Investment Strategies 03 (Jul 13 - Mar 19)

Investment Strategies 03 (Jul 13 - Mar 19)

Postby winston » Fri Jul 12, 2013 9:02 pm

The Three Most Critical Drivers of Stock Prices By Louis Basenese

What drives stock prices? In this bull market, it’s the Fed, earnings and jobs.

Source: Wall Street Daily

http://www.thetradingreport.com/2013/07 ... ck-prices/
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Investment Strategies 02 (Jun 10 - Jun 13)

Postby winston » Thu Jul 25, 2013 8:14 pm

My Simple Approach to Sizing up Any Investment By Dr. Steve Sjuggerud

People often ask me, "Steve, how do you know how to size up so many different types of investments?"

On the surface, that's a difficult task. After all, what do stocks in Hong Kong have to do with U.S. real estate, Japanese bonds, or gold-mining stocks?

"Not much," is probably the correct answer. But there is a simple way to put all of these investments (and almost any investment) on the same playing field.

Anyone can understand this approach. And right now, it shows a clear winner in the global investing landscape. Let me explain…

It's simple. Regardless of whether it's stocks, bonds, real estate, or something more exotic, I look at all investments through the same lens…

I want to know how long it will take me to get my initial investment out of it.

This is a great way to equalize investments… and size them up with the same measuring tool.

Let's look at a couple examples…

Last year, I bought a property (with some partners) for less than $1 million. In 2008, that property had been under contract for $14 million. Within a month, we got an offer for twice what we paid for it. (We actually didn't take the offer… We think the property is worth more than that.)

It was risky, with no income potential, but I thought it could be worth double what we paid in 12 months. (The offer we got was proof of that.)

I also think this way with income… For example, how many years of rent (after expenses) will it take to pay off the purchase price of a house? Or how many years will it take to double your money in the bank at current interest rates?

In other words, how long will it take until you're riding on "the house's money"? It's an easy yardstick… an easy equalizer.

I think this way when I'm sizing up companies to invest in, too. In simple terms, I think of it as if I was the only buyer of the business.

How many years will it take for me to earn back what I paid for the business? After that, all the income is free money…

If you're collecting rent from a property you own, it might take decades… And at current interest rates, it would take over 100 years to double your money at the bank.

The overall stock market trades at a price-to-earnings (P/E) ratio of 15 today. That means it would take you roughly 15 years to get all your money out, assuming you could buy the entire market as though it were a single business and earnings never grew.

The table below shows a few major assets classes… and how long it would take to get our money out of each one. Take a look…


Investment Years to Get Money Out*
Savings Account 100+
U.S. Treasurys 40
AAA Corporate Bonds 24
Junk Bonds 16
U.S. Stocks 15
European Stocks 12
Emerging-Market Stocks 11
* Assuming no reinvestment and no earnings growth


Of course, this isn't a perfect approach. The less risky an investment, the longer it should take to get your money back. But it's a simple way to look at several very different investments and get a feel for how they stack up against each other.

In my opinion, even factoring in risk, stocks offer the best value today…

As I wrote earlier this week in DailyWealth, I believe the S&P 500 could rise another 1,000 points over the next few years. And at values like these, we could see similar gains around the globe.

I suggest you position your portfolio accordingly.

Source: Daily Wealth
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Investment Strategies 02 (Jun 10 - Jun 13)

Postby winston » Thu Jul 25, 2013 8:21 pm

"Investors who continue to follow a proven system do much better, in the long run, than investors who pick stocks randomly or follow a system only when they want."

- Mark Ford
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Investment Strategies 02 (Jun 10 - Jun 13)

Postby winston » Thu Aug 01, 2013 6:01 am

Just Go Halfsies by Mebane Faber

Many people are attracted to investing (rather, trading) largely due to the excitement. Also, a lot of people like to have a position one way or another so they can cheer for the position, much the same way they cheer for a sports team or their home country. ie I’m long gold! I’m short Tesla! Go Broncos!

So, the act of scaling in and out of a position is boring and emotionally difficult for many investors. I can’t tell you how many investors I’ve talked to that have said, “I don’t know what to do, should I buy or sell? Do I own too much gold?”.

