Investing Strategies for the Individual Investor
Common Sense
Investing
Investing
Copyright McAllen Investments 2010 All Rights Reserved
Charting & Technical
Analysis
Analysis
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The retired couple:
He was 74 at the time, his wife of 52 years was 73, and both retired. Their savings included almost $200,000 in CDs.
They were approached by a Financial Advisor in June 2007 canvassing their neighborhood. Sure, they wanted their money to earn more to supplement their Social Security, and were sold a mutual fund, moving all their savings into the fund. 18 months later their account balance was down to $72,000. Fearful of losing it all, they were then sold an Annuity for a total amount of $72,000 that would pay them a few hundred dollars a month.
The Widow:
She was 76 at the time, lived alone, retired, and had just over $50,000 in a savings account. Besides her home and social security income, this was her assets. She became acquainted with the Financial Advisor who was cold-calling. After several calls over a period of 3 weeks, she was convinced that Bonds would pay her more than what she received from the bank. During late 2008 bond prices were high since interest rates had been cut to help offset the recession.
She was sold ten $5,000 30-year bonds, leaving about $2,400 in her savings account. Yes, these bonds will mature and her money will be returned just after her 106th birthday. Or she needs cash; she can sell them at any time at the current market price, whatever that might be.
Don’t open the statements:
The sales pitch was to transfer their assets from one fund and buy shares in another. This couple in their mid 40s had $160,000 invested, were sold on the idea another fund was more profitable, and convinced to not only make the switch, but to add to the investment using a Dollar-Cost average approach. Thus, the shares of the new fund were purchased at the market price and monthly deposits were made directly into the account to purchase additional shares. Problem is; the transfer was made in August 2007 during the Dow Jones Industrials all-time-high. As the market started declining, so did their account balance. With each additional purchase, the deficit grew exponentially.
Seeking answers and a possible solution to prevent further declines, the Salesperson/Advisor was contacted. They were informed to wit: -verbatim:
“The market fluctuates, so don’t open your statements. That only causes you stress. The market has always come back, so just keep buying more and averaging down.”
20-Year rolling time period:
Retirement had to be postponed. The purchase of shares in 3 different mutual funds turned out not to be 'diversification.' The mutual funds had all done well in the previous year or two, but that was during a bull market. When the market started declining, worried about the possible loss, he contacted the Advisor and was told, "for 70 years using a 20-year rolling time period, the market had always returned a profit."
Problem was - he was 61 years old, and had no idea about 'Secular Bear Markets', and never suspected he would have to wait many years to just break-even.
Just a note: There is a reason salesmen use the phrase '70 years' and the "20-year roling time period." Because anything less than 20 would not work. Anything more than 70 would not work.
A bit of history:
After the crash of 1929 and the ensuing bear market, investors waited 25 years to break-even. The market did not trade above the highs reached in 1929 until the mid-1950s. Throughout more than 100 years of market history, the overall market has had traded in cycles. An 18 year advance, then 18 years of sideways, followed by another 18 year advance, followed by another 18 years of sideways trading. This is why the 20-year rolling time period phrase is conveniently used.
The last 18 year advance ended in 2000. Will history repeat itself? Probably so.
Conclusion:
Numerous investors have been given the same advice: “Don’t even look at your statements.”
Adding to a losing investment is a Loser’s strategy.
But what do all these stories have in common?
1. They all purchased at the wrong time.
2. They didn’t cut loses early or move to safety.
3. They all relied on a salesman to make their decisions.
Look, Mutual Funds are not a bad investment. But there are bad times to invest in them. Bonds aren’t a bad investment, but there are bad times to invest in them as well. Every one of these investors could have saved 1000s and 1000s of dollars by being knowledgeable about market and price movements.
Let me give you a little insight:
Since 1900 there have been 29 bear markets. Just like clockwork, they have appeared on the average of every 3.5 years, with an average market decline of -30%, lasted an average of 18 months, then took about 19 more months to return to break-even, and devastated the average portfolio by -29%.
For the past 110 years:
·Bear Markets consumed 32% of the time of your investment
·Getting back to break-even took another 44% of the time
·Only 24% of the time was spent in net-gain Bull Market territory.
Historically, it has taken more time to recover from every bear market there has ever been than the duration of the actual bear market itself.
Becoming a successful investor requires using this knowledge to your advantage, not being decimated by it. By knowing with 100% certainty there will be another bear market, start today preparing for the next decline and implement strategies to protect your investment capital. Then you are sure to have the funds available to take advantage of the next market advance.
What do these, and every bad investing story have in common?
The uninformed investors risk their money at the wrong time. They rely on someone else to make their investing decisions, and get caught buying when they should be selling.
Wouldn’t you rather keep your money safe and buy in at the bottom after declines instead of watching your money evaporate?
Charting and Technical Analysis is the investor’s bible when it comes to recognizing when to put your money at risk and when to move to safety.
Trading the Trends is a MUST have for the individual investor, and especially the long-term investor. You will learn strategies to protect your money and to make money regardless what the market might be doing.
He was 74 at the time, his wife of 52 years was 73, and both retired. Their savings included almost $200,000 in CDs.
