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Whitewater Stock Market

Feb 20

Posted by admin in Stocks Mutual Funds

Ever done any whitewater rafting or canoeing? Long periods of tranquil river followed by short periods of terror. Suddenly the water grips your vessel and you are pushed and shoved by massive currents over which you have no control. Missing boulders you paddle as hard as you can. You almost lose everything and think to yourself, “Why didn’t I portage that last rapid”

Remind you of the stock market lately? Nice steady up moves of equity growth in your portfolio followed by gut-wrenching waterfalls when the market takes back most of your gains.

You got into that canoe because you wanted to. Did you have any lessons on how to control the ride or when it might be a good idea to portage? Maybe you didn’t or maybe you got the wrong lesson. You didn’t want to crash or drown.

The same goes for the stock market. You might have read a book on how to invest your money or worse yet you might have received information from a broker or financial planner whose reason for helping you is based on commission. If you are a small account don’t plan on getting much ?help?.

Brokers are not taught how to make money. They are taught to make recommendations that will not get them sued if you lose your money. The basic Wall Street tenet of Buy and Hold is totally wrong. Unfortunately, even the brokers believe it. When you have a stock or mutual fund that is going down they never tell you to sell ? ?you are in for the long haul?. WRONG. Of 33,000 stock recommendations last year only 127 were ‘sells?. After stocks have declined 50% they tell you to “hold”. You know where. Brokerage companies do not want to offend the corporate executives and mutual fund managers; they seem to have forgotten who is paying them.

When you are whitewater rafting you had better know how to guide yourself through or around the rapids to the calm water. When you invest in the market you must learn the first basic rule ? protect your capital ? so you won’t crash and lose all you have worked for. In canoeing it means learning when to paddle or portage. With investing it means learning when to sell, be in cash and out of the market. Know when to hold em, know when to fold em.

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8 Rules For ETF Success

Jan 31

Posted by admin in Investing

Managing a global ETF portfolio does not have to be rocket science. Follow these eight steps for a successful global ETF portfolio.

1) Liquidity First: Before you even think of building an investment portfolio, you should set aside about six month of income in a ?rainy day? account. This could be put into a money market fund or U.S. Treasury securities. Having this money set aside will ease your mind and allow you to be more open and creative with your global portfolios.

2) Separate Portfolios: you should separate your core conservative portfolio from your growth portfolios. With the core conservative portfolio, your top priority is capital preservation and growth is a secondary consideration. Your growth portfolios are more speculative with capital growth as the primary goal.

3) Really Diversify your Portfolios: You need positions in your portfolios that are likely to offset each other as unexpected events and market movements become a reality. This is not accomplished with different sectors ETFs or a mix of small cap, mid cap and large cap ETFs. Rather the goal is to have some investments that are on both sides of risks.

For example, if the US dollar declines, have some investments in precious metals or denominated in other currencies such as Switzerland or Australia or Singapore ETFs. If inflation heats up have some investments that hedge this risk such as timber, gold or Treasury inflation protected bonds (TIPs). If political events or policies in one country take a turn for the worst, it is helpful to have investments in other well developed countries to offset any loss of value.

4) You get the idea, spread your risk and avoid having one ETF account for more than 5-10% of your core portfolio. Be Careful what Countries You Pick: You need some guidelines to help keep you from getting carried away and having too concentrated a position in a particular country or region.

In particular, take a good look at the following: 1) the stability and overall political and corporate governance, 2) the legal environment, respect for contracts, low levels of corruption, due process and rule of law, 3) the macroeconomic environment including fiscal discipline and currency strength, and 4) political risks that could affect financial markets.

Keep in mind that the quality of the countries you choose to invest in is the primary but not the only factor. The price or valuation of a country’s stock market is also extremely important. Oftentimes the best time to buy into a country’s stock market is when it is beaten down but there are signs that its economic and political problems will sharply improve. If you have a long-term perspective, you might consider annuities specially structured for ETF portfolios.

