Investment Strategies 02 (Jun 10 - Jun 13)

[winston]

Five Ways to Get Better Results in 2012

Here are five tips to help you get started:

• Have specific goals. Wall Street traders like to beat the S&P 500 or the Dow Jones Industrial Average and they pay themselves huge bonuses for having beat this index or that benchmark. But that's crap.

Everybody I know invests to meet objectives like paying for college for their children or living the retirement of their dreams.

Decide what you want and when. Then, figure out how you're going to get there. You might be surprised how manageable all of this actually is.

[winston]

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• Know why you want, what you want.

Many investors spend more time analyzing a new washing machine than they do picking their next investment. Or, they count on Uncle Bertie and his sure things. Both are bad ideas.

Ask yourself if that new hot stock or exchange-traded fund (ETF) fits the goals you've laid out for yourself.

If so, great. Buy it. If not, pass.

It's a waste of money to have something in your portfolio that doesn't help you meet your goals, not to mention it's more risky, too.

[winston]

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• Be realistic. You'd be surprised how many of the investors I meet want to earn 5,000% by tomorrow at 8:00am and only use $100 to do it. Then again, maybe you wouldn't.

It is possible, just not probable. There's a big difference.

On the other hand, it's much easier to earn a consistent double-digit return from a choice like Kinder Morgan Energy Partners LP (NYSE: KMP) that yields a healthy 5.40%, or the quintessential "glocal" stock, McDonalds Corp. (NYSE: MCD), which yields 2.8%, was the best performing Dow component in 2011 and ended the year up 35.50%.

Since 2000, KMP has returned 768.58% while MCD has tacked on 220.32% -- even with both the dot.bomb crash and the financial crisis.

You probably don't need to be reminded, but I will do so anyway to make my point: The S&P 500 has turned in 10.87% over the same period -- including dividends.

[winston]

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• Take action. The single biggest impediment to success stares back at you every morning in the mirror.

Psychologists say we have built in saboteurs; common wisdom says we are our own worst enemies. Both are true.

The "enemy" is standing in the mirror and is so persuasive we can talk ourselves out of anything, including success.

That's why actually taking action can quiet the doubt and help minimize any backsliding.

Besides, if you hit a few small winners, you'll have the confidence needed to take even stronger, more decisive actions down the road.

[winston]

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• Don't stay down.

My grandfather used to tell me that it was not how I handled getting knocked down that mattered but how I got up.

That's why sticking to a disciplined plan is a lot better than making panicky decisions.

If you're simply reacting by the seat of your pants, chances are you're going to get knocked down a lot.

But if you get up, plan ahead and take steps to avoid the next stumbling block, chances are you'll begin to pull ahead. And stay there.

So what about the risks?

That's a fair question and an important one, especially now when there are so many fundamental problems to consider - Europe, China, our debt, the lack of adult supervision amongst the world's central bankers, and more.

That's what trailing stops are for.

If the fire gets too hot, trailing stops will get you out of the kitchen. The important part is to get back to cooking when things cool down.

http://moneymorning.com/2012/02/03/five ... year-ever/

[winston]

Why I'll Never Worry About What the Government's Going to Do Next By Dan Ferris

The key to investment success is not a technique or a strategy.

It's not position sizing, trailing stops, options, having inside information, or owning World Dominators. It's not even the ability to value a business (a skill without which you're virtually guaranteed to lose money in stocks).

The key is not "buy low, sell high," or "be greedy when others are fearful and fearful when others are greedy"… though both adages will certainly help.

The key to investment success is a simple, powerful truth.

It's the reason U.S. stocks appreciated 1.5 million percent during the 20th century. It's the reason great investors are great… And it's the reason you can set yourself up for the biggest, safest gains the market has to offer.

You see, understanding this truth is what allows you to buy when stocks are down and everyone is scared… and sell when stocks are overvalued and everyone is complacent…

To succeed in the stock market, you must believe that shopping trumps politics…

That's the simplest (and maybe the crudest) way to say that what happens in the business world is more important to your daily life and the daily lives of everyone in America than what happens in the White House or the Capitol.

The amount of shopping for hamburgers at McDonald's is more important than the debt ceiling debate. The amount of shopping for beer at the local convenience store is more important than any contest for the Republican presidential nomination. And the number of shoppers occupying the aisles of Target and Wal-Mart is more important than the number of protestors occupying Wall Street.

Save your hate mail. I already know what you're thinking…

"Dan has lost his mind. Politics is everything to investors. America could be ruined with so-and-so in the White House… and with so-and-so running Congress."

In reply to this phony concern, I ask you to remember the 20th century… The panic of 1907, Prohibition, the income tax, the founding of the Federal Reserve, the Great Depression (in which half the country's banks failed), World Wars I & II, the outlawing of gold, the Korean and Vietnam Wars, oil shocks, the end of gold-backed U.S. dollars, the great inflation of the 1970s, the market crash of 1987, the savings and loan debacle and recession of the early 1990s, and the Internet bubble and crash in 2000…



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After one page of yapping, he still has not said anything ...

[winston]

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Some of those things scared the hell out of investors. But you'd have made a lot more money if you bet against them lasting forever and for the primacy of commerce.

Despite all the horrible things that happened in the 20th century – despite it being the deadliest century in history (in terms of lives lost) – U.S. stocks… as tracked by Dimson, Marsh, and Staunton in their excellent book, Triumph of the Optimists… appreciated about 1.5 million percent.

If you want an idea that'll help you cut through the noise and make great, winning bets when everybody else is throwing up, this is it. Knowing that the Dow Jones Industrials' value was highly unlikely to be permanently impaired would have helped you scoop up those businesses near the bottom in late-2008/early-2009. The Dow is up more than 100% since its early-2009 bottom.

