Investment Articles

Selecting your method for Investing in the stock market can be somewhat scary. With today’s internet popularity a Google search will give you 16,900,000 results if you ask, “how to invest in the stock market.” The same question on Amazon produces 338 results. So what can you do?

I have previously discussed many aspects of investing and sources for selecting your trading method, but with all the resources available on the internet, printed books and eBooks, it can get confusing, if not overwhelming.

A few authors have pumped out not just one or two but many books advising you on how to manage your money and how to invest. So again, “What do you do?”

In this article and future articles I want to explore in more depth some of these sources and mechanisms for you to use in making your purchase and selling decisions.

The focus in this article is on books and web resources. The first thing to recognize and remember is that almost none of books or websites agree entirely with each other. Let me say this another way: no two books or websites are going to give you the same answer. This doesn’t mean their recommendations or methods are wrong, no, it just means they are different. It also means you need to invest in a way that makes you comfortable and fits with your goals and the amount of time you have for managing your investments.

You can spend hundreds of dollars buying books, and hundreds of hours reading books and websites. Magazines can give you a lot of the same information but you would need to read each issue for a year or two to accumulate as much information as equal to one book.

One of the first books I read was “24 Essential Lessons for Investment Success” by William J. Oneil. If nothing else, the book got me thinking and for that reason I believe it is good readying. (No, I am not associated with Oneil or his companies in any way).

When I go to my local bookstores and look for books on investing there are not 338 titles, 35 if I am lucky but usually just a dozen or so; and who picked them? Someone in marketing or someone familiar with successful investing?

You can also go directly to a publisher’s website that specializes in investment books, like Traders Press, http://www.traderspress.com

What I recommend is reading a few books, scanning and reviewing a few websites to educate yourself on different methods of investing. Probably a few of any of the top 20 books on Amazon (with reviews you like) would give you a good foundation.

Remember that almost all websites and authors want to sell you something. I just mention it because you want to feel comfortable with how you are going to make your investment decisions before committing yourself.

Author Raymond Dominick has been investing in the markets since his teenage years. He is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana.
View his software at: http://www.dynamicinvestorpro.com

Picture yourself as clueless about the investment world looking for the best investment guide, a guide that could get you up to speed on investment basics and more with little effort on your part. If you don’t know stocks from bonds and mutual funds, I think you would agree that if you could find the right guide that it would be the best investment you could make. With so many books out there, how do you sort out the best guide, one that talks to YOU?

There is a world of difference between the best investment guide and a get-rich-quick book. Many popular publications on the subject of investing are timely in nature and are soon outdated or worse. For example, people who bought some of the popular real estate investment books written in the years leading up to the 2008 financial crisis were sorely mislead, and soon bankrupt if they followed the advice given. The best investment guide for most people focuses on investment basics and sound investment strategies that don’t change from year to year.

In sorting things out, a good way to get a handle on any non-fiction book is to leaf through the table of contents. Does the publication cover the subject areas of interest to you, in a sequence that seems to make sense and is easy to follow? Most people need an investment guide that starts at the beginning and assumes that the reader is a new student to the subject with little prior knowledge of the subject matter. Then it progresses step by step from the basics to investment strategies that work in any economic environment.

There is no reason in the world why learning needs to be boring or difficult. The best investment guide will keep the reader’s interest because it is written in a down-to-earth fashion in plain simple English that’s easy to understand. For example, bonds and the bond funds that invest in them are an investment alternative that most people should consider, but few understand. If this subject is introduced using a real-life example of one person lending money to another virtually anyone can relate to it and get the picture.

An investment guide written for people without a background in finance should first cover the basic financial characteristics common to all investments before getting into specific areas like stocks and bonds. Every investment in the world can be stripped down to its basics in terms of what it brings to the investor’s table. Deciding whether an opportunity is right for you is simple if you know how to compare its investment characteristics with your needs for liquidity, safety, profit potential, and other factors. With these basics covered, our best investment guide then turns its focus to the specific investment alternatives of interest to all average investors: like stocks, bonds and mutual funds.

At this point in the learning process the average person should have a handle on their investment options, and is ready to progress into investing concepts and investment strategies. After all, to succeed and make money as an investor you also need to know how to play the game. The world’s best investment guide, if you can sort it out from the others, is really a complete guide to investing for beginners that starts with investment basics and takes you all the way to the finish line.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

Modern Portfolio Theory and related hogwash

When I watch financial news channels, it always strikes me as a little odd when commentators are asked to interpret the latest economic statistic to predict the fate of the economy and the stock market. They willingly oblige, sounding as confident as ever, and back their claims with charts and statistics.

But time after time, their predictions turn out to be just plain wrong because trying to predict an economy as complex, large and globally-linked as ours, is almost impossible.

Most economists are trained to glean statistical trends from mountains of historical data, and then develop predictive formulas. Many have even won the Nobel Prize for their efforts. And yet, these formulas have caused much investment misery over the years.

