Investment Strategies 03 (Jul 13 - Mar 19)

[winston]

Bullish or Bearish, Here's What You Should Be Doing Today

By Dan Ferris

Humans love stories.

They like to turn complex ideas into simple stories.

The stock market is a perfect example. It doesn't actually tell stories... It's just a place where millions of investors go every day to buy and sell shares of businesses. But humans can't help but think about the market as if it were telling them a story with every tick up or down.

Every market participant tells himself a bullish, bearish, or neutral story. Add them all up, and you get one big "mega story." That mega story is what we call "the prevailing bias" (a term I stole from legendary investor George Soros and redefined for my own purposes).

Over the past couple years, the prevailing bias has been bullish. That seems to be changing...

Last year was a minefield that led to the stock market's worst performance since 2008 (which we largely avoided). But many stocks are still expensive, and the market is still way up over the past seven years.

There's more fear in the market today than there was a year ago. Stocks are cheaper, and there are far fewer bullish investors. But that doesn't mean there are a lot more bearish investors. Instead, the majority of investors are neutral about the stock market...

The American Association of Individual Investors (AAII) Sentiment Survey showed 51.7% of investors surveyed were bullish at the start of 2015 versus just 25.1% bullish today.

It showed 22.3% of investors were bearish at the start of 2015 versus 23.6% bearish today.

And it showed 51.3% of survey participants are neutral on stocks now, neither bullish nor bearish, versus just 32.7% neutral a year ago.

Investors looking in their rearview mirror at last summer's 13% plunge in the S&P 500 feel more scared than they did last year. But because the market has recovered somewhat in the last couple months, it has taken the edge off their fear.

Here's where we stand today...

Many stocks are still unattractive... even though investors are less bullish and last year's poor market performance made some stocks relatively more attractive than they were a year ago.

The prevailing bias is weakening. The combination of a weakening prevailing bias and still-expensive stocks means you have to be careful.

Some people like to be careful by selling short the shares of weak companies. Others prefer to hedge their portfolios with put options, like buying insurance against a market drop. But there's a much easier way to reduce risk in an equity portfolio...

By far the easiest, safest, most certain way to reduce risk in an equity portfolio is to hold plenty of cash. As I showed you in this DailyWealth essay, the optionality of cash isn't priced in a large, liquid market.

There aren't millions of people trading it back and forth millions of times a day. It has no expiration date. And you aren't locked into buying or selling at a particular time.

Right now the market is telling us to be careful... Making sure you have plenty of cash on hand is the best way to prepare.


Source: Extreme Value

[winston]

This 'subtle shift' in the markets could have a big impact on your wealth

by Dr. David Eifrig

Source: The Crux

http://thecrux.com/why-you-need-to-be-a ... e-markets/

[winston]

One Little Secret for Big Results

By Kevin Matras

One Less Loser

Setting a goal to have one less loser may not sound exciting, but the results can be dramatic.

There are over 10,000 stocks out there. So be choosey.

One of the best ways to put the odds of success in your favor is to focus on the top industries.

? Because roughly 50% of a stock’s price movement can be attributed to the group that it’s in.

Even a mediocre stock in a top industry can outperform the strongest stock in a weak industry.

If you found yourself driving the wrong way on a one way street, you wouldn’t keep driving the wrong way or speed up, you’d turn around and get off. Same thing with stocks.

If you bought a stock expecting it to go up, and it’s now doing the exact opposite, get out before you crash your portfolio.

Source: Zacks Investment Research

http://www.thetradingreport.com/2016/01 ... results-8/

[winston]

These are the hedge fund strategies everyone wants in on

By Julia La Roche

Source: Business Insider

http://finance.yahoo.com/news/hedge-fun ... 00150.html

[winston]

3 Long-Term Investing Strategies With Strong Track Records

By Stephen Vita

Source: Investopedia

http://www.investopedia.com/articles/in ... er=YahooSA

[winston]

How to Profit from Market Volatility

By MICHAEL A. ROBINSON

Source: Money Morning

http://moneymorning.com/2014/05/13/how- ... olatility/

[winston]

5 Ways to Beat the S&P 500 in 2016 (XME, XLE)

By Alan Farley

Source: Investopedia

http://www.investopedia.com/articles/in ... er=YahooSA

[winston]

Here are 3 of the best ways to beat negative interest rates…

Source: Bloomberg

http://thecrux.com/where-can-investors- ... ive-rates/

[winston]

Exactly What I Do With My Own Money

By Dr. Steve Sjuggerud

"How do you invest your own money, Steve?"

