international finances during the past year. You can carry losings forward to adjacent twelvemonth to offset against net income and statistical statistical distributions next year.

The top numbers of common finances declare these distributions near the end of the year, usually starting in November with most of them in December. The rumours I hear are that the statistical distributions will be early this twelvemonth because of the poor public presentation of the bulk of funds.

This uses to everyone who makes not have got a tax shelter of some sort such as as a 401k, IRA, September or other similar investing vehicle.

One piece of advice I desire you to heed. Don't purchase any common finances now because they are "cheap". Wait until after they declare their capital additions and dividend distributions. You could be whacked with a large tax bill.

Choosing An Investment Stock Broker

If you desire one.

And I don't urge any broker with whom to merchandise who will be giving you advice on what to purchase and sell. When a broker talks it is a encomium for your money. My definition of a broker is one who do you broker.

The ground I state this is that when I owned my brokerage company I hired and supervised over 300 brokers. The existent number of good bargainers I could number on one manus and have got fingers left over.

Let's understand that a broker is hired by a brokerage company for one ground - to generate commission, not to do you money. He is trained to analyse pillory or common funds, but not to protect your capital. Pitifully, he believes he is. They never state you to sell before a stock falls to 50% of its value. Most of the clip brokers are left to themselves as to what they urge to their customers, but there are many brokerage houses that volition take a firm stand that they force some peculiar stock of the twenty-four hours or new Initial Populace Offering (IPO). Many modern times he have a quota - and you're "it".

Don't deal with a relative. Bash Iodine have got to explicate this?

If you dwell in a small town, don't deal with anyone who also dwells there. You don't desire everyone knowing your business and anyone in that local office can see your account if they desire to.

The average broker have 300 accounts and you cognize those with six and seven figure amounts are the 1s he calls. Those people with less then 100K seldom get attention. Understand you are on your ain which in most cases is best.

Be careful of any broker who recommends fading the market. I can hear him now, "This stock have gone so low it have to come up back". This is a death wishing for your money. Bottom choosers end up with fetid fingers.

A broker who names you and states he have a "system" must be highly suspect. If that system is so good then why is he willing to share it with you? He should be independently affluent by now. Be fishy of any broker who names you out of the bluish with a "story". I don't care how good it is if you don't cognize this "Billy Sol". These cats mention to you as mushrooms. I inquire why. Maybe because mushrooms are grown in the dark and Federal horse manure.

Never merchandise trade goodss with a stockbroker. There is a human race of difference in trading pillory and commodities. Stockbrokers don't believe fast enough. You shouldn't have got person who is used to drive a kiddie car trying to manage a Formula One.

Make any broker turn out what he says. Get references. What you desire from a brokerage company is proper executing of your order at a low price, not advice. Your best stake is a price reduction broker because they are not allowed to give you "advice".

Buy Low - Sell High

Now where have got I heard that before? I know. It was my broker.

So I took his advice and bought some of the pillory he recommended. I am still waiting for the 'sell high' portion of the equation. Everything he touted went up for a piece and now it is lower than when I bought it. It is so low Iodine can't convey myself to sell it. My capital have shrunk about 60% from where I started. That's a batch of money to me because it took a long clip to salvage it. What happened?

The brokerage company that your broker plant for put option out recommendations almost very hebdomad for assorted companies listed on the major stock exchanges. They have got simple things like Buy or Strong Buy. Then they have got a complex grouping of words used when they downgrade a stock. It never travels from Buy to Sell. No, it goes Accumulate, Underperform, Attractive, Market Perform, Neutral or some other meaningless term. If any stock is ever downgraded even one notch sell it immediately. Finally after a stock have lost 50% Oregon more than of its value it goes a 'Hold". And you cognize where you are holding it.

