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Invest, Be Wrong, And Make Money In The Stock Market

Aug 18

Posted by admin in Stocks Mutual Funds

I have been trading for several decades
and was an exchange member and floor trader for 17
years. You learn fast there or you go broke in a
hurry. As you can see I managed to hold my own
for a few years until I found the secret and
started to become a successful trader. Every
professional trader I know knows the one great
secret and that is to keep your losses small.

We all learned that when we took a position ?
either long or short ? that we better be able to
jump out if the trade was not going our way.
Many of my friends were scalpers. That means
they were trading for just a few ticks and every
night went home flat. Flat is no positions at
all.

Others, myself included, took a longer look
and planned to hold a position for a period of time.
That could be several days or weeks. If you were
right the longer you held on the more money you
would make.

The general public seems think that
exchange members know everything and always made
money.Tain?t so. Many traders were wrong more than
50% of the time. Huh? Yes, fifty percent. My account
had losses 40% of the time and 20% were scratch
trades (neither winners nor losers).

You ask, ?If you are out of the money
60% of your trades how can you make money?? This
is what every professional knows: Keep your losses
small and let your profits run. How many times
have you heard that one? BUT how many times have
you ignored that rule?

At the end of the year when you
analyze your trades you find that you made $3.00 for
each $1.00 you lost you will show a nice big profit.

I don?t care what business you are in
you don?t put your whole wad on a single outcome
and stick with it until it either works or go broke.
That is what brokers and mutual fund managers
want you to do. They want you to buy, but never sell.

It is a tragedy for the small
investor today that mutual fund families are putting
in selling restrictions to discourage investors from
dumping funds that are headed down. Many require
long holding periods and if you sell prior to
that time they charge an extra fee of 2%. They
give lame excuses that I know are not true for
doing this. Never buy any fund or trade with any
brokerage company that has that kind of rule.

It is cheaper to pay the 2% or whatever
fee there is and get out than hang around and lose
20% to 40% of your equity. Look back at 2000 to
2003. This can happen again despite what your
broker tells you.

Be wrong and run home with most of
your money. You still have enough to invest in a
better opportunity. If you are disciplined to get out
of any bad situation early you will end up a
rich person.

Al Thomas\’ book, \”If It Doesn\’t Go Up, Don\’t Buy It!\”
has helped thousands of people make money
and keep their profits with his simple 2-step method.
Read the first chapter at http://www.mutualfundmagic.com
and discover why he\’s the man that Wall Street does
not want you to know.

Writen By : Al Thomas

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Taxation Of The Sale Of Your Home

Jul 18

Posted by admin in Taxes

Most home sellers are very excited on closing day. They anticipate seeing a very large check, usually the largest check they will see for any type of possession or investment they have sold. But, come the following April 15th, their accountant will be asking whether there are any taxes that must be paid on the profit.

When the 1997 Tax Act passed, the home sale rules were completely changed. Many home sales that were not taxed under the old law may now be subject to tax. But many more people who might have paid taxes on the profits of their home sale under the old rules do not pay anything under the current law.

There are three tests to meet in order to have the profits from your home sale excluded from income taxes:

1. Use test: You must have lived in your home for any two years out of the last 5 years.
2. Ownership test: You must have used the house you sold as your principal residence for any 2 years out of the last 5 years.
3. Timing test: You must not have excluded gain from the sale of another home within the last 2 years.

If you meet all three tests, you can exclude from your taxes up to $250,000 of gain, if you are single, or up to $500,000 of gain, if you are married, filing jointly. If only 1 spouse meets the Ownership test, the full exclusion is allowed, as long as both spouses meet the Use test. Or if 1 spouse has done a tax-free sale within the last 2 years, the other spouse may sell and exclude $250,000 of gain. If 2 non-married persons own a house together and both live there, each can exclude up to $250,000 of gain. Even if you don?t meet the Use test because you did not live in the home for at least 2 years, you may still qualify for a partial exclusion. If you own a second (vacation) home, this tax law will not apply, because you will not meet the Ownership test.

Robin M. Gronsky has been practicing law since 1982. She is admitted to practice in New York, New Jersey and Florida.

As a former general counsel of a national mortgage lender, Ms. Gronsky is experienced in corporate matters, mortgage licensing on a nationwide basis, and all facets of real estate transactions.

Ms. Gronsky\’s practice is geared to maintain personal contact with her clients and develop a close-working professional relationship over a long period of time. This helps assure that her clients\’ work will be performed by the lawyer they have chosen.

