Investing Strategies for the Individual Investor
Common Sense
Investing
Investing
Copyright McAllen Investments 2012 All Rights Reserved
Charting & Technical
Analysis
Analysis
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Common Sense Investing
Introduction
The late Will Rogers said it best.
" I'm more concerned about the return OF my money than with the return ON my money". ~Will Rogers
ABOUT THIS BOOK
This is a “tell-it-like-it-is” book. There is no fluff, no journalistic slant, just the unvarnished truth. I was a certified financial planner, stockbroker, and portfolio manager, but now I am only an individual investor just like you, and I’m tired of the Investment Firms and the Wall Street clique misleading the investing public by not giving you the full story.
I have been trading the markets for more than 20 years in stocks, bonds, mutual funds, and options. It’s not difficult, but if you listen to the ‘Talking Heads’ on the financial news networks, stock pickers that have their own radio and TV shows, and follow their advice while blindly entering the investing world with no knowledge of your own, then you will certainly lose.
In Trading and Investing there are more theories, plans, stock pickers, investment vehicles, gimmicks, scams, and Snake Oil Salesmen than at any other time in the past.
There are crazy people on TV pushing buttons that make all sorts of goofy noises to tell you whether to buy or sell. However, the skeptics that keep up with those wonderful investment tips claim they are a miserable failure.
Some think you might as well throw darts at a financial newspaper to reveal the investment of choice.
There are others who claim a certain amount of success by giving a chimpanzee a Financial News Journal and let him ‘point’ at which stocks to buy.
There are companies that develop software for computers to trade for you. It’s so easy! And you’ve seen it on TV, so it ‘must’ be true!
There are Financial Advisors that work out of the trunk of their car canvassing your neighborhood looking for anyone with a dollar to invest who will answer the door.
There are Investment Representatives working phone banks cold calling anyone brave enough to answer in search of the next sale.
No wonder so many believe they are safe to just put their money in a Mutual Fund and forget about it. At least you have an excuse when you answer the phone or the door; you can tell the salesperson, “Sorry, I already have an investment.”
Problem is, having an investment and investing wisely are two totally different things. Most every investor has no idea what to invest in or why they are invested in ‘It’, whatever ‘It’ is. They rely on the advice of so-called professionals to make their investing decisions, and are constantly and consistently misled.
Throughout this book you will come to understand ‘WHY’ you have been misled. When a Wall Street Guru, TV host, or a Financial Advisor gives you advice, there is almost always an ulterior motive involved, money for them - not you.
Did your investments get crushed in the last stock market crash? No, not in 1929, I’m talking about 2000 to 2002, and/or 2008. Most investors got a rude awakening when they opened their year-end statements for the past 10 years, because the Bear Market of 2000 was only the second time in history that the market was down three years in a row, then right back down after the all time high in the DOW in 2007.
Are you confused by the daily gyrations of the stock market? Are you upset that you lost a bundle by listening to a salesperson hungry for a commission? Are you ready to give up on the stock market, and cash in at any price? The talking heads on the business shows continually profess a bullish stance, no matter what the market is doing. They can always put a ‘positive spin’ on it.
Most every one of them will profess the Buy-and-Hold Strategy for investing. But you will quickly learn why they do this, why this strategy does not work. Never has, and never will. Buy and hold will get you broke. You must learn to invest with the market, not against the market.
Ignore their opinions. That is the first rule, and don’t forget it.
No one knows where the market is going tomorrow, let alone in the months and years further down the road. Just because the stock market has averaged an annual return of about 10.2% since 1926 does not mean that you can expect that rate of return to continue in the coming year, next 5 years, or even the next 10 years. Just because you may not be retiring soon does not mean that you can afford to ignore what is going on in the stock market.
If you have been investing since 1982, or perhaps since early 1995, you were probably ecstatic with your returns through the first quarter of 2000. But then the market dramatically and swiftly reversed direction, and it dropped faster than it rose. Then after decimating portfolios large and small, the market turned and moved to an all-time high in 2007 giving you hope once more, only to reverse again and drop to another low.
Did you sell at or near the top and put the proceeds into cash? You probably did not. Did you sell after your stocks or mutual funds fell 10%, then 20%, then 30%, and perhaps 90% in some cases? Probably not, since you thought the market would come back, as it always has. I will give you the statistics and facts to show you why Buying-and-Holding is not a successful strategy in the long run because the intermittent Bear Markets continually rob you of the profits... You’ll be surprised by the outcome.