Last twelvemonth the brokerage companies gave over 33,000 stock recommendations to their customers. Of those lone 125 were Sell. On the NASDAQ exchange alone there were over 1,000 pillory that lost more than than 90% of their value. The "experts", known as analysts, were all revealing you to buy. Your child could have got thrown a dart at the Wall Street Diary in 1999 and done as good a occupation as almost any analyst. What I desire to cognize (and I believe you make too) is if they were smart adequate to state you to purchase then why weren't they able to state you to sell?

I'll state you why. Brokerage companies never give sell signalings because they don't desire to pique a company that mightiness come up out with a public offering on which they will do a killing. It is better to kill a few clients than lose out on respective million dollars. You pay committee and inquire for honorable advice, but you are being Federal disinformation.

Is there any manner you can protect yourself from this nonsense? Yes! It is called a stop-loss order. Brokers don't like them because then they have got to watch your account. He will state you you don't need it as he will watch your account. And hogs can fly. The average broker have got 300 accounts and unless you have a large 6-figure account you will be on the underside of the pile.

Anyone can put a protective unfastened stop-loss order for stocks. Most are about 8% to 15% below the highest shutting price. I urge that each Saturday morning time time you look in the paper for the Friday shutting terms of your stock and topographic point your unfastened halt each Monday morning with the broker. As your stock moves up maintain raising the halt and you will sell near the high. Never lower it. This volition lock in your net income or take you out of a losing position. I can guarantee you your broker will never name you to sell. Brokers are not taught to protect your capital.

This is the lone manner to purchase low, sell high, protect your capital and lock in your profits.

Bull or Bear?

Cat or dog? Maybe Zebra. Shucks, I don't know, but my broker maintains telling me it is a bull and to purchase this and that. It looks like he is right - for a change. I retrieve he said the same thing in 1999 and 2000 and I ended up losing most of my money. But it looks good right now.

Yes, it makes expression good now and I have got been a buyer since the center of last year. Are this another bubble? The talking caputs on CNBC-TV state we are back in the bull market again.

My one regulation have been to purchase when the market turns up and it sure have done that; however, there is another regulation that have kept me from losing money and that is to sell when the market starts going down. The nice thing about this is you don't have got to be a market "expert" to cognize when this happens. All you have got to look at is the terms of one of the major indexes such as as the S&P500 or the NASDAQ Complex to see when they penetrate their 200-day moving average. One that I watch all the clip is the Investor's Business Daily Mutual Fund Index that is in the first subdivision of the paper. You don't even have got to purchase it as you can read it at the library.

Anyone who states you he foretells when or where the top or underside of a market will be is usually guessing unless he have a proved existent clip path record of making those phone calls for many bull and bear markets. Predictors are usually wrong, but tendency followers are almost always right. The ground is simple. Once the implicit in facts, whether physical or emotional, come up into drama and a new direction is establish the stock market will follow that course of study until another major set of facts come ups into play.

This tin be seen when the market goes very overbought and overvalued as it was in 2000 and very oversold as it became in October 2002. A new set of fortune were initiated and the general market took off in another direction. These long-term trends are relatively easy to determine by anyone who will to listen to the voice of the market.

Long term tendency following have a drawback. You will not be a buyer at the underside or a marketer at the top because of the clip delay, but you will never lose large sums of money of money as many did from 2000 to 2003. The usage of this simple method will not necessitate research or tons of useless information that Wall Street take a firm stands you need. You will be able to determine on your ain when a major tendency changes and then move accordingly to either bargain or sell.

Those who have got got been wise adequate to detect proverb the tendency change and became buyers last Spring and Summer and now have nice profits.

Yes, it is a bull.

Buy and Hold Investment Philosophy

Wall Street have been sermon the philosophy of Buy and Hold forever. The worst portion about it is the small investor (and some large ones) actually believe it. Brokers and financial contrivers believe it, but when you demo them they can get a better tax return by timing the market they just say, "It can't be done". They are either lazy or stupid.