Ms. Gronsky graduated magna cum laude from the State University of New York at Buffalo and received her J.D. from Boston University School of Law.

Writen By : Robin Gronsky

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Analyze Your Stocks And Double Your Profit

Jun 20

Posted by admin in Finance

An investor buys a share of stock by resorting to various approaches that validate his investment by reaping rich profits. Before investing, however, it is necessary for a value investor to study the financials of a business, so that the stock he buys at the company?s intrinsic value promises a greater return at its liquidation value (the value of a company if all its assets were sold). A typical investor would buy growth stocks that have an upward trend, and seem likely to keep growing for a long time. Whereas, a technical investor (also known as a Quant) makes decisions based upon the psychology of the market and related factors, which involve much higher risk but may prove to be more profitable, or, can conversely result in much greater losses. The fundamental analysis of any business can depend on various factors: efficient market theory, value and growth, growth at a reasonable price and the quality of the business.

1. Efficient market theory pertains to stocks being always correctly priced, as all the requisite information is available on the current price.
2. The stock market sets up the price.
3. Analysts decide upon the value of a company based on the potential for its growth.
4. Price and value may not be equal, due to certain irrationalities governing the market.

Value investors need to rely on certain stringent rules governing the nature of the stock which adhere to the following criteria:

1. Earnings: company earnings are profits after taxes and interests.
2. Earnings per share (EPS): the amount of recorded income (on per share basis) available to the company to pay dividends to stockholders, or to reinvest in itself.
3. Price/Earnings Ratios (P/E) ratio (having a justified upper limit): If the company\’s stock is trading at $80 and its EPS is $8 per share, it has a multiple, or P/E of 10. This means that investors could expect a 10% cash flow return:
$8/$80 = 1/10 = 1/(PE) = 0.10 = 10%
If it\’s making $4 per share, it has a multiple of 20 (20 times $4 equals $80). In this case, an investor might receive a 5% return (in the same conditions);
$4/$80 = 1/20 = 1/(P/E) = 0.05 = 5%
However, a low P/E is not an untainted value indicator.
4. Price/Sales Ratio (PSR): is the same as a P/E ratio, except that the stocks are divided by sales per share instead of earnings per share.
5. Debt Ratio: percentage of debt a company has relative to the shareholder equity.
6. Dividend yields above a certain absolute limit.
7. Book value ratio: comparison of the market price against the book value of the stock per share.
8. Market capitalization value: Complete total value of a company?s outstanding shares (Market price per share ? Total number of shares outstanding).
9. Equity Returns – ROE: Net income after taxes divided by owner?s equity.
10. Beta: comparison of volatility of the stock to that of the market.
11. Institutional ownership: percentage of a firm?s outstanding shares owned by certain institutions: insurance companies, mutual funds etc.

Learning to analyze one?s stocks and thus reaping the desirable profit is in fact a continuous process, as no amount of market efficient theories can ever predict a flawless financial return system. Even though one invests judiciously by studying the market, the over-valuation or under-valuation of stocks can often be determined by market emotions.

Joe Kenny writes for CardGuide.co.uk, offering the latest offers on UK credit cards, visit them today for some great credit card applications.

Visit today: http://www.cardguide.co.uk

Writen By : Joseph Kenny

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How To Avoid Mistakes When Investing In Shares

May 19

Posted by admin in Finance, Investing

The promise of making a lot of money has been heard by many, and many have found out that it just is not as easy as they had heard. They lost money – sometimes a lot of it. They then turned away from the stock market and ended up totally disillusioned about it. The truth is, they may have been somewhat confused about it in the first place. They may have thought it would come to them just like it did to others – without knowing the why?s or the how?s. Here are some strategies that you can use in order to help you to avoid the common mistakes that others have made.

Get A Realistic View

By looking at the market with your eyes open, you can come to understand not only the profit possibilities, but also the possibility of losses. The truth is that the higher the possible gain there is, that it is always associated with the increased likelihood of loss. The safer investments always bring a lower level of profit, and the safest investments have attached to them the lowest levels of profit.

Understand The Market

One of the greatest benefits that you can have to help you avoid a lot of potential pitfalls in your investments is to understand the principles of investing. In other words, read all you can about the process, how to judge a good stock, etc. The more you know about it yourself, the wiser you will be able to invest your funds – and hopefully see a profit. You will also be able to develop a worthwhile investment strategy – both for the short term and for the long term.

