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Investing - Keep Up Your Guard |
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Tuesday, 03 April 2007 |
By Jeffery Voudrie
Do you like being taken advantage of? I sure don’t. In fact, I hate it! Worse, it seems like it is happening more and more. Now, more than ever, it is buyer-beware. Read on for some specific examples and to learn how you can protect yourself.
Trust is involved when we buy a company’s products of services. Companies spend millions of dollars a year in advertising trying to gain our trust. Employees, especially salespeople, are trained in what to say to build our trust in them and their company.
When I take the bait and find out that the product or service doesn’t meet my expectations, I feel my trust has been violated. I’ve been taken advantage of just so the company could make another dollar. It used to be rare. Now it’s common.
Take AARP for example. Founded as the American Association for Retired Persons, it quickly became the largest defender of senior’s rights. It is still one of the most powerful lobbying groups in Washington. Its members trust it to act in their best interest.
That’s why so many of them were surprised when AARP suddenly changed course and supported the Medicare Drug Bill. AARP even spent $7 million advertising their support! Members were stunned--only 18% of them supported it.
What could have caused this trusted voice of seniors to stop acting on their behalf? I’m not going to judge motives, but isn’t it interesting that AARP stands to make millions of dollars selling its new prescription drug insurance called MedicareRX? Hmmm.
AARP receives more money from licensing the AARP name to products and services then it does from membership dues. They’re becoming more of a marketing firm then a lobbying firm. Are their products truly in their member’s best interest? Not always.
AARP mutual funds are a perfect example. Managed by Scudder, not a single one has performed in the top 20% of its category. Those who invested because of the AARP name have forgone thousands and thousands of dollars of growth due to low returns—while AARP has pocketed tens of millions of dollars.
The key point is that you shouldn’t trust a product just because it has a familiar name associated with it. Do you homework and compare it to its competitors.
We can be taken advantage of in other ways. I recently responded to an offer for a ‘free credit report’. It was provided by one of the largest credit reporting companies in the world. Surely it could be trusted.
Nope. Buried in the fine print is that fact that anyone who receives the ‘free’ credit report is automatically signed up for their credit monitoring service. Until you call and cancel, your credit card is billed each month. Since I used my debit card, I didn’t notice the charge right away. The lesson? Be careful when signing up for ‘free’ offers, read all the fine print, and don’t use your debit card for online purchases.
Lastly, I recently bought an electronic book online as part of some research I was doing on Equity-Indexed Annuities. The sales pitch explained that ‘shocking’ truths about annuities would be revealed. It’s easy to find people promoting annuities and I was looking for an opposing view. This seemed to be it.
When I went to purchase it I learned that the information I was looking for wasn’t included in the ‘shocking truths’ and that I had to upgrade to learn those secrets. The entire package cost $97, double what was initially advertised.
Worse, the material ended up being a sales pitch FOR annuities! I read the terms and conditions. They sell your information to list brokers and insurance agents. One of the ‘bonus’ services was the ability to talk with a live person about your situation. In reality, you would be connected to an insurance salesperson and received biased advice.
It shouldn’t be this way. We shouldn’t have to constantly keep our guard up to protect ourselves. But we do. Be careful who you trust—especially a financial salesperson. The people and companies that provide the products and services you use should repeatedly earn your trust. If not, they don’t deserve your business.
Have a financial question? Send me an email and I’ll personally respond, free of charge. Go to www.guardingyourwealth.com and click on ‘Ask Jeff’.
In addition to being a nationally syndicated columnist and Certified Financial Planning Practitioner, Mr. Voudrie provides personal, private money management services to clients nationwide.
Nationally-syndicated financial columnist and Certified Financial Planner® Jeffrey Voudrie provides personal, in-depth money management services and advice to select private clients throughout the USA. He’ll answer your financial question – FREE at http://www.guardingyourwealth.com
Article Source: http://EzineArticles.com/?expert=Jeffery_Voudrie
http://EzineArticles.com/?Investing---Keep-Up-Your-Guard&id=500503
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Learn How To Start Trading In The Stock Market |
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Tuesday, 03 April 2007 |
By Mike Singh
Trading in stocks has existed since the 12th century. It has come a long way from men sitting in barn yards trading in a small community, these days, however trading on the stock market has changed to an almost unrecognisable degree.
Global stock markets not account for an estimated $23 trillion in money flows. Stock exchanges such as the NYSE, NASDAQ and the London Stock Exchange are all market places for trading stocks on. These markets facilitate the trading of stocks by bringing together buyers and sellers.