Modern Portfolio Theory

Developed in the 1950s, Modern Portfolio Theory (MPT) was one such concept that was all the rage in the 1990s and most of the 2000s. It assumed a world where share prices accurately reflected the company’s worth, and where all investors acted in their own best interest and rationally all the time (if you’ve observed stock prices and been married for any length of time, you’ll automatically see the folly in this.)

With reality safely banished, the model analyzed and correlated trends and went on to create all kinds of beautiful mathematical models. Then all you needed was a computer program to construct the perfect portfolio. Sounds nice, doesn’t it?

MPT and Me

I came across MPT in the 90s when my employer at the time gave me the program to construct model portfolios. All I had to do was input my client’s existing investments and his responses to a simple risk-tolerance questionnaire, and press enter. After a few seconds, a beautiful chart would appear, with an upward sloping perfect portfolio line.

But I kept running into a problem. You see, the program would repeatedly recommend assets that fared well in the past. But that as we know, presents a number of problems.

First, only a few assets would dominate the portfolio… so not much diversification. If small cap stocks did extremely well for the last 10 years, the model would suggest an 80% allocation to small caps. Absurd!

Second, it would recommend putting a lot of money into an asset that had already seen tremendous appreciation. Like the dot com stocks in 1999, investing after something has increased a lot in value portends disaster.

It was frustrating to work around the model’s constraints while trying to put together a common sense portfolio for my clients. For me, MPT, with its beautiful charts, was a total waste of time.

Fed up, I abandoned model-based investing… and consequently avoided huge losses in the mortgage meltdown of 2008.

Instead, I started studying investment books – now a lifelong vocation for me – for insights from star investors like Warren Buffet, John Neff, George Soros, Peter Lynch, and many others.

Learn to Pick Value

Getting back to the financial news commentators – their predictions are of no more value than the esoteric formulas of the Nobel Prize winners.

Fortunately, we don’t need either of them to do well.

You need to learn what makes something more valuable in the future. Is it a growing income stream? Is it diminishing supply?

Be it fine art, classic autos, stocks or comic books – the economy may impact their value in the near term, but if you get it right, you will have a winner over the long term, no matter what the economists think.

To succeed, learn the lessons of the masters, learn from their successes and failures. Successful investing doesn’t require a Ph.D. and complex models. All it needs is common sense and a little math to help you along the way.

Visit http://onthemoneyradio.org for weekly commentary and money advice that covers the entire financial spectrum which also airs on my weekly radio show, “On The Money!”

Steven L. Pomeranz, CFP is a 29 year investment management veteran and host of “On The Money!” which airs on NPR station, WXEL in South Florida. He concentrates on serving high net-worth individuals and has been named one of the Top 100 Wealth Advisors 2007, by Worth magazine (October 2007 Issue), honoring America’s premier financial and wealth strategists.

“He who has the gold, makes the rules”, so say many investment books. Being older than printed money and stock exchanges Gold can be a powerful hedge against inflation. In this rapidly fluctuating environment there is one gold investment that’s as solid as a rock – American Golden Eagle Coins. But why would you consider American Gold Eagle coins as part of your portfolio? Let’s look at the main reasons.

U.S. Government Guarantee

The U.S. government guarantees the weight, purity, and content. This unique guarantee ensures that the coins are recognized world-wide as America’s official investment-grade gold bullion. Additionally gold eagle coins are accepted globally in all investment markets.

Performance

Golden Eagle Coins consistently hold their value offering a stable investment. In volatile financial times this makes investing in gold very appealing as price often moves independently of stocks and bonds. If you are looking to a prosperous future consider gold as way of improving your portfolio’s overall performance.

Liquidity and Privacy

Golden Eagle Coins are really easy to buy and arguably as easy to convert into cash at most bullion dealers in part due to the U.S. Government Guarantee and global recognition. When you sell you can sell with peace of mind knowing there will be minimal delays and your sale (and indeed you original purchase) is private and non-reportable.

The Design

Gold is a lustrous and beautiful metal and the design of Golden Eagle Coins ensures none of this beauty is lost but significantly enhance. Being minted in 22-karat gold the design of the coin is inspired by Augustus Saint-Gaudens, the famed American sculptor. The $20 gold coin is considered one of the most beautiful coins ever produced. So these coins offer a fantastic investment and a real physical sense of tangible beauty.

With the uncertainty in the world, it makes a lot of sense having some of your investment portfolio in gold. When you’ve decided to invest in gold ensure you choose a reputable dealer preferably one that is recommended. Get informed by reading investment books and ensure any purchases include certificate of authenticity (COA). Gold’s everlasting scarcity and desirability ensures that it time and time again beats established investments.

Want to know more?

http://www.mygoldeaglecoins.com

Are you new in the world of trading and investment? Are you a trader or an investor who has been in the market for a while and yet is still on the red in his portfolio? If yes, then it is a must that you reflect on the mistakes the newbies make.

At the beginning of my trading journey, I lost $10,000 despite spending $20,000 for attending many programs, subscribing to trading tool websites and buying trading and investment books. I kept asking myself: how can I improve my trading and investment? The first step that I took was to review what mistakes I and other new traders and investors made. Here they are:

1. Fail to overcome fear and greed.

The biggest enemies of every trader and investor are fear and greed. Fear prevents people from taking action when opportunity comes. Greed stops them to get out after making small profits or when the market goes against them. Remember that FEAR is False Expectations Appear Real, and that GREED is Grasping Richness in Extreme Excessive Desperation. Newbies should learn to be emotionless while they trade and invest.

2. Follow a trading or investment program or a coach blindly.

Being newbies, they are easily persuaded to follow one theory. If they attend a program with a charismatic person, they might believe he is smarter than them and thus worth to be trusted.

3. Have no clear plan.

When newbies enter the market, most of them have no clear plan regarding how much they aim to earn and when they should get out. By failing to calculate the risk and reward before entering the market, they let their fear and greed lead them to the disaster of losing their capital.

4. Know it all.

Once newbies learn the techniques and approaches, apply them and see the initial winning, they tend to be over-confident. They tend to stick with that winning formula and fail to improve their skills, and never question that this initial winning is only a coincidence instead of a result of a valid formula. Then after losing money, many still insist on their proven approach instead of reviewing and improving it.

5. Lack support.

Many newbie traders or investors have no support from their close friends and/or family members. As a result, they feel even worse when they lose money because of the criticism they receive. Emotionally battered traders and investors make even worse mistakes.

6. Fail to do the homework before trading.

Newbies who have initial success tend to become less diligent in spending time to read, listen to the news and do the fundamental and technical analysis. Market condition changes daily. Spending a few hours to analyze what moves the market is a must before trading.

7. Follow market analysts (experts) blindly.

While reading or listening to the news with various analysts giving their opinions, newbies need to do further analysis instead of blindly following those opinions.

8. Fail to preserve capital.

Warren Buffet has two rules. Rule 1: Do not lose money. Rule 2: See Rule 1. If those rules are held by the world number 1 investor, should newbies consider to put those rules as theirs? Very often, when newbies buy options they let them expire or when they buy shares they don’t buy put for their protection.

9. Fail to sharpen the saw.

No trading or investment program has all the answers people need for their trading and investment. They still need to sharpen their skills by reading books, joining forums and attending courses.

10. Have no trading and investment record.

Recording every trading and investment with the details of reasons of buying and selling them allows newbies to learn from their own experience. Recording their successes and failures is one of important disciplines to succeed in the world of trading and investment.

Life is too short to make all of our mistakes. The cheapest way is to learn from others so that we do not need to experience those mistakes ourselves.

Perhaps you can add to the above lists. However, do not dwell in your mistakes but move on to the next step: finding solutions to every mistake you make. Once you find the solutions, put them into practice. It is not how much you know that will make the difference in your trading and investment but how much you put into practice. Remember that all the great traders and investors were once newbies.

Learn US Equities Trading

http://www.ConradAlvinLim.com

If you are new in the world of trading and investment then you need to get all the tips that will save you from losing money and indeed make money. Here are the seven important things you need to prepare:

1. Invest in yourself. Reading trading and investment books, taking courses and finding the right coach are ways to implement continuous learning. Just like an athlete before going to the Olympics, he spends so many hours to prepare for the battle mentally as well as physically. Practice with virtual trading.

2. Have a positive attitude. If you ask professional traders and investors what the ingredients to win the battle are, they will say 80% psychology and 20% technical skills. Thus it is important to master our mind and feeling while we trade. All traders or investors experience defeats. Some are never able to live with the consequences and quit while other raise and make lots of money.

3. Know thyself. When you know your personality, risk appetite, interest of industry and company then you can create clear objectives in your trading or investment. You cannot be other people or compare yourself to others. You do not compete with anyone except yourself. When you enter the trading, you will understand more about yourself – fear, greed and other qualities of you will come to surface. Accept that as a part of journey to understand yourself.

4. Create clear objectives. You need to decide to be a long or short term investor. What your targeted profit, risks-rewards probability and exit plan are. This needs to be clearly stated before your enter the trading, otherwise you will let your emotion runs you.

5. Pick the right horse. We cannot buy every share in the market. We can only buy a few that we can afford. Many shares look attractive; which ones do you choose as your winning shares? Remember you do not marry your shares. It means that when the shares do not meet your criteria anymore then you must change with others.

6. Be humble. It is important to be humble and candid so that you will admit mistakes and keep learning from your own experience and others.

7. Trust your instinct. After you analyse fundamental, technical, news and market condition, you need to trust your instinct. You will know you make the right planning when you feel peaceful with your planning. However, when your instinct alarms you, stop. The more you trust your instinct, the more it will equip you to be better trader or investor. As you prepare yourself for the trading, you will gain confidence and thus you will have a better chance to make money.

Learn US Equities Trading

http://www.ConradAlvinLim.com