Investment Strategies 02 (Jun 10 - Jun 13)

[winston]

These Four Simple Words Are the Key to Your Investment Success By Shah Gilani

If there's one single, indispensable key to successful investing, it's to go with the flow.

That's my distillation of well-worn market mantras that you're probably familiar with.

They include:

The trend is your friend;

Don't fight the tape;

Trade the market you are given, not the one you want;

And don't fight the Fed.

Go with the flow.

http://moneymorning.com/2013/02/08/thes ... t-success/

[winston]

Should You Buy at New Lows? Or New Highs? By Dr. Steve Sjuggerud

You might not agree with today's lesson… But it's based on numbers going back nearly 100 years.

Last month, I told you even though stocks are way up and hitting levels that have preceded major corrections in the past, it is NOT time to sell.

It might be scary to hang on with stocks near all-time highs. But as I explained, it's the right thing to do today.

And it's been the right thing to do throughout recent history. Let's take a look at the facts…

With our True Wealth Systems databases, we have the best financial data on the planet at our fingertips. We can test just about anything to find ideas that make money.

You see, when stocks hit a new 12-month high, people get scared… They sell. They get worried that the market must be about to fall. On the other hand, when stocks hit a new low, they might figure they're getting them "on sale."

So we tested which strategy works better: Buying near 52-week lows… or buying at 52-week highs. We looked at nearly 100 years of weekly data on the S&P 500 Index, not counting dividends.

You might be surprised at what we found…

After the stock market hits a 52-week high, the compound annual gain over the next year is 9.6%. That is a phenomenal outperformance over the long-term "buy and hold" return, which was 5.6% a year.

On the flip side, buying when the stock market is at or near new lows leads to terrible performance over the next 12 months… Specifically, buying anytime stocks are within 6% of their 52-week lows leads to compound annual gain of 0%. That's correct, no gain at all 12 months later.

Using monthly data, our True Wealth Systems databases go back to 1791. The results are similar… Buying at a 12-month high and holding for 12 months beats the return of buy-and-hold. And buying at a 12-month low and holding for a year does worse than buy-and-hold. Take a look…


1791 to 2012
All periods 4.3%
New Highs 5.5%
New Lows 0.9%


The same holds true for a more recent time period, this time starting in 1950…


1950 to 2012
All periods 7.2%
New Highs 8.5%
New Lows 6.0%


History's verdict is clear… You're much better off buying at new highs than at new lows.

You might not agree with it… but it's true.

We didn't "cherry pick" in our testing… We looked at 12-month lows and how stocks performed 12 months later. But you'll find similar results when you vary the number of months.

You might think you're getting a deal when you buy with the market at new lows. But it doesn't work.

And you might think buying at new highs "feels risky." But when it comes to the broad market, history shows you're better off buying at new highs than at new lows.

We're not making this stuff up… We're just asking our True Wealth Systems database for the facts… And these are the facts.

You might try to fight this… You might want to "catch a falling knife" and buy when stocks are at new lows. But if you do, realize you are fighting against more than 220 years of historical precedent.

Instead of fighting this… embrace it…

When the market hits a new high, DON'T sell. Enjoy it. New highs mean you're making money. And with history as your guide, you may have more new highs coming.

This idea can keep you from losing money by buying too early, and it can allow you to capture bigger gains by not selling too early. This is the big lesson. Don't forget it…


Source: www.dailywealth.com

[winston]

The Three Smartest Screens to Identify Takeover Targets By Louis Basenese

Takeover Screen #1: Cash is King

No doubt you’ve heard about the gobs of cash sitting on corporate balance sheets. Well, it turns out that a lopsided amount is being held in a handful of sectors.

According to S&P Capital IQ, companies in the technology, industrials and healthcare sectors are holding roughly two-thirds of the $1.1 trillion in corporate cash. In other words, those three sectors possess the most deal-making ammo.

Naturally, we should begin our hunt for opportunities here.


Takeover Screen #2: Go Where There’s Deal Flow

Now that we’ve identified the sectors flush with cash, we want to narrow our search down to the one area where companies are putting that cash to work. That’s the healthcare sector.

In the last year, the number of healthcare deals increased 6% – enough to rank as the second most active year in the last decade.

Rest assured, this wasn’t some fluke, either. The healthcare sector is always a hotbed for activity.

Ever since 1983, it’s been the most active sector for takeover offers, according to a recent Morgan Stanley study.

On average, 4% of stocks in the sector receive offers each year, compared to only 1.7% of companies in the consumer staples sector.


Takeover Screen #3: Go Small for BIG Gains

After honing in on a cash-heavy sector with ample activity, it’s time we pinpoint the most likely targets in that sector. And that’s definitely small caps.

How can I be so confident?

For one thing, although the number of healthcare takeovers spiked last year, the dollar value plunged 38%. That means the majority of takeovers were smaller deals.

The second reason we want to focus on small caps is because Wall Street analysts routinely ignore them. But I’m not bemoaning their ignorance. On the contrary. This limits investor information and leads to rampant mispricing.

Or, more simply, the efficient market hypothesis is rendered null and void in the small-cap space, which creates a tremendous opportunity for us.

You see, potential suitors aren’t dummies. They know what a small-cap company isreally worth. And once they make an offer, it leads to an immediate repricing.

