BUYING TROPHIES WORKS!
Today, we highlight our favorite strategy for making big gains in the resource business… one our colleague Matt Badiali is using to rack up incredible gains right now…
The strategy? After big selloffs, buy trophies.
The "boom and bust" natural resource sector usually sees a big crash every few years in at least one of its "subsectors," like oil, grains, precious metals, uranium, and copper.
These crashes present opportunities to buy the world's largest and most valuable "trophy" deposits… often for 33 cents on the dollar. When things go from "bad to less bad" in these markets, valuable assets scream higher.
In March 2009, just after the credit crisis, our colleague Matt Badiali went trophy hunting and recommended buying a stake in "Pebble," a colossal undeveloped gold and copper deposit in Alaska. Matt recommended buying shares in Pebble's majority owner, Northern Dynasty, around $4.18.
As you can see from today's chart, buying trophies works. Things have gone from "bad to less bad" in the mining sector… and investors are flocking back to these stocks. Northern Dynasty is north of $20 per share. Matt's S&A Resource Report readers have more than quadrupled their money so far.
Source: Daily Wealth
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Investment Strategies 02 (Jun 10 - Jun 13)
Re: Investment Strategies 02 (Jun 10 - Mar 11)
by winston » Tue Feb 08, 2011 8:49 pm
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111077
- Joined: Wed May 07, 2008 9:28 am
Re: Investment Strategies 02 (Jun 10 - Mar 11)
by winston » Thu Feb 10, 2011 9:08 pm
How I Always Keep My Subscribers in the Money By Dr. Steve Sjuggerud
Thursday, February 10, 2011
A subscriber complained this week…
He didn't like my technique for always keeping my subscribers in the money.
So let me explain to you the time-tested technique I use… and then I'll answer his complaint.
Right now, 17 out of the 18 recommendations in my True Wealth newsletter are up. That's typical for our True Wealth recommended list… because of the one thing I do that always keeps my subscribers in the money.
"Treat your portfolio like a rose garden," my friend and colleague Alex Green says. "Trim your weeds. And let your roses fully bloom."
The problem is, most individual investors do exactly the opposite of Alex's rose garden… They trim their roses before they fully bloom. And they let their weeds fester.
What I mean is, as soon as most individual investors see any sign of a profit, they take it. They don't let the rose bloom. And instead of selling their losers, they hang on, letting them become bigger and bigger losers.
But think about what you've got… In time, by selling your winners and holding your losers, you'll simply have a portfolio full of losers.
Also, consider this: At the most basic level, if you want to make 10 times your money (like some of my subscribers made in shares of Seabridge Gold), you can't sell at the first sign of a 20% profit. You are only given the opportunity for a few 10-baggers in your career… You can't cut them off early.
The rule is an old one: Cut your losers and let your winners run.
My technique for doing this is a "25% trailing stop." It is incredibly simple. As soon as a stock falls by 25%, you sell it. For example, if you buy a stock at $10, and it falls to $7.50, you sell.
I call it a "trailing stop" because if the stock rises to $20, you'll sell at $15. The stock price rose. And your stop rose with it. It is a fail-safe… It keeps you from big losses, while letting your winners run.
But subscriber J.C. wrote in, saying, "Trailing stop percentages seem very crude to me."
J.C., I'm with ya. But here's why I recommend a 25% trailing stop, anyway…
First, it's simple to understand. This way, readers can't tell me, "I didn't sell because I didn't understand your exit strategy." If I made it any more complicated, I'm certain readers would look for excuses not to sell something that is down.
Second, it works. My publisher, Stansberry & Associates, recently commissioned a study of trailing stops… We asked a statistics firm to test whether or not adding trailing stops to a great stock picker's picks would help his performance. The study tested all this great stock picker's newsletter recommendations from 2002 through 2010. Here's what we found:
Using trailing stops of 16% or higher increased performance, almost uniformly, all the way up to a trailing stop level of 34%. That is, using trailing stops at any level between 16% and 34% increased performance.
Is there something magic about the 25% level? Not really… But I've used it in my newsletters, very successfully, for the 16 years I've been writing.
You could do all kinds of other things to plan your exit… a dollar stop, a time stop, an exit based on a technical indicator. The goal of all these is simply to keep you from hurting yourself, to keep you from turning a small loss into a big one.
I use the 25% trailing stop because it gives you a "no-thinking-required" way to do one of the two things you need to do to make a fortune in stocks: 1) cut your losers and 2) let your winners run.
So yes, J.C., trailing stop percentages are very crude. You are welcome to get much fancier, if you'd like. The important thing to me is my readers have an exit strategy.
You see, a successful trade has two parts: a good entry and a good exit. Most investors spend all their time thinking about the entry… what to buy and when. But they don't think at all about their exit strategy.
I believe by keeping it simple, I've gotten a higher percentage of my readers actually having a "fail-safe" exit strategy. In many cases, I believe it's the first time in their lives they've ever had an exit strategy, or even considered one.
What's your exit strategy? Do you have one?
If you don't, at the very least, I urge you to start using one now… That way, you're on the road to cutting your losers and letting your winners ride. You're on the path to making a fortune in stocks.
Source: Daily Wealth
Thursday, February 10, 2011
A subscriber complained this week…
He didn't like my technique for always keeping my subscribers in the money.
So let me explain to you the time-tested technique I use… and then I'll answer his complaint.
Right now, 17 out of the 18 recommendations in my True Wealth newsletter are up. That's typical for our True Wealth recommended list… because of the one thing I do that always keeps my subscribers in the money.
"Treat your portfolio like a rose garden," my friend and colleague Alex Green says. "Trim your weeds. And let your roses fully bloom."