Let me tell you something very important. I know you have heard it, and it is true; “The market has always come back”. But this is what you are never told: Just because the ‘market’ comes back, that never means your investments will come back, too. Some do, many do not. Historically the general market has come back, but also ‘historically,’ the same stocks that were once the ‘Stock Market Darlings’ are not usually the ones that came back with the market. Most stay down and never come back.
Perhaps you have followed the widely touted Buy-and-Hold investing approach. And if you are like most investors, you have no game plan for cutting your losses or taking your profits. I can promise you, lacking an investing strategy and blindly following the buy-and-hold approach can lead to financial ruin. It can wipe out years of investment profits in a short time, and it can take years for your portfolio to recover, if ever. Don’t fall for the Buy-and-Hold RUSE, even though a majority of financial professionals tout it. This is the same crowd that also tells you that dollar-cost averaging is a sound investment approach. Check it out for yourself. Has your own dollar-cost averaging worked for you? Probably not.
Dollar-cost averaging is great when stock prices are rising, but can send you to the ‘Poor House’ when they continue to fall. One of the most critical rules of investing is never average down. It is a loser’s game. Think about all the unfortunate and uninformed investors who still own Amazon, Dell, Cisco, EMC, AT&T, Intel, GE, Eastman Kodak, Xerox, WorldCom, Palm, and hundreds of other past high-flyers. Those investors got killed by continually buying more shares on the way down, or by holding on to their original shares bought at much higher prices.
Is There a Better Way to Invest?
Is there a smarter way to handle your investments, to protect your profits, and to steer clear of bear markets before they decimate your portfolio? Yes. The approach is called Common Sense Investing, and it works. In this book you will see compelling data on successful approaches that beat the market indexes over decades. The strategies are simple so that you can use them yourself with little work.
After reading this book you will understand both sides of the Buy-and-Hold myth and why using Common Sense and some simple strategies when investing is a more successful, sensible, risk-averse, and unemotional approach to investing in the stock market or Mutual Funds.
By presenting you with the facts and figures of many investing theories and scenarios, you will be educated on the market, the market history, the sales pitches you will likely hear, and the valuable strategies and tools to use to make your own decisions to be a successful investor.
My objective here is fourfold.
· First, I want to provide you with the rationale and facts indicating why Common Sense Investing is a superior investment strategy compared to the ever-popular buy-and-hold strategy.
· Second, I want to provide you with profitable investing strategies that are simple to understand and easy to implement.
· Third, I want to help you avoid future bear markets and protect your principal.
· And last, I want to help you maximize your returns, both in good times and in bad.
Introduction
The late Will Rogers said it best.
" I'm more concerned about the return OF my money than with the return ON my money". ~Will Rogers
ABOUT THIS BOOK
This is a “tell-it-like-it-is” book. There is no fluff, no journalistic slant, just the unvarnished truth. I was a certified financial planner, stockbroker, and portfolio manager, but now I am only an individual investor just like you, and I’m tired of the Investment Firms and the Wall Street clique misleading the investing public by not giving you the full story.
I have been trading the markets for more than 20 years in stocks, bonds, mutual funds, and options. It’s not difficult, but if you listen to the ‘Talking Heads’ on the financial news networks, stock pickers that have their own radio and TV shows, and follow their advice while blindly entering the investing world with no knowledge of your own, then you will certainly lose.
In Trading and Investing there are more theories, plans, stock pickers, investment vehicles, gimmicks, scams, and Snake Oil Salesmen than at any other time in the past.
There are crazy people on TV pushing buttons that make all sorts of goofy noises to tell you whether to buy or sell. However, the skeptics that keep up with those wonderful investment tips claim they are a miserable failure.
Some think you might as well throw darts at a financial newspaper to reveal the investment of choice.
There are others who claim a certain amount of success by giving a chimpanzee a Financial News Journal and let him ‘point’ at which stocks to buy.
There are companies that develop software for computers to trade for you. It’s so easy! And you’ve seen it on TV, so it ‘must’ be true!
There are Financial Advisors that work out of the trunk of their car canvassing your neighborhood looking for anyone with a dollar to invest who will answer the door.