My response is usually, “If you are unsure or it is making you uncomfortable, sell 1/3, or 1/2.” That way you don’t look back and regret your decision. However that is boring for many investors.

Once you’ve bet $100 on a football game, likely betting $1 will not generate the same ‘excitement’. You will also feel much more regret when the reduced bet wins than you will when the reduced bet avoids loss.

Anyways, this also applies to to asset allocation strategies. One question I often get, especially from advisors, is mentally committing to a tactical (market timing) system (like our global tactical models). My advice: why not just go halfsies? ie Why not allocate half to your old buy and hold system, and half to whatever new system you are contemplating?

You no longer risk being completely wrong, and you still potentially look brilliant in a 2008 or other bear market.

Below is a look at a simple buy and hold, then the effect of 50/50 buy and hold in a GTAA Aggressive strategy from our paper. As you can see it still helps, and avoids the “all-in” problem many people have.

Maybe it is not as much fun, but it could help build your portfolio and business.

http://www.mebanefaber.com/2013/07/26/j ... halfsies/#
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Investment Strategies 02 (Jun 10 - Aug 13)

Postby winston » Tue Aug 13, 2013 5:38 am

The Most Dangerous Assumption About Stocks and GDP By Louis Basenese

Bottom line: Economic growth rates are terrible proxies for predicting stock market returns.

So if you’re interested in consistently making money, stop using them as a basis for your investment decisions.


Source: Wall Street Daily


http://www.thetradingreport.com/2013/08 ... s-and-gdp/
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Investment Strategies 02 (Jun 10 - Aug 13)

Postby winston » Wed Aug 14, 2013 5:57 am

10 Investment Rules To Live By By Lance Roberts

http://pragcap.com/10-investment-rules-to-live-by
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Investment Strategies 02 (Jun 10 - Aug 13)

Postby Chinaman » Thu Aug 15, 2013 12:06 pm

Bump into this old folder, today free free relook & review:
Learn from the real master

The Tao of Warren Buffett – Mary Buffett & David Clark

Getting & staying rich

#1 – Rule No. 1: never lose money. Rule No. 2: never forget rule no. 1.

#2 – I made my first investment at age eleven. I was wasting my life up until then.

#3 – Never be afraid to ask for too much when selling or offer too little when buying.

#4 – You can’t make a good deal with a bad person.

#5 – The great personal fortunes in this country weren’t built on a portfolio of fifty companies. There were built by someone who identified one wonderful business.

#6 – It is impossible to un-sign a contract, so do all your thinking before you sign.

#7 – It is easier to stay out of trouble than it is to get out of trouble.

#8 – You should invest like a Catholic marries – for life.

#9 – Wall Street is the only place that people ride to in a Rolls-Royce to get advice from those who take the subway.

#10 – Happiness does not buy you money.

#11 – It takes twenty years to build a reputation and five minutes to lose it. If you think about that, you will do things differently.

#12 – The market, like the Lord, helps those who help themselves. But unlike the Lord, the market does not forgive those who know not what they do.

#13 – I don’t try to jump over seven-foot bars; I look around for one-foot bars that I can step over.

#14 – The chains of habit are too light to be felt until they are too heavy to be broken.

#15 – Marrying for money is probably a bad idea under any circumstances, but it is absolutely nuts if you are already rich.

#16 – It’s not necessary to do extraordinary things to get extraordinary results.

#17 – You should look at stocks as small pieces of a business.

#18 – My idea of a group decision is to look in the mirror.

#19 – If I can’t make money in a $5 trillion U.S. market, it may be a little bit of wishful thinking to think that all I have to do is get a few thousand miles offshore and I’ll start showing my stuff.

#20 – You should invest in a business that even a fool can run, because someday a fool will.

#21 – With each investment you make, you should have the courage and the conviction to place at least 10% of your net worth in that stock.

#22 – Money, to some extent, sometime lets you be in more interesting environments. But it can’t change how many people love you or how healthy you are.

Business

#23 – Anything that can’t go on forever will end.

#24 – When management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.

#25 – Accounting is the language of business.

#26 – Turnarounds seldom turn.

#27 – If a business does well, the stock eventually follows.

#28 – Managing your career is like investing – the degree of difficulty does not count. So you can save yourself money and pain by getting on the right train.

#29 – The reaction of weak management to weak operations is often weak accounting.

