Investment Strategies 03 (Jul 13 - Mar 19)

[winston]

Stocks Just Hit All-Time Highs... Time to Sell? By Dr. Steve Sjuggerud

"I'm scared. My stock just hit a record high. I've got to get out while I can…"

Clients said that to me regularly when I started out as a broker a few decades ago.

Everyone seems to get scared when their stocks hit new highs, and they want to sell… but that is the WRONG way to think.

The truth is, new highs are a GOOD thing…

History is clear on this one. You want to get rid of stocks hitting new lows. And you want to keep ones hitting new highs.

Too bad everyone wants to do the opposite.

Look, if your stock is at new highs, it's obviously going up. You're obviously making money. Don't fight it… Hopefully you'll agree with me after today's DailyWealth.

Let me share the facts with you…

In a massive undertaking just a couple of years ago, James O'Shaughnessy studied all U.S. stocks in history going back to 1926, to find out what works in investing. And he wrote the book on it – called What Works on Wall Street.

One of his simple conclusions was that "winners continue to win."

O'Shaughnessy didn't have preset notions when he started his research. He just tested everything.

The results were sometimes shocking – the truth turned out to be so much different from what people believe. One of the most shocking conclusions to me was what happens when you buy losers…

People love to buy what's down – what's cheap. But O'Shaughnessy discovered that's a terrible idea…

If you found a list of the worst-performing stocks over the last 12 months, and bought them all expecting a rebound, I hate to break it to you, but history says that rebound typically doesn't come.

According to O'Shaughnessy's work, buying last year's worst performers almost never works…

O'Shaughnessy found that the worst-performing 10% of stocks over the previous 12 months perform absolutely terribly going forward…

Astoundingly, even five years later, you're STILL worse off buying last year's bad performers – just about always.

(Specifically, O'Shaughnessy shows that buying the trailing-12-month losers in any month and holding for five years hasn't beaten buy-and-hold for five years at any time in the last sixty years, with the exception of a brief time in about 2008. Now that is astounding! The chart of that is on page 429 of his book.)

So you don't want to buy stocks that have been hitting 12-month lows. What about stocks hitting new highs? Yes, you want to own those…

In short, O'Shaughnessy found that buying the best-performing 10% of stocks of the last 12 months dramatically outperforms buy-and-hold going forward.

As I write, the stock market is sitting at all-time highs. Hopefully you're sitting on some stocks yourself that are at 12-month highs.

Should you sell? Should you worry? Based on O'Shaughnessy's work, you shouldn't.

Most people think that when they see new highs, they need to sell. And most people want to buy what's "on sale" at new lows.

History tells us that you need to do the opposite.

"Winners continue to win," O'Shaughnessy says. And though he didn't say it, the opposite is true as well… Losers continue to lose.

So yes, stocks are at new highs. But no – today's new highs are not a reason to sell…

Don't forget it…


Source: Daily Wealth

[winston]

I Have This Quote Taped to My Computer... You Should, Too By Amber Lee Mason

It's the most important thing ever said about trading…

If you print this quote out, pin it up close to your computer, and read it every day, you'll find trading a lot easier… and a lot more lucrative.

It's the most important thing ever said about trading…

If you print this quote out, pin it up close to your computer, and read it every day, you'll find trading a lot easier… and a lot more lucrative.

Here's the quote:

It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.

The quote comes from George Soros. And while you might not like his politics, Soros is one of the greatest traders alive. He and legendary trader Jim Rogers produced a 3,000%-plus return over 11 years in their Quantum Fund. (His most famous trade was a 1992 bet against the British pound, which netted $1 billion.)

When Soros says "it's not whether you're right or wrong that's important," he means that your "batting average" as a trader barely matters. It's much more important that you maximize your winners and minimize your losers.

It sounds simple, but it can be hard for many traders to put into action…

The natural impulse is to close winning trades as soon as they're up 10% or 20%. You figure you can't go broke taking profits… It's also natural to want to leave losing trades alone. You hold and hope it'll come back to breakeven.

But that's exactly how NOT to make money over a lifetime of trading. Instead, you need to cut your losers short and let your winners run. If you can do that, you're almost mathematically guaranteed to win.

You can see what I mean in three hypothetical portfolios, which I pulled from my video "The Most Important Thing Ever Said About Trading." Each portfolio holds 10 hypothetical trades, with $10,000 in each trade.