Most brokers have got not learned their trade - investing. John Webster states that agency putting money into something (stocks) for the intent of obtaining an income or profit. When people look at their brokerage statements these years they must inquire where their broker went to school. Investors could have got done better with a dartboard.

Brokers are not taught to do money. They are taught all the ordinances that come up out of American Capital that must be followed so the brokerage company will not be sued. To my knowledge none of them are taught the basic basics of increasing customers' wealthiness or protecting the customers' capital from loss.

Brokerage houses engage people to make reports about companies. They name them analysts, but today those occupations have got deteriorated into snowfall occupations to get people to purchase stock in a peculiar company. When you read the report you will happen it very professionally done with pretty images and graphical records and charts. Wow! I'll purchase that. And a few calendar months later you will wish you hadn't. When you have got a loss the criterion answer is, "Don't worry. You are in for the long haul. The market always come ups back". In your lifetime? Today there are 100s of pillory that have got lost 50% to 90% of their value and there is absolutely no hope they will ever retrieve those losses. But….you are in for the long haul. You now have got got the Buy and Hold philosophy.

Why make so many people cleave to this doctrine?

You have a stock you bought for $40 per share that went up to some profitable number and now is down below $10/share. You're come out of the closet 75% of your money. You are waiting for it to travel back up so you can get out "even" and I will state you "even" is a loser.

Many old age ago I heard a narrative about how they used to catch monkeys in Africa. A hole was made just large adequate for the monkey to get his outstretched manus in a hollowed out coconut meat shell. Fruit and Sweets were placed inside. The monkey set his manus in and gripped the goodies, but could not take his clinched fist. It refused to allow travel even when the huntsman came to set him in a cage. All the monkey had to make was allow spell of the candy and he could have got escaped.

Many investors are the same manner about the stock they bought. They won't allow go. The investor makes not desire to acknowledge he was wrong. You are not incorrect until you sell - just broke. Small losings will not ache you, but retention on tin set you in the poorness cage. Buy and Hold conventional wisdom will interrupt you. Learn to allow travel of the also-rans quickly and you will continue your capital.

Catnip of the Stock Market

I have got watched my true cat drama with a bag of catnip. At first he is having merriment and slowly he goes intoxicated with pleasance and then finally he goes so besotted he falls over to kip it off. The pleasance portion is great, but I am not certain if he awakes without a hangover.

Rocket (that's his name) reminds me of a 1 of those people who purchase a stock and throw it. At first while it is going up there is great pleasance and then euphoria until they cognize they are market geniuses. That's the drunken stage. Finally when the market turns against them they fall over not having adequate sense to discontinue (sell) and later when realisation tax returns they have got a huge katzenjammer (called hindsight) - and no money.

Can these 4-footed animate beings learn us 2-footed animals anything? Can we be smart adequate to discontinue while we are ahead? Rocket (and his friends) go on to do the same mistake clip after time. We are supposed to be smarter so let's learn from their misconduct.

If you have pillory and/or common finances and the market is going up it is ace catmint and we maintain buying knowing that somewhere over the rainbow we are going to be rich and retire like kings. Almost none of today's investors ever believe about selling. Wall Street states us to purchase and hold. They don't desire you to sell because if you make they discontinue making money. Brokers do nil on money market accounts.

Today with money market accounts paying less than 1% investors cognize the market will come up back up. That is what all brokers preach. That is their catnip; their promise of better modern times ahead (with no program to protect your cash). If they take that catmint promise away you might sober up and get quit of those losing pillory and common funds.

The great female parent of all stocks, AT&T, well, it used to be, have dropped from $100/share to $14. What are those widow women and orphans eating for supper now? Not steak. Maybe true cat food.

When your equities are no longer rising and many are declining it is clip to go out the market. Give up the catnip. When the tendency Michigan its upward angle it is clip to sell. Of all methods of investment the safest and most dependable is tendency following. It is the catmint on the manner up, but when the tendency starts to worsen you recognize you are one smart true cat and you are sober and walk away (sell).