There are Investment Representatives working phone banks cold calling anyone brave enough to answer in search of the next sale.
No wonder so many believe they are safe to just put their money in a Mutual Fund and forget about it. At least you have an excuse when you answer the phone or the door; you can tell the salesperson, “Sorry, I already have an investment.”
Problem is, having an investment and investing wisely are two totally different things. Most every investor has no idea what to invest in or why they are invested in ‘It’, whatever ‘It’ is. They rely on the advice of so-called professionals to make their investing decisions, and are constantly and consistently misled.
Throughout this book you will come to understand ‘WHY’ you have been misled. When a Wall Street Guru, TV host, or a Financial Advisor gives you advice, there is almost always an ulterior motive involved, money for them - not you.
Did your investments get crushed in the last stock market crash? No, not in 1929, I’m talking about 2000 to 2002, and/or 2008. Most investors got a rude awakening when they opened their year-end statements for the past 10 years, because the Bear Market of 2000 was only the second time in history that the market was down three years in a row, then right back down after the all time high in the DOW in 2007.
Are you confused by the daily gyrations of the stock market? Are you upset that you lost a bundle by listening to a salesperson hungry for a commission? Are you ready to give up on the stock market, and cash in at any price? The talking heads on the business shows continually profess a bullish stance, no matter what the market is doing. They can always put a ‘positive spin’ on it.
Most every one of them will profess the Buy-and-Hold Strategy for investing. But you will quickly learn why they do this, why this strategy does not work. Never has, and never will. Buy and hold will get you broke. You must learn to invest with the market, not against the market.
Ignore their opinions. That is the first rule, and don’t forget it.
No one knows where the market is going tomorrow, let alone in the months and years further down the road. Just because the stock market has averaged an annual return of about 10.2% since 1926 does not mean that you can expect that rate of return to continue in the coming year, next 5 years, or even the next 10 years. Just because you may not be retiring soon does not mean that you can afford to ignore what is going on in the stock market.
If you have been investing since 1982, or perhaps since early 1995, you were probably ecstatic with your returns through the first quarter of 2000. But then the market dramatically and swiftly reversed direction, and it dropped faster than it rose. Then after decimating portfolios large and small, the market turned and moved to an all-time high in 2007 giving you hope once more, only to reverse again and drop to another low.
Did you sell at or near the top and put the proceeds into cash? You probably did not. Did you sell after your stocks or mutual funds fell 10%, then 20%, then 30%, and perhaps 90% in some cases? Probably not, since you thought the market would come back, as it always has. I will give you the statistics and facts to show you why Buying-and-Holding is not a successful strategy in the long run because the intermittent Bear Markets continually rob you of the profits... You’ll be surprised by the outcome.
Let me tell you something very important. I know you have heard it, and it is true; “The market has always come back”. But this is what you are never told: Just because the ‘market’ comes back, that never means your investments will come back, too. Some do, many do not. Historically the general market has come back, but also ‘historically,’ the same stocks that were once the ‘Stock Market Darlings’ are not usually the ones that came back with the market. Most stay down and never come back.
Perhaps you have followed the widely touted Buy-and-Hold investing approach. And if you are like most investors, you have no game plan for cutting your losses or taking your profits. I can promise you, lacking an investing strategy and blindly following the buy-and-hold approach can lead to financial ruin. It can wipe out years of investment profits in a short time, and it can take years for your portfolio to recover, if ever. Don’t fall for the Buy-and-Hold RUSE, even though a majority of financial professionals tout it. This is the same crowd that also tells you that dollar-cost averaging is a sound investment approach. Check it out for yourself. Has your own dollar-cost averaging worked for you? Probably not.
Dollar-cost averaging is great when stock prices are rising, but can send you to the ‘Poor House’ when they continue to fall. One of the most critical rules of investing is never average down. It is a loser’s game. Think about all the unfortunate and uninformed investors who still own Amazon, Dell, Cisco, EMC, AT&T, Intel, GE, Eastman Kodak, Xerox, WorldCom, Palm, and hundreds of other past high-flyers. Those investors got killed by continually buying more shares on the way down, or by holding on to their original shares bought at much higher prices.
Is There a Better Way to Invest?