Traders of stocks have many varied approaches to how they invest in the market. Some traders are risk loving and like to take large gambles when they invest in stocks. These types of traders who include day traders like to ride the wave of the minute to minute fluctuations in the value of stocks.
This allows them to make a quick buck by constantly buying and selling stocks at a mind boggling pace. Although there is the chance of making a very quick buck this way this type of trading also runs the risk of making a massive loss. It is estimated that about 80-90% of all day traders make a loss on the stock market each day.
However if like most people you feel you don't have the stomach or the time for minute to minute trading, there are other methods to investing in the market. For example value traders are a much more rationale, risk adverse type of trader. They try to avoid the minute to minute fluctuations of the stock market by ignoring all the announcements made by companies and just look at the average book price of the stocks over a longer term.
Value traders search out companies they believe to be undervalued possibly because it just announced profit warnings and now which led to a dumping of shares from the company. This leaves the stock price below its average price. Value investors buy the shares at the depreciated price and then wait for them to go up in value again.
Trading on the stock market can take place in the traditional manner in which buyers and sellers come together on the stock market floor and stocks are auctioned off. Buyers and sellers act on behalf of clients who place order for stocks to be sold or bought. In recent years the traditional method has been combined with an electronic method in which orders can be placed over a network, or through the internet.
Check out http://www.stock-trading-made-ez.com/ for more articles on stock investment resources and trading stock internet.
Article Source: http://EzineArticles.com/?expert=Mike_Singh
http://EzineArticles.com/?Learn-How-To-Start-Trading-In-The-Stock-Market&id=498569
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Stock Trading Online - The 3 Essential Tools |
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Tuesday, 03 April 2007 |
By Mark Crisp
Tool #1: A Computer
This is an obvious one. In order to trade stock online, one must have a computer. This computer should have the power to be fast and it should at least have Windows XP as an operating system.
Tool #2: The Internet
Another obvious one, right?
What may not be so obvious that the internet should have a broadband connection. Dial-up would take far too long and cause far too many problems.
Also, there should always be a back-up internet service available for stock trading. Even the most reliable internet servers go down sometimes. Being left without access to the internet could be very costly.
Just in case the computer isn’t working and/or both internet servers are down, every day trader should make sure he/she has access to a telephone. That way if he/she needs to exit a trade and doesn’t have internet access, he/she can call the brokerage firm to exit the trade.
Tool #3: Trading Brokerage
To trade stock online, everyone needs a brokerage that supports Day Trading. There are many different types of brokerage firms that charge many different fees and offer many different services.
Choose wisely with what you need and want in mind.
Also, look to choose a brokerage that offers good stock charting software and good trading software. You can purchase the software separately, and you may want to do so anyway, but having it all supplied by the brokerage firm is usually the most inexpensive way to go.
You also want to choose a brokerage that provides its clients with market data. Again, an online stock trader can get this information him/herself but its often easier and more cost effective to choose a brokerage that provides their clients with all the information.
With each of the essential tools for online stock trading there are many different options. A Day Trader needs to decide what he/she needs and wants out of each tool. Then the tools should be used their full extent.
Stock trading online is growing more and more every single day. People are realizing it’s the most convenient way to trade stocks. Anyone wishing to begin trading stocks online needs to get acquire 3 essential tools: a computer, the internet, and a trading brokerage.
Get your Momentum Stock Trading System and sign up for my free weekly online trading system newsletter here at: http://www.stressfreetrading.com
Article Source: http://EzineArticles.com/?expert=Mark_Crisp
http://EzineArticles.com/?Stock-Trading-Online---The-3-Essential-Tools&id=502349
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Tuesday, 03 April 2007 |
By Al Thomas
Everyone gets those stock solicitations in the mail or maybe a direct phone call telling you about all the money their clients are making with their method of trading. There are full page ads touting 90% plus winning trades. And pigs can fly.
It is unfortunate that the general public has been so mislead by Wall Street and have lost so much money following their advice that Joe Sixpack continues to seek the Holy Grail of trading. There isn’t any and you can be sure it is not in any of the hype of some company offering a system with huge profits.
It is possible there may be a few good trading methods, but they remain the secret of the system developer. Why should he tell everyone when he can make his own fortune without customer complaints.
