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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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Why Women Make Better Investors than Men

Feb 14

Posted by admin in Investing

Being involved with a company that trains people how to actively trade in the stock market. I get to see first hand the success or failure of our clients. Eighty percent of our clients are male. But I?d wager that eighty percent of the successful stock traders are women.

Based on this experience, I began to wonder why is it that women tend to be better investors than men. I thought about it over and over, and I could not ignore the facts. Women make successful investors.

But why? I think it comes down to three simple words: EGO, EGO, EGO. The one thing that most men have in common is a big ego. Men tend to let their egos make their decisions for them. They hold when they should sell. They buy in for fear of missing out on that one big opportunity. In other words, they invest not to get the best deal out of the market but invest so that they look good (or not look bad).

Usually when people think of investing, they think of taking chances and risks. But the truth is that investing has much more to do with emotional intelligence than most people realize. Emotional intelligence is the ability to think objectively about a situation and not get too emotionally involved in it. Women, in general, possess a high emotional intelligence.

This quality makes women great investors. Rather than investing according to what will make them look good, women will invest according to a plan?not according to what mood they are in or whether they will be ?right? or ?wrong”.

Investing is not about being right or wrong. It’s about making money. Women are able to put their egos aside in ways men have trouble doing. This ability to set their ego aside makes women great investors.

Need proof? Ask yourself this: if a man and a woman are lost on a trip, who is more likely to stop and ask for directions? Women are more likely to ask investment questions until they completely understand the concepts. Men, on the other hand, can be too afraid to ask the necessary questions because he may look bad doing so. Women tend to come to investing with a mind to learn. And when they learn, they execute solid plans. Men can be heard saying they ?know that a company is good?, whereas women can usually tell you why the company is good.

As more and more women turn to investing, I think we will see this trend of women outperforming men. A woman’s ability to put her ego aside already gives her the upper hand in investment strategy.

And because women on average still get paid less than men (a situation that needs to change-pronto!), women can use their inherent advantages to invest more and work less. So men can go out, work hard, and earn a lot of money, whereas women can invest more, work less, and earn a lot more money.

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A Guide to Mutual Funds

Jan 23

Posted by admin in Stocks Mutual Funds

If you’ve been thinking about getting into investment but aren’t sure what you should invest in, you might want to consider looking into investments in mutual funds. These funds are designed to provide a diverse investment opportunity for the shareholders who have purchased shares in the fund. They can be used as an easy way to create a diverse investment portfolio, or they can be used to accent your own portfolio with securities that have been chosen by the creator of the mutual fund.

The information below is designed to help you decide whether mutual funds are right for you, and includes more details of what mutual funds are, what sets them apart from other types of investments, and how to find the mutual funds that will best accent your investment style.

Defining Mutual Funds

Before you can decide whether or not to invest in mutual funds, you need to know exactly what mutual funds are. These funds are a type of security that is traded on the stock market, enabling shareholders to purchase and sell shares in the funds as they choose. The money that is raised by the purchasing of shares by shareholders is utilized by the investment company that created the firm to purchase more shares of certain stocks, bonds, and other market securities and money market instruments.

As the value of the stocks, bonds, and other securities contained within the mutual fund rise and fall, the value of the fund itself fluctuates? the average value of each share of the mutual fund is determined each day as an average of the total value of all of the securities that are contained within the fund.

Because of this, shareholders who own part of a mutual fund are more directly involved with their investment than those who simply own individual securities and watch as they rise and fall.

Important Attributes of Mutual Funds

As was mentioned above, mutual funds are created by investment companies to purchase shares in various stocks and other securities. What this means for the mutual fund investor is that in addition to their ownership of shares of the mutual fund, they also have a limited claim of ownership of some of the securities contained within the mutual fund. In addition to this, mutual funds also benefit from having a built in system of diversification, as well as professional money management services that handle all of the money that is invested into the fund.

