Stock Market Diversification
In one of my previous articles (Investing in the stock market -9 powerful tips), tip number one was:
1. Do not spread your money too thin.
My friend has a little over $200,000 invested in the stock market through 27 different Mutual funds. In my opinion, 27 Mutual funds is 27 too many collecting load fees, management fees, commission fees, operating and advertising fees. Diversity is important, but just as important is over-diversification. Also, in my opinion, $200,000 should not be put into more than 12 stocks, let alone 27 different Mutual funds....
Stock Chart Reading
As an investor you will want to checkout any equity before you buy it. Many investorsgo to Morningstar which is one of the largestproviders of mutual fund information in the world. It is assumed that their information is correct. After all that is what you are paying for.
Recently the SEC (Securities andExchange Commission) called them on the carpet fornot correcting an error within a reasonable time(whatever that is according to the SEC). Everyonemakes errors and this was no big deal.
It seems that when you went to theirsite and drew up a chart or asked for statisticson Rock Canyon Top Flight mutual fund it failed tonotify the potential buyer that the fund hadissued a very large dividend of approximately 25%and the NAV (Net Asset Value) dropped from $15 to$11 to reflect the $4....
Investment Capital Gains
Have you bought any mutual funds this year or late last year while the market was doing its skyrocket thing? Last year it was hard to lose money. This year it has been easy.
You should be calling your mutual fund (they all have 800 numbers) to find out if and when they plan to pay their capital gains and dividends. You might say to yourself, they won't be paying anything this year because the fund is selling for less now than it did at the beginning of the year. Think again. It is very probable that the mutual fund manager took profits on many high flyers that he bought cheap last year....
Long Term Financial Vehicles
Investing in long-term financial vehicles give you the most gains but it also puts your funds at greater risk. There is much truth to the saying, "there is no gain if there is no risk". Still you can reduce your chances of losing your hard earned money, by researching and taking time to understand what you are buying. Would you purchase a house you've only just seen on the outside? Both of these are serious investments and you need to arm yourself with the basic knowledge about the subjects....
Will the Stock Market be Lower in October?
The stock market often closes a week in the middle of a "perceived primary-trend range." SPX closed at about 1,234 Fri, which is between a multi-year Fibonacci level at 1,253 (i. e. 38.2% retracement level from the peak in 2000 to the trough in 2002) and the 20 day MA at 1,212 (which was general support over a recent rally).
It's possible, SPX can rally to 1,253 short-term. However, longer-term (perhaps in Aug and Sep), SPX seems destined to fall sharply. A Goldilocks economy (of neither too hot nor too cold) is priced-into the stock market, and if any future economic data show either output growth has slowed more than expected or inflation has risen more than expected, then massive selling may take place....
Is Your Garage Full Of Junk?
I have a 2-car garage. There are nice shelves on one side and a good practical workbench with a vice on the other side. Plenty of room for 2 cars yet I have to be careful when I pull in so I won't run over stuff stacked on each side. Sound familiar?
Kinda reminds me of the investment portfolio of many people. Full of junk. If I threw out almost all of that stuff I really wouldn't miss it. For whatever crazy reason I still have a stock certificate of 100 shares for a copper mine in Cuba. You know how much that is worth....
Hill of Hope
Just about now everyone is confused as to which way the stock market is going to go - up or down. For the past 3 years it has been headed south, but the Wall Street experts have told us that the market never goes down 4 years in a row so this has to be an up year. But no guarantees.
The old saying is that the stock market climbs a wall of worry. We watch sharp moves up followed by days, sometimes weeks of weakness and then another shot to higher prices. From 1982 to 2000 this went on until we absolutely, positively knew it was going to continue forever....
I Love You, Warren Buffet
Sometime around 1980, can't remember exactly, there was a flight of money from many countries to Switzerland. The clock makers had so much money pouring in that the banks took interest rates to zero and even for a period of time were actually making you pay Ѕ% interest to them to put your money in their banks. Yes, it actually happened because people believed their money was going to be safe there. It was.
Warren Buffett recently sold some convertible debentures - about $400 million. These are bonds that can be converted into shares of stock in the same company, namely Berkshire Hathaway (BRKA)....
The Stock Market - Part 1: Believe It Or Not, Its Always Been Your Best Friend And Always Will Be
Regardless of the fact that the world's stock markets have shown absolutely no growth between the date of writing this article (Late April 2005) and the late 1990s, they should still be looked at with more than just a sideways glance.
Speak gently to them, speak well of them to your friends, learn to trust them, cuddle up close and get to know them - and they will reward you in a way that the banks, mutual funds (Unit Trusts in the UK), pension funds and insurance companies never can or will.
The Personal Stock Market Revolution is here, and it's here right now - on a computer screen near you....
Mutual Fund Honor Roll - Buy High, Sell Low by Chasing Performance
Buy high and sell low -- It's not a typo.
Millions of investors guarantee their failure by selecting mutual funds and stocks based on quarterly or annual performance records. Do you chase performance? You might be buying high and selling low!
As the year draws to a close, millions of mutual fund investors begin an annual event to divine next year's winners. Yet most of these individuals rely heavily on a time-honored - but terribly wrong - method of evaluating strength. Whether analyzing screening tools from websites, reviewing fund honor rolls in magazines, or using star ratings from fund analysts, normally savvy business people foolishly chase the returns of last year's hottest investments....
The 10 Commandments
Wall Street has been preaching for years and years to investors how and where to put their money. The "experts" have put forth these ideas for so long that they seem to be carved in stone just like Moses did with God's 10 Commandments. The only difference is that what Wall Street preaches is lies that will make you broke.
It will be difficult in this short space to elaborate on them, but please stop and give a long think to all of these commandments.
1. Do research
2. Buy and Hold
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