Investment Strategies 03 (Jul 13 - Mar 19)

[winston]

Three clues for finding 100-bagger stocks in todays expensive market

Source: Daily Crux

http://thecrux.com/chris-mayer-three-cl ... ve-market/

[winston]

The Only Advantage You'll Ever Get in the Financial Markets

By Dan Ferris

There's one simple way you can make a fortune in the financial markets.

It's simple, but it's not easy...

First, you must understand the three advantages the market has over you. Stop trying to beat it at these things. You can't. You'll waste your time and your money...

The informational advantage: You need good information to succeed in the financial markets, but you'll never have more information about an industry or a public company than all the other investors in the market combined.

The analytical advantage: Financial markets are populated by armies of overeducated, workaholic geniuses who analyze every aspect of every stock, bond, and index while calculating square roots and standard deviations in their heads.

Again, you need good analytical skills to succeed in the financial markets, but you're not going to out-analyze the market.

The timing advantage: No matter what anyone tells you, you can't time the market. There are millions of people making individual market decisions every day. It's impossible to predict what they will do with any consistent accuracy.

Forget about the advantages you can't get. Instead, focus on the one that's readily available to all investors – individual and professional alike: the behavioral advantage.

To make plenty of money in stocks, you must behave better than the vast herd of investors.

Research firm Dalbar publishes an annual study on investor behavior called the Quantitative Analysis of Investor Behavior ("QAIB"). Every year since 1994, the QAIB has compared stock market returns over the previous decades with returns earned by real investors. The result is always the same: The market beats the investor.

For the 30 years ended December 31, 2015, the S&P 500 returned 10.4% per year, on average. Equity mutual fund investors earned an average return of just 3.7% per year.

Those investors didn't have as much information as the market, it's unlikely they were better-than-average analysts, and they definitely failed to time the market. They bought at the top and sold at the bottom (the primary behavior responsible for their awful returns).

Behavior made all the difference, and it was a huge difference... The S&P 500 turned every $10,000 invested into about $192,000 over 30 years. The average investor turned that $10,000 into just $29,000.

A single behavior – refusing to sell at market bottoms – would have multiplied profits nearly tenfold.

Investment legend Warren Buffett has often said that to succeed as a stock investor, you need to "be fearful when others are greedy and greedy when others are fearful." He means you need to buy at or near market bottoms and sell, or at least not buy, at or near market tops.

This is essentially the behavioral advantage. But I've thought about Buffett's quote a lot over the years, and his paradigm of waxing and waning greed and fear doesn't work for me. I've observed something different...

Financial markets don't really oscillate between greed and fear... Fear is the dominant emotional impetus in the market at all times. It's just magnified at big market tops and bottoms. People are afraid of not doing what everyone else is doing, at the top, the bottom, and every day in between.

Acquiring the behavioral advantage is simple (but again, not easy). Don't be afraid to move in a different direction than the herd.

You'll never banish fear entirely. Your biology won't let that happen. So maybe, like an old self-help book title said, you must learn to "feel the fear and do it anyway."

Source: Extreme Value

[winston]

5 Ways to Recognize a Good Investment Opportunity

by Brian Preston, Bo Hanson

Source: U.S.News & World Report

http://finance.yahoo.com/news/5-ways-re ... 00389.html

[winston]

This Is How You Make Hundredfold Gains in the Market

By Chris Mayer

"Buy right and hold on"

Phelps advises looking for new methods, new materials, and new products – things that improve life, that solve problems, and allow us to do things better, faster, and cheaper.

There is also an admirable ethical streak to Phelps' style, as he emphasized investing in companies that do something good for mankind. This requires looking beyond past figures.

"My advice to buy right and hold on is intended to counter unproductive activity," he said, "not to recommend putting them away and forgetting them."

Every quote above comes not from a conversation, but from his book, 100 to 1 in the Stock Market: A Distinguished Security Analyst Tells How to Make More of Your Investment Opportunities, published in 1972

Source: Chris Mayer's Focus

[winston]

Exactly what I look for in a trade

Source: Daily Crux

http://thecrux.com/sjuggerud-exactly-wh ... n-a-trade/

[winston]

Exactly what I want to see in a trade

Source: Daily Crux

http://thecrux.com/sjuggerud-exactly-wh ... e-part-ii/

[winston]

Three Simple Rules to Improve Your Investment Results

By Kim Iskyan

A lot can go wrong when you're deciding how to invest your money.

A range of investment pitfalls can destroy your wealth.

Today, I'll discuss three of the most common mistakes investors make – and I'll explain how to minimize the damage they can cause to your portfolio…


1. Regretting your buys

Once you've entered a buy order, it is common to be flooded with a range of emotions – excitement, pleasure, anxiety… or deep regret. "Did I just buy the right stock?" "Am I the sucker who just bought at the top of a market bubble?" "What if this company is a total lemon?" All this worrying – or "buyer's remorse" – can be damaging and could lead to an impulsive, emotional decision to prematurely sell a stock.

Just as you would do when you buy anything from a refrigerator to a new car, do your research. Understand what you're buying and create an exit strategy (like a stop loss).


2. Doing what everyone else is doing

People tend to follow the herd. It's human nature to think that the majority is doing the right thing. This crowd mentality is one of the reasons market bubbles form. When everyone is bullish on a stock, prices skyrocket. Of course, it works the other way, too.

But just like Mom and Dad always said, just because everyone else is doing it doesn't mean it's the right thing to do. Do research and form your own opinions.


3. Assuming that someone else cares about your money as much as you do

One of the most expensive phrases in the English language is, "My financial adviser is taking care of my money."

Your adviser isn't your friend. You're just a bag full of money, and he's trying to get as much out of that bag as possible. That doesn't mean you should ignore your adviser. He isn't out to get you. But he does want to generate fees for his company.

At the end of the day, you're the only person who has your best interest in mind. Ask questions. Read the fine print. Ask your broker or adviser to lower his fees. Make sure you understand what you're buying.

Of course, there's no way to guarantee that every investment decision you make will turn out as you had planned. But taking these steps will help you grow your portfolio over the long run.

Source: Truewealth Asian Investment Daily

[winston]

6 Actions for Shrewd Investing

By Chris Mayer

If you suffer from information overload regarding your investments, Bonner & Partners chief investment strategist Chris Mayer suggests implementing these six strategies from investing legend Peter Stormonth Darling:

1. Set aside as much as you can for long-term investing in stocks.

2. Buy shares in a small number of companies in which you have great conviction.

3. Do not look at prices every day or every week. “You will only give in to fear and greed.”

4. As in collecting, buy the best — avoid the junk.

5. Only buy companies you can understand.

6. Hold indefinitely.


Source: Bonner & Partners

[winston]

This is the only investment strategy I would teach my kids

Source: Daily Crux

http://thecrux.com/james-altucher-this- ... h-my-kids/

[winston]

Second Level Thinking

The second-level thinker takes many things into account:
1. What is the range of likely future outcomes?
2. Which outcome do I think will occur?
3. What’s the probability I’m right?
4. What does the consensus think?
5. How does my expectation differ from the consensus?
6. How does the current price for the asset comport with the consensus view of the future, and with mine?
7. Is the consensus psychology that’s incorporated in the price too bullish or bearish?
8. What will happen to the asset’s price if the consensus turns out to be right, and what if I’m right?

Source: ETR