Shareholders are free to purchase additional shares or sell the shares that they already possess at any time, though the value of the shares fluctuates daily and therefore must be bought or sold with care so as to get the best value for the money.

Finding the Best Mutual Funds

Since the value of mutual funds varies from day to day, it can be difficult to find the funds that are best for your investment. Instead of tracking the funds as you would traditional stocks and securities, it’s often better to investigate the fund to determine which investment company is managing the fund and what specific securities are currently being held by the fund itself.

Finding a mutual fund that is managed by an investment company that has a strong record of choosing lucrative investments is a good sign that the fund might be a smart buy, and securities held within a fund that are consistent performers can help add stability and security to an investment that may seem otherwise unstable.

You may freely reprint this article provided the following author’s biography (including the live URL link) remains intact:

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Year-End Rally

Jan 17

Posted by admin in Investing

The stock market fell sharply in October after end-of-the quarter window dressing and on the inflation spike revealed in the September data. Consequently, the stock market no longer believed the Fed’s tightening cycle will end this year, and became fearful of stagflation. However, third quarter earnings so far have generally beat expectations, in what was expected to be a slow quarter, because of high energy prices.

Both monetary and fiscal policies remain stimulative. The FOMC raised the Fed’s Fund Rate from 1% to 3.75%, on small 25 basis moves, over the past 16 months, along with a steady policy of “jawboning” to keep inflation expectations low. A neutral stance may be above 5%. So, the FOMC may continue to tighten well into next year. The Bush Administration tax cuts are still intact, and the damage by hurricane Katrina will increase government expenditures.

Oil prices fell below $60 a barrel last week, for the first time in about three months, and closed at $60.63 Friday. Economic growth has slowed to a more sustainable rate of around 3% real growth. The summer driving season and the worst of the hurricane season are over. Heating oil prices will be largely dependent on winter weather in the Northeast. The price of oil may stabilize at just over $50 a barrel within the next few weeks.

The chart below is an SPX weekly year-to-date chart. SPX is down for the year, at the lower range of a trading range, and somewhat oversold. The ADX and CCI indicators, in particular, suggest the market will rally into the end of the year. It seems, SPX will continue to consolidate, short-term, above several strong (multi-year) support levels at around 1,165 (explained in previous articles) and then rally.

The high recent inflation data may be a temporary phenomonen caused in large part by transportation bottlenecks in the Gulf region after hurricane Katrina. Also, output and employment should pick-up, temporarily, with a boost in government expenditures. Moreover, lower energy prices will shift consumption from energy into non-energy products and lower production costs.

It seems likely SPX will trade between roughly 1,170 and 1,200, short-term, and then retest the high (for the third time) at about 1,250 later this year. However, a final “wash-out” in late October is possible, where SPX closes the open gaps at 1,143 and 1,138, before staging a powerful rally. So, unless SPX falls below 1,165, it may be best to trade the volatile range with a stop at 1,165.

Charts available at PeakTrader.com Forum Index Market Overview section.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.

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Expense Ratios Are Nonsense

Oct 1

Posted by admin in Finance, Stocks Mutual Funds

One of those investment counselors says, ?I will take your money and make you a profit every year, but I have a very hefty fee. For every
dollar I make you I will charge you a dollar?.

?How much will you make for me??

He replies, ?Because I invest in the stock
market I am not sure what each year will be, but
I have a real time track record that I have
doubled my clients money every three years. If
you start with $10,000 you should have $20,000
three years from now.?

?In other words out of the $20,000 you make
with my money you get half? That seems like an
awful lot.?

Mr. Money Manager asks, ?Does it make any
difference how much I make if I can double your
money??

Here we are computing a 50% expense ratio.
Who cares as long as he doubles the money? When you
talk to brokers when buying mutual funds one of their
pet talking points is that a particular fund has
a very low expense ratio. Who cares? The only
thing that is important is the final return.

Does it make any difference if a fund has a
3.5% expense ratio or a 1% expense ratio if the
3% fund makes more money? Of course not.