Opportunities to appreciate the importance of business over macroeconomic issues abound in the roller coaster that is the market. For example, take the European crisis today… I can hardly think of a noisier event.

Yet, Warren Buffett is buying European stocks. That's right. The chairman and CEO of Berkshire Hathaway – and one of the richest men in the world – recently put about $1.9 billion of Berkshire's money into eight European stocks. (Sorry, we don't get to know which ones he bought. Buffett hasn't disclosed their names yet.)

During a special, three-hour TV appearance last week, CNBC's Becky Quick asked Buffett why he bought those eight stocks. His answer shows how the primacy and dynamism of business trumps the relatively static, less-important business of government…

I just thought these eight companies were cheap. And they obviously were affected by the European crisis. And in the end, those eight companies I bought are going to be there five, 10, 20, 50 years from now.

And there may be something else that's bothering the world 10 years or 20 years from now. There's always going to be something that's bothering the world. These companies will do fine regardless of what happens in Europe, and there will probably be plenty that happens in Europe.

Notice the words, "…something else that's bothering the world." That's the stuff that terrifies the herd out of being able to make money in stocks… and has made Buffett a $43 billion fortune. Buffett effortlessly looks past the crisis in Europe and focuses instead on the fact that those eight businesses were "terrific companies that were cheap."

He's telling us what's most important to us as investors… owning a terrific company that's cheap and will still exist five, 10, 20, even 50 years from now is far more important to you as an investor than the European crisis, or any other government-created crisis, regulatory regime or tax scheme.

People will continue to drink Coke, use computers, and buy necessary household goods at a reasonable price. Buffett knows this as well as anyone. That's why he owns big stakes in Coke, IBM, and Procter & Gamble, among others, in his holding company, Berkshire Hathaway. (And Berkshire itself happens to be a great buy at these levels.)

I'm sure there are folks out there – perhaps even readers of this publication – who are out of U.S. stocks permanently because they believe the U.S. is going straight to hell in a handbasket. It's not true. Yes, we have problems, many caused by goofy politics… But they're no match for the vigor of the marketplace. Shopping trumps politics. Business trumps politics.

Source: Daily Wealth

[Chinaman]

3 important rules on investing

First, investment is something one has to do homework on. If one doesn't, it is almost as good as speculating (similar to gambling in the casino). Homework besides fundamental, risk-reward ratio, etc are essential footwork.

Second, investment should never be done on money that is not ready to be lost no matter how good the risk-reward ratio is. If it is crucial retirement fund, keep it. It is better earning the 3-4% interest in CPF abeit it is not too high ..... but it is better than losing the fund.

Third, investment looks into time-line. All markets, forex, stocks, futures, others need time to substantial the gains. If one doesn't have the time horizon to realize the gains, don't jump in.

just a recap, happen to pick up from my past articles.

[kennynah]

good advice bro C !!

until i know exactly when and how my CPF can be withdrawn, i wont be rushing in to place money into this institution... i no longer trust the govt to handle my money.

[winston]

This 30-Second Quiz Will Drastically Improve Your Investment Results By Dr. David Eifrig

For more than a decade, I've used a simple quiz to guide my investments.

This quiz has helped my Retirement Trader readers close 61 consecutive trades with a profit. And it's allowed my Retirement Millionaire readers to safely make more than 20% per year in regular stocks.

This quiz takes less than 30 seconds to complete. And if you start using it, you could drastically improve your investing results.

All you have to do to take the quiz is ask, "Does the company I'm investing in enjoy tremendous customer loyalty?

If the answer is no, chances are good that you should pass on the stock.

But if the answer is yes, chances are good that you've found a safe, long-term stock investment… one you can hold for years and compound wealth at 10%-15% per year.

Take Coca-Cola for example. Coke enjoys customer loyalty because its products taste good. They are consistent. They are everywhere. And for less than a dollar, a customer can enjoy a brief bit of pleasure. Since 1995, Coke's shareholders are up 250%, including dividends.

Other great consumer brands like Hershey (chocolate) and McDonald's (fast food) enjoy this loyalty as well.

These are familiar examples of "retail" loyalty. But there's another little-known type of loyalty… This form of loyalty comes down to "switching costs" for larger companies.

You see, when company is considering moving its business from one service provider to another, it must consider the costs.

Take Microsoft, for example. If your 500-employee office is used to using Windows and Office software, it's going to be difficult for your company to ever switch to a new software.

If your company is going to switch 401(k) providers or payroll managers, there's going to be a big cost. If it's going to switch the phone system it uses on thousands of phones, there's a big cost. A company might think another service provider would be better, but it won't ever switch from its current provider because the "switching costs" are too high.

This means constant sales and insulation from competition for Microsoft, communication equipment provider Cisco, and tech giant IBM. Since 1995, IBM investors have seen a total return of more than 1,100%.

No matter what form it comes in, loyalty ensures a constant and unrelenting demand for products… which keeps profit margins high and sales growth strong. It also helps insulate a company from competition… which is a crucial attribute for a long-term investment.

Remember… in the "survival of the fittest" world of capitalism, a business must get every possible bit of insulation from upstart competitors. Otherwise, it will eventually fail and leave its shareholders empty-handed.

By now, most DailyWealth readers know that owning great dividend-paying businesses is the key to long-term stock market success. These companies get you on the road to compounding.

These businesses are almost always identified by their extreme customer loyalty. And this loyalty ensures big profit margins, steady sales growth, and extreme resistance to competition. Plus, they allow you to sleep well at night. These are the sorts of companies I look for in my advisories.

And all it takes to recognize them is a 30-second quiz.


Source: Daily Wealth