The problem is, most individual investors do exactly the opposite of Alex's rose garden… They trim their roses before they fully bloom. And they let their weeds fester.
What I mean is, as soon as most individual investors see any sign of a profit, they take it. They don't let the rose bloom. And instead of selling their losers, they hang on, letting them become bigger and bigger losers.
But think about what you've got… In time, by selling your winners and holding your losers, you'll simply have a portfolio full of losers.
Also, consider this: At the most basic level, if you want to make 10 times your money (like some of my subscribers made in shares of Seabridge Gold), you can't sell at the first sign of a 20% profit. You are only given the opportunity for a few 10-baggers in your career… You can't cut them off early.
The rule is an old one: Cut your losers and let your winners run.
My technique for doing this is a "25% trailing stop." It is incredibly simple. As soon as a stock falls by 25%, you sell it. For example, if you buy a stock at $10, and it falls to $7.50, you sell.
I call it a "trailing stop" because if the stock rises to $20, you'll sell at $15. The stock price rose. And your stop rose with it. It is a fail-safe… It keeps you from big losses, while letting your winners run.
But subscriber J.C. wrote in, saying, "Trailing stop percentages seem very crude to me."
J.C., I'm with ya. But here's why I recommend a 25% trailing stop, anyway…
First, it's simple to understand. This way, readers can't tell me, "I didn't sell because I didn't understand your exit strategy." If I made it any more complicated, I'm certain readers would look for excuses not to sell something that is down.
Second, it works. My publisher, Stansberry & Associates, recently commissioned a study of trailing stops… We asked a statistics firm to test whether or not adding trailing stops to a great stock picker's picks would help his performance. The study tested all this great stock picker's newsletter recommendations from 2002 through 2010. Here's what we found:
Using trailing stops of 16% or higher increased performance, almost uniformly, all the way up to a trailing stop level of 34%. That is, using trailing stops at any level between 16% and 34% increased performance.
Is there something magic about the 25% level? Not really… But I've used it in my newsletters, very successfully, for the 16 years I've been writing.
You could do all kinds of other things to plan your exit… a dollar stop, a time stop, an exit based on a technical indicator. The goal of all these is simply to keep you from hurting yourself, to keep you from turning a small loss into a big one.
I use the 25% trailing stop because it gives you a "no-thinking-required" way to do one of the two things you need to do to make a fortune in stocks: 1) cut your losers and 2) let your winners run.
So yes, J.C., trailing stop percentages are very crude. You are welcome to get much fancier, if you'd like. The important thing to me is my readers have an exit strategy.
You see, a successful trade has two parts: a good entry and a good exit. Most investors spend all their time thinking about the entry… what to buy and when. But they don't think at all about their exit strategy.
I believe by keeping it simple, I've gotten a higher percentage of my readers actually having a "fail-safe" exit strategy. In many cases, I believe it's the first time in their lives they've ever had an exit strategy, or even considered one.
What's your exit strategy? Do you have one?
If you don't, at the very least, I urge you to start using one now… That way, you're on the road to cutting your losers and letting your winners ride. You're on the path to making a fortune in stocks.
Source: Daily Wealth
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111077
- Joined: Wed May 07, 2008 9:28 am
Re: Investment Strategies 02 (Jun 10 - Mar 11)
by winston » Sat Feb 12, 2011 7:16 am
The Worst Possible Investing Mistake
There are many mistakes people make that ensure they won’t get rich investing. In 2011, I think one in particular mistake will hurt more than others. I can sum it up by citing the phrase, “Generals fighting the last war.â€
I have come across many people in my travels who, despite a 50%-plus drop in the stock market from its peak in October 2007 to the March 2009 bottom, are still waiting for the market to crash. They missed one of the greatest rallies in the history of Planet Earth because they looked backward when they should’ve been looking ahead.
I know people who still think the housing market will crash. Yet housing prices are already down 30% from the peak nationwide. Housing is now more affordable than it’s been in a generation, as we’ve seen.
I know people who still won’t touch a tech stock, even though the tech bubble burst and hit bottom eight years ago, or who won’t even think about owning a Brazilian stock, because they lost money on one when Brazil blew up in the 1990s.
These are not dumb people. Most of them are successful in their chosen fields. But even smart people can get stuck in their views…which become outdated – and unprofitable – as the world changes around them.
It is like Mark Twain’s old dictum about the cat and the stove. “She will never sit on a hot stove lid again – and that is well,†Twain said, “but also she will never sit down on a cold one anymore.â€
Over the holidays, I read a good paper on this subject entitled, “Investment Strategy,†by Barton Biggs in January 1977. Biggs was a well-known strategist for 30 years at Morgan Stanley. More recently, he wrote a very good book about investing called Hedgehogging, which I would recommend. Anyway, Biggs wrote his paper as a sort of New Year’s address to the money managers under his charge.
Experience also comes with barnacles that latch onto your hull. Biggs captures it eloquently:
The problem is that in accumulating experience, he also acquires prejudices against industries and stocks because he has lost money in them. It is easy to…become an investment bigot with a closed mind on many subjects…
A fresh, opportunity-minded mind, uncluttered by prejudice, is crucial for superior investing in an environment where the one constant, the one inevitability is change and industry group rotation. By definition, there can be no uninvestable industries.
In short, an investor should never say, “Never.†As in, “I’ll never buy a housing stock,†or “I’ll never buy an airline stock.†Biggs calls that kind of thinking “pure, fat, unadulterated laziness.†There is a time and place for all things.
I know I have to work hard to cultivate an open mind about all things investing. I try to change as the market changes. I don’t want to be one of those guys who say the same thing every year even though the market has clearly changed.
