Investment Strategies 01 (Nov 08 - May 10)

[kennynah]

what if the world resolves this protracted crisis overnight?

[winston]

How to Profit From Wall Street's Neglect by Marc Lichtenfeld

When I was an analyst at the uber-contrarian Avalon Research Group, we only initiated coverage on a stock if our opinion went against the consensus, or it was barely (or not at all) followed by Wall Street.

For this column, I'm going to focus on the latter - and show you how this seemingly unconventional way of investing can actually make you a lot of money.

How?

Well, consider this from Cem Demiroglu at Koc University in Turkey, and Michael Ryngaert at the University of Florida: In 2008, they conducted a study which showed that stocks without any analyst coverage experienced a 4.82% higher return than their peers after coverage initiation.

The lesson here is simple...

Get In Before the Crowds... Get Out With the Money

Owning stocks that Wall Street doesn't follow is usually a sure-fire way of getting in before the crowds.

When you buy stocks before analysts cover them, there usually aren't many institutional owners. But once firms like Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) start recommending them to their hedge and mutual fund clients, it often triggers new and heavy demand for the shares.

Plus, just having a new "Buy" rating flash across the news ticker can often be enough to move a stock higher all by itself.

When talking about neglected stocks, Greg Forsythe, Senior Vice-President of Equity Model Development for Charles Schwab, puts it best: "Explorers seeking new lands don't look where others have already been."

So let's explore some stock territory that Wall Street hasn't yet discovered...

Don't Be Wall Street's Lackey

To get in while the gettin's good, you often need to buy stocks before you hear about them from analysts. As a quick guide, look for companies that have healthy balance sheets, trade at reasonable valuations, and aren't receiving much attention from Wall Street.

You'll likely outperform many of those Wharton MBA types who crunch numbers in their spreadsheets for 15 hours a day, trying to figure what out Apple's (Nasdaq: AAPL) revenue will be. View their neglect as your call to action - and use it to your advantage.

Source: Investment U

[Poles]

like that also can write one article......Karung Guni men have been practising this principle since ice age......

[winston]

Even the Best Investors Make This Huge Mistake... Make Sure You Don't! By Dr. Steve Sjuggerud

Personally, I have just one rule: Avoid big mistakes.

If I do that, I know I'll be fine. I know I won't "blow myself up" in my investments. Knowing that gives me peace.

I can't believe how many brilliant, successful people fail to do this one simple thing... and lose what they have... or even lose everything.

Look, if you do nothing else, remember this: Avoid big mistakes. And the biggest of the big mistakes is STILL DANCING when the music stops.

Get the heck out of there, my friend! If you're a little late to realize it, then STILL get out. Better late than never. Let me show you what I mean...

Chuck Prince, the former CEO of Citigroup, is a perfect example of a guy who kept on dancing...

In the summer of 2007, just as the banking crisis was getting underway, Chuck actually told the Financial Times he was "still dancing."

About the banking business, Chuck said, "When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing."

But the music had already stopped when he was speaking. Shares of Citigroup are down 93% since he said that... just a year and a half ago. And Chuck lost his job less than four months later.

I've also seen it close to home...

Most of the wealthy investors where I live made their fortunes in local real estate – that's Florida real estate.

The music stopped in Florida real estate a few years ago... But even today, they're STILL dancing. If they had acknowledged the music stopped early, they might have been able to keep much of their wealth.

I could go on, with examples throughout history... from Sir Isaac Newton in the 18th century South Sea Bubble to George Soros in the 2000 tech bubble.

The message today is incredibly simple...

When the music stops, STOP DANCING.

Get off that dance floor... and do it fast. Do NOT allow small mistakes to become big ones.

It sounds simple. But as I briefly showed, even the smartest people succumb to it.

We are all vulnerable to the risk. So you must make a conscious choice here... you must tell yourself you will never let a small loss become a big one.

You can use whatever "system" works for you to reinforce this idea: stop losses, trailing stops, NOT averaging down a losing position, NOT taking too big a position in anything.

I actually use all of the above.

Whatever works for you, do it. The important thing is, do NOT let a small loss become a big one.

Want to be just fine, forever, in your investments? Then don't forget my one rule... Avoid big mistakes!


Source: Daily Wealth

[winston]

Tips to keep the Tiger in control by Dr. Check, The Standard HK:-

To prepare for a challenging Year of the Tiger, follow my guidelines on stock investment.

First, you should invest in markets in the Greater China area as the mainland is likely to maintain its current growth pace for at least the next ten years.

When markets keep falling, park your investments in cash.

Second, put most of your equity holdings in H-shares, red chips and SAR-listed mainland companies.

Thirdly, invest in major market themes, which are:
1) consumption (automobile, computer, food and clothing counters, for instance);
2) environmental protection (clean energy, natural gas);
3) urbanization (mainland properties, infrastructure);
4) agriculture (fertilizer, machinery);
5) resources (oil, coal, metals); and
6) financials (mainland banks, insurance companies).

Focus on the leading stock in each area. Brokers' recommendations are important as many fund managers rely on them.

Select 20 of such stocks with modest valuations and rising prices.

