Investment Strategies 02 (Jun 10 - Jun 13)

[Chinaman]

Are You A Smart Money Investor? By Jeff Clark

1. Smart money buys when others are fearful.
2. Smart money sells when others are greedy.
3. Smart money sees trends others don’t.
4. Smart money ignores the headlines.
5. Smart money plays the big trend, not the gyrations.
6. Smart money doesn’t count its money before it’s made.
7. Smart money ignores official government reports and relies on its own research

With that description of smart money, the next logical question to ask is, what are they looking at now?

Therefore, I think they’re asking themselves questions like these:

Is real inflation likely to rise or fall over the next few years?
Is it more probable that interest rates will remain depressed or move higher?
Is the U.S. dollar likely to be stronger or weaker in the next few years?
What is the best way to hedge against egregious debt and runaway government spending?
Which assets are most likely to make money over the next few years? Which should be avoided?
Is it time to invest in real estate again, or will it take the rest of my life to see big profits?
Will the global economy be on solid footing during the next few years?
Is oil – or something else – the best energy investment?
Are gold and silver in a bubble, or will they push higher in the coming years?

http://www.caseyresearch.com/editorial. ... 404ED0411A

Good 1....must remember these few points, mentioned above.
TOL
My take, there another round of oil price hike, after gold & silver had die off.
SURGE IN OIL PRICE = LOW GROWTH & HIGH INFLATION.

It time to look at ppty and maybe buy 1 if you found a good 1...some fear has been surfaced at this sector...time to revisit it............

[winston]

The Rich Investor's Secret to Avoiding Worry and Wasted Time
By Dr. David Eifrig, editor, Retirement Millionaire
Friday, June 3, 2011


Many of the world's richest and most successful investors grow and protect their wealth using a strategy the average investor has never considered…

If you can master this technique, you can avoid a huge amount of worry and wasted time and set yourself up to make extraordinary returns.

I realize it might seem like a silly comparison, but I've found the most useful way to describe this approach is in terms of the anaconda…

Anacondas are one of the world's deadliest, most efficient predators… They don't "zip" around, wasting energy chasing after their prey. They don't get into long battles. In fact, they don't hunt in a traditional sense at all.

Instead, anacondas lie around in rivers for long periods of time. They wait for an unsuspecting animal to pass by. Only then do they strike… Anacondas aren't interested in fair fights. They are nature's "no risk" operators.

And because they don't spend much time or energy chasing every animal that comes along, they can grow to enormous size.

So what I call "anaconda trading" is all about patience… Developing the patience to hold cash and savings and sit tight until the ideal opportunity presents itself… an opportunity where the odds are overwhelmingly stacked in your favor.

Here's an example of how it works…

I love the idea of owning muni bonds. You collect tax-free income, and they have a tiny default rate (around 0.1%). But up until late last year, investors chasing yield had pushed payouts down to unattractive levels.

Then our opportunity arrived…

In December, famed bank analyst Meredith Whitney made a splash predicting billions of dollars of losses in the municipal bond market. Prices plunged. The biggest muni-bond fund fell to mid-2009 levels… Investors could collect low-risk, tax-free yields that were higher than taxable Treasury yields. (Historically, you only see that situation about 10% of the time.)

So we struck. In my Retirement Millionaire newsletter, we bought funds yielding a taxable-equivalent 10%… at a 5% discount.

Since then, the fear has subsided in the muni market, prices are up, and we're still collecting our fat yield.

It was a perfect "anaconda trade." We weren't "chasing yield" like the rest of the crowd. Instead, we were watching an asset we liked, waiting patiently for our opportunity. When it came, we didn't hesitate.

And right now, we're taking advantage of another huge "anaconda" opportunity… formerly high-flying technology stocks like Microsoft, Intel, and Cisco.

These companies dominate their markets. Intel controls 80% of the world market for microprocessors. Cisco is the major manufacturer of networking devices worldwide. And they increase earnings year after year after year. For the first quarter of 2011, Intel's earnings were up 37% from the same time in 2010.

They've also built up large hoards of cash. Microsoft alone has close to $50 billion. Many are even paying dividends now. Cisco, for example, started paying a dividend in March.

These are fantastic companies that I'd love to own at the right prices. And our opportunity is here…

These stocks used to be the darlings of Wall Street. But they're no longer the fast-growing stocks they used to be. Last year, Microsoft's earnings grew "only" 22%. So they've been tossed aside and forgotten by many investors today. In the past four months, Cisco has fallen more than 25%.

There's no reason a relentless cash-flow generator like Cisco should be trading at nine times earnings. The same goes for Intel and Microsoft.