5) Minimize Company Risk by using our “Buy Countries, Not Stocks” strategy that helps you minimize company risk. Instead of trying to pick the best three stocks on the Tokyo Stock Exchange, why not just minimize company risk by buying the Japan iShare ETF (EWJ) that tracks the Nikkei 225 and spread this risk amongst 225 Japanese companies. Or you could hedge your bets and do both.

6) Monitor ETF Country and Company Exposure: Be careful to look under the hood of ETFs to see where your money is going. For example, let’s look at the iShares MSCI Emerging Markets ETF. It invests in 26 different countries so it is natural to think that you will get broad exposure to all 26 countries. You would be wrong: 50% of your investment in this fund is going to four countries: South Korea, South Africa, Taiwan and China. In addition, incredibly, 7.5% is going to one company, Samsung Electronics of South Korea.

The same is true for the MSCI Europe, Asia and Far East (EAFE) index. It contains 21 developed countries but 48% of the money you invest would go to just two: Japan and the United Kingdom. Meanwhile less than 1% would go to Singapore and Ireland! Country specific ETFs such as the new China iShare (FXI) can also have a fair amount of concentrated risk. Although the China iShare tracks a basket of 25 companies, the largest 5 companies account for nearly 50% of your exposure.

7) Cut Losses with Trailing Stop Loss Policy and ETF Put Options: We have all been there. You buy a stock or fund and it appreciates in value rapidly. Then it stumbles and begins to decline. What do you do? Should you buy more, let it ride, or sell?

Save yourself a lot of pain and agony by following a simple rule. If a position ever falls more than 20% from its high, sell it immediately and reassess the situation. And if you invest in an ETF with a sizable downside risk, why not spend a few hundred dollars to purchase a put option as an insurance policy?

8) Rebalance Your Portfolio: At least annually, you need to make some changes so that you are not overly exposed to countries that have higher risk factors and volatility. One way is by selling some shares of your winners and increasing exposure to under performers. This accomplishes another goal, locking in gains and taking some money off the table. Remember, only a fool holds out for top dollar especially in the more volatile emerging market countries.

Building your portfolios with low-cost, tax-efficient ETFs is a smart strategy but don’t set it on auto pilot.

Carl Delfeld has over twenty years of experience in the global investment business with a strong background in Asia.

- Author of global investor primer “The New Global Investor”
- President of the global investment advisory firm Chartwell Partners
- Publisher of the Chartwell Advisor ETF Report and Asia-Pacific Growth
- Columnist on global investing with Forbes Asia: Global Gambits
- Former U.S. Representative to the Executive Board of Asian Development Bank
- Chairman of the global economic strategy think tank ChartwellAmerica
- Asian specialist with the U.S. Joint Economic Committee and the U.S. Treasury
- Former member of the U.S. Asia Pacific Economic Cooperation Committee
- Former investment executive with Robert Baird & Company and UBS
- Graduate of the Fletcher School of Law & Diplomacy with economics scholarship from U.S.-Japan Friendship Commission
- Exchange student at Sophia University, Japanese Ministry of Education Fellow at Keio Universi

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What is Swing Trading?

Jan 28

Posted by admin in Investing

Swing Trading takes advantage of brief price swings in strongly trending stocks to ride the momentum in the direction of the trend.

Swing trading combines the best of two worlds – the slower pace of investing and the increased potential gains of day trading.

Swing traders hold stocks for days or weeks playing the general upward or downward trends.

Swing Trading is not high-speed day trading. Some people call it momentum investing, because you only hold positions that are making major moves.

By rolling your money over rapidly through short term gains you can quickly build up your equity.

How does Swing Trading work?

The basic strategy of Swing Trading is to jump into a strongly trending stock after its period of consolidation or correction is complete.

Strongly trending stocks often make a quick move after completing its correction which one can profit from.

One then sells the stock after 2 to 7 days for a 5-25% move. This process can be repeated over and over again. One can also play the short side by shorting stocks that fall through support levels.

In brief a Swing Trader’s goal is to make money by capturing the quick moves that stocks make in their life span, and at the same time controlling their risk by proper money management techniques.