#30 – There is a huge difference between the business that grows and requires lots of capital to do so and the business that grows and doesn’t require capital.

#31 – In a difficult business, no sooner is one problem solved than another surfaces – never is there just one cockroach in the kitchen.

#32 – You can always juice sales by going down-market, but it’s hard to go back upmarket.

#33 – When a chief executive officer is encouraged by his advisers to make deals, he responds much as would a teenage boy who is encouraged by his father to have a normal sex life. It’s not a push he needs.

#34 – You don’t have to make money back the same way you lost it.

#35 – I look for businesses in which I think I can predict what they’re going to look like in ten to fifteen years’ time. Take Wrigley’s chewing gum. I don’t think the Internet is going to change how people chew gum.

Warren’s Mentors

#36 – Someone is sitting in the shade today because someone planted a tree a long time ago.

#37 – With enough inside information and a million dollars, you can go broke in a year.

#38 – Read Ben Graham and Phil Fisher, read annual reports, but don’t do equations with Greek letters in them.

#39 – I am a better investor because I am a businessman and a better businessman because I am an investor.

#40 – If principles become dated, they’re no longer principles.

#41 – You pay a very high price in the stock market for a cheery consensus.

Education

#42 - If calculus or algebra were required to be a great investor, I’d have to go back to delivering newspapers.

#43 – You have to think for yourself. It always amazes me how high-IQ people mindlessly imitate. I never get good ideas talking to other people.

#44 – The smarter the journalists are, the better off society is.

#45 – You want to learn from experience, but you want to learn from other people’s experience when you can.

The workplace

#46 – It’s hard to teach a young dog old tricks.

#47 – In looking for someone to hire, you look for three qualities: integrity, intelligence and energy. But the most important is integrity, because if they don’t have that, the other two qualities, intelligence and energy, are going to kill you.

#48 – Can you really explain to a fish what it is like to walk on land? One day on land is worth a thousand years talking about it, and one day running a business has exactly the same kind of value.

#49 – It’s only when the tide goes out that you learn who’s been swimming naked.

#50 – When ideas fail, words come in very handy.

#51 – The really good business manager doesn’t wake up in the morning and say, “This is the day that I am going to cut costs,” any more than he wakes up and decides to practise breathing.

#52 – Wouldn’t it be great if we could buy love for $1 million. But the only way to be loved is to be lovable. You always get back more than you give away. If you don’t give any, you won’t get any. There’s nobody I know who commands the love of others who doesn’t feel like a success. And I can’t imagine people who aren’t loved feel very successful.

#53 – We enjoy the process far more than the proceeds, though I have learned to live with those also.

#54 – If you hit a hole in one on every hole, you wouldn’t play golf for very long.

#55 – There comes a time when you ought to start doing what you want. Take a job that you love. You will jump out of bed in the morning. I think you are out of your mind if you keep taking jobs that you don’t like because you think that it will look good on your resume. Isn’t that a little like saving up sex for your old age?

#56 – A friend of mine spent twenty years looking for the perfect woman; unfortunately, when he found her, he discovered that she was looking for the perfect man.

Analysts, advisers, brokers – follies to avoid

#57 – Never ask a barber if you need a haircut.

#58 – Forecasts usually tell us more of the forecaster than of the forecast.

#59 – A public-opinion poll is no substitute for thought.

#60 – The business schools reward difficult, complex behaviour more than simpler behaviour, but simple behaviour is more effective.

#61 – There seems to be some perverse human characteristic that likes to make easy things difficult.

#62 – Recommending something to be held for thirty years is a level of self-sacrifice you’ll rarely see in a monastery, let alone a brokerage house.

Why not to diversify

#63 – I can’t be involved in fifty or seventy-five things. That’s a Noah’s ark way of investing – you end up with a zoo that way. I like to put meaningful amounts of money in a few things.

#64 – Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing.

#65 – Wall Street makes its money on activity. You make your money on inactivity.

#66 – Why not invest your assets in the companies you really like? As Mae West said, “Too much of a good thing can be wonderful.”

#67 – Wide diversification is only required when investors do not understand what they are doing.

#68 – You only have to do a very few things right in your life so long as you don’t do too many things wrong.

