Investment Articles

Is your destiny, your financial future controlled by you, a family member, a financial person chosen by you or a total stranger?

In other words: Who’s in control of your investments, or your retirement account, of your MONEY?

These can be scary questions especially if you think you are not qualified to manage your own retirement account, create one or invest in the stock market. The truth is, I believe almost every single person can manage their financial future. Perhaps you need a little assistance, but you can not only do it, but probably do it better than almost anyone else.

Controlling your financial future involves just a few key factors:

• Time – are you willing to spend 30 minutes a week, perhaps an hour managing and developing your financial future? Your retirement account?

Yes, this means finding 30 minutes almost every week, perhaps skipping a TV show, but the reward is equivalent to paying yourself the “big bucks”.

• Method – invest some initial time to review software that can aid you with recommendations for what stocks, ETFs or mutual funds to buy and when; plus equally important when to sell and especially critical, when you should sell out and stay out of the stock market to preserve and protect your money.

The software should be flexible enough to meet your goals, your personality -conservative – moderate – aggressive.

Preferably the software shouldn’t require months to learn or even a college degree. Even then training videos at a reasonable cost should be available along with the opportunity to talk with a human being whenever you have a question – for free.

And the program should work with stocks, ETFs and mutual funds so you have full flexibility. It should allow you to manage your portfolio daily or weekly or even just occasionally.

• Understanding – what kind of future do you want? Just saying “more money” doesn’t cut it. You need to be specific, for example:

Money for a new house
A new car
Secure retirement
Vacation funds

• Recognize – there are pluses and minuses to having someone else handle your portfolio. They may have cookie cutter portfolios that you must fit into or so many clients that there is no time for true personal attention. Yes, some advisors can and do work with your specific goals and objectives, but you must check them out thoroughly.

Your company sponsored retirement account is most likely handled in the most generic manner and without your input and management will grow slowly and is apt to suffer whenever the market drops.

Thus, my suggestion is that the person to really control your financial future should be you if you have 30 minutes or so most weeks.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. 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

There is a difference between being afraid to invest and be cautious. When you are considering whether or not to buy stocks, invest in ETFs or purchase mutual funds for your financial future being afraid to act does nothing but insure that you will not be successful.

Being cautious with your investments is totally different from being afraid. Caution should be part of every investment decision. But there are precise ways to exercise caution so you can be successful with your investments and grow your money.

Growing your money is what investing in the stock market is all about. If you grow your money you accomplish many key factors including:

• Less stress because your portfolio or checkboo9k is expanding
• Comfort in knowing you will have enough money to live in retirement
• Comfort in knowing you have a financial cushion if it is ever needed.
• Knowledge you can dream about big purchases or trips and they can become a reality.

So how do you invest cautiously yet with confidence and knowledge that your money will grow? A few simple premises:

• Pick a proven method of analysis to guide you in your evaluations.
• Pick a software program that enables you to invest to meet your objectives.
• Pick a software program where help from a real human being is just a quick phone call or email away.
• Back test your investment strategies or ideas to make sure they are most likely to see going down the road.
• Pick a software program that makes reading charts clear and easy.
• Pick a software program that goes beyond charts and evaluates your stocks, mutual funds or ETFs on other factors, especially in comparison to the general market and other stocks, ETFs or funds.
• Use a software program that tells you when to get out of the market and preserve your money.

If you follow these principles the fear of investing, the fear of losing, will be diminished. Will it go away completely? No. We are all human and all afraid of losing but if you invest with caution and base your decisions on solid recommendations your likelihood for success jumps dramatically.

Will you ever lose in the stock market? Yes. Not every decision, even with the best of analysis is going to turn out right. But remember that a successful baseball play is one who bats over 300 which means he gets a hit one out of three times. A successful quarterback never throws each pass for completion, just the majority. On the other hand if you can score a gain on 60% or 80% of your investments while keeping those losing choices to a bare minimum your portfolio, your checkbook is going to see substantial growth.

You can see substantial investment success if you follow these key principles.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. 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

How do you protect your investments with stops? This is a good question. Should you sell your mutual funds, ETFs or stocks only when a strategy says so, even if it is a strategy updated weekly or monthly? Or should you set stops with your broker following the same stop rules as in your strategy, but letting them activate whenever necessary?