So while I always insist upon a favorable risk/reward proposition, I do not care what shape or structure that proposition takes.
As Roy Neuberger, who didn’t suffer a single down year in 68 years on Wall Street, once said, “Fall in love with people…the last thing to fall in love with is a particular security. It is, after all, just a sheet of paper indicating a part ownership of a corporation. Its use is purely mercenary.â€
But I think Biggs’ message is going to be particularly important in 2011. That’s because the wind has shifted…and some areas that have been hot will cool. And some areas that I’ve avoided look promising once again.
The world changes and your views need to change with it. Don’t get stuck. As Biggs said, “Successful investing is like riding a bicycle – either you keep moving or you fall down.â€
http://www.thetradingreport.com/2011/02 ... g-mistake/
There are many mistakes people make that ensure they won’t get rich investing. In 2011, I think one in particular mistake will hurt more than others. I can sum it up by citing the phrase, “Generals fighting the last war.â€
I have come across many people in my travels who, despite a 50%-plus drop in the stock market from its peak in October 2007 to the March 2009 bottom, are still waiting for the market to crash. They missed one of the greatest rallies in the history of Planet Earth because they looked backward when they should’ve been looking ahead.
I know people who still think the housing market will crash. Yet housing prices are already down 30% from the peak nationwide. Housing is now more affordable than it’s been in a generation, as we’ve seen.
I know people who still won’t touch a tech stock, even though the tech bubble burst and hit bottom eight years ago, or who won’t even think about owning a Brazilian stock, because they lost money on one when Brazil blew up in the 1990s.
These are not dumb people. Most of them are successful in their chosen fields. But even smart people can get stuck in their views…which become outdated – and unprofitable – as the world changes around them.
It is like Mark Twain’s old dictum about the cat and the stove. “She will never sit on a hot stove lid again – and that is well,†Twain said, “but also she will never sit down on a cold one anymore.â€
Over the holidays, I read a good paper on this subject entitled, “Investment Strategy,†by Barton Biggs in January 1977. Biggs was a well-known strategist for 30 years at Morgan Stanley. More recently, he wrote a very good book about investing called Hedgehogging, which I would recommend. Anyway, Biggs wrote his paper as a sort of New Year’s address to the money managers under his charge.
Experience also comes with barnacles that latch onto your hull. Biggs captures it eloquently:
The problem is that in accumulating experience, he also acquires prejudices against industries and stocks because he has lost money in them. It is easy to…become an investment bigot with a closed mind on many subjects…
A fresh, opportunity-minded mind, uncluttered by prejudice, is crucial for superior investing in an environment where the one constant, the one inevitability is change and industry group rotation. By definition, there can be no uninvestable industries.
In short, an investor should never say, “Never.†As in, “I’ll never buy a housing stock,†or “I’ll never buy an airline stock.†Biggs calls that kind of thinking “pure, fat, unadulterated laziness.†There is a time and place for all things.
I know I have to work hard to cultivate an open mind about all things investing. I try to change as the market changes. I don’t want to be one of those guys who say the same thing every year even though the market has clearly changed.
So while I always insist upon a favorable risk/reward proposition, I do not care what shape or structure that proposition takes.
As Roy Neuberger, who didn’t suffer a single down year in 68 years on Wall Street, once said, “Fall in love with people…the last thing to fall in love with is a particular security. It is, after all, just a sheet of paper indicating a part ownership of a corporation. Its use is purely mercenary.â€
But I think Biggs’ message is going to be particularly important in 2011. That’s because the wind has shifted…and some areas that have been hot will cool. And some areas that I’ve avoided look promising once again.
The world changes and your views need to change with it. Don’t get stuck. As Biggs said, “Successful investing is like riding a bicycle – either you keep moving or you fall down.â€
http://www.thetradingreport.com/2011/02 ... g-mistake/
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111077
- Joined: Wed May 07, 2008 9:28 am
Re: Investment Strategies 02 (Jun 10 - Mar 11)
by winston » Wed Feb 23, 2011 8:22 am
TOL:-
Market Sentiment is definitely negative. So what should you do now ?
Didn't CANSLIM ask you to sell in such a situation because Market Direction is down and it will bring 80% of the stocks with it, unless there's a great story on your stock that can go against Market Direction ...
And everyone seems to be an expert on Market Direction nowadays. They are "selling first, investigating later "
Questions:-
1) Do you want to sell today or on the technical rebound ?
2) Do you know why you are selling ?
3) Do you want to play the short term volatility ie. buy Bear Warrants, short stocks, buy a put on the indices, buy a short ETF etc ?
4) Do you want to move some of your assets into the USD, GLD or Oil ?
5) Do you want to sell your Investment Properties ?
6) Do you know why you are panicking ?
7) Is this a 5% correction, 10% correction, 25% correction, 50% or 80% correction ?
8) Have you cleaned up your watch-list of stocks to buy ?
9) How are you going to play the rebound ie. Bull Warrants, Calls on the Indices, Long Stocks, Long ETF, Margin, etc. ?
10) When would the shorts be covering ?
Market Sentiment is definitely negative. So what should you do now ?
Didn't CANSLIM ask you to sell in such a situation because Market Direction is down and it will bring 80% of the stocks with it, unless there's a great story on your stock that can go against Market Direction ...
And everyone seems to be an expert on Market Direction nowadays. They are "selling first, investigating later "
Questions:-
1) Do you want to sell today or on the technical rebound ?
2) Do you know why you are selling ?
3) Do you want to play the short term volatility ie. buy Bear Warrants, short stocks, buy a put on the indices, buy a short ETF etc ?
4) Do you want to move some of your assets into the USD, GLD or Oil ?