Buying Mutual Funds

It looks like the market is ready to start up again so it is time to buy mutual funds, but you only want to invest your money in funds that go up. First, you don't want to start with a loss so be sure to purchase no-load mutual funds. There is no need to ever pay commissions as there are several thousand funds that have no commission whatsoever for either buying or selling.

If you talk with a broker he will try to confuse you that a commission fund is better than a no-load fund. He is lying. Find another broker. Also don't pay any attention to who the fund manager is. All big name fund managers have cold periods when their funds go down.

Another thing the "experts" tell you is look at the expense ratios. Nonsense again. Whether it is 1%, 2% or 3% the only thing you are concerned with is is it going up because that is the net figure for your bank account. If you buy a fund at $20/share and it goes to $40/share do you care if the expense ratio is 10%? (It won't be.) The only thing that counts is the bottom line.

Now the most important thing. Which no-load fund? There are several good sources. Go to the library to look in recent back issues of Investor's Business Daily. On the first page of the second section under "Making Money in Mutuals" near the bottom there will be a box listing 25 to 50 funds. You will want to find the top funds for the past 3 months, 6 months and 9 months sometimes in several different issues of the paper. Don't pay any attention to a longer period of time than 12 months. You want funds that are going up now. In the same paper you will find the toll-free phone numbers listed by the names of the funds.

Or if you can use a computer go to www.smartmoney.com. Click on Mutual Funds. Then click on 25 Top Funds. Here you will find another list of the best performing funds for the past year. Most of them are no-load and if there is a load charge it is shown in the Fee column. There are many Internet sources like this if you want to hunt for them.

Call to be sure they have no redemption fees if you decide to sell them in a short period of time. This is important.

With your computer or you can use one at the library I suggest you go to www.bigcharts.com or www.cbsmarketwatch.com to look up each fund by the symbol. You will immediately see why these particular funds are a good buy. They have been going up even when the general market was going down. As long as this upmove continues you will want to own these funds. When they start down you must sell them to protect your capital and your profits. Never stay with a fund that is going down. Brokers will not do this for you. You must be in charge of your own money.

This may or may not be the start of the next bull market move, but if it is this is the right way to buy mutual funds now or any time. (Cut out and save this column.)

Hedge Fund 101 - Make Money with Hedge Funds

Investors are always looking for the best investings that volition output the most profit. Any investor who can afford the extra cost should see investment in Hedge Funds. Hedge Funds were started in 1949 by Aelfred Winslow Jones, who pioneered non-traditional investment strategies. Mother Jones innovated this new investing strategy by merchandising short stocks, while purchasing other pillory (long stocks). Hedge Funds are very similar to Mutual Funds, except that there are fewer ordinances on Hedge Funds. As a result, Hedge Funds usually necessitate a much larger investment.

What Are Hedge Funds?

Hedge Funds can assist investors do more than money with higher-risk investments. Other techniques used in Hedge Funds include “leverage,” which is borrowed money to merchandise in improver to the capital provided one’s investors. The usage of Hedge Funds also necessitates an inducement fee. An inducement fee is a fee based on a part of the client’s net income as opposing to a fixed percentage of assets. This fee is then invested and ideally will derive the investor more money.

Generally, companies are the proprietors of Hedge Funds because most people make not have got got adequate money to ran into the minimum investing required to have a Hedge Fund. In 2004, Hedge Fund investings passed the $1 trillion dollar mark. In mid-2004 about 39 companies shared the sum Hedge Fund values of 1.1 trillion dollars.

Common Techniques for Investing

There are also other techniques for investment with Hedge Funds. One manner is to put in a company just before a major merger. If one additions knowledge of a merger, and purchases large amounts of share in a company that is about to merge, the shares travel up greatly once the merger occurs. This is, unfortunately, a very high-risk investment strategy because some mergers may not occur.