Is there a smarter way to handle your investments, to protect your profits, and to steer clear of bear markets before they decimate your portfolio? Yes. The approach is called Common Sense Investing, and it works. In this book you will see compelling data on successful approaches that beat the market indexes over decades. The strategies are simple so that you can use them yourself with little work.
After reading this book you will understand both sides of the Buy-and-Hold myth and why using Common Sense and some simple strategies when investing is a more successful, sensible, risk-averse, and unemotional approach to investing in the stock market or Mutual Funds.
By presenting you with the facts and figures of many investing theories and scenarios, you will be educated on the market, the market history, the sales pitches you will likely hear, and the valuable strategies and tools to use to make your own decisions to be a successful investor.
My objective here is fourfold.
· First, I want to provide you with the rationale and facts indicating why Common Sense Investing is a superior investment strategy compared to the ever-popular buy-and-hold strategy.
· Second, I want to provide you with profitable investing strategies that are simple to understand and easy to implement.
· Third, I want to help you avoid future bear markets and protect your principal.
· And last, I want to help you maximize your returns, both in good times and in bad.
* 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.
Trading
the
Trends
the
Trends
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In writing this book, I have assumed that you have some knowledge of investing and index funds. My emphasis is on the importance of using Common Sense Investing and how to use it to improve your investment performance, while limiting your risk and protecting your principal.
Throughout this book we will focus on:
· How you, the investor can come out ahead in the stock market in the long run
· How and Why investors keep getting killed in the short run with periodic bear markets
· We will debunk the buy and hold myth
· The complete story on missing the best days and missing the worst days will be provided
· The best strategies to use when investing
You will see, in very real terms, losses suffered in bear markets often exceed the gains earned in bull markets. Bull Market and Bear Market market cycles are reviewed in detail, including secular bull and bear markets where there are long periods of time when the market does nothing and you are biding your time. That is no way to make money.
Also you will be given the truth, the REAL story, about the poor record of the market experts. You will also see the advantages of Common Sense Investing using index funds, sector funds, and leveraged funds. We will cover the characteristics of exchange-traded funds and the substantial benefits they offer investors.
Most importantly, we will cover everything you wanted to know about investing using common sense but were never told by the Wall Street gurus, the financial magazine articles, or financial radio and TV shows. The critical characteristics of successful investing are provided, as well as six key points about Common Sense Investing that you need to understand. And you will learn why being ‘Out of the Market’ at certain times is the best strategy to protect your capital and preserve your retirement.
The ‘general market knowledge’ included in this book, and especially market history, is critical for your knowledge base. Learning how the market has performed in the past not only prepares you to recognize when these problems are about to occur in the future, but by the end of the book you will learn how to avoid the worst times to be invested.
It is about learning to use plain common sense, knowledge of the market, and implementing tactics available to you as an investor to be successful.
Let’s get started.
Keep Reading....
Throughout this book we will focus on:
· How you, the investor can come out ahead in the stock market in the long run
· How and Why investors keep getting killed in the short run with periodic bear markets
· We will debunk the buy and hold myth
· The complete story on missing the best days and missing the worst days will be provided
· The best strategies to use when investing
You will see, in very real terms, losses suffered in bear markets often exceed the gains earned in bull markets. Bull Market and Bear Market market cycles are reviewed in detail, including secular bull and bear markets where there are long periods of time when the market does nothing and you are biding your time. That is no way to make money.
Also you will be given the truth, the REAL story, about the poor record of the market experts. You will also see the advantages of Common Sense Investing using index funds, sector funds, and leveraged funds. We will cover the characteristics of exchange-traded funds and the substantial benefits they offer investors.
Most importantly, we will cover everything you wanted to know about investing using common sense but were never told by the Wall Street gurus, the financial magazine articles, or financial radio and TV shows. The critical characteristics of successful investing are provided, as well as six key points about Common Sense Investing that you need to understand. And you will learn why being ‘Out of the Market’ at certain times is the best strategy to protect your capital and preserve your retirement.
The ‘general market knowledge’ included in this book, and especially market history, is critical for your knowledge base. Learning how the market has performed in the past not only prepares you to recognize when these problems are about to occur in the future, but by the end of the book you will learn how to avoid the worst times to be invested.
It is about learning to use plain common sense, knowledge of the market, and implementing tactics available to you as an investor to be successful.
Let’s get started.
Keep Reading....
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