5) Do you want to sell your Investment Properties ?
6) Do you know why you are panicking ?
7) Is this a 5% correction, 10% correction, 25% correction, 50% or 80% correction ?
8) Have you cleaned up your watch-list of stocks to buy ?
9) How are you going to play the rebound ie. Bull Warrants, Calls on the Indices, Long Stocks, Long ETF, Margin, etc. ?
10) When would the shorts be covering ?
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111077
- Joined: Wed May 07, 2008 9:28 am
Re: Investment Strategies 02 (Jun 10 - Mar 11)
by winston » Wed Feb 23, 2011 9:10 pm
Do You Have the "Guts" to Make Money in the Markets? By Dr. Steve Sjuggerud
I have some "serious guts" when it comes to investing, according to one subscriber…
Do you have the "serious guts" needed to be a successful investor? Today, I'll show you how to have the guts you need to make money in the markets…
Getting the guts you need is actually a simple skill you can learn.
You don't need to be a tough guy. (I'm not.) And you don't need to have nerves of steel. (I don't.)
Let me explain what I mean, starting with a letter my publisher received from a subscriber named Mei last week:
I am constantly amazed by Steve Sjuggerud. While everyone is being cautious, he sends out some of the most bullish calls telling us to buy, don't cash out, get into muni bonds.
I mean, I'm sure he knows what he's doing but this guy has some serious guts. And he's been spot on.
I've always liked his approach but in the face of so much that can go wrong and is going wrong, I just couldn't bring myself to act on his recommendations. I haven't cashed out but I could certainly have made a lot more if I followed him. What can I say? Great job, Steve!
Mei, the truth is, I don't have serious guts…
I'm no man of steel. In reality, my mouse hand still quivers when I put in the "buy" order… and I've been in this business full time for nearly two decades.
I do two different things than the average guy:
First, I actually put the buy order in! I don't chicken out.
Second, I've learned my "quivering hand" is a good thing… The more my hand quivers when I enter a buy order, the more money I'm likely to make. Let me explain…
It took me a long time to get here. But now I know the way it works… The scarier it is, the better.
For example, when it seemed like the financial world was coming to an end in March 2009, I personally stepped up big to buy…
I don't recommend this for most people, but I actually borrowed money to invest, for the first and only time in my career. My house was already fully paid for… but I took a home equity line of credit out on it, and put it to work in the stock market. Stocks were downright cheap, fear was high, and we had a glimmer of an uptrend. So I bought!
For another example, subscriber Mei above mentioned municipal bonds…
I saw the same fears in municipal bonds in mid-January 2011 that I saw in stocks in March 2009. Like stocks in March 2009, municipal bonds became cheap, hated, and we saw a glimmer of an uptrend. So in mid-January, I recommended buying safe municipal bonds for my subscribers.
It's not easy to buy into turmoil. It's downright hard. But it is the right thing to do… Why? Typically you're buying in at a cheap price. Though risk is perceived to be high, it's actually low because of the low price you're able to pay for great assets.
Today, we're in the opposite situation in the stock market. Stocks have doubled since March 2009. There's not much fear in stocks today. Risk is now perceived to be low. And the price for stocks is much higher today.
You have the choice…
1) You can buy when risk appears high and assets have already crashed and are cheap.
2) You can buy when risk appears low and assets have already soared and are expensive (like real estate in 2006, or stocks today).
Almost all investors choose No. 2. But you need to choose No. 1.
So how can you be certain you're choosing No. 1? By how much your hand quivers when you place the buy order. The more your hand quivers when you click "buy," the more money you will make on the trade…
People will think you have serious guts if you buy like that – if you buy what has crashed where risk feels high. Actually… people will think you're nuts.
But the more people think you're nuts for investing in something – and the more your hand quivers when you click "buy" – the better the chance you'll make a lot of money on that investment.
It's worked for me for 20 years.
I don't have serious guts, as my subscribers think. Honestly, I have a quivering hand. But the more it quivers when I buy, the more money I make.
The same will be true for you if you stick with it… I'm certain of it.
Source: Daily Wealth
I have some "serious guts" when it comes to investing, according to one subscriber…
Do you have the "serious guts" needed to be a successful investor? Today, I'll show you how to have the guts you need to make money in the markets…
Getting the guts you need is actually a simple skill you can learn.
You don't need to be a tough guy. (I'm not.) And you don't need to have nerves of steel. (I don't.)
Let me explain what I mean, starting with a letter my publisher received from a subscriber named Mei last week:
I am constantly amazed by Steve Sjuggerud. While everyone is being cautious, he sends out some of the most bullish calls telling us to buy, don't cash out, get into muni bonds.
I mean, I'm sure he knows what he's doing but this guy has some serious guts. And he's been spot on.
I've always liked his approach but in the face of so much that can go wrong and is going wrong, I just couldn't bring myself to act on his recommendations. I haven't cashed out but I could certainly have made a lot more if I followed him. What can I say? Great job, Steve!
Mei, the truth is, I don't have serious guts…
I'm no man of steel. In reality, my mouse hand still quivers when I put in the "buy" order… and I've been in this business full time for nearly two decades.
I do two different things than the average guy:
First, I actually put the buy order in! I don't chicken out.
Second, I've learned my "quivering hand" is a good thing… The more my hand quivers when I enter a buy order, the more money I'm likely to make. Let me explain…
It took me a long time to get here. But now I know the way it works… The scarier it is, the better.
For example, when it seemed like the financial world was coming to an end in March 2009, I personally stepped up big to buy…
I don't recommend this for most people, but I actually borrowed money to invest, for the first and only time in my career. My house was already fully paid for… but I took a home equity line of credit out on it, and put it to work in the stock market. Stocks were downright cheap, fear was high, and we had a glimmer of an uptrend. So I bought!