They were approached by a Financial Advisor in June 2007 canvassing their neighborhood. Sure, they wanted their money to earn more to supplement their Social Security, and were sold a mutual fund, moving all their savings into the fund. 18 months later their account balance was down to $72,000. Fearful of losing it all, they were then sold an Annuity for a total amount of $72,000 that would pay them a few hundred dollars a month.
The Widow:
She was 76 at the time, lived alone, retired, and had just over $50,000 in a savings account. Besides her home and social security income, this was her assets. She became acquainted with the Financial Advisor who was cold-calling. After several calls over a period of 3 weeks, she was convinced that Bonds would pay her more than what she received from the bank. During late 2008 bond prices were high since interest rates had been cut to help offset the recession.
She was sold ten $5,000 30-year bonds, leaving about $2,400 in her savings account. Yes, these bonds will mature and her money will be returned just after her 106th birthday. Or she needs cash; she can sell them at any time at the current market price, whatever that might be.
Don’t open the statements:
The sales pitch was to transfer their assets from one fund and buy shares in another. This couple in their mid 40s had $160,000 invested, were sold on the idea another fund was more profitable, and convinced to not only make the switch, but to add to the investment using a Dollar-Cost average approach. Thus, the shares of the new fund were purchased at the market price and monthly deposits were made directly into the account to purchase additional shares. Problem is; the transfer was made in August 2007 during the Dow Jones Industrials all-time-high. As the market started declining, so did their account balance. With each additional purchase, the deficit grew exponentially.
Seeking answers and a possible solution to prevent further declines, the Salesperson/Advisor was contacted. They were informed to wit: -verbatim:
“The market fluctuates, so don’t open your statements. That only causes you stress. The market has always come back, so just keep buying more and averaging down.”
20-Year rolling time period:
Retirement had to be postponed. The purchase of shares in 3 different mutual funds turned out not to be 'diversification.' The mutual funds had all done well in the previous year or two, but that was during a bull market. When the market started declining, worried about the possible loss, he contacted the Advisor and was told, "for 70 years using a 20-year rolling time period, the market had always returned a profit."
Problem was - he was 61 years old, and had no idea about 'Secular Bear Markets', and never suspected he would have to wait many years to just break-even.
Just a note: There is a reason salesmen use the phrase '70 years' and the "20-year roling time period." Because anything less than 20 would not work. Anything more than 70 would not work.
A bit of history:
After the crash of 1929 and the ensuing bear market, investors waited 25 years to break-even. The market did not trade above the highs reached in 1929 until the mid-1950s. Throughout more than 100 years of market history, the overall market has had traded in cycles. An 18 year advance, then 18 years of sideways, followed by another 18 year advance, followed by another 18 years of sideways trading. This is why the 20-year rolling time period phrase is conveniently used.
The last 18 year advance ended in 2000. Will history repeat itself? Probably so.
Conclusion:
Numerous investors have been given the same advice: “Don’t even look at your statements.”
Adding to a losing investment is a Loser’s strategy.
But what do all these stories have in common?
1. They all purchased at the wrong time.
2. They didn’t cut loses early or move to safety.
3. They all relied on a salesman to make their decisions.
Look, Mutual Funds are not a bad investment. But there are bad times to invest in them. Bonds aren’t a bad investment, but there are bad times to invest in them as well. Every one of these investors could have saved 1000s and 1000s of dollars by being knowledgeable about market and price movements.
Let me give you a little insight:
Since 1900 there have been 29 bear markets. Just like clockwork, they have appeared on the average of every 3.5 years, with an average market decline of -30%, lasted an average of 18 months, then took about 19 more months to return to break-even, and devastated the average portfolio by -29%.
For the past 110 years:
·Bear Markets consumed 32% of the time of your investment
·Getting back to break-even took another 44% of the time
·Only 24% of the time was spent in net-gain Bull Market territory.
Historically, it has taken more time to recover from every bear market there has ever been than the duration of the actual bear market itself.
Becoming a successful investor requires using this knowledge to your advantage, not being decimated by it. By knowing with 100% certainty there will be another bear market, start today preparing for the next decline and implement strategies to protect your investment capital. Then you are sure to have the funds available to take advantage of the next market advance.
What do these, and every bad investing story have in common?
The uninformed investors risk their money at the wrong time. They rely on someone else to make their investing decisions, and get caught buying when they should be selling.
Wouldn’t you rather keep your money safe and buy in at the bottom after declines instead of watching your money evaporate?
Charting and Technical Analysis is the investor’s bible when it comes to recognizing when to put your money at risk and when to move to safety.
Trading the Trends is a MUST have for the individual investor, and especially the long-term investor. You will learn strategies to protect your money and to make money regardless what the market might be doing.
Financial Advisor Nightmares
and
What they have in common
and
What they have in common
* 318 pages
of the very best investing and trading knowledge - ever...
Stop being a 'LOSER'
Invest and Trade safely with Trading the Trends. Get out of the market at the highs - avoid the corrections - avoid bear markets - Profit on the upswings - keep your money safe when the market tanks! Buy-and-Hold is a Loser's Strategy!
*Make money in ANY market.
of the very best investing and trading knowledge - ever...
Stop being a 'LOSER'
Invest and Trade safely with Trading the Trends. Get out of the market at the highs - avoid the corrections - avoid bear markets - Profit on the upswings - keep your money safe when the market tanks! Buy-and-Hold is a Loser's Strategy!
*Make money in ANY market.
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