Discipline, prudence, and patience

#69 – If you let yourself be undisciplined on the small things, you will probably be undisciplined on the large things as well.

#70 – There is nothing like writing to force you to think and get your thoughts straight.

#71 – The less prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs.

#72 – I’ve never swung at a ball while it’s still in the pitcher’s glove.

#73 – Imagine that you had a car and that was the only car you’d have for your entire lifetime. Of course, you’d care for it well, changing the oil more frequently than necessary, driving carefully, etc. Now, consider that you only have one mind and one body. Prepare them for life, care for them. You can enhance your mind over time. A person’s main asset is themselves, so preserve and enhance yourself.

#74 – I buy expensive suits. They just look cheap on me.

#75 – In the search for companies to acquire, we adopt the same attitude one might find appropriate in looking for a spouse: it pays to be active, interested, and open-minded, but it does not pay to be in a hurry.

Beware the folly of greed

#76 – When proper temperament joins up with the proper intellectual framework, then you get rational behaviour.

#77 – The fact that people are full of greed, fear, or folly is predictable. The sequence is not predictable.

#78 – A stock doesn’t know that you own it.

#79 – When you combine ignorance and borrowed money, the consequences can get interesting.

#80 – Of the seven deadly sins, envy is the silliest, because if you have it, you don’t feel bitter. You feel worse. I’ve had some good times with gluttony.. we won’t get into lust.

#81 – We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

When to sell, when to leave

#82 – The most important thing to do if you find yourself in a hole is to stop digging.

#83 – If at first you do succeed, quit trying.

#84 – I buy stocks when the lemmings are headed the other way.

#85 – Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.

#86 – We don’t go into companies with the thought of effecting a lot of changes. That doesn’t work any better in investments than it does in marriage.

#87 – Risk comes from not knowing what you are doing.

#88 – The only time to buy these is on a day with no y in it.

#89 – We also believe candour benefits us as managers: The CEO who misleads others in public may eventually mislead himself in private.

#90 – That which is not worth doing at all is not worth doing well.

#91 – A good managerial record is far more a function of what business boat you get into than it is of how effectively you row. Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.

Mistakes to beware of

#92 – We never look back. We just figure there is so much to look forward to that there is no sense thinking of what we might have done. It just doesn’t make any difference. You can only live life forward.

#93 – I want to be able to explain my mistakes. This means I do only the things I completely understand.

#94 – If you don’t make mistakes, you can’t make decisions.

Your circle of competence

#95 – Investment must be rational; if you don’t understand it, don’t do it.

#96 – If you understand an idea, you can express it so others can understand it.

#97 – If they need my help to manage the enterprise, we are probably both in trouble.

#98 – Our method is very simple. We just try to buy businesses with good-to-superb underlying economics run by honest and able people and buy them at sensible prices. That’s all I’m trying to do.

#99 – If we can’t find things within our circle of competence, we don’t expand the circle. We’ll wait.

#100 – Any business craving of the leader, however foolish, will be quickly supported by studies prepared by his troops.

#101 – In the business world, the rear view mirror is always better than the windshield.

#102 – I’m very suspect of the person who is very good at one business – it also could be a good athlete or a good entertainer – who starts thinking they should tell the world how to behave on everything. For us to think that just because we made a lot of money, we’re going to be better at giving advice on every subject – well, that’s just crazy.

#103 – It won’t be the economy that will do in investors; it will be investors themselves.

The price you pay

#104 – For some reason people take their cues from price action rather than from values. Price is what you pay. Value is what you get.

#105 – That which goes up doesn’t necessarily have to come down.

#106 – The key is that the stock market basically just sets prices, so it exists to serve you, not instruct you.

#107 – At the beginning, prices are driven by fundamentals, and at some point, speculation drives them. It’s that old story: What the wise man does in the beginning, the fool does in the end.

#108 – The smartest side to take in a bidding war is the losing side.

#109 – A pin lies in wait for every bubble, and when the two eventually meet, a new wave of investors learn some very old lessons.

#110 – I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.

Long-term economic value is the secret to exploiting short-term stock market folly

#111 – The stock market is a no-called-strike game. You don’t have to swing at everything – you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, “Swing, you bum!”

#112 – What we learn from history is that people don’t learn from history.