Diversify

It is smart investing to place your available investment funds into a minimum of 6 different kinds of shares. Some suggest that you go as many as 20 in order to diversify safely. Spread your investments into different kinds of stock (sectors) that are not related. This way if one type of market does not do well, then the other ones should. This enables you to still make money from some of your investment.

It is usually a good idea to diversify into more than just the stock market – at least until you really understand what you are doing. The smart investor will take a portion of their investment money and put a percentage of it into secure investments like trust funds which are solid investments, and possibly also bonds, which are the most secure, but do provide less interest.

Seek Counsel From Professionals

Unless you have money to just throw away, it would be a real good idea to seek help from someone who understands the market better than you do. There are professionals out there, financial advisors, brokers, etc., that are more than willing to help you build a solid portfolio for your investments. Their expertise can spare you a lot of unnecessary loss, and get you on to the right track to some solid profit.

Make Your Investments For The Long Term

While there is different thinking about the markets and how to invest, the general idea is to make your investments for the long term. Experienced stock market experts tend not to watch the market everyday, but only check on it once a month and many of them only quarterly. Watching it everyday leads to a lot of anxiety – since the market normally fluctuates a lot from day to day. Overall, though, it generally moves upward.

Joe Kenny writes for the UK Loans Store offering loans for UK residents and offer more information on secured loans UK and other loan topics available on site.
Visit Today: http://www.ukpersonalloanstore.co.uk

Writen By : Joseph Kenny

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Tips On How To Choose Winning Stock

Apr 8

Posted by admin in Stocks Mutual Funds

Learning how to use the stock market is always more than just a little tricky. But even then, being able to foresee what is going to happen in the stock market will always have a risk factor – you win some, and… Knowing just which ones to pick should not be left to mere guesswork, or \”hunches.\” Here are a few good things to look at when trying to find that \”just right\” stock for you to invest in.

Pay Attention To The Market

Anyone that does any kind of investing knows that you have to keep your eye on it at all times. It certainly will not take care of itself. So unless you have a stockbroker, then plan on checking the overall results of the company that you choose to buy stocks from. Unless you have a good memory, it may be a good idea to make some kind of chart to plot its stock trends, too. This will give you an instant overall view of the way your company\’s stock is performing.

Investigate Carefully

Unless you have a lot of money that you can just throw away, you need to be careful where you invest. Do a little homework. Being a success in the stock market takes a little more than blind luck. Here are three things that you should look at when considering what company to invest in.

* The History And Background Of The Company

It is always good to find out what is the reason that this company is doing so well. Ask yourself whether or not it is because of good leadership, overall quality in the products or services it supplies, or is it just a fad product, that will soon fade away? Ask yourself if there is apt to be a projected demand for whatever that company is offering; in other words, is there a reasonable expectation of growth in the near future?

Other things that you want to understand are the quality and integrity of the company. If you are not sure, or if that company is definitely involved with things that you do not agree on, stay away from it – there are many other ones to choose from.

* The Performance On The Stock Market In Recent Months

This is also a must. You need to study the way that their stock has performed in at least the last six months. See if you can spot a trend that goes in a generally upward direction. Be careful of companies whose stock explodes overnight – they can implode just as quickly, and there goes your money with it. Seek for a more even, but generally constant increase in stock value.

* News About The Company

This is a continuation of paying attention to what is happening. The stock market, and the companies behind it, changes everyday. Do weekly Internet searches for news about the company in order to detect forward motion, and whether or not it is staying a leader in its field. You can also be aware of negative events, such as a shakeup in CEO\’s, scandals, the misuse of funds, improper reporting of its finances, etc., anything that might mean you should take your investment somewhere else. Other news might deal with why some stock market watchers think that your company is solid, and a good investment – which is always good to hear.

Don\’t Put All Investments In One Company.

Finally, be wise and spread your investments over a rather broad base. Make different kinds of investments, too – don\’t put them all in the stock market. When you start to see problems in one, don\’t be afraid to make a decision and move your investment. Always be learning more about how to invest. You want to learn as much as you can from those who may know more than you.

Joe Kenny writes for the UK Loans Store, offering UK loans and offer more information on personal loans and other loan topics available on site.