The trades were exactly the same: There were four winning trades, five losers, and one trade that broke even. The only thing that changed was the exit strategies.

Please Enable Images to See this

The "Original Strategy" shows what the portfolio looked like at the end of the year… without closing any of the positions. You can see it just about broke even.

The "Beginner's Strategy" was to take profits quickly – at 20% – but to hold the losers. That portfolio lost nearly 13%.

The final strategy, "Soros' Strategy," was to cut losses quickly – at 10% – but to let winning trades ride. That portfolio returned nearly 15%.

Remember, that's using the exact same trades… and only four winning trades out of 10. It's that simple.

So the smartest thing I can do is to maximize the value of my good decisions and minimize the impact of my bad decisions.

In short, you need to be patient while you're making money so you can reap the full benefit of your good decisions. And you need to be impatient when you're losing money, so you don't get hurt.


Source: www.growthstockwire.com

[winston]

Six Investment Lessons from Six Billionaires By Amber Lee Mason

If you're thinking long term, it's not all about "stock picks"…

I recently attended the Stansberry & Associates Spring Editors Conference in Nassau, Bahamas. Every year, we come together to present our best ideas and hear from a few of our best contacts and industry insiders.

We threw around a lot of specific opportunities for making money… But those weren't necessarily the most valuable ideas we discussed.

After highlighting a handful of his top stocks, for example, one money manager (who asked to remain anonymous) started talking about the billionaires he has worked with in his career… and what he learned from them.

If you can take these ideas to heart, his list will be more useful than a hundred winning stock recommendations. Here it is…


• From Julian Robertson, who founded the legendary Tiger Management: Make sure you've got a great elevator pitch for your investment idea.

​Julian's office was on the 48th floor. You had to be able to describe your idea before you got there. If you couldn't describe your idea that quickly, it was probably too complex and unlikely to work out well.


• From John Griffin, who was Julian Robertson's right-hand man: Have the courage of your convictions.

When you find a great idea, make sure you're putting a meaningful amount of money into it.


• From Stephen Schwarzman, co-founder, chairman, and CEO of private-equity giant Blackstone: Demand excellence of yourself. Don't cut corners.
When Schwarzman greeted new analysts, he said, "Folks, I've looked at all your resumes. You got A-minuses in college. But an A-minus performance does not work here."


• From Peter Peterson, co-founder and former chairman of Blackstone: Make great returns by avoiding mistakes.

It's not necessarily the 3,000% winners that will give you great long-term results, it's avoiding the total losers.


• From legendary trader George Soros: Understand the big picture.

George was a macro genius. When discussing private-equity investments the firm was making, he recognized that company-specific fundamentals were important, but his real value-add was making sure investors understood the structural and secular forces that could move entire industries and economies.


• From Steve Cohen, founder of hedge fund SAC Capital Advisors: Ask,"What is the most important thing?"

Steve would have dozens of ideas pitched to him daily, usually by analysts who were experts in that field or security. Steve was uniquely adept at cutting through the noise. He could identify and solve for the most important thing, allowing him to make an informed, decisive action.

The money manager wrapped up his talk with this advice: "Take your best practices… and all the things you've learned from the folks you respect… and create your own ideas."

If you have lessons like these at hand and practice putting them to work, you'll end up creating a lot of great ideas.

Source: DailyWealth Trader

[behappyalways]

5 investing tips from hedge fund titans
http://buzz.money.cnn.com/2014/05/05/5- ... ?iid=HP_LN

[winston]

The Simple Secret to My Success in Life By Dr. Steve Sjuggerud
Wednesday, May 7, 2014

What's my secret?

Friends at home in Florida think that I have some sort of "Golden Touch."

They want to know my secret to repeatedly making great investment decisions.

Usually, I just shrug off their questions without much of an answer. "Just good luck," I'll say. Or something like that.

The thing is, I do have a "secret" that helps guide my investment choices. Even better, it is not hard to understand or to put into action. Today, I'll show you what I do… And I hope you will always remember it.

My friends at home have seen me succeed over and over again. Usually, it appeared from the outside that what I was doing was a bit crazy. I wasn't. I was simply following the secret…

For example:

• My friends looked at me like I was crazy in the mid-2000s. Back then, they were all buying real estate. I was buying gold coins. As you can guess, my friends were clobbered in real estate, but I came out ahead.