#113 – Look at stock market fluctuations as you friend rather than your enemy – profit from folly rather than participate in it.

#114 – Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be mis-appraised.

#115 – Uncertainty actually is the friend of the buyer of long-term values.

#116 – To many on Wall Street, both companies and stocks are seen only as raw materials for trades.

#117 – No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.

#118 – If past history was all there was to the game, the richest people would be librarians.

#119 – Only buy something that you’d be perfectly happy to hold if the market shut down for ten years.

#120 – The investor of today does not profit from yesterday’s growth.

#121 – I’d be a bum on the street with a tin cup if the markets were efficient.

#122 – As far as I am concerned, the stock market doesn’t exist. It is only there as a reference to see if anybody is offering to do anything foolish.

#123 – We believe that according the name investors to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a romantic.

#124 – We do not have, never have had, and never will have an opinion about where the stock market, interest rates, or business activity will be a year from now.

#125 – Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.
User avatar
Chinaman
Boss' Left Hand Person
 
Posts: 709
Joined: Wed Mar 24, 2010 9:01 pm

Re: Investment Strategies 02 (Jun 10 - Aug 13)

Postby iam802 » Thu Aug 15, 2013 1:47 pm

This caught my eye.

Quite true for tech stocks. Once those darlings lose their glory or competitive edge, the turnaround is just so much more difficult.

AAPL is probably the only company I know in tech that has a successful turnaround.

#26 – Turnarounds seldom turn.
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

TA and Options stuffs on InvestIdeas:
The Ichimoku Thread | Option Strategies Thread | Japanese Candlesticks Thread
User avatar
iam802
Big Boss
 
Posts: 6353
Joined: Wed May 07, 2008 1:14 am

Re: Investment Strategies 03 (Jul 13 - Dec 14)

Postby winston » Thu Aug 29, 2013 8:32 pm

One Simple Thing You Can Do to Dramatically Increase Your Returns By Dr. Steve Sjuggerud

It's so simple… so easy… and it can dramatically increase your investment returns.

Yet most people don't do it. Heck, I know I have trouble doing it.

Still, I know it works… because when I manage to do it, I've made a lot of money!

So what is it? And are you capable of doing it too?

All I'm talking about is simply sticking with a good trade… and not selling too early. You need to keep holding a winning trade until you're really uncomfortable still holding it. This is where you make the big money.

Here's what you need to understand: Trends in financial assets tend to go on for much longer than you can possibly imagine. So to make big money, you need to stay with a good trend much longer than you feel comfortable doing.

Let me show you an example…

Biotech stocks have done nothing but go up for years now. Thankfully, my subscribers have been in the trade… We're up, A LOT, and we're still in.

For example, in my True Wealth newsletter, we bought the biotech sector through the iShares Nasdaq Biotech Fund (IBB). So far, we're sitting on a 71% gain in less than two years. Take a look:

Even though we're up from $113 to $193, we're still in the trade.

I'm sure some folks would take their profits here. They'd say, "You can't go broke taking profits." But you could have said that any time over the last two-year bull market. And thinking like that will limit you to mediocre returns.

So we're going to stay in the biotech trade until our stop loss forces us out.

In order to make real money in stocks – and most assets – you need to be able to stick with a good trade on the way up, even when it feels uncomfortable.

Trust me on this. You can dramatically increase your investment returns… if you can simply do this one thing.

It's worth repeating: Trends in financial assets tend to go on for much longer than you can possibly imagine. That's one "truth" that has proven itself over and over in my career.

Don't forget it. And use it to your advantage. Stay in that trade longer than is comfortable.

I can't overestimate the power of this one idea in making money. Go with me on this… Always maintain a stop loss. But don't cut out early. You have to believe you'll make a lot more money in your investments than you already are.

Source: Daily Wealth
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Investment Strategies 03 (Jul 13 - Dec 14)

Postby winston » Wed Apr 02, 2014 8:28 pm

The Richest Man in History Reveals His Simple Wealth Generating Secret

By Jae Jun

Source: GuruFocus

http://www.thetradingreport.com/2014/04 ... ng-secret/
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118541
Joined: Wed May 07, 2008 9:28 am

Next

Return to Other Investment Instruments & Ideas

Who is online

Users browsing this forum: No registered users and 11 guests