Visit Today: http://www.ukpersonalloanstore.co.uk

Writen By : Joseph Kenny

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Gold Is Where Yo Find It

Feb 23

Posted by admin in Investing

There are many ways to own gold, many forms: jewelry, bullion, coins, mutual funds, gold mining stocks (indirectly) and ETFs (Exchange Traded Funds). The latter are similar to mini mutual funds, but usually have few stocks and they remain constant rather than have internal trading as mutual funds do.
So you can own gold. So what? Why bother when it does not pay any interest or pay any dividends? What is interesting to note that one ounce of gold today will buy the same amount of goods as it did 100 years ago. That item in 1906 might have been $1.00 and today the same item would be priced at $100, but when translated into ounces of gold the weight is the same.

Doesn?t that make you wonder? That is inflation at work. Gold is inflation proof. Man has had an ongoing love affair with gold since time began. Every culture has valued it.

Columbus didn?t set out to find America. He came looking for gold.

Gold is the only real store of wealth not the paper we call money. Dollars have depreciated about 50% in value over the past 18 years. It is hard to realize as it sneaks up on us that each day that our dollars are worth less in purchasing power. Wealth is purchasing power.

The Federal government prints money that has no backing other than their word. Each dollar is watered down as the printing presses turn. Every war is financed with paper money not gold. If wars were financed with gold there would be fewer wars.

People were not interested in California. It was too far and too hard to get to, but when the cry of ?gold? went up thousands made the journey to strike it rich. One enterprising man in San Francisco found out about the strike and did not head for the American River to pan for riches. He bought up every pan, pick and shovel in town and them went out to spread the word. The pans he paid 15 cents for he resold for $15. In a week he made $36,000. In those days that was big, big money.

Without gold I don?t think there would be an American California today as it was claimed by Mexico.

Alaska is another territory that brought the dreamers and schemers because of the lure of gold. Good digs were uncovered in 1949 and more in 1914. Thousands came to remain and settle this seemingly desolate country.

Men continue to search the planet for this elusive golden maiden. Very few find it. Others become entrepreneurs who make their fortune from the gold seekers.

How you seek your wealth is an individual choice, but the wise ones who do strike it rich convert some of the new found riches into the golden metal to protect their wealth from the attrition of inflation.

Al Thomas\’ book, \”If It Doesn\’t Go Up, Don\’t Buy It!\” has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he\’s the man that Wall Street does not want you to know. Copyright 2006 All rights reserved.

Writen By : Al Thomas

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My Broker Doesn\’t Know

Feb 23

Posted by admin in Investing

The market has been slowly (well, not so slowly in my case) coming down so I called my broker to find out what to do. And I thought I was confused.
He did have some suggestions such as this is a good buying opportunity so send in more money and we (catch that ?we?, but it?s my money) can buy some more shares and dollar cost average so when the market turns back up I will make a nice profit.

Problem is he doesn?t know when that will happen. I asked about selling my shares and waiting until ?we? saw it going up again and then I could buy back in. He definitely did not like that idea and told me I could not afford to be out of the market as I could miss the next big up move. He did not mention anything about missing the next big down move.

He gave me that worn out story about staying in for ?the long haul?. The truth of that story is it takes 30 years to wait it out and I don?t have that long. If I had been a shareholder in 1929 and not sold out I would have had to sweat it 25 years to get back to even. Even is not what I had in mind. Even doesn?t make any money.

One of my friends told me to ask him about the 16-year cycle of bull and bear markets. He seemed confused at first, but as soon as he realized I didn?t know anything he became the expert again and told me there was nothing to it. Later I looked it up and found out he was wrong and was BS-ing me so I would not sell.

Going back for more that 100 years there is a pattern of approximately 16-year bull and bear market cycles. The last bull cycle was 1982 to 2000 (OK 18 years, close enough). According to the cycle we are in the next bear phase may (I did not say would) last until 2016 or thereabouts. During those long term bear periods there are shorter term bull cycles. But you have to be smart enough to be able to see when those turns occur.

My broker who is (supposed to be) smarter that I am said it is not possible to time the market – just buy and hold. Isn?t he supposed to know this?

I went on the Internet and did a search about ?market timing?. I was buried with all the information. There are many ways to do it so I looked for the simplest one I could find as I did not want to be trading in and out and also did not want to watch to market all the time. Was there one that I could relax and look at weekly or even monthly?

I did see one called Two for the Money and showed it to my broker. He didn?t like it. Maybe because it involved equities that paid no commission.

I think I?ll get a new broker.

Al Thomas\’ book, \”If It Doesn\’t Go Up, Don\’t Buy It!\” has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he\’s the man that Wall Street does not want you to know. Copyright 2006 All rights reserved.

Writen By : Al Thomas

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