If any investor feels inclined to buy and trading system or give his money to an account manager there are some questions that must be asked. It is called due diligence. Here are some of the minimums:
1. Is this a real time track record being shown or is it a hypothetical? If it is hypothetical trash it immediately.
2. Is there loss protection on every trade in the form of a stop? What percentage drawdown is allowed for the stop?
3. How much money is needed to trade every recommendation?
4. What was the largest single trade loss?
5. What was the largest continuous loss accumulation?
6. How many trades are made in a 12 month period? Number of winners and number of losers?
7. What is the dollar average for winners and loser?
8. How long has this system been in operation?
9. Do they recommend a specific broker to handle transactions?
10. Ask for a printout of last years monthly statements that can be verified.
11. Ask for references of people who have been trading the system for at least a year.
It is doubtful the investor will get all of the above and maybe they will refuse to provide important information saying it is private or proprietary. Also be sure that that the account may be terminated at any time for any reason with no penalty.
The customer should be able to speak with the broker at almost any time during trading hours if it is a managed account.
As a former exchange member and floor trader I say that Rule 2 is the most important of all. Small losses will not hurt. Big losses will ravage the trading account.
For any managed account or software system there will be losses. The investor must learn to live with these and realize that it is the big winners that offset small losses.
Before putting money into any program get the facts and make them prove it.
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 profitswith his simple 2-step method. Read the first chapter and receive his market letter at http://www.mutualfundmagic.com anddiscover why he's the man that Wall Street does not want you to know. Copyright 2007 All rights reserved
Article Source: http://EzineArticles.com/?expert=Al_Thomas
http://EzineArticles.com/?MakeEm-Prove-It&id=502541
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Simple Money Management Technique |
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Tuesday, 03 April 2007 |
By Al Thomas
Very few investors make money in the stock market.
Wall Street will deny this, of course, but look at where your account is today compared with what you had at the beginning of 2000. Don’t count what you have added during that time or interest income. Most folks are still running a loss.
Your broker, if you are unlucky enough to have one, will assure you that the market always comes back and you are in for the long haul. So don’t worry, be happy. Is your name Alfred E Newman?
If you were one of the few (about 1%) who had a broker or financial planner that actually knew how to protect your money you would not have lost a huge portion of your portfolio from 2000 to 2003. The Wall Street mavens do not teach their brokers the simplest technique for account protection. And they never will.
So, you have to learn to protect yourself! It is a lot easier than you think and most brokers are not even aware of it. Even if they were their company would not allow them to implement it.
Let’s suppose you have been reading my column for the past few years and I showed how to know when the stock market was a buy. The buy signal was April 2003 and you are still long today. About 80% of 401K portfolios have less than $50,000 so here is how to set up this money management technique.
It was time to buy. Divide the portfolio into 10 equal parts. Select 10 mutual funds and/or exchange traded funds (ETFs) that have quit going down and are now going up and buy these. This doesn’t have to be done all in one day. Spread it out over the next 2 or 3 months as good equities present themselves.
Here is the key. Don’t lose money. Ha, ha, you say. Place a 10% stop loss order on each fund that was purchased and as each fund advances raise the stop every month. The investor has 10 separate positions with a 10% risk on each one. If the selection of the fund was poor and it goes down instead of up the loss is one percent (1%) of the total portfolio.
The investor has been smart enough to diversify into several sectors so the chance of losing in all 10 positions is very small. Do not buy individual stocks. Few investors are capable of choosing company stocks. Let the mutual fund manager do that. Buying no load mutual funds there is no commission and even smaller fees in exchange traded funds. As stops are hit find other good equities that are going up. When the market turns down you will be in cash as you will have been stopped out of all positions with nice profits.
Brokers don’t know any more that you do (and I’m not kidding) so you pick the no load funds and ETFs you like.
This simple strategy will spread risk, prevent large initial losses and prevent giving back profits as they are made.
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 at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know. Copyright 2007 All rights reserved
Article Source: http://EzineArticles.com/?expert=Al_Thomas
http://EzineArticles.com/?Simple-Money-Management-Technique&id=502558
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''Investing'' Versus ''Trading'' - A False Dichotomy |
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Tuesday, 03 April 2007 |
By David Van Knapp
Recently, have you run across a growing number of references to the virtues of being a “committed” investor instead of a “speculative” trader? I know that I have.
Here is a typical statement: “You cannot succeed if you trade a lot. You can only succeed by being an actual investor. You must realize that by owning a share of stock, you are in fact a partial owner of a real business. No business owner wants skittish investors. Corporations want committed, interested investors who are going to look to the long term, support the company through thick and thin, and not sell the stock at the first sign of short-term problems or bumps in the road.”
Well. As they say in The Godfather, “It’s business, not personal.” Let’s look at a few facts.
