Investment Strategies 01 (Nov 08 - May 10)

[iam802]

Can I add the Singapore Flyer in?

It was the tallest and was launched in 2008? or 2007?

[winston]

There are always signs of underlying problems in a country ie. how careful they are with the money of the country.

Are they spending money to improve the lives of the people or are they spending money to show off only ?

No need to have a degree in rocket science to observe these things eg. fireworks, sporting events, parades, ceremonies, speeches, stadiums, opera houses, 8 lane highways that are empty, bullet trains that are empty, new office blocks that are empty etc.

[winston]

This is One of the Best Insider Buying Indicators in the World
By Braden Copeland, Inside Strategist

When I sift through insider buying information, there's one type that really grabs my attention...

It's when the chief financial officer (CFO) of a company is a large and regular buyer of his company's stock.

Why is this sort of buying so significant? It's simple. The CFO lives, eats, and breathes his company's finances. He knows the strength of his company's balance sheet. He knows how healthy his company's cash flow is. He knows what his company's future projections are.

Making sure the company has the money it needs to execute its business plan is his responsibility. Every day, it's the CFO's job to look at the numbers and understand exactly what's happening.

That's why few insiders at a public company understand its stock price better than the CFO. He, more than anyone else, can always tell if shares are cheap... if they are a screaming buy.

Of course, the CFO isn't always able to buy when shares are cheap.

For one thing, a company typically pays the CFO barely 60% of what it pays the CEO. In 2008, the average CEO pay was $346,000... The average CFO pay was $214,000. For the CFO, investing a chunk of his personal money in the company's stock can be a stretch. At the right time, he just might not have it.

And a CFO isn't usually the type to put all of his eggs in one basket. He's often the conservative accountant type. He's not going to concentrate his risk. Investment diversification is almost part of his genetic code.

Usually, only a very special situation will convince a CFO to invest his savings in the same company he's already investing most of his life. And that special situation is when shares are cheap and carry little risk.

Ask yourself: Would the CFO – the guy who knows more about his company's finances than anyone else – buy his company's stock if he thought
(1) he was overpaying,
(2) he might lose his money, or most of all,
(3) he wouldn't get a fantastic return on his investment? It's highly unlikely.

So when the CFO buys, it pays to take notice. And when a CFO buys regularly, I really stop and investigate.

There's a lot of "secrets" marketed in the financial advisory business. Many of them aren't secrets at all. Many of them won't help you get an edge in the market.

But watching for big CFO buys is one of the great ones I've found in my career. They don't come around often, but when they do, it's a sign you have a low-risk, high-reward trade on your hands.

Good trading,
http://www.growthstockwire.com/

[Aspellian]

This is One of the Best Insider Buying Indicators in the World
By Braden Copeland, Inside Strategist

When I sift through insider buying information, there's one type that really grabs my attention...

It's when the chief financial officer (CFO) of a company is a large and regular buyer of his company's stock.

Why is this sort of buying so significant? It's simple. The CFO lives, eats, and breathes his company's finances. He knows the strength of his company's balance sheet. He knows how healthy his company's cash flow is. He knows what his company's future projections are.

That reminds me when OSIM CEO and CFO both bought shares in Osim in the tens of cents - just after they wrote off Brookstone and $100mm loss. Another great rule to follow!

[winston]

Your Best Investment Strategy for 2010... And Beyond by Alexander Green

At 11:38 AM on January 28, 1986, the space shuttle Challenger lifted off its launch pad at Cape Canaveral in Florida.

Seventy-four seconds later - and 10 miles higher - it blew up.

The launch was televised live, so the news spread quickly.

The stock market didn't stop to mourn. Within minutes, investors began bailing out of the four major shuttle contractors:
~ Rockwell International, which built the shuttle and its main engines.
~ Lockheed Martin, which managed ground support.
~ Martin Marietta, which manufactured the ship's external fuel tank.
~ Morton Thiokol, which built the solid-fuel booster rock.

All four stocks were hit hard initially. But by the end of the day, three of them were down just slightly. Only Morton Thiokol closed sharply lower.

While there were no public comments that day singling out Thiokol as the guilty party - and it would be six more months before a Presidential Commission revealed that the company's O-ring seals were the culprit - the stock market almost immediately labeled Thiokol as the company responsible for the disaster.

So how did the market know something that even NASA scientists didn't? Author James Surowiecki calls it "the wisdom of crowds." And there's evidence of it all around us...

Follow the Experts or Follow the Masses?

Take the economy, for example. No individual is smart enough to know where to put the dry cleaners, tire stores, banks, or coffee shops in your community. But rational, self-interested people - as if directed by Adam Smith's famous "invisible hand" - will provide what we need, where we need it and when we need it.

That's why free markets work and command economies don't.

Or consider the TV show "Who Wants to Be a Millionaire?" When a contestant got stuck on a question and was allowed to ask an expert of his choice, the expert gave the right answer 65% of the time. But when the contestant polled the audience - a random group of people with nothing better to do on a weekday afternoon than sit in a TV studio - they picked the right answer 91% of the time.

My point? We prize and honor individual intelligence. Yet counter-intuitive as it seems, crowds are usually smarter than the experts.

Unfortunately, they're also more emotional. And that often leads to disaster. Especially when it comes to investing...

The Madness of Crowds

Over the last decade, look at where the mob has taken Internet stocks, residential real estate and the entire stock market (on both the high and low sides).