For another example, subscriber Mei above mentioned municipal bonds…
I saw the same fears in municipal bonds in mid-January 2011 that I saw in stocks in March 2009. Like stocks in March 2009, municipal bonds became cheap, hated, and we saw a glimmer of an uptrend. So in mid-January, I recommended buying safe municipal bonds for my subscribers.
It's not easy to buy into turmoil. It's downright hard. But it is the right thing to do… Why? Typically you're buying in at a cheap price. Though risk is perceived to be high, it's actually low because of the low price you're able to pay for great assets.
Today, we're in the opposite situation in the stock market. Stocks have doubled since March 2009. There's not much fear in stocks today. Risk is now perceived to be low. And the price for stocks is much higher today.
You have the choice…
1) You can buy when risk appears high and assets have already crashed and are cheap.
2) You can buy when risk appears low and assets have already soared and are expensive (like real estate in 2006, or stocks today).
Almost all investors choose No. 2. But you need to choose No. 1.
So how can you be certain you're choosing No. 1? By how much your hand quivers when you place the buy order. The more your hand quivers when you click "buy," the more money you will make on the trade…
People will think you have serious guts if you buy like that – if you buy what has crashed where risk feels high. Actually… people will think you're nuts.
But the more people think you're nuts for investing in something – and the more your hand quivers when you click "buy" – the better the chance you'll make a lot of money on that investment.
It's worked for me for 20 years.
I don't have serious guts, as my subscribers think. Honestly, I have a quivering hand. But the more it quivers when I buy, the more money I make.
The same will be true for you if you stick with it… I'm certain of it.
Source: Daily Wealth
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111077
- Joined: Wed May 07, 2008 9:28 am
Re: Investment Strategies 02 (Jun 10 - Mar 11)
by winston » Sat Feb 26, 2011 5:57 pm
Six questions to consider before investing By Teh Hooi Ling
The six questions are:
1) Would investors rationally buy this asset if they did not believe it would give returns above cash?
2) Where do the returns from this asset come from, and who funds them?
3) Why would the funder of returns for this asset be willing to offer a return greater than cash in the long run?
4) Have historical returns been consistent with the risk premium we expected?
5) Have the sources of the returns been consistent with the returns achieved?
6) Has something important changed to make us doubt the relevance of the historical returns?
http://business.asiaone.com/Business/My ... 48535.html
The six questions are:
1) Would investors rationally buy this asset if they did not believe it would give returns above cash?
2) Where do the returns from this asset come from, and who funds them?
3) Why would the funder of returns for this asset be willing to offer a return greater than cash in the long run?
4) Have historical returns been consistent with the risk premium we expected?
5) Have the sources of the returns been consistent with the returns achieved?
6) Has something important changed to make us doubt the relevance of the historical returns?
http://business.asiaone.com/Business/My ... 48535.html
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111077
- Joined: Wed May 07, 2008 9:28 am
Re: Investment Strategies 02 (Jun 10 - Mar 11)
by winston » Mon Feb 28, 2011 9:49 pm
PLEASE Don't Fall for This One By Dr. Steve Sjuggerud
Monday, February 28, 2011
I usually keep my mouth shut on this idea… People don't want to hear it.
Why don't people want to hear it? Because they're most likely guilty of it.
You're probably guilty of this, too, to a certain degree. So I should keep my mouth shut.
Then again, if you're reading this, you're trying to become a better investor… And you need to know the truth.
You don't know me… So you might not appreciate it at first if I point out that your fly is down or that you have food stuck in your teeth. But after the initial look of horror, you'll correct it. And then you'll be thankful, I hope.
This is an important concept to understand… If you're guilty of this, it will keep you from making money. Worse, it could cause you to lose a lot of money. And if you don't change this behavior, you will lose money for years.
Let me start with a few examples. Then I'll tell you the simple concept and how to avoid it. Let's get started…
Have you heard this one before?
"The U.S. dollar is garbage right now! So I'm getting some money outside the dollar – and I'm putting it into euros."
The problem is, the people saying this usually don't know anything about the euro… They have no clue they could be moving their money from the frying pan into the fire.
Or how about this one?
"America is going down the tubes! So I'm putting my money into China – through Chinese stocks."
Ah, yes. Brilliant. Once again, the people saying this usually know nothing about the Chinese stock market. Once again, they could be taking money out of the frying pan and putting it into the fire.
The important point here is NOT about Chinese stocks or the euro currency. There are two important points:
1) Don't buy just any ol' thing out there, as an emotional protest.
2) Know what you're investing in.
It's fine if you think the U.S. dollar is garbage. But please, don't hurry out and buy euros in protest – particularly if you don't know anything about euros!
The truth is, you'd have been better off earning 2% a year on your U.S. cash than putting it into euros since the launch of the euro in 1999. A dollar is backed by "the full faith and credit of the U.S. government." But what country is a euro backed by? The U.S. might be swamped with debt. But have you done your homework on Europe? Just how much debt is Europe swamped with?
It's fine if you think China is rising and the U.S. is sinking. But is owning Chinese stocks the best way to capitalize on that?
The truth is, since 1992, Chinese stocks have lost one-third of their value. The MSCI China Index has fallen from a starting value of 100 in 1992 to around 67 today. Are Chinese companies a good value right now? How much do you know about the Chinese company you want to buy?
Again, my point is NOT about the euro or Chinese stocks.
My point is about something I hear all the time at conferences. I talk to people that have spent a ton of time researching why the U.S. is in trouble… And they're eager to put their money to work somewhere else.