This is a perfect example of an anaconda opportunity… Our "prey" is just sitting there. We can make an easy, low-risk bet with a high probability of success.


Source: Daily Wealth

[winston]

TOL:-

It looks like a Trading Market.

That means that I have to long the sharp corrections and short the strong rallies.

At the same time, I expect the Greece issue to be a non-event and Window Dressing to lead to some short-squeezing.

[winston]

Greenblatt on the Dangers of Short-Term Thinking by Joel Greenblatt

In this clip, Greenblatt talks about how the institutionalization of the investment world has made for a major increase in short-term thinking, which opens up opportunities for patient, long-term investors — if they stay disciplined.

“If you look at top performers over the last decade, the top 25% of managers that have outperformed — came out with the best record for the last ten years — 97% of those top managers spent at least three years in the bottom half of performance,” he says.

“79% spent at least three years in the bottom quartile of performance. And almost half, 47%, spent at least three years in the bottom 10% of performance.

So all their investors left if they did that, but these are the ones who ended up with the long-term record. Most people leave them, most people don’t stick around for long enough.”

http://theguruinvestor.com/2011/07/08/g ... -thinking/

[winston]

Why Stocks Won’t Crash by Moses Kim

It seemed like only a week ago when permabears were predicting the appearance of a new bear market that would take out the lows of 2009. The variables all seemed to be there: Greek debt crisis, inflation from higher commodity prices, and worsening economic data in the U.S. Most economic observers believe these kind of variables lead to lower stock prices. As you can clearly see, this is not the case.

There will be a lot of buying pressure in stocks due to:
1) the flight to liquidity, and
2) the attempt to hedge against inflation.

As long as bond yields remain incredibly low, stocks are a viable investment option, even for retiring Boomers who have been brainwashed into believing there is some magic bond to stock ratio you must follow as you age. Such rubbish.

Every era is different: sometimes you have good leaders, sometimes bad leaders; sometimes you are on a gold standard, sometimes you are not; sometimes taxes are low, sometimes they are high. You must use your common sense or risk losing all your retirement savings.

I have consistently said that there won’t be another stock market crash along the lines of what we saw in 2008. The positive correlation between stocks and the economy is far from absolute.

In the current economic environment, rising domestic stock prices are actually bad in a way because it evidences a growing lack of confidence in the U.S. dollar. As I’ve said before, stocks rose in the 1930′s because we were on a gold standard and the flight to safety to gold was effectively a flight to safety to the dollar.

This created the deflationary environment that exacerbated the stock market crash. We now essentially have the 1930′s situation in reverse: a flight to safety to gold is a flight out of the dollar.

What to look for now is rising inflation along the lines of what we experienced in the U.S. following FDR’s confiscation of gold. The dollar was untethered and this led to a rally in stocks and real estate even with about 20% unemployment.

While our situations are somewhat similar, we also face a debt crisis that threatens to undermine the dollar. That being said, I would not be surprised if stocks double or tripled in the next 5 years. The debt crisis will wipe out bondholders, which means people have to put their capital somewhere. Stocks and gold are the likeliest candidates to receive massive inflows of hot money.

The coming years will likely be profitable for those who maintain a bullish bias in stocks, commodities, and gold. Besides minor reactions these markets are poised to rise dramatically because of the devaluation of the dollar and the concurrent loss of confidence.

The thing to remember is that Treasuries are government debt, which means they will eventually fall as the public’s confidence in the government falls. This leads to a cascading effect in all other type of bonds, and in the worst case scenario, a panic.

It is virtually guaranteed that money will panic out of bonds in the same way it panicked out of real estate. Our job is to figure out where that money will find a home and why. Believe me, conventional wisdom will do you no good in the coming years.- it’s time to think independently and intelligently.

http://expectedreturnsblog.com/why-stocks-wont-crash/

[winston]

The Toughest "Easy" Lesson You Must Learn by By Dr. Steve Sjuggerud
Wednesday, July 20, 2011


If you want to get rich investing… if you want to make a fortune… you must learn this simple lesson…

In principle, this lesson is so easy, you could teach a monkey to do it.

But in practice, almost nobody is able to do it.

And this is actually easy to do… It's not like trying to lose weight, where we know what to do, but it's hard to stick to it. But still, nobody is able do it.

I have a hard time with it myself, darn it… and this is my career! I've gotten much better at it over the years though.

What is "it"? What is the lesson?

The lesson is doing nothing…

You see… the big gains are in the big trades.

Your lifetime investing success is hiding in your big trades. If you sell early – if you never give a trade a chance to become a big trade – you'll never get rich investing.