This is part of the Wall Street mystique
designed to confuse clients. Whatever mutual
fund you choose it should be one that has the
highest return. When it is no longer going up it
should be switched to a better performing fund
that is why you should only buy no-load funds.
Full service brokerage companies do not want to
sell no-load funds.

Commissions are expenses, but brokers don?t
talk about that. Do NOT pay commission. Brokers
will tell you that load (commission) funds are
better than no-load funds. Not true. Get up and
walk away from that broker. He is lying. Be
careful of certain types of mutual funds that
will have several classes of the same fund some
of which have hidden commissions. Don?t be
afraid to ask. To be absolutely sure call the
mutual fund company. They all have toll free
numbers.

There is only one way to make sense out of
expenses and expense ratios and that is the
performance of the fund in relation to all other
funds. First eliminate commissions. All other
expenses are apportioned over the year. One
other nasty charge funds have started adding is
redemption fees. Most are 2% and run out for
long periods of time. These are added to
discourage selling; no other reason.

There is only one thing that distinguishes
a ?good? fund from any other. It is going up while
the investor owns it. If it doesn?t you should
not have it. When it starts down it should be
sold and this has nothing to do with expense
ratios.

There is only one reason to own any equity
and it has nothing to do with expenses. It must go
up.

Copyright 2006

Al Thomas\’ best selling 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 and receive his market letter for 3
months at no charge 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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Wealth Creation As A Stock Market Investor – Is It Risky?

Oct 1

Posted by admin in Stocks Mutual Funds

When creating wealth in the stock market, you need to build a certain understanding of the risks involved. How do you assess the risk? When do you listen to other people?s opinion and when do you make up your own mind based on training and research?

Well, for starters, don?t listen too much to others. Who is going to look after your money best? You, of course! Then why not learn for yourself how to be a stock market investor instead of listening to advice from possibly unreliable sources.

To start with, learn basic strategies. If you understand how the stock market works to a certain degree, then maybe you should look at derivatives. These are highly leveraged investment instruments and need to be understood properly to be used to their full advantage.

Once you understand stock market derivatives (and you will if you apply yourself), you can move on to more advanced strategies and this will open up some interesting possibilities for you.

For instance: I invest with returns around 15 ? 20% per month. I learnt this with very little knowledge of how to be a stock market investor. I achieved this in less than 2 years. I know several investors who learnt this in 3 to 6 months.

There are also bad months. This is where money management comes in. Learning to manage your investments with a proper strategy and money management is vital to your success in the stock market.

You have plenty to gain by learning from other enthusiastic traders. Visit stock market or wealth creation forums. Learn from other like minded people. A little bit of effort, fuelled by dreams will get you a lot further than little effort with no dreams.

Remember this is all about leverage. Learn to leverage yourself and the income potential rises with it.

Many will say that the risk rises with the income potential. If you agree with that, then read this quote by a very seasoned stock market investor and think again:

?Risk is NOT understanding what you are doing? – Warren Buffet

Think about it. If you didn\’t think ? ?YES, that\’s true!?, then read it again and again until you really get the point.

What some people perceive as risky, others do as an everyday task, as if it is second nature. It?s just like having a casual walk to the local shop.

Driving a car is risky. Especially if you haven\’t driven before, or have little experience. Maybe you haven\’t bothered learning the basic traffic rules.

How risky is it for you to drive a car when you know the traffic rules, have made the effort to practise and stay aware of any changes that may affect you in that environment?

Not very risky at all!

Same task. Very risky for some. Hardly any risk at all for others.

Compare this to being a stock market investor. If you enter a trade with little or no knowledge, it would be fair to say it is very risky. Do it with base knowledge, research and networking, then it would be fair to say that you have reduced your risk dramatically.

The very same trade will have different outcomes depending on how you react to the market place. Hence, the different risk levels in the very same situation.