Meanwhile, these folks have spent virtually zero time investigating what it is they're actually putting their money into. Quite often, it seems, they're going from the frying pan to the fire, without even knowing it.
Investing outside the U.S. is fine… I've been a strong advocate of it for my near-two-decade career. (Gold bullion is actually a way to "escape the dollar." So are some big dividend-paying companies that earn profits around the world.)
But buying stuff you have no clue about – mainly as an emotional protest against what's going on at home – that's when I see people get into real trouble.
Buy an investment on its merits. Make sure it stands alone as a good buy. Do these things, and you'll be fine.
It's a small point today. But it's an important one… one that way too many individual investors are secretly guilty of ignoring. Don't be one of them.
Source: Daily Wealth
Monday, February 28, 2011
I usually keep my mouth shut on this idea… People don't want to hear it.
Why don't people want to hear it? Because they're most likely guilty of it.
You're probably guilty of this, too, to a certain degree. So I should keep my mouth shut.
Then again, if you're reading this, you're trying to become a better investor… And you need to know the truth.
You don't know me… So you might not appreciate it at first if I point out that your fly is down or that you have food stuck in your teeth. But after the initial look of horror, you'll correct it. And then you'll be thankful, I hope.
This is an important concept to understand… If you're guilty of this, it will keep you from making money. Worse, it could cause you to lose a lot of money. And if you don't change this behavior, you will lose money for years.
Let me start with a few examples. Then I'll tell you the simple concept and how to avoid it. Let's get started…
Have you heard this one before?
"The U.S. dollar is garbage right now! So I'm getting some money outside the dollar – and I'm putting it into euros."
The problem is, the people saying this usually don't know anything about the euro… They have no clue they could be moving their money from the frying pan into the fire.
Or how about this one?
"America is going down the tubes! So I'm putting my money into China – through Chinese stocks."
Ah, yes. Brilliant. Once again, the people saying this usually know nothing about the Chinese stock market. Once again, they could be taking money out of the frying pan and putting it into the fire.
The important point here is NOT about Chinese stocks or the euro currency. There are two important points:
1) Don't buy just any ol' thing out there, as an emotional protest.
2) Know what you're investing in.
It's fine if you think the U.S. dollar is garbage. But please, don't hurry out and buy euros in protest – particularly if you don't know anything about euros!
The truth is, you'd have been better off earning 2% a year on your U.S. cash than putting it into euros since the launch of the euro in 1999. A dollar is backed by "the full faith and credit of the U.S. government." But what country is a euro backed by? The U.S. might be swamped with debt. But have you done your homework on Europe? Just how much debt is Europe swamped with?
It's fine if you think China is rising and the U.S. is sinking. But is owning Chinese stocks the best way to capitalize on that?
The truth is, since 1992, Chinese stocks have lost one-third of their value. The MSCI China Index has fallen from a starting value of 100 in 1992 to around 67 today. Are Chinese companies a good value right now? How much do you know about the Chinese company you want to buy?
Again, my point is NOT about the euro or Chinese stocks.
My point is about something I hear all the time at conferences. I talk to people that have spent a ton of time researching why the U.S. is in trouble… And they're eager to put their money to work somewhere else.
Meanwhile, these folks have spent virtually zero time investigating what it is they're actually putting their money into. Quite often, it seems, they're going from the frying pan to the fire, without even knowing it.
Investing outside the U.S. is fine… I've been a strong advocate of it for my near-two-decade career. (Gold bullion is actually a way to "escape the dollar." So are some big dividend-paying companies that earn profits around the world.)
But buying stuff you have no clue about – mainly as an emotional protest against what's going on at home – that's when I see people get into real trouble.
Buy an investment on its merits. Make sure it stands alone as a good buy. Do these things, and you'll be fine.
It's a small point today. But it's an important one… one that way too many individual investors are secretly guilty of ignoring. Don't be one of them.
Source: Daily Wealth
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111077
- Joined: Wed May 07, 2008 9:28 am
Re: Investment Strategies 02 (Jun 10 - Jun 11)
by winston » Tue Mar 01, 2011 8:36 pm
5 Steps To Managing Money In Current Markets By Jim Farrish
1) This is a pullback, not a correction. The market is right sizing. Use the November 2010 pullback as a benchmark. The May to August pullback could be an example if geopolitical issues expand. Either way investors can see clearly how to manage the pullback.
2) Manage portfolio risk. Sell the laggards and raise cash to take advantage of the resulting opportunities.
3) Accept this as a traders’ market. Non traders hold cash and build a watch list of leaders that hold up throughout the pullback period. Those will be the leaders when the market resumes its uptrend.
4) Look for support on the S&P 500 to be in the 1225 range, 1200 worst case. Having realistic expectations help prevent investor anxiety.
5) Investors should be patient! Don’t force positions and don’t overreact to the news events. Building cash helps to dampen risk and emotions.
http://www.dailymarkets.com/stock/2011/ ... t-markets/
1) This is a pullback, not a correction. The market is right sizing. Use the November 2010 pullback as a benchmark. The May to August pullback could be an example if geopolitical issues expand. Either way investors can see clearly how to manage the pullback.
2) Manage portfolio risk. Sell the laggards and raise cash to take advantage of the resulting opportunities.
3) Accept this as a traders’ market. Non traders hold cash and build a watch list of leaders that hold up throughout the pullback period. Those will be the leaders when the market resumes its uptrend.
4) Look for support on the S&P 500 to be in the 1225 range, 1200 worst case. Having realistic expectations help prevent investor anxiety.