All we have to do is position our portfolios in advance of an announcement to benefit from the sudden increase in price. And guess what? Doing so in the healthcare sector last quarter netted investors an average windfall of 37.2%. In less than four weeks, no less.

http://www.thetradingreport.com/2013/04 ... r-targets/

[winston]

Fives Ways To Make Good Money by Clem Chambers


Way 1: Silence is Golden

On stock discussion forums like InvestorsHub and ADVFN, if you find that a discussion on a stock you are interested in is muted this is an extremely good sign.


Way 2: Know Your Company

You can definitely invest in a company and know bugger all about what it does.


Way 3: Hot in Japan

This should be a very short entry. Japan has, over the last decade or so, also reached a level of economic and cultural maturity and dominance to set the big trends. When little girls start wearing strange footwear or playing with weird electronics: take note.


Way 4: Death of a Salesman

It’s morbid but it remains a phenomenon that the death of the CEO of a high flying company can bring about the company’s collapse.


Way 5: Constant Gainers

A company that keeps sneaking up every day is a no-brainer to consider for your portfolio. Someone is clearly buying and you’d hope that would be for a reason.


http://www.forbes.com/sites/investor/20 ... d-money/2/

[winston]

A Strategy That Pays Off… Handsomely by Carl Delfeld

Source: Investment U

http://www.investmentu.com/2013/May/a-s ... omely.html

[winston]

The Five Questions Every Investor Should Ask

http://www.forbes.com/sites/jonstein/20 ... hould-ask/

[winston]

The Six Questions that Can Make You Rich (Part One) By Garrett Baldwin

http://moneymorning.com/2013/06/10/the- ... -part-one/

[winston]

The Six Questions that Can Make You Rich (Part Two) by Garrett Baldwin

Source: Money Morning

http://moneymorning.com/2013/06/11/the- ... -part-two/

[winston]

The Six Questions that Can Make You Rich (Part Three)

by Garrett Baldwin


Source: Money Morning


http://moneymorning.com/2013/06/13/the- ... art-three/

[winston]

This Simple System Turned $10,000 into $1.8 Billion By Dr. Steve Sjuggerud

Last year, a man named Jim O'Shaughnessy discovered a simple investment strategy that turned $10,000 into $1.84 billion.

This strategy has trounced the stock market for decades. Even better, it has always done so with less volatility than the stock market. To me, that sounds like a "Holy Grail" investment…

O'Shaughnessy went looking for what investing strategies worked best. He tested hundreds of different investment strategies all the way back to 1927 using the world's most in-depth U.S. stock database.

Then he wrote a book called What Works on Wall Street: The Classic Guide to the Best-Performing Investment Strategies of All Time.

One strategy in the book stood out to me above the others. It was simple… yet it delivered mind-blowing results – very high returns with low risks.

The numbers get silly… From 1927 through 2009, this simple strategy would have turned $10,000 into $1.84 billion.

I call the strategy simple because O'Shaughnessy built it using just two criteria: price momentum and "shareholder yield." In short, he concluded, "Price momentum married to high shareholder yield gave us one of the best-performing long-term strategies we've seen." (The actual study is on page 457 of O'Shaughnessy's book.)

The criteria were remarkably simple…

• He first wanted stocks that were in an uptrend. He was looking for stocks that were up more than the median stock over the preceding three months and six months.

• From that list, he took the 25 stocks with the highest "shareholder yield."

The term "shareholder yield" may be new to you. But it's not complicated. O'Shaughnessy defines it as dividend yield plus stock buybacks. Basically, if a company pays a 3% dividend and buys back 6% of its shares in a year, its shareholder yield is 9%.

You pay taxes when you receive dividends, but you don't pay taxes when a company buys back shares. It's like a "stealth dividend." In recent years, companies have spent more money buying back shares than paying out dividends.

In other words, the term "shareholder yield" describes how much of a company's cash flow it's using to give back to shareholders. That's what's important. The more a company is giving back to shareholders, the higher the return shareholders have made over history.

The magic is in combining shareholder yield with the trend. O'Shaughnessy sums it up…

Buying stocks with great price momentum or high shareholder yield ALONE works quite well, but we've seen that combining these factors… generates significantly higher returns at lower levels of risk.

My friend Mebane Faber of Cambria Investment Management is a great number-cruncher. He was interested in O'Shaughnessy's ideas, too.

In fact, he just wrote a book called Shareholder Yield, A Better Approach to Dividend Investing. Inside, Meb explains why this strategy is incredibly important today…

Three decades ago, no companies really bought back shares. But in 1982, the government made it easier for companies to buy back their own stock. Once that happened, Meb says, "stock buybacks went from nearly nothing to either equaling or surpassing cash that was paid out as dividends in the late 1990s."

Meb crunched a lot of numbers. And he actually discovered a way to improve on O'Shaughnessy's amazing results. In short, Meb's system beat both O'Shaughnessy's system and the stock market… earning 16.8% a year since 1982, versus 15.5% for O'Shaughnessy's system and just 11% a year for the market.

And best of all, thanks to Meb, we can invest in this strategy with just one click of the computer mouse. His company recently launched the Cambria Shareholder Yield Fund (SYLD).

SYLD is based on the principles of buying stocks with the highest shareholder yield. His fund follows the principles of O'Shaughnessy's amazing strategy the closest of any I've seen. I highly recommend you check it out…


Source: Daily Wealth