What are the advantages of Swing Trading?

Swing Trading combines the best of two worlds – the slower pace of investing and the increased potential gains of day trading.

Swing Trading works well for part-time traders ? especially those doing it while at work. While day traders typically have to stay glued to their computers for hours at a time, feverishly watching minute-to-minute changes in quotes, swing trading doesn’t require that type of focus and dedication.

While Day Traders gamble on stocks popping or falling by fractions of points, Swing Traders try to ride “swings” in the market. Swing Traders buy fewer stocks and aim for bigger gains, they pay lower brokerage and, theoretically, have a better chance of earning larger gains.

With day trading, the only person getting rich is the broker. “Swing traders go for the meat of the move while a day trader just gets scraps.” Furthermore, to swing trade, you don’t need sophisticated computer hook-ups or lightning quick execution services and you don’t have to play extremely volatile stocks.

We believe that the Swing Trading method is a better way for the individual investor to attain superior investment results through short-term trading in the stock market. This trading strategy has been carefully designed for the needs of the individual investor who does not have the resources that institutions and professional money managers may have.

How to Swing Trade?

To fully understand what swing trading really is, you first need to understand what up/down trends are.

Up Trend: Simply put an uptrend is a series of higher highs and higher lows. In other words, an uptrend is a series of successive rallies that extend though previous high points, interrupted by declines which terminate above the low point of the preceding sell-off. Often the high of the last “swing” in the trend will serve as support for the next low. These areas are circled.

Down Trend: Simply put a downtrend is a series of lower highs and lower lows. In other words, a downtrend is a series of successive declines that extend though previous low points, interrupted by increases which terminate below the high point of the preceding rally. Often the low of the last “swing” in the stock’s trend will serve as resistance for the next high. These are circled.

Long Swing Trades: Once an uptrend has been identified a swing trader looks for buying opportunities in that stock. This can be identified when the stock experiences a minor pullback or correction within that uptrend. The swing trader then activates a trailing buy-stop technique. If prices break out above the trailing stop loss, you will be stopped out and long in the trade. If prices decline, your buy-stop will not be touched.

Short Swing Trades: Once an downtrend has been identified a swing trader looks for selling opportunities in that stock. This can be identified when the stock experiences a minor rally within that downtrend. The swing trader then activates a trailing sell-stop technique. If prices break down and fall below the trailing stop loss, you will be stopped out on the short side. If prices rally, your sell-stop will not be touched.

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Costa Rica Property for Sale – Prices up 300% in 10 Years, and more to come

Jan 26

Posted by admin in Real Estate

If you’re looking to buy property as an investment, then the property for sale in Costa Rica offers you the chance to make substantial gains in the coming years – with low risk.

Buying Costa Rican property is inexpensive and easy – and prices are on the move.

Here we look at Costa Rica property for sale, and the importance of location – which will help you make even bigger capital gains on your investment.

So, when you’re looking at the Costa Rican property that’s for sale, what do you need to consider for making the big capital gains?

The Last 10 years have Shown 300% Growth

The biggest change in the Costa Rica property for sale during the past decade is that prices have doubled, or tripled in many locations ? and the good news is – it’s still cheap!

Costa Rican property prices range considerably:

. 1/4-acre beachfront home sites ranges from $50,000 to upwards of $200,000.

. Beachfront homes range from $165,000 upwards.

. Seaside condominiums range from $55,000 to $250,000 – depending on size and geographical location.

. Just inland – maybe a 10-minute walk to the beach, two-bedroom, two-bathroom, homes start at $40,000 – and single-family building lots start at $6,500

. Less expensive deals can be found in more remote areas – such as the northern Osa Peninsula in Costa Rica’s southern region.

Popular Places

Most realtors agree that the best turnover, and fastest-selling properties are generally located in the Central Valley, and along the Pacific coast – and it’s here that you can get the best capital gain on your investment.

Although the Central Valley covers just five percent of Costa Rica, it contains the vast majority of the country’s population. Therefore, property prices around the greater metropolitan area (including San Jos?, Alajuela, Heredia and Escaz?) – where many of the country’s businesses and services are located, tend to be among the highest in Costa Rica.