Legendary speculator Jesse Livermore explained it best in the 1923 book Reminiscences of a Stock Operator:

After spending many years in Wall Street, and after making and losing millions of dollars, I want to tell you this: It was never my thinking that made the big money for me. It always was my sitting. Men who can both be right and sit tight are uncommon.

In my newsletter True Wealth, we've stuck to our "script" of owning stocks and owning precious metals investments since the market bottomed in March 2009. Here in the second half of 2011, we're still sticking to our script.

In March 2009, just after the stock market bottomed, I told True Wealth readers, "I believe the entire stock market could rise by 50% from its lows last week over the next 18 months. And the next seven to 10 years could be phenomenal…" And I recommended a precious metals stock.

Last summer, I ran the headline "A Potential Bull Market in Everything" for one of my True Wealth issues. And in the latest True Wealth, out last week, the conclusion was the same… Own stocks and own precious metals investments.

The conclusion has stayed pretty much the same for nearly two and a half years. Both gold and stocks are up some 65%-plus in that time. Hopefully, we're offsetting any "boredom" subscribers might have from hearing the same conclusion with all the money they've made in that time.

"Men who can be both right and sit tight are uncommon," Jesse Livermore reminds us. In True Wealth, I've done my best to be right AND sit tight.

Our script is still the same… Own stocks and own precious metals investments.

We are in the midst of the Bernanke Asset Bubble, which – when it's all said and done – may turn out to be the greatest asset bubble (in stocks and gold) the world has ever known. That is worth staying on board for.

Don't get antsy. Don't feel the need to "stay busy." Don't trade away your winners too quickly.

Stick to the simple lesson. Be right, and sit tight!

Do nothing. For as long as you can. (And then longer.) It's possible you could come out of it with more wealth than you ever imagined.

But you've got to do nothing, for longer than you can bear it. You've got to do the tough part… and stick with the easy lesson.


Source: Daily Wealth

[winston]

Three Simple Trading Rules Every Retiree Needs to Learn By Dr. David Eifrig, Retirement Trader
Friday, July 29, 2011

At first glance, it sounds ridiculous… 28 for 28… a 100% win rate.

I never thought I'd be "that 100% guy."

I've been investing and trading for over 30 years. I've read investment advisories for nearly that long. I've worked at several of Wall Street's most prestigious firms.

And I can tell you from experience that when someone claims to win 100% – or even 90% – of the time, you should brush them off as delusional, using "massaged" numbers, or a criminal who trades on illegal insider information.

The stock, commodity, and futures markets are simply too big and complex for someone to win all the time. Even for great traders, a 60% win rate is more realistic. Heck, traders who make sure their wins are huge and their losses are small can make millions by being right just 30% of the time.

With this warning in mind, I do think it's worth pointing out a secret we've used in my Retirement Trader service to generate a perfect trading record (28 out of 28 so far):

We think like long-term investors.

There's a lot that goes into that – more than I can discuss today. But I can explain the most important pieces and show you an opportunity that fits perfectly into our strategy…

First, we take fundamentals into account. Often, when folks look to make short-term profits in the stock market, they focus exclusively on chart patterns and complicated computer programs.

While several successful traders I know rely on this kind of "technical analysis," most folks will start seeing patterns that don't really exist. And a "can't lose" system can turn into a "can't win" system overnight.

Instead, I look at how "healthy" a company is. I check cash flow, profit margins, debt, and so on. I look to place leveraged trades (using options) in great companies like Coca-Cola and Intel.

The second advantage we have over most traders is we only bet on companies that treat their shareholders right. Most traders get excited about the latest IPO, the hottest penny stocks, and riskiest resource investments. Sometimes, these can be high-reward trades. But they're incredibly risky. The IPO can flop, the penny stock can collapse, and the next big gold mine can turn out to be just another empty hole.

I'd rather have the deck stacked in my favor… So what I do is look for companies that buy back shares, have a history of increasing dividends, and bring in enough cash to keep doing both.

These are the marks of a solid, conservatively run company. After all, you can massage a financial report a hundred different ways to fake a profit. But you can't fake a cash dividend. When you're buying a company that has a long-term-focused corporate attitude, the chances of a catastrophic loss are much smaller.

Finally, when we don't see the right setup, we WAIT. In short, a lot of amateur traders hop in and out of positions, incurring fees and sweating to catch the next big win.

But I don't take a trade unless the "stars are aligned." In fact, I made it a condition of my contract before I signed up to write Retirement Trader. I refused to agree to publish a "hot trading tip" every week. Safe investment and trading opportunities don't pop up just like that… The markets don't adhere to anyone's schedule. And success only comes from waiting patiently for what billionaire investor Warren Buffett calls the "fat pitch."