Other techniques include selling short, which is where one put in seemingly undervalued securities, trading trade goods and FX contracts, and taking advantage of the separation between the current market terms and the highest purchase terms in events such as as mergers.

Why are Hedge Funds Beneficial?

Hedge Funds are also good because of their high degree of security. Hedge Funds are private, between individuals, and make not have got to be made known to the authorities or other companies. Currently, Hedge Funds make not need to be registered with the SEC. Hedge Funds are also based in topographic points with less ordinances (I.E. The Cayman Islands, The Virgin Islands, etc). However, one drawback of Hedge Fund security is the fact that it looks leery to have got close investments. For this reason, many companies and investors are criticized for being involved with Hedge Funds.

Conclusion

Hedge Funds are a very risky investment, with a large payoff. In order to put in Hedge Funds, one must be prepared to do a very large investment. Hedge Funds are similar to Mutual Funds, except there are less ordinances on Hedge Funds. Less ordinances lead many people to be leery of investors who put in Hedge Funds. However, if one is willing to take the risk, Hedge Funds can certainly pay off!

Box Of Chocolates

Ever have got one of those sample boxes of candy? Each small piece is beautifully wrapped in colourful foil or decorated with an interesting design. Taste just one. So good! One more. And another. Before you cognize it the box is empty. Nothing left.

This upmove in the stock market is very alluring - and could go forth you with a pot ache.

All the market "experts" are telling you that the bull market is back and to get your purchasing clothing on. Open your wallet and get in before it is too late. Mr. Schwab states it is dangerous to be out of the market. There are great values out there. These pillory are so low they can't travel any lower. And there is a Santa Claus and an Easter Bunny.

There is one place I make advocate, but most broker and financial contrivers won't like it. It is called CASH. No broker believes cash is a position. They state you must always be "invested". It looks they have got got got forgotten that investment intends making money and another of import portion of investment intends not losing money.

For the last calendar month we have seen the market travel up and some of you have seen some of your money come up back. Not too much, but some. You desire desperately to believe the bull market is back and your profits will be restored. I sure trust so. Just say this is what is called a mass meeting in a bear market and that it will not last. Then what? You don't desire to see your investings steal away again, make you? You don't cognize if it is a good thought to sell now or wait. Your broker won't be any help.

There is a solution. Stay with your pillory and common finances as long as they are going up, but sell them if they travel down. How? Every Friday after the stopping point you get the settlement terms of your assorted issues and you then name your broker Monday morning time to set in a "Good Til Cancelled Stop-Loss Order" that is approximately 10% below that shutting price. As long as the stock is going up you follow this process every hebdomad and eventually you will be stopped out. Never travel your halt down. You no longer have got to think if this is the highest terms that your stock will reach. The stock itself will state you.

Now you have got cash and, if you desire to, you can purchase a better stock or common monetary fund that is going up..

When you pick out a new cocoa (stock) make it carefully and don't seek to eat the whole box at once. Sometimes it is best to set the box (your cash) away so you can come up back to it another day.

What Do You Mean By Diversity?

The word ‘diversity’ is a alone one. It can stand for many things, depending upon its context. To work in a diverse workplace is to have got all genders and ethnicities represented. In another example, people endeavor for diverseness within their leisure clip activities, while at the same time seeking consistence (yes, that is strange).

Used to depict your financial affairs, diverseness is equally important, and I’d be happy to share why this is so. Rich Person you ever met person who said, “I put all my finances in small technical school stocks?” Iodine have, though they’re not as vocal about it these days! The same tin be said for those who prefer healthcare, existent estate, debris bonds, emerging markets, or their sleeping room mattress! Every section of the market have short-term and long-term cycles and fluctuations, and no 1 is immune to them.

I prefer nothing! No section of the market is more than or less important—they all have got a role. I manage assets like I feed ducks—everyone gets some, but no 1 gets too much. Handled mathematically and reviewed regularly, there is, in my opinion, no better manner to near the issue of long-term growth.