I usually set the stops with my online broker and if they execute mid-week on my weekly strategies, I simply wait until the weekend to get the signal of what action to take from my investment analysis software This way I am protected from major losses. This doesn’t work well, however if you set stops that are really tight, like one or two percent, because a fund, ETF or stock can rebound that amount when the markets are topsy turvey.

Let me give you an example: let’s say that my investment program recommended buying EWD and VALU. The ETF, EWD (ishares Sweden) has a stop of 4% and the stock, VALU (Value Line) also had a stop of 4%. With these somewhat tight stops set with an online broker the positions easily stopped out and were sold with the recent market gyrations. Both tickers began a recovery within about 10days and were climbing steeply in the few weeks afterwards. If the stops had been set to 6% they would have still been sold because the recent market drop was so extreme.

However the loss would have been minimal because the stops were used mid-week.

In other situations where the markets do not have extreme movements on an almost daily or every other day basis, stops can move you out of a position one day and then the same position recovers and soars ahead in the following days. Again, the solution depends upon the stop percentage.

In any case, as a “weekly” trader, if my stops with the broker close me out of a position mid-week I wait until the end of the week for my software to tell me what to do next. I don’t try and second guess what the program will recommend.

The hard part of this process is remaining positive. When you are stopped out, it means you took a loss, but the positive point of view is that your loss was minimized. The even more important factor to keep in mind is that if your strategy of buy-sell rules with stops is based on a thorough back test analysis and the history of this strategy has produced excellent returns, strong gains, then yes, a few losses should be expected, but the long term outlook is for further gains and more money in the bank or portfolio.

I said I usually set stops with my online broker, but I don’t set them for every position. If I knowingly have purchased a stock or fund for the long term, I won’t set the stops with the brokerage, but will follow the recommendations of my investment software if it says to sell, even if I have only owned the position a short time. In these situations my buy-sell rules have settings designed to hold a position a long time extreme situations where the market or the position is taking a dive.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. 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

A recent article in a noted financial magazine discussed the folly of market timing versus buying and holding good stocks. The author pointed out how a ten year investment in a strong stock could produce substantial gains, while admitting that buying and selling the same stock a few times during the 10 years produced almost twice the results…but only if you timed the purchase-sale correctly. In essence, with many examples and reasons, he shot down the concept of market timing while making his case for buy & hold.

The true folly of anti-market timing arguments is that they always focus on tracking particular tickers symbols and questioning the ability to buy or sell at the right time. You could argue that all programs that give buy-sell recommendations are market timing programs, but that would be stretching the argument way out. The advantage with some software is that they can tell you when a ticker is going down and when another ticker is outperforming your current holding, even if your current holding is still going up. This power means that losses are limited by your sell rules and gains become cumulative so as to far surpass results from simply holding an individual ticker.

The folly with taking a buy/hold approach has been fully illustrated with our recent recession and again with the recent turmoil and drops in the markets. News headlines during the recession pointed out how retirees had lost 40-60% of the value of their portfolios. The latest market swings have been almost as dramatic.

While many portfolios recouped a lot of their value when the markets swung up from the recession lows few, if any, fully recovered and then surpassed their pre-recession level to the same degree as the markets climbed out of the recession if they were still holding the same positions.

I know the recession hit my portfolio – but not nearly as bad as most because the software I was using told me to sell and move to cash. The same software then told me to buy just as the markets were swinging up so my gains were based on about the same value as before the crash.

The recent decline in the markets also triggered the software I use to sell and I moved 80% of my portfolio value into cash, placing me in an excellent position to obtain future gains as the market rebounds.
In other words, buy and hold means your stocks and your portfolio are going to jump upon a roller coaster ride. While I like riding the Space Mountain roller coaster at Disney World, I would rather my portfolio traced a route more like going on a scenic drive along a valley floor that has a few ups and down but is basically moving on a constant upward path – kind of like following the Missouri up river to its high mountain peak origins.

The key is not simply market timing, but rather to picking positions that are moving ahead better than others, even better than what your current holding is doing. This is accomplished by implementing:

• Relative strength analysis using alpha or relative strength momentum
• Implementing sell signals based on stops, ranking level and market movement – just to mention a few.