Generally, the farther away from town you go, the lower the prices of property for sale will be. The exception to this rule is the central and northern Pacific coast – where a number of major developments are underway.

Property for Sale in Costa Rica – the Secret of Big Returns

Here you need to get out your map of Costa Rica, and look at areas set to increase in value – simply watch for changes in the infrastructure that will boost property prices.

Buying property that’s for sale in Costa Rica can give you great returns – but if you build in advance of important building projects that will enhance local amenities – and the quality of life, will make you even more money.

So, what sort of changes in the infrastructure are we referring to? Let’s look at three projects currently underway that look set to increase property prices in adjacent areas:

New Freeway: Scheduled to be completed shortly. The freeway will link the largest cities to the Pacific Coast – generating an increased flow of traffic and buying interest in areas with easy access to the freeway.

New Marina: The largest marina in Costa Rica will be completed shortly in Quepos.

New Airport: A new international airport is coming to the town of Orotina in the near future.

When buying property for sale in Costa Rica, being in ahead of the crowd – before an important part of the infrastructure is completed, will enable you to take advantage of the increased demand for real estate in the areas that these changes will benefit.

Buying Property that’s for Sale in Costa Rica is Straightforward

The government encourages investors ? they place no restrictions on foreigners. In fact, foreigners are entitled to the same ownership rights as Costa Rican citizens. When you factor in low costs, and no capital gains tax, overseas buyers will continue to buy the property that’s available in Costa Rica.

Property for sale in Costa Rica as an investment

Buying property currently for sale in Costa Rica can be a rewarding experience. The future looks bright – as the big fluctuations in property prices that you see in the United States, doesn’t happen in Costa Rica.

Based on past history, prices either go up by at least 10 percent per year – or at worst, stay the same. When the real estate market is in a downturn, properties don’t tend to go down in value – they stay static – making this a low risk way to invest.

Currently, the chances of a downturn in the market now look slim ? due to the rising number of investment property buyers.

If you want to double or triple your money in the next few years, think about the Costa Rican real estate market – and buy some building lots or property.

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Lies, Damn Lies and Mutual Fund Returns

Jan 12

Posted by admin in Stocks Mutual Funds

How many times has this happened to you? You’re at a social function and the conversation turns to investing. Pretty soon, people are comparing how well their investments are doing. As you might imagine, being an investment advisor this happens to me a lot. However, I recently had an experience with it that startled me.

Bob, one of the guys I was chatting with at a party, asked what kind of returns I had made for my clients with my methodical no load mutual fund strategy during the past year. I replied that they had unrealized gains of slightly over 29%, after management fees, for the 8 months that we were invested.

Bob countered with a smirk that he had made a 40% return. I raised my eyebrows and told him that was darn good?and suggested that maybe he ought to be managing my money. At that point we were interrupted and, as the evening went on, I began to wonder exactly how Bob had gotten his great return.

I cornered him a little later on and, upon digging a little deeper, the story looked somewhat different. Yes, he had made a 40% return on a mutual fund he had some money invested in, however, we were comparing apples and bananas.

He had a total portfolio of $100k. Being cautious, he had invested only $10k into a mutual fund, from which he profited $4k after he sold it. The balance of his portfolio ($90k) was sitting in a money market fund earning some 0.35% per year.

So, while he had made 40% on 10% of his investment, he had only made 4.35% on his whole portfolio. My methodology was also focused on protecting my clients’ investments and it had increased their entire portfolio 29% (unrealized). That would be an apple to apple comparison when measuring my returns against his. Bob’s one fund realized 40% return. However, had I approached it the same way Bob had, I could have described one of the funds I used that had realized over 49% for the same period.

Actually, Bob’s not-so-good-news story didn’t stop there. Bob admitted to having followed the losing Buy and Hope strategy through the bear market of 2000 and had finally sold out at a 50% loss a year ago, before committing $10k to a mutual fund investment.