So hang in there. Utilise resources like stock market forums. Do a course or attend a seminar to fast track your learning. Educate yourself with things that WILL make a difference to your future. Believe me, whoever said money doesn?t buy happiness, either didn?t have any money at all or never went without.

Of course, money doesn?t buy happiness. But it sure does help. I know which option I prefer.

Let me think. Here are my financial options:

Option number 1 ? Little or no wealth.

? Work until I?m 65.
? Put my kids through average under funded schools because I have no choice.
? Having to budget most or all of the time.
? Trying to make ends meet.
? Keep a relationship and a happy family while always struggling to pay the bills.
? Have very few holidays.
? Constantly worrying about fuel prices.
? Have little or no money for charities.
? Etc, etc.

Option number 2 ? Plenty of wealth.

? Enough money.
? Comfortable living. Stress-less lifestyle.
? Work until I want to. NOT until I have to.
? Work as a hobby. Do what I want to do. With a passion!
? Put my kids in the schools I want to. It?s my choice.
? Support as many charities as I like. Make other peoples life easier.
? Support my local community financially, because I can.

? Holiday as much as I like.
? Make ends meet ALL of the time. Who cares how much the grocery bill is?
? What fuel prices? What?s the issue? When fuel prices go up, so do my shares.
? Etc, etc.

If I cannot be happy using Option number 2, then I?ve got some serious problems!

You choose your own destiny. Don?t let others make up your mind for you. Make wealth creation a part of your financial education.

Happy researching, and good luck to you in your quest for financial independence.

Sean Rasmussen is a Property

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The American Stock Market

Oct 1

Posted by admin in Stocks Mutual Funds

A stock is a legally binding symbol of ownership in a company. When you purchase a stock, you actually become the owner of a part of a company ? a share holder. Since one company can release a lot of stocks, the ownership is typically spread over hundreds or thousands or owners. Selling shares in a company is a way for that company to bring cash to the company. If you start up a new small company, you typically own 100 % of the shares yourself. When you need to invest a lot of money in necessary equipment, you can allow people to purchase parts of your company. This will provide the company with enough cash to buy equipment.

To gain any real influence over a company, you must own a lot of the stocks or work together with a lot of the smaller owners. Today, people often buy stocks not in order to gain control over a company, but as an investment. They hope for the value of the stock to increase over time. A company can also decide to give a part of its annual earnings to the stock owners. This way, you can make money from your stock without selling it.

To put it simple, a stock market is a place where stocks are traded, just like a fruit market is a place where fruit is traded. The New York Stock Exchange, the American Stock Exchange and Nasdaq are three important stock markets in the United States. Unlike the fruit market, it would be impractical for you to stroll down to the New York Stock Exchange and purchase a bag of stocks from a vendor. Stocks are instead typically bought and sold via a stock broker or through Direct Investment Plans and Dividend Reinvestment Plans. If you purchase stocks via a Direct Investment Plans or a Dividend Reinvestment Plans, you will not actually buy stocks at the stock market; you will purchase them directly from companies.

Wall Street is very important place in the history of the American stock market. During the 17th century, Dutch settlers in New York built a high fence to defend themselves from attacks. The wall only lasted until 1685, but the Englishmen continued to call the street near the former wall Wall Street. The history of the American stock market does however begin in Philadelphia, not in New York. The very first stock exchange in America was created in Philadelphia, in 1790. The first stock exchange in New York was created only two years later, but it didn?t do as well as the Philadelphian stock exchange. In 1817, representatives from the New York stock exchanged travelled to Philadelphia in order to find the key behind the Philadelphian success.

The result of the trip was the creation of a more formal and disciplined New York Stock and Exchange Board. One of the more notable incidents in the history of the American stock market is naturally the stock market crash of 1929. During the early years of the 20th, vast amounts of money had been made on the booming stock exchange markets. This boom came to a rapid end when the stock market plummeted in 1929 and triggered the Great Depression in American.

Read more about the American stock market as well as other International stock markets

Writen By : William Berg

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