• My friends know that when the financial world looked like it was ending in 2008, I took out a home-equity loan to buy stocks. (That was the first and only time I've ever done that.) I doubled that money pretty quickly and used those profits to pay off that loan. I've been saying "buy stocks" ever since.

• In recent years, I've been buying large properties in Florida for 80%-90% less than what they sold for at their peaks. It's already working out well… One of these properties – a few hundred acres – is currently listed for a price more than five times what I paid for it. (That price was suggested by the realtor, not by me.)

So what is my secret?

I call it "The One Critical Thing."

My secret to success is figuring out the One Critical Thing… and investing accordingly.

Most aspects of life have at least One Critical Thing that's the key to success. (Some things have two or more Critical Things.) The trick is finding that One Critical Thing and sticking with it.

Take golf, for example… golf has a few Critical Things, like:

1. Don't swing too hard/keep your head still.
​2. Don't take big risks.

If you simply do these two things, you can become an extremely good golfer. I'm sure of it.

Finding that One Critical Thing can bring you a bit of peace and clarity. Most people get bogged down by too much noise and advice, and most of it is not that helpful.

When you start to feel bogged down and overwhelmed, just return to the Critical Things. Chances are you'll come out ahead.

Human nature is a funny thing, though…

Even when we know these Critical Things… even when they are obvious… we still want to fight them. Go back to the golf example. We want to bend these rules, test them, take them to their limits, and ultimately break them.

We want to think that this time is different. It is not.

So what I want to find are these Critical Things – both in the markets and in life.

The way I make the biggest money – by far – is when human nature gets in the way… when people think the Critical Thing no longer matters. That happened in the three examples I gave at the beginning of this story. When I see people forgetting about what matters, I simply bet that the Critical Thing will end up mattering after all.

It's simple.

In tomorrow's essay, I'll share a few Critical Things that I think are moving the markets today and will continue to move the markets. Sticking to these ideas is how I make my money.


Source: Daily Wealth

[winston]

Three Simple Ideas That Will Make You a Better Investor By Dr. Steve Sjuggerud
Thursday, May 8, 2014

Yesterday, I shared the "secret" to my success…

As I explained, this secret is not hard to understand or to put into action. And it works in both the markets and in life.

In short, the idea is to boil things down to the "One Critical Thing" – and invest accordingly.

See, most people get bogged down by too much noise and advice, and most of it is not that helpful. But finding that One Critical Thing can bring you a bit of peace and clarity. It can make your investing decisions much easier.

Today, I'm going to share a few examples. I'm going to discuss the three Critical Things that are guiding my investment choices right now.

Sticking to these ideas is how I make my money…

When Porter Stansberry talks about the End of America – the idea that America's debt-addicted economy is going to create dire consequences for our way of life – I agree with him.

Some people find that surprising given my bullish stance on the stock market. But at the heart of it, the only thing we differ on is timing…

You can get lost in all the aspects of what our government is doing wrong to destroy our country.

Or you can boil it down to One Critical Thing.

To me, the Critical Thing to remember here is, you cannot spend more than you make forever.

It's common sense. But as I explained yesterday, human nature often gets in the way. The following chart sums up all I need to know…

The chart shows that U.S. government spending on entitlements (health care and Social Security) will eat up ALL government revenues very soon.

The chart is a graphical depiction of what I believe is The Critical Thing for our government.

If you want to fix the country, fix that chart. Simple. That is The Critical Thing.

In the stock market, the Critical Thing has been the Bernanke Asset Bubble…

This is my idea that the U.S. Federal Reserve will keep interest rates lower than anyone can imagine for longer than anyone can imagine. And that will drive asset prices (like stocks and real estate) higher than anyone can imagine.

This is The Critical Thing.

Amazingly, the Federal Reserve is trying to revive the housing market as well. "Although we work through the financial markets, our goal is to help Main Street, not Wall Street," Federal Reserve Chair Janet Yellen said last month. "By keeping interest rates low, we are trying to make homes more affordable and revive the housing market…"

People have been continuously worried about the stock market and the housing market. Can they hold up? My opinion is, yes. That's because our Critical Thing – the Fed and its interest-rate policies – isn't going away for a while.

I do have concerns…

My biggest concern is The Critical Thing in the bond market…

Right now, high-yield "junk" bonds pay less interest than ever in recorded history. This scares me.