(If you go on to have got any fat ducks in your portfolio, I would urge you set them on a diet.)

© 2005 Matthew S. Clement, All rights reserved

Risk and Reward

If you are doing your ain investing in the stock market, what would be the first inquiry you would inquire yourself before you do any trade or investment? If your reply is how fundamentally sound the stock is, or whether the stock just broke out of a trading range on a chart, or the fact that the stock have gone down 50% inch the last 6 months, or whether the volatility is low now so it is a good clip to purchase or sell, then you are probably on the route to ruin. These strategies have got got nil in common with each other and there are all sorts of different criteria that I did not advert that have nil in common with each other. However no matter what type of strategy you utilize to do your investing decisions, there is only one important inquiry that must be asked before you draw the trigger and do the trade. That is, what is my hazard and what is my reward on this trade. Even if you are going to purchase a stock and throw it for a long time, you still have got to be aware of your hazard and your reward. Why? Because the full stock market may be here for the remainder of your life, any 1 stock might not be. You think, that is all right Iodine diversified a batch so I don’t need to cognize hazard and reward. Wrong.

Diversification is great, but you should still be aware of the hazard and reward because even indexes of the full market have got a hazard and a reward, depending on the length of clip invested. Point of entrance, exit, stops, and diversification, are all of import things, but they by themselves are not hazard and reward. You have got to inquire yourself how much am I risking, and what my possible reward is. How much are the of import words

Okay how make I make that? Well first you must define your investing strategy. If you desire to purchase and throw what exactly makes that mean. Hold for 5 years, 10 years, or forever? What is forever? If you are 20 old age old forever is different than if you are 55. Also if you are purchase and holding, is forever when you halt investment or is it when you begin withdrawing money? These are of import inquiries that must be answered specifically. You might state it doesn’t matter because I will be diversified with index finances for the adjacent 15 years. Okay allow me inquire these questions. Are you 100% invested at all times? Bash you cognize the upper limit drawdown (the largest loss from the index high and low in any 15 twelvemonth period) for the index you invested in? Are you able to financially defy that sort of drawdown? Alright, Iodine cognize these are a batch of inquiries and all you desire to make is put in an index common monetary fund for the adjacent 15 old age and forget about it.

Well I am going to state right now that if you believe you are taking very small hazard on 15 old age you are wrong. If you bought the S&P Five Hundred in a 100% place in 1965 and needed the money in 1980 you would have got made no tax return on investing and had a 40% drawdown from 1969 to 1975. If you look at the time time period of 1930 to 1955, a 25 twelvemonth period it is even worse. I cognize it’s the great depression and things are different today. Don’t presume anything. I am not saying that you should not invest. I am just saying that there is a hazard and a reward. Every clip you merchandise whether it is once a hebdomad or once every 15 years, that trade have a opportunity of winning and a opportunity of losing. Also, when you purchase a managed common monetary fund for 15 old age you are not buying and holding. You are buying and merchandising but you are paying a professional to make it for you. He or she will have got draw down feathers in the monetary fund and hopefully he or she will be looking at hazard and reward for you. Even an index monetary fund held for 15 old age is not truly purchase and throw because the indexes change on a annual basis. Some pillory come up in the index and some pillory travel out of the index. The longer the clip span, state 40-55 years, the bigger the hazard but the bigger the reward. Also the longer the clip span, the longer you can defy a large drawdown if it comes.