By selling to strength, limiting losses and exiting the market when risk becomes too great, your portfolio has a better chance for substantial gains with minimum losses.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. 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

Investment decisions should be based on solid analysis. Two of the many methods available to base your decision upon are ‘return’ and relative strength momentum as analyzed with an ‘alpha’ formula.

‘Return’ sounds pretty straight forward and is popular. In fact many chart programs are in effect illustrating the return of a ticker symbol simply by showing the movement of the ticker’s price. Either it is going up or down or perhaps gyrating nowhere. But normally there is a percentage change almost every day and if you bought and sold on this basis it would be easy to calculate your return just as you can calculate the return from previous days or history.

‘Alpha’ on the other hand is best used to try and predict the future movement of a stock, mutual fund or ETF.

Let me explain.

If you analyze a particular symbol that is part of a group of symbols using ‘return’ over a particular time period you will quickly and quite simply see which symbol has outperformed the others. You can take this a step further and say that the symbol with the best return for the past 10 or 30 days out of your group is the one to now buy. Investing in this manner can be very successful as the analysis indicates which symbols have the greatest growth or loss rate.

The difference between ‘return’ and ‘alpha’ is that ‘alpha’ is calculating not just the progress of the ticker symbol over your selected time period but it is comparing that progress, the change, to a benchmark like the S&P 500 and to all the other symbols in the group, and, most importantly, it is factoring in the rate of change and comparing this rate of change between all of the symbols in the group. In other words, ‘alpha’ is saying symbol X is moving at a more rapid pace than any of the other symbols and its pace also differs from the benchmark more than that of the other symbols in the group.

This concept of relative strength momentum analysis, of which ‘alpha’ is one means of calculation, can be used to predict changes. Because the analysis, or predictions, are calculating the relative differences between the ETF or stock symbols in your group the potential for accuracy and stronger profits are greater.

Personally, I have used ‘alpha’ as my favorite means of analysis for many years. But recently I decided to test ‘return’ to see which one would produce the best results. I ran tests from 1999 and from 2005 to the present. You might say I did a test drive to see if another model car would outperform the car I own.

Quite frankly I was amazed at the great results, the superb performance provided by ‘return’, especially when I incorporated a Market Exit signal into the analysis to pull me out of the markets when the S&P 500 was tanking.

However, the ‘alpha’ test drive still outperformed the ‘return’ and you might say, let it eat my dust. So I am sticking with my ‘alpha’ method of relative strength momentum analysis.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. 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

Staying prepared and ready to invest when the markets are down or rolling like a roller coaster is a challenge, but there are a few key actions that will help. There are obvious and the not so obvious steps to take.

When stocks or ETFs or mutual funds are sliding the question always is when will they land and when they do land will there be a deafening splat or will you and the markets pop upright ready to go?

The obvious get ready actions:

• Continue to monitor the markets at your normal pace whether it be weekly or daily.

• Pay attention to key news items like new housing starts, sales of existing homes, unemployment trends and the level of manufacturing. These indicators are important because when people buy a home they usually have to spend more money in the months ahead furnishing or fixing up their new home to match their desires and needs. The more employed mean there is more money going into spending pockets and when manufacturing is climbing employment becomes more stable and even increases which means more spending money in everyone’s hands.

• Review your investment software or other means you use to get by signals just as if the market were climbing.

The less obvious actions that will help you grow your portfolio are:

• Evaluate the strategies in your software or the settings in your charts. On a monthly basis for the last few months, or even weekly, which strategies (rules for buying and selling) had the least losses or even made money while the markets dived. Especially compare their results to the S&P 500 so you have a guidepost with which to compare all your groups and strategies. In this manner you will discover when groups and which strategies hold up when times get tough.

• Evaluate the groups or universes of stocks, mutual funds or ETFs you use for your investments. Has the climate changed so that different types will be more likely to climb in the future? If this is the case, have you put together a group of these potential ticker symbols? Unless you have kept a diverse selection of groups on your desk or in your software you are likely to miss the next group or groups of symbols that recover first from the current market slump.