5) Investors should be patient! Don’t force positions and don’t overreact to the news events. Building cash helps to dampen risk and emotions.
http://www.dailymarkets.com/stock/2011/ ... t-markets/
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111077
- Joined: Wed May 07, 2008 9:28 am
Re: Investment Strategies 02 (Jun 10 - Jun 11)
by winston » Sun Mar 06, 2011 8:40 pm
What Your Investment Guru Isn’t Telling You by Alexander Green
Two weeks ago, I spoke at The World Money Show in Orlando – one of the largest investment conferences in the country. More than 11,000 investors registered to attend.
In my talk, I argued that the only certainty in the world is uncertainty. Then I demonstrated how investors can effectively capitalize on this uncertainty, starting with the seven factors that determine the future value of your portfolio…
Seven Factors That Shape the Value of Your Portfolio
Those seven factors are:
•The amount you save.
•The length of time it compounds.
•Your asset allocation.
•Your security selection.
•Your annual compounded return (as a result of 3 and 4).
•The expenses you absorb.
•The taxes you pay.
As I walked around the event, however, I listened to other speakers talking instead about the outlook for the stock market. And I kept hearing the same thing.
No, not persistent bullishness or bearishness. There’s always plenty of both at a conference of this size. The universal part was analysts confirming just how right their previous market forecasts had been.
Count me as skeptical.
“I Wasn’t Wrong… Just Earlyâ€
If I flipped a coin and said “heads†and it came up heads, would you be impressed? If not, why not?
What if I flipped it again and said “tails†and it came up tails this time. Would that impress you?
Maybe on the next coin flip, I get it wrong. Then I remind you that no system is perfect and that no one bats a thousand. Does that add to my stature and make my next prediction more credible?
The idea is laughable.
Yet listen to some market gurus and you’d think they’re all a bunch of smart guys who never get blindsided by events. Even those who missed the boat generally claim that they weren’t wrong… “just early.â€
I suspect that more than a little revisionist history is going on here. The truth is that even the market forecasters who are right are generally dead wrong.
Let me give you an example…
The Bear Philosophy: Every Silver Lining Has a Cloud
I know a famously bearish investment analyst – one who has been bearish not just for years but for decades. He sincerely believes that every silver lining has its cloud.
Just before the financial crisis of 2007-2009, he let his readers know that we were on the edge of catastrophe. He predicted that inflation would soar, the dollar would crash, foreigners would repatriate their assets and the stock market would keel over.
And it did.
Today, he insists he “called the recent market crash.†It’s true he was bearish before the market tanked – and I hate to quibble – but…
•Inflation is 1.2%.
•The dollar is up against the euro and the yen.
•Foreigners have clearly not repatriated their assets.
Yet he crows about how much money you would have made if you’d listened to his analysis before the recent meltdown. Of course, you’d also have made a ton if you’d bet large on my first call of “heads†a few minutes ago.
What? You say my forecast had nothing to do with the result, that my success was meaningless?
That brings me to analysts who are busy claiming that they called the recent spike in oil and gold prices…
The Core Principles for Investment Success
Think about it: Who foresaw that a frustrated market vendor in Tunisia would set himself ablaze in the street – a move that would ultimately bring down the Tunisian government? In turn, who knew that would lead to a successful uprising in Egypt and then anarchy in Libya – developments that would cause oil (and thus gold) to soar?
Who? Precisely no one.
There’s a lot of money to be made in the prophecy racket… I mean, the market forecasting business. But here’s the industry’s dirty little secret:
Real investment success doesn’t come from following the right predictions. It comes from following the right principles:
•Allocate your assets properly.
•Diversify your portfolio broadly.
•Buy quality investments.
•Reduce your investment costs.
•Tax-manage your portfolio.
Yes, you can make it a lot more complicated than this. But you really don’t need to.
http://www.investmentu.com/2011/Februar ... g-you.html
Two weeks ago, I spoke at The World Money Show in Orlando – one of the largest investment conferences in the country. More than 11,000 investors registered to attend.
In my talk, I argued that the only certainty in the world is uncertainty. Then I demonstrated how investors can effectively capitalize on this uncertainty, starting with the seven factors that determine the future value of your portfolio…
Seven Factors That Shape the Value of Your Portfolio
Those seven factors are:
•The amount you save.
•The length of time it compounds.
•Your asset allocation.
•Your security selection.
•Your annual compounded return (as a result of 3 and 4).
•The expenses you absorb.
•The taxes you pay.
As I walked around the event, however, I listened to other speakers talking instead about the outlook for the stock market. And I kept hearing the same thing.
No, not persistent bullishness or bearishness. There’s always plenty of both at a conference of this size. The universal part was analysts confirming just how right their previous market forecasts had been.
Count me as skeptical.
“I Wasn’t Wrong… Just Earlyâ€
If I flipped a coin and said “heads†and it came up heads, would you be impressed? If not, why not?
What if I flipped it again and said “tails†and it came up tails this time. Would that impress you?
Maybe on the next coin flip, I get it wrong. Then I remind you that no system is perfect and that no one bats a thousand. Does that add to my stature and make my next prediction more credible?
The idea is laughable.
Yet listen to some market gurus and you’d think they’re all a bunch of smart guys who never get blindsided by events. Even those who missed the boat generally claim that they weren’t wrong… “just early.â€
I suspect that more than a little revisionist history is going on here. The truth is that even the market forecasters who are right are generally dead wrong.
Let me give you an example…
The Bear Philosophy: Every Silver Lining Has a Cloud
I know a famously bearish investment analyst – one who has been bearish not just for years but for decades. He sincerely believes that every silver lining has its cloud.
Just before the financial crisis of 2007-2009, he let his readers know that we were on the edge of catastrophe. He predicted that inflation would soar, the dollar would crash, foreigners would repatriate their assets and the stock market would keel over.