Now what if you are trading pillory with an entry and an issue point already predefined; that is where make I get in and where make I get out. That strategy might be good but that is not hazard and reward. The most of import inquiry is how much am I invested and how much make I get out. What is the % of hazard on each stock place in the portfolio and what is the hazard to the sum portfolio. Let’s take an example. You bought 100 shares IBM @50 for $5000 in a sum portfolio of $200.000. You set a sell halt loss to sell all 100 shares if IBM travels to $40 / share. That agency your hazard on IBM is $10 / share or $1000. But your existent hazard to your portfolio is .5% Oregon $1000 divided by $200,000. If you have got a sell issue point of $100 then your reward on the stock would be 100% and the reward to your sum portfolio was 2.5%. So your sum hazard to reward was 5 to 1. You could crunch numbers all twenty-four hours to do up expressions to suit your strategy, but the most of import portion is how much are you risking. Here are some general regulations when it come ups to risk:

Don’t put on the line more than 2% on any given trade or idea. That doesn’t matter if your strategy is technical or cardinal or discretionary. Risking 1% would be safer. Most large monetary fund managers hazard much less.

Diversify. Buying 1% hazard on IBM and 1% on Dell and 1% on Hewlard Packard is a 3% hazard because they all sell the same products

Don’t hazard more than 20% of your portfolio at any 1 time, 10% would be better. You have got got to have a manner to quantify the greed factor or it might devour you and all your money at the same time.

In my ain portfolios I seek not to put on the line more than than 7% on an initial portfolio position.

Initial hazard and on going hazard can be two different risks. As a trade goes profitable the amount of at hazard at any minute in clip can be a variable not a constant. That would allow for letting net income run while cutting losings short. However, making your initial hazard a variable in most cases would be a disaster. Once initial hazard is conceived it should never be increased. Greed may go the primary factor in increasing initial hazard and that is always a fast path to increasing losses.

I trust that hazard and reward go the primary strategy concern in your hereafter investment and trading.

Earn $100 for Every 10 Cents in the Price of Fuel

I’m about to reveal a strategy that has made thousands of dollars for my clients just recently. There are no “fool proof” methods for making lots of cash. There are however, methods that can generate more cash more quickly than you can imagine. I’ll also tell you the best time to take advantage of this opportunity.

By now everyone is aware of the increase in the price of fuel. The price we pay at the gas pump seems to get more and more press coverage. That is because this is considered an extreme situation. Successful traders look for extreme situations. It’s a setup for a very profitable situation.

OPPORTUNITY

There are a number of ways to take advantage of this opportunity. The way I suggest is to look at crude oil. Fuel is made from crude oil. On the commodity exchange (a place where commodities are bought and sold) every ten cents (dime) in the price change of crude oil equals $100. Why every 10 cent move in the price of crude oil equates to $100 deserves more of an explanation than I have room in this article. This is explained in detail in the Money Tracks System at www.themoneymotivator.com.

PROFITS

Recently the price of crude oil changed $1.14 in one day. What that means is if the price changed $1.14 that equated to a profit potential of $1,140 in one day. You could have made that amount of money while you continued to go about your daily life. How would making $1000 a day change your life?

TIMING

Now let’s talk about timing and why I love weather forecasts. Natural disasters happen. I don’t want them to happen but they happen. So you may as well turn lemons into lemonade. Here’s what I mean, if a hurricane is headed for the Gulf Coast that means that crude oil will probably rise in price. Smart traders know this and they position themselves to profit from the rising price of crude oil.

REASON

The reason the price of crude oil goes up is because a major portion of oil rigs are on the Gulf Coast and they can get damaged by the hurricane or maybe temporarily shut down. This shut down of the oil rigs means there is less oil in supply. Less oil in supply means people must pay a higher price to get the oil that is available. So one of the best times to buy crude oil is when a hurricane is headed towards the Gulf Coast. Remember gas is made from crude oil. When you earn your profits be sure to help hurricane victims.

Finally, you see there really is a simple way to make money. I’m sure you have thought to yourself, “there’s got to be a better way”. Now you know you were right; there is a better way. People similar to you are making money while taking vacations, relaxing at the beach and spending time with their loved ones.

For more information on how to profit from current events visit www.themoneymotivator.com and order Wealthy Investing Secrets today.

To Your Continued Wealth-building,

David