First, some of the points in the statement above are true. If you buy a share of stock, you are, in fact, part owner of the business. Corporations generally would prefer shareholders with a long-term point of view. A long-term view does look right over and beyond mere bumps in the road.
But other ideas are false or misleading. For one thing, many active traders are, in fact successful. You can succeed or fail if you trade stocks. It is probably true that the majority of hyperactive traders do not beat the market, but that simply means they have faulty strategies, or that they execute their strategies poorly, or both. Many traders do beat the market, handily and consistently. Poor traders are often people who have insufficient knowledge, don’t do their homework, do not have a strategic approach that suits their goals and personality, and are impatient.
The “trading versus investing” dichotomy sets up a false premise: that there are only two ways to participate in the market, by being a “buy and holder” or by being a “trader.” The word “trader” often carries a negative connotation while “investor” has a halo.
Where does one cross the line from being a “trader” to an “investor”? Must you only buy—-but never sell—-to be an investor? If I turn my portfolio over ten percent per year, does that make me a trader? Twenty percent? One hundred percent? If I buy a stock and then sell it ten days later because its CEO just got indicted, does that make me a trader rather than an investor? Or does it make me a smarter investor? If I hold most of my stocks at least a year, does that make me an investor? Three years? Five years?
The fact is, there are places all along the spectrum between the extremes of “buy-and-holder” to “trader.” It does not advance the analysis to force any person into one category or the other. And self-defeating decisions are not limited to traders. Sometimes the most reckless thing you can do with an investment is hold onto it. The dot.com bubble proved that.
To me, the most sensible approach to being an investor is to establish a set of rules and principles that are intelligent and fact-based, and then execute them according to plan. Every so often, take a step back to re-examine your goals and strategies to see whether they still make sense. The bottom line is to take a long-term view, but recognize that will sometimes lead to short-term activity. There is no logical contradiction in that.
The Sensible Stock Investor holds some stocks for a relatively short time (measured in weeks) and other stocks for years. What label should be put on that? I would suggest a label like “sensible.” Or “buy-to-hold,” meaning that the intent when purchasing a stock is to hold it for a long time, but that you will sell it when it stops achieving the goals you set for it.
From the corporation’s point of view, what I (as a small investor) do with my shares of stock is irrelevant. Owning a tiny share of a business is not the same thing as having a controlling interest in the business. If I buy 100 shares of AT&T, I own .00016% of the business. My ownership of those shares gives me zero control over how the business is run. I don’t have a seat on the Board, and management doesn’t listen to anything I say.
Now if I were just starting out my own business, and I had five angel investors, of course I would want them to be committed to my business, stand behind me, and not pull their investments out at the first sign of trouble. They would want me to do well, and they would recognize that the best chance for me to do well is for them to help me.
But with a large public corporation, the trading of their shares does not affect the running or financial foundation of the corporation in the slightest. The corporation got its capital at the IPO, via secondary offerings of its stock, or by borrowing. If you and your neighbor trade the shares back and forth, the corporation isn’t affected and shouldn’t care. There is nothing morally virtuous about being a buy-and-holder. Trading is morally neutral. The question whether to trade or not is a business decision, pure and simple.
Each party acts in his or her best interest as each perceives it. It is true that many investors who trade a lot, or who react emotionally to short-term “noise” in the market, do worse than others who hold their investments longer. But so what? That does not mean that you have to make those mistakes. At other times, traders do better than buy-and-holders. Neither approach is inherently better than the other.
The fact is, “investing” is the buying of a security. No more and no less. If that security serves my purposes for a long time, I may well hold it for years. But if the security fails to meet my reasonable expectations for it, or if the corporation that issued it screws up and starts to hurt me, I owe no obligation to continue to hold that security. I can sell it and look for a better place for my money. In fact, my fiduciary duty to myself demands that I do so.
If you would like to learn about a stock investment approach that that uses the same strategies reflected in this article, please consider purchasing Sensible Stock Investing: How to Pick, Value, and Manage Stocks. Click on this link to go directly to the book's page on Amazon.com: http://www.amazon.com/gp/product/059539342X/sr=1-1/qid=1155381420/ref=sr_1_1/002-5852738-5260830?ie=UTF8&s=books . Or click on this link to learn more about the book and its sytematic approach to investing: http://www.SensibleStocks.com
I encourage you to reproduce this article or any portion of it. If you do so, please include the title, author, and the following Web site address: http://www.SensibleStocks.com . Thank you.
Article Source: http://EzineArticles.