As Charles Mackay wrote in Extraordinary Popular Delusions and the Madness of Crowds:

"Men, it has been well said, think in herds. It will be seen that they also go mad in herds, while they only recover their senses slowly and one by one."

This investment classic was published in 1841 - and those words are still true 169 years later. So when the herd begins to stampede, there is only one intelligent thing to do: Get the heck out of the way.

It's called contrarian investing - and we've used it to capitalize on, and avoid, a number of dramatic developments in recent years. That includes dodging the overheated real estate market... selling $150-a-barrel oil... and buying great companies at a 13-year low last March.

However, you can't bet against the crowd every day and expect to win. That's simply blind contrarianism and it doesn't work.

Remember, you aren't right simply because you agree or disagree with the crowd, but only when your facts and reasoning are right.

Source: Investment U

[BreakoutTrader]

My sentiments are if crude oil were to go above 100 , it would result in serious inflation especially with the low rates in US. I doubt US would allow something like that to happen.

But i would be waiting for a breakout to happen before i enter.

[kennynah]

let's be a man and dont hide behind a veil breakouttrader....

are you boon chuan?

if u r not..please accept my apologies...

[winston]

A simple stock strategy that will put you far above the average investor
By Dan Ferris in the S&A Digest:

Our friend Whitney Tilson and his partner John Heins wrote in a recent Forbes article the average holding period for New York Stock Exchange stocks is just six months. Thirty years ago, it was five years.

Investors are more shortsighted than ever, virtually begging you and me to exploit a major competitive advantage – patience – by simply holding longer than six months.

Failing to hold on long enough is, unfortunately, all too human a mistake to make. I just looked at my track record since the credit crisis began in March 2008. My most common mistake was selling too soon. I'd have done much better for you had I been less active.

That's usually the way it is with stock market investing. The combination of buying value and exercising patience trumps most strategies over time. Warren Buffett has famously said inactivity strikes him as intelligent behavior and lethargy bordering on sloth is the cornerstone of his investment style.

[winston]

Another long article. Link below.

12 steps to being a 'Zen millionaire'

The principles of 'inner peace' shared by the unlikely trio of Warren Buffett, Buddha and Vanguard's John Bogle can provide a relaxed guide to investing happiness.

By Paul B. Farrell, MarketWatch

1. Zen first -- get it before you get the million
2. Your mind creates money
3. Being rich is 'nothing special'
4. Investors play a lazy game of solitaire
5. No outside authorities; you are centered within
6. You are always a beginner
7. You must make peace with the dark side
8. Wealth building is about building character
9. You are the only guru
10. You're on a never-ending journey of self-discovery
11. You are making a difference
12. The secret power within you

http://articles.moneycentral.msn.com/le ... naire.aspx

[winston]

These Are the Only Stocks You Should Ever Buy By Tom Dyson

My younger brother is developing an interest in the stock market. He asked me for advice recently.

"Only buy small companies," I told him.

On Wall Street, brokers and analysts judge the size of a company by its market capitalization. A company's "market cap" is simply the stock market's best estimate of a company's total value.

Generally speaking, brokers call any company with a market cap under $1 billion a "small-cap stock" and any company with a market cap under $250 million a "microcap stock." (It's also common to refer to both groups as "penny stocks" because in the past, these small-cap stocks often traded for less than a dollar per share. These days, very few stocks actually trade for pennies, but they're called penny stocks anyway.)

If you're serious about making a fortune in the stock market, I recommend you only buy small caps and microcaps...

For one thing, Wall Street and big funds cannot invest in small-cap stocks. It's a liquidity problem. Micro investments can't offer meaningful profit opportunities to large investors. There's a practical problem, too. Micro stocks are thinly traded. It's impossible for them to take large positions without pushing the price up.

So in general, the "big money" ignores small-cap stocks. And because the fund managers aren't interested, the investment banks don't bother researching these companies... and the press ignores them, too.

Dozens of analysts and traders follow the large companies. The market for large stocks is efficient. There are rarely pricing anomalies or bargains. But the small-cap market is full of pricing anomalies, undervaluation, and inefficiencies. So you can find true values among small caps.

For another thing, you have mathematics on your side when you buy a small-cap stock. You don't buy stock in a giant company like McDonald's or Coca-Cola and expect to quadruple your money in a few years. These companies are so big, there's simply no way they can grow fast enough to produce 200%, 300%, and 500% gains.

Small-cap stocks generate returns (and losses) of this magnitude all the time. I can list dozens of stocks that have risen more than 1,000% in the past nine months.

But for me, the most compelling reason to own small caps is because we've just pulled out of a recession. At the end of every major market downturn, small stocks rise higher and faster than any other investment in the world on the way back up...

I have What Works on Wall Street by James O'Shaughnessy in front of me. It compares the performances of small-cap stocks with the S&P 500. Following the 1973-74 bear market, small-cap stocks had risen 447% six years later versus only 264% for the S&P 500.

In 2003, as the markets recovered from the bear market of 2001, small stocks outpaced all others by a nearly two-to-one margin. The same story repeated in 2009.

Now, if you're retired and your investment goals are to preserve your capital and make low-risk income, then I wouldn't recommend small-cap stocks. They're too volatile. Small-cap stocks are best suited for aggressive investors... like my younger brother. He's 22 years old and can handle the large dips you get with small-cap stocks.

He didn't ask me for more specific advice on how to pick stocks, but if he had, I would have told him to pick companies that have rising stock prices, always use a trailing stop loss, and favor companies in boring industries that produce lots of cash.

Source: Daily Wealth