One fat pitch we just took a swing at in Retirement Trader is health care giant Johnson & Johnson. This company is a perfect trade…

It's selling for about 13 times forward earnings. And at 10 times operating cash flow, it seems reasonably priced. It's shareholder friendly, buying back shares and paying dividends to the tune of $19 billion over the past three years. And recently, its stock price has risen along with the health care space.

In short, everything is lined up. And we played it by selling puts, which should hand us a 6.7% return in two months. (That annualizes out to 40%.)

If you're ready to start safely doubling or tripling the trading gains you normally make in your retirement account – with much less risk – these are the kinds of trades you need to make. You need to think like a long-term investor… and stick with these three simple rules.


Source: Daily Wealth

[winston]

TOL:-

Now that the "Splash Crash" has happened, where do we go from here ?

Are you going to buy, hoping for the rebound ? And what happens if it goes down further ? Will you have a Stop Loss ?

Or are you going to Sell, eventhough it has dropped a lot ? Didnt they tell you that the end of the world is coming ? And when would you realize that you are wrong and that the market is actually rebounding and not falling ?

Are things really that bad out there ? Has the world ended ?

And are things really that great out there ? Can your company last through a severe recession, assusming that their books have not not being cooked and that you have a fairly honest CEO ?

Do you know why you are Buying or Selling ?

[winston]

Three Trends to Look for Before Jumping Back into Small Caps By Frank Curzio
Friday, August 12, 2011


Looking at valuation, it seems right now is the perfect time to start buying.

After dropping 16% in three weeks, the S&P 500 is trading at its cheapest levels in decades. In fact, more than 25% of the S&P 500 is trading below 10 times forward earnings. That's super-cheap given S&P earnings for the current quarter grew more than 17%.

But I'm not buying yet.

I want to see three things happen before I put a good amount of money to work…

Investors who are struggling to find the right opportunity to buy stocks should first look for…
• The Volatility Index (the "VIX") to ease back below 25.
• Insiders to start buying.
• Corporations to initiate share buybacks.

Let's start with the VIX…

The more volatile the market, the higher the VIX goes, And usually, when the VIX is climbing, stocks are falling.

As you can see from the chart below, the VIX has been trading between 15 and 25 (marked with the blue lines) for most of the past two years… And the market has been climbing most of that time. But two weeks ago, the VIX surged past 40…

The last two times the "fear index" traded above 40 was during the minor correction in June 2010 and the credit crisis in 2008. Both times, we saw massive swings in stocks.

Most small-cap stocks were trading in 40% ranges on a weekly basis. It was almost impossible to hold stocks for longer than a week without getting stopped out.

But when the VIX is below 25, the markets are less prone to these massive price swings. So I feel more comfortable investing in the market with the VIX below 25 than above. (You can track the VIX on Yahoo Finance with the symbol ^VIX.)

Another trend to look for is insider buying. There's nothing that gives investors more confidence in a company than a CEO buying shares. After the 20% pullback in stocks since May – and a 50%-plus drop in small-caps like AOL (tech), Dendreon (biotech), and Stereotaxis (medical devices) – we should see insiders step up to the plate. (You can watch the number of insider buys here.)

The last trend I want to see before jumping back into stocks is corporate buybacks. S&P 500 companies are carrying more cash on their balance sheets ($1.2 trillion) than any other time in history.

It would be nice if (for once) these companies used their cash hoards to buy their stock at 52-week lows – instead of 52-week highs. Corporate buybacks will lead to stronger bottom lines (profits). Also, robust earnings will lead to more confidence in the markets. (You can see which companies are buying back shares here.)

Waiting for these three trends to develop will reduce your odds of buying into a falling stock market too early. And I'll let you know as soon as I see them line up.


Source: Growth Stock Wire

[Chinaman]

TOL:-

Now that the "Splash Crash" has happened, where do we go from here ?

Are you going to buy, hoping for the rebound ? And what happens if it goes down further ? Will you have a Stop Loss ?

Or are you going to Sell, eventhough it has dropped a lot ? Didnt they tell you that the end of the world is coming ? And when would you realize that you are wrong and that the market is actually rebounding and not falling ?

Are things really that bad out there ? Has the world ended ?

And are things really that great out there ? Can your company last through a severe recession, assusming that their books have not not being cooked and that you have a fairly honest CEO ?

Do you know why you are Buying or Selling ?

To ans your guess?
My take: Any sharp correction is a good opportunities for investors with strong risk appetite and medium term horizon.....short term pain, long term gain.