People ask me that all the time…

Some of these folks are looking for a very technical answer (like what percentages I invest in stocks and bonds, and how I come up with those).

Others are actually just looking for a hot tip. (The best hot tip is this: There is no such thing as a hot tip!)

I will share with you what I do with my own money today…

Upfront, you need to know that what I do with my money is probably NOT the right thing for you to do with your money.

I break "the rules"…

However, if you know the rules, and if you are strong enough to cut your losses when necessary, you can consider doing what I do…

I can sum up what I do with my own money very simply:

I wait for the fat pitch.

I am often "under-invested." I don't typically own a lot of stocks just because "I'm supposed to." Instead, I wait for an extraordinary situation – a fat pitch.

The idea of "the fat pitch" comes from the most successful investor of all time… Warren Buffett. He said:

I call investing the greatest business in the world because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you. There's no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it.

Fat pitches don't happen often. Sometimes you have to wait years for them to appear.

For example, I thought my fat-pitch opportunity in U.S. real estate would never appear…

I'd been an investor for decades, but I'd never bought U.S. real estate as an investment.

It was never cheap enough for my standards. It was never a fat pitch.

I thought I'd gotten it wrong. Plenty of people around me had gotten rich through real estate. But I had an aversion to borrowing money… And I didn't see the dramatic upside potential.

Then it happened… We had the worst real estate bust in generations. And mortgage rates hit their lowest levels in generations. I got my fat pitch. And I swung, starting in 2011.

Before the "great bust" in the U.S. real estate market, I had never bought any property in the U.S. (except for my home) – because I never saw my fat pitch. Now, Florida real estate is the biggest part of my investment portfolio, by far.

Fat pitches like the great real estate bust don't come along every day. Personally, I have been very patient…

I swung the bat just three times in the last 10 years.

Here's what I did:

Fat Pitch No. 1: In late 2008, I saw a fat pitch coming in stocks. I bought all I could – and I even took out a home-equity loan to buy even more. That's the only time I've ever done that. I was a bit early – the real bottom was March 2009. But it worked out fantastically… I paid off the home-equity loan a little more than a year later out of my profits.

Fat Pitch No. 2: In 2011, I started buying Florida real estate heavily. I may have gone overboard… but the fat pitch was too good. In one deal, I bought a couple hundred acres for 90% less than they were worth under contract just two years before. And just last week, I signed a contract to sell a condo for twice what I paid for it – less than three and a half years ago.

Fat Pitch No. 3: Late last year, I started building up a portfolio of microcap gold-mining stocks. This sector had lost more than 90% of its value in the previous four years. It was the cheapest it had been in a generation, at least.

Like U.S. real estate a few years ago, I had never invested a significant chunk of my money in gold stocks – until now.

By buying small gold stocks late last year, I was a full three months early… Fortunately, I didn't lose much. Importantly, I cut my losers when they hit new lows, and I added to my winners. Then the last month hit… and gold stocks soared!

I am up dramatically… and I plan to stay in for a while.

Waiting on "the fat pitch" works for me…

It is challenging.

I think about life in a unique way… I think that 98% of the time, life is ordinary. The other 2% of life is extraordinary moments…

If you are capable of recognizing those "2% moments" and acting on them to the fullest extent possible, then you can potentially generate extraordinary returns.

I am constantly on the lookout for those extraordinary moments in life and in investing, and I try to make the most of them.

Whether this way of thinking is right or not doesn't actually matter… I believe it – and it works for me!

Again, I am not suggesting that you follow my "fat-pitch" way of investing. But if you want to know what I do with my own money, and how I think about it… now you know…

Source: Daily Wealth

[winston]

Comparing Investment Strategies: The 1% Vs. the 99%

By Daniel Cross

Source: Investopedia

http://www.investopedia.com/articles/in ... z42UqDj6SQ