You want to invest when junk-bond yields are high – like they were in 2002 or 2009. When junk-bond yields are high, that usually means investors are scared. So you can often find incredible investment bargains, if you're bold enough to buy.

On the flip side, you typically start getting worried when junk-bond yields are low. And right now, they're really low. Here's a chart of junk-bond yields, so you can see what I mean.

The Bernanke Asset Bubble has been the right Critical Thing to believe in over the last few years. I believe it still has room to run…

However, other signs – like my Critical Thing in the bond market – tell me we are getting into the later innings of the Bernanke Asset Bubble. I think we're around the seventh inning in this great bull market… and often the biggest gains come in the final innings.

You can't forget about the first Critical Thing I shared, though, either… You can't forget about government spending on entitlements. The trajectory there is terrible, and it's hard to see an end in sight. With this one simple chart – with this one Critical Thing – Porter's End of America thesis looks like a near certainty.

So adding up just the few Critical Things I shared with you…

Since the Fed hasn't changed its policies, the Bernanke Asset Bubble is still in play. But junk bonds are giving us a warning that we are in the late innings. And in the long run, government spending on entitlements will force us to face Porter's End of America thesis.

That's three Critical Things that significantly shape my world view.

I try to find these Critical Things in everything I do… both inside and outside of the office.

I suggest you spend your time focusing on finding the Critical Things that matter in what you do… and try to tune out the rest.

Doing so has made me a wealthy man… and it allows me to sleep easier as well, with fewer things cluttering my brain. It works…


Source: Daily Wealth

[winston]

How to Be a 'Shark' Investor in a Bull Market

By Brett Carson

Source: U.S.News & World Report LP

https://sg.finance.yahoo.com/news/shark ... 08508.html

[winston]

5 Ways To Improve Your Portfolio

By Rick Ferri

Source: Forbes

https://sg.finance.yahoo.com/news/5-way ... 0c-;_ylv=3

[winston]

The Myth About Buying at New Highs By Dr. Steve Sjuggerud

I have a surprising message for you today…

It's something that will give you an edge over your fellow investors. It's something that will allow you to keep making money in stocks after they have sold.

Let me explain…

The U.S. stock market just hit a record high yesterday. That probably gets you worried.

You aren't alone… most investors get worried… because they believe that if we're at new highs, then there can't be much upside potential remaining in the markets.

Although that sounds right, it's actually completely wrong…

Think about this…

Sixty-three times since 2009, the stock market has closed the week at a new 52-week high. That's not 63 days – that's 63 weeks, 63 different Fridays – since 2009.

If you decided to sell your stocks because of any of those 63 new weekly highs, then you would be unhappy now… because you would have missed out on some phenomenal gains in stocks.

The thing is, what has happened since 2009 with new highs is not some kind of odd occurrence…

Buying at new highs has surprisingly been a winning strategy since the beginning of stock market history… Take a look at the average 12-month returns when buying at new highs versus new lows:

This table looks at monthly data instead of weekly, but the point is still the same… If you buy when the market is at a new 12-month high, then you outperform over the next 12 months.

Also, surprisingly, if you buy when the market is at a new 12-month low, then you underperform over the next 12 months.

Since we're not back in the 18th Century, let's look at things in more recent times…

The point remains – you are better off buying the market when it's at a new 12-month high than a new 12-month low.

99% of investors don't know this. Just about all of them don't believe it. But it is completely true.

The numbers get even more shocking if the market has performed REALLY well lately…

For example, over the last 100 years, the Dow Jones stock index has gone up at about 5.4% a year (not including dividends). But when stocks soared in a short period of time, they continued to soar over the next year.

For example, if stocks rose by 10% or more in a quarter – then stocks performed outstandingly over the next 12 months – up roughly 10% over the next 12 months.

The opposite was true as well… If stocks fell dramatically in a quarter (by 7.5% or more), then stocks only managed to eek out a 3.5% gain over the next 12 months.

The moral to the story is – at the very least, don't worry about new highs… History tells us they are more of a good sign than a bad one. In short, new highs in the market are NOT a reason to sell.

Of course, one of these new highs is bound to be the top, eventually… I'm not blind to that idea. My point is, it's simply not smart to bail out just because stocks have hit new highs… History shows that, chances are, bigger gains lie ahead.

Source: Daily Wealth

[winston]

How to Play This Flat Market

by Alexander Green

Source: Investment U

http://www.investmentu.com/article/deta ... 4wDBnY0OZQ