Perhaps the biggest challenge is to keep yourself positive and ready to take action when the opportunity arrives. The easiest way to keep yourself ready is to remind yourself that investing is like going to the exercise club, jogging, hiking, swimming or playing tennis every day. If you skip a day or (gasp) a week you find yourself quickly out of shape and fighting to get back into your groove. It’s a lot easier to stay in shape and to stay prepared than to get back into shape or get back to a readiness level for increasing your portfolio.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. 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

A big investment pitfall can be summed up in one word: greed. A major challenge when investing in stocks, ETFs or mutual funds is to remain with a working system, a methodology that produces results.

Too often new or even experienced investors get caught up in the “investing game”, the hype about what can be, the success story flowing from some sensational, but self-promoting newsletter or advertisement. There are dozens of ways to invest in the markets, not just stocks or ETFs or mutual funds, but using options or margin, buying and selling commodities, are amongst the many.

The key, as I have previously written, is to learn what suits you best and then to stick with it. Find a software program that works for you, based on your available time and the amount of risk you can afford.

Too often situations crop up that tempt you to sway from your path. These temptations can be:

• A friend telling you about new ways to invest money• Volatile markets in which you aren’t recording gains but advertisements make it seem like going a different direction will make you bundles of dough• Publicity and reports about new trends, like technology or foreign investments that tempt you to change course or even abandon your present methods

This doesn’t mean that there are not other methods to investment your money; it just means it is not a simple as the promoters or friends make it out to be. Switching tactics takes time to properly figure and evaluate the best tactics. Switching to totally new types of investments or investing styles can involve weeks and months of learning and studying.

So the question becomes: is it worth the time? Are the tradeoffs worth it?

If the methods you are using for investing are not working when everyone else is making money then, yes, you need to re-evaluate. But if your current methods do work, then perhaps they just need to be tweaked to make more money or perhaps the grass is not greener on the other side of the hill and you should stick with what you have.

If you are not satisfied with the results of a particular software program or you must work to make it work with your lifestyle then, yes, start looking for another investment software program. Don’t be afraid to contact your current software provider or any new one to see if you can do better with the program; in other words are there ways to boost performance that you may not know of but the authors are willing to share?’

Simply switching to new ways or places to invest can cost you money because of lost time and investment losses while you are learning so proceed cautiously and ask lots of questions.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. 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

Reducing your risk during times of market volatility, or any time, can help preserve your portfolio. There are several ways you can achieve this while maintaining either an aggressive or conservative investment strategy.

A principle of investing is to minimize drawdown, the percentage your portfolio drops at any one time or between the market highs and the lows. If you invest with the buy and hold philosophy you will most likely experience dramatic drawdowns over the course of time, and while your portfolio may recover from these losses, if you need to cash out part or all of your money in the midst of these drops, you will suffer with big money losses. This is the underlying fault of the buy and hold concept.

The alternative to buy & hold is to be willing to trade and:

• Take profits• Cut losses to a minimum• Buy at the best opportunity

Using a good investment software program you should be able to set buy sell rules to help you reduce risk. Some of these rules may give you signals for when to simply get out of the markets, while others will help you avoid massive or even medium size losses (drawdowns).

Keys to risk reduction include:

• Standard Deviation – adding this type calculation to your analysis can help to reduce risk as sell signals are generated when a ticker drops too far from its “typical” deviation or up-down movement.

You can use standard deviation with many types of analysis: alpha, relative strength momentum, return…are just a few examples.

• Benchmark Exit – this signal will tell you when to quit investing and either move to cash or a safer position like bonds. The signal is triggered when a key index like the S&P 500 cuts down through its moving average (a moving average between 90 -150 seems to work best).

• Equity Curve – an equity curve based on a group of tickers can signal when to stop using a particular investment strategy set of buy sell rules. An equity curve uses the moving average of the strategies performance. A stop signal is generated when the performance line of the strategy cuts down thru the moving average line (a moving average of 100 works well in volatile times while 250 works during a long term upward running market).

You can even employ two or three of these risk reduction conceptions at the same time. You can have a strategy, for example, analyzing the performance of a group based on return with standard deviation and also look at the benchmark exit or the equity curve to be sure it is a good time to invest or a good time to use the particular strategy’s set of buy sell rules.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. 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

How can you tell the economy will get better? What about good buy opportunities in the market? Do they always exist?