I was pleased to be able to tell him that my methodology had gotten my clients out of the market before the bear took his big bite, and they suffered only minimal losses before finding safety in money markets accounts. And when my trend tracking figures directed us to move back into the market, they still had most of their money poised to start earning for them again?which it did and very nicely, thank you.

The moral of the story is to look past the surface and don’t take any numbers thrown at you at face value. Remember, most people returning from a weekend in Las Vegas will shout about their winnings and mumble about their losses.

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3 Truths About Tax Lien Certificate Investing

Jan 5

Posted by admin in Real Estate, Taxes

Truth #1 ? It is going to take some work on your part to succeed.

If you have done some research into tax lien certificates and tax deeds you may have heard some so called ?gurus? bragging about how easy it is to make a fortune. While it is easier and safer than many investments, it doesn’t come without some work on your part. You need to learn about the business and you need to inest some of your time to succeed. The good news is that with less work than most traditional investments you can get substantially higher returns while exposing yourself to less risk.

Truth #2 ? There are hidden treasures for those that are persistent. You’ve heard the stories I’m sure. An investor buys a tax lien certificate at auction, the owner doesn’t redeem, and the investor ends up with 25 acres of land for the low price of 68 dollars.

First let me say that these sorts of things do happen and more often than you think. I personally know the gentlemen who bought the previous piece of land for 68 dollars. But you can be sure that it did not happen the first time at the auction. With some persistence and a little bit of experience you can get better at finding the jackpots.

Truth #3 ? Most properties at auction do have real value. There are a lot of reasons that a property can end up at auction. The common misconception is that most of the properties do not have any real value. True ? there are properties on the auction that seem worthless, and to many, they are ? but to the creative investor they are literal gold mines.

Think outside the box. Put your mind to work and you’ll discover that there are a lot of things you can do with the property that no one else wants. By being creative you give yourself an advantage over 99% of the people at the auction. Now cash in on it!

Invest some time and money into the business and you will discover that there are huge returns waiting.

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Investing in the Real Estate Market

Dec 31

Posted by admin in Real Estate

Many people market real estate investing as your key to financial security. Is it? Will investing in real estate let you live the dream life? How does real estate investing work over other forms of investment?  First you have to consider that there are different ways to invest in real estate. Here are a few of the basics:

1. Investing in tax liens. Many boroughs and counties sell overdue tax liens to companies at reduced rates. These position the buyer to either collect a large profit on money invested in the lien (when the overdue tax is paid to the buyer) or to obtain the property in foreclosure. Note that in buying a lien, you in essence become a debt collector. Also, you must be willing to go through the foreclosure process to obtain the property should the homeowner not pay.

2. Flipping properties. This involves buying run-down or foreclosed houses significantly under their market value, fixing them up, and reselling them for a profit. The upside is that you do not have tenants or homeowners to evict like you would in owning a rental or tax lien. The downside is that if the real estate market becomes bloated with inventory, you could be holding your house for a long time before selling it.

3. Renting properties. Renting to people the right properties (meaning location, quality, and design of the properties) for an extended period of time can be a good financial investment. If you buy the properties below market value and with the right amount of rental income, the tenants will pay the mortgage for you plus provide some positive cash flow. Once the properties are paid for, most of the rent can go into your pocket (some will have to go towards upkeep), and you can cash out by selling the properties. When renting out your properties, you can either manage the properties yourself or you can hire a property management company.

4. Wholesaling. This involves finding houses that are well below market value and selling them to other real estate investors for a fee. If the contracts are properly structured, you do not have to do anything to the property itself other than be a middle man. Is real estate investing better than other forms of investment? It really depends on your skills and your desire to work for your money. With a mutual fund you have few responsibilities other than selecting and monitoring the fund. Real estate investing generally requires more time and energy on your part, being more like owning a business than simply putting your money into an account each month. Because of that, you will want to start off slowly.

Skills that can be beneficial in real estate investing include good research skills for finding the right properties to buy, self-discipline, networking skills to find others in your area from which you can learn and develop relationships between, debt-management practices and organizational skills.

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