And it did.
Today, he insists he “called the recent market crash.†It’s true he was bearish before the market tanked – and I hate to quibble – but…
•Inflation is 1.2%.
•The dollar is up against the euro and the yen.
•Foreigners have clearly not repatriated their assets.
Yet he crows about how much money you would have made if you’d listened to his analysis before the recent meltdown. Of course, you’d also have made a ton if you’d bet large on my first call of “heads†a few minutes ago.
What? You say my forecast had nothing to do with the result, that my success was meaningless?
That brings me to analysts who are busy claiming that they called the recent spike in oil and gold prices…
The Core Principles for Investment Success
Think about it: Who foresaw that a frustrated market vendor in Tunisia would set himself ablaze in the street – a move that would ultimately bring down the Tunisian government? In turn, who knew that would lead to a successful uprising in Egypt and then anarchy in Libya – developments that would cause oil (and thus gold) to soar?
Who? Precisely no one.
There’s a lot of money to be made in the prophecy racket… I mean, the market forecasting business. But here’s the industry’s dirty little secret:
Real investment success doesn’t come from following the right predictions. It comes from following the right principles:
•Allocate your assets properly.
•Diversify your portfolio broadly.
•Buy quality investments.
•Reduce your investment costs.
•Tax-manage your portfolio.
Yes, you can make it a lot more complicated than this. But you really don’t need to.
http://www.investmentu.com/2011/Februar ... g-you.html
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111077
- Joined: Wed May 07, 2008 9:28 am
Re: Investment Strategies 02 (Jun 10 - Jun 11)
by winston » Sun Mar 20, 2011 3:48 pm
TOL:-
Have you observed your investment "style" over the past few crisis eg. Subprime, European Contagion, Middle East Crisis, Japanese Earthquake etc. ?
Weren't you trying to get as much info as possible about the event ? And then trying to make an "educated guess" on where things are heading ?
Isn't that what everyone else is doing too ? What's so great about your info, that it's better than the next guy that would allow you to make an "informed" bet ?
And with a lot of retail investors sitting on the sidelines since the Lehman collapse, you are probably betting against people whose info is as good as yours, if not better ...
Example:-
1) What do you know about the European Contagion that would allow you to make an 'informed" bet on the EUR, that the next guy dont know ?
2) What do you know about Libya, Saudi Arabia, Yemen etc, that would allow you to make an "informed" bet on Oil, that the next guy dont know ?
3) What do you know about Nuclear Reactors, Nuclear Radiation etc. that would allow you to make an "informed" bet on the JPY, Nikkei etc. that the next guy dont know ?
4) What do you really know about Commodities and Currencies, that would allow you to make an "informed" bet, that the next guy dont know ?
5) What do you really know about the US Economy, that would allow you to make an "informed" bet, that the next guy dont know ?
Just because you read a few articles, hear some parrots speak on CNBC, does that qualify you to make an "informed" bet, that's better than the next guy ?
The longer I play this game, the more I realize that my "informed" bets were not that "informed" after-all. And I have dozens of Analysts Reports everyday with more than a hundred emails on the latest info and news...
Therefore, I need to do more of the following:-
1) Have a longer time frame ie. Position Trading rather than Scalping
2) Contrarian rather than Momentum but only when the money is sitting in the corner
3) Staying within my Circle of Competence
4) Avoiding trades that are too lop-sided. If it's too good to be true, it is.
5) If you feel that it's cheap, just buy; dont nickel and dime.
6) If it's too expensive, sell and leave some for the next guy.
7) Filter out the Noise; Everyone is an "expert" nowadays
Have you observed your investment "style" over the past few crisis eg. Subprime, European Contagion, Middle East Crisis, Japanese Earthquake etc. ?
Weren't you trying to get as much info as possible about the event ? And then trying to make an "educated guess" on where things are heading ?
Isn't that what everyone else is doing too ? What's so great about your info, that it's better than the next guy that would allow you to make an "informed" bet ?
And with a lot of retail investors sitting on the sidelines since the Lehman collapse, you are probably betting against people whose info is as good as yours, if not better ...
Example:-
1) What do you know about the European Contagion that would allow you to make an 'informed" bet on the EUR, that the next guy dont know ?
2) What do you know about Libya, Saudi Arabia, Yemen etc, that would allow you to make an "informed" bet on Oil, that the next guy dont know ?
3) What do you know about Nuclear Reactors, Nuclear Radiation etc. that would allow you to make an "informed" bet on the JPY, Nikkei etc. that the next guy dont know ?
4) What do you really know about Commodities and Currencies, that would allow you to make an "informed" bet, that the next guy dont know ?
5) What do you really know about the US Economy, that would allow you to make an "informed" bet, that the next guy dont know ?
Just because you read a few articles, hear some parrots speak on CNBC, does that qualify you to make an "informed" bet, that's better than the next guy ?
The longer I play this game, the more I realize that my "informed" bets were not that "informed" after-all. And I have dozens of Analysts Reports everyday with more than a hundred emails on the latest info and news...
Therefore, I need to do more of the following:-
1) Have a longer time frame ie. Position Trading rather than Scalping
2) Contrarian rather than Momentum but only when the money is sitting in the corner
3) Staying within my Circle of Competence
4) Avoiding trades that are too lop-sided. If it's too good to be true, it is.
5) If you feel that it's cheap, just buy; dont nickel and dime.
6) If it's too expensive, sell and leave some for the next guy.
7) Filter out the Noise; Everyone is an "expert" nowadays
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111077
- Joined: Wed May 07, 2008 9:28 am
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