Fifth, don't chase but wait to buy on dips if such a stock has had a 10-15 percent correction. When you buy the stock at the trough, hold it and let the profits run.

Sixth, sell the stock when its valuation becomes expensive - the price chart will form a double top - and when it starts to cascade lower.

http://www.thestandard.com.hk/news_deta ... 00212&fc=8

[millionairemind]

Tips to keep the Tiger in control

First, you should invest in markets in the Greater China area as the mainland is likely to maintain its current growth pace for at least the next ten years.

When markets keep falling, park your investments in cash.

Fifth, don't chase but wait to buy on dips if such a stock has had a 10-15 percent correction. When you buy the stock at the trough, hold it and let the profits run.

Wait to buy on dips.... and when the markets keep falling, park your investments in cash???? Contradictory!!!

[kennynah]

When you buy the stock at the trough, hold it and let the profits run.

motherhood statement...who doesn't know this....except that it is an art to be buying at troughs... when stock prices fall... many people wont have the guts to buy at low prints...like now....

[winston]

The Ultimate System for a Volatile Market By Dr. Steve Sjuggerud

My friend Mebane Faber stumbled onto the ultimate system for a volatile market.
* It only takes you two hours a year (10 minutes a month) to implement.
* It's only had one losing year since it started in 1973 (a tiny 0.59% loss in 2008).
* And it's outperformed the stock market... with substantially less volatility than stocks.

Meb has just updated his numbers for 2009. The results over the last decade are downright extraordinary...

If you had invested $10,000 in Meb's simple system in 2000, you would have gotten back nearly $26,000. Meanwhile, $10,000 invested in the stock market would have shrunk to less than $9,100.

The secret, as you can see, is not losing money in the down years:

Year / S&P 500 / Meb's System

2000 -9.1% +13.8%
2001 -11.9% +3.2%
2002 -22.1% +3.4%
2003 +28.7% +20.5%
2004 +10.9% +15.1%
2005 +4.9% +8.2%
2006 +15.8% +14.2%
2007 +5.5% +9.5%
2008 -37.0% -0.6%
2009 +26.5% +14.0%


Just looking at the last decade, you can see how much less volatile this system is than the overall stock market...

The stock market's annual return was about -1% per year. But the actual returns were usually way higher or way lower than that.

Compare that to Meb's system, where the average annual return was about 10% a year. You can see the annual returns were always within about 10 percentage points of that average.

Here's how Meb's system works... There are only five holdings. And there are two modes: in and out.

The five asset classes are: U.S. stocks, foreign stocks, bonds, commodities, and real estate stocks. Your only decision each month is whether you own a fund that tracks that investment, or not.

You want to be in when the asset is going up. And you want to be out when the asset is going down. This idea could hardly be dumber... But it actually works.

First, you divide your portfolio into five pieces. You dedicate each piece to one of these five asset classes... and you are either in or out of each fund every month. So you might be only 40% invested one month, with the rest in cash (earning interest at the bank).

To figure out whether you're in or out, you just have to do some simple math. You can keep track of it by hand with a pencil and paper. You don't need a computer – or even a calculator.

Once a month, get the last 10 monthly closing prices of the five funds. You can get them from a service like Yahoo Finance. Then calculate the 10-month average.

If the fund is above its 10-month average, keep 20% of your money in it. If the fund is below its 10-month average, sell the fund and move to cash.

Repeat the next month, rebalancing existing positions back to 20% each if they're buys. Never put more than 20% in a fund. For example, if only three are in buy mode, then you're 60% invested with 40% in cash.

Remember, with the exception of a tiny loss in 2008, Meb's system has never lost money, and it has delivered double-digit compound annual gains.

It's actually delivered the investment "holy grail" ... higher returns with lower volatility... all in a portfolio of just five things that you only have to look at a dozen times a year.

Source: Daily Wealth

[winston]

Invest Ahead of the Wall Street Herd

Owning stocks that Wall Street doesn't follow is usually a sure-fire way of getting in before the crowds.

Stocks that lack Wall Street's sponsorship in the form of analyst coverage are known as "orphan stocks." And there's a big advantage to owning these orphan shares.

When you buy stocks before analysts cover them, there usually aren't many institutional owners. But once firms like Goldman Sachs Group Inc. (NYSE: GS) and Morgan Stanley (NYSE: MS) start recommending them to their hedge- and mutual-fund clients, it often triggers new and heavy demand for the shares.

Plus, just having a new "Buy" rating flash across the news ticker can often be enough to move a stock higher all by itself.

When talking about neglected stocks, Greg Forsythe, senior vice president of Equity Model Development for The Charles Schwab Corp. (Nasdaq: SCHW), explained it the best when he said: "Explorers seeking new lands don't look where others have already been."

Source: Money Morning

[kennynah]

When you buy stocks before analysts cover them, there usually aren't many institutional owners. But once firms like Goldman Sachs Group Inc. (NYSE: GS) and Morgan Stanley (NYSE: MS) start recommending them to their hedge- and mutual-fund clients, it often triggers new and heavy demand for the shares.

any trader who has worked for any funds companies will tell you (secretly after a few drinks) that most times, they make money from their customers..not for their customers....