There are many answers to these questions. Sometimes events cloud the overall picture. Sometimes there may not be good investments but getting prepared to make an investment is just as important.

If the markets are down and nothing looks good, but a major company announces they are buying another company or pouring money into a new project, that company is saying, “we think the future is great.” Does it mean you should buy that company or an ETF or fund holding that company, no, not necessarily. But you should view the news as a sign that some people in the business world see a strong future. On the other hand if there are multiple reports about different companies taking similar action then maybe, even if the markets are down or dismal, it is a time to be taking your own stake in the future.

Most news on the front page or TV is negative if not downright bad news. This makes it difficult to detach your emotions from seeing good or positive news and indicators pointing to opportunities. In this respect all the different books and articles about positive thinking are equally important to manage your investment portfolio. Without a positive and open attitude you may miss the news report that could result in either an immediate or future investment.

Some of the obvious ways to gauge the future of the economy come from the various economic reports that are release every week: housing sales, consumer confidence, inflation, and the list goes on and on. Many of these reports are good. Unfortunately the headlines about these reports are usually based on the first two paragraphs and not the entire report. Many times a report may sound negative but upon reading down into the nitty gritty you will find evidence of positive aspects.

What it amounts to is simple but often befuddling: be willing to look past today’s negative news to find indicators of the future. Look at the trends in your investment analysis software program so you are prepared to buy when the time is right. If you are using a software program this doesn’t mean just watching a single chart, but the trends of different groups or sectors of the markets and different charts to see how the all correlate and where they are pointing.

Check out an equity chart for your group or the S&P 500, perhaps with a 100 day setting to see what type of signal this chart is generating.

If you are keeping you mind grounded with solid facts and information you will almost always find there are investment opportunities and if there are none that meet your goals with your risk basis, you will be better prepared to act when the time is right.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. 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

How many times have you seen the markets crash and watch portfolios shrink like a never washed cotton shirt? Before the market dives there are three methods that can help you preserve your shirt and your cash.

With the aid of computers and many software programs you can activate key signals that can tell you when to exit the market before your portfolio becomes totally at risk.

• Equity Curve

• Benchmark Exit

• Ticker Rank + Combo Charts

Equity Curve – Michael Carr, in his book “Smarter Investing in Any Economy” writes about using an equity curve to signal when to stop using a particular investment strategy.

This equity curve chart is a type of moving average chart. When the price line of the group’s strategy cuts down through the moving average of the groups tickers, then a sell or “don’t use” this strategy signal is generated. In other words, this strategy is not making money and it is either time to switch strategies with this group, switch to a different group of ticker symbols, OR move to cash or bonds to safeguard your money.

In his book, Carr writes about an equity curve based on 250 trading days, but in turbulent market times an equity curve based on 100 trading days or even a bit less will provide more safety.

Benchmark Exit – this exit signal is similar to an equity curve or moving average but is based strictly on the performance of a major index. I prefer to use the S&P 500 (SPX) but the Dow Jones index or the Nasdaq index could also be used.

The signal is based on the price line of the index as compared to the moving average of the index. When the price line cuts down through the moving average or equity line of the index it is a signal to exit the markets and move to either bonds or cash. In my experience I have found a setting of 100 trading days works extremely well and has consistently moved me out of the markets prior to major crashes.

Ticker Rank + Combo Charts – this technique is a bit more complicated yet is still easy and gives very strong signals for reducing risk and keeping your money safe.

The first element of this method is to see where the ticker symbol of your holdings or potential buys stands in comparison to the performance of the benchmark in your group of tickers. For Example: Is the ticker you hold or want to buy ranked above or below the S&P 500 based on your method of analyzing the data (relative strength, alpha, return, etc.). If your ticker is below the S&P 500 then it is under-performing and is most likely not a good investment choice.

The next step in this method is to examine two key charts: moving average and full stochastic. Both of these charts should be giving out buy signals if you are going to buy the particular position.

If the ticker ranks below the S&P 500 and both charts are giving sell signals then the best course is to protect yourself by either moving to cash or bonds.

These three methods will enable you to avoid losing large chunks of your portfolio. You can either employ all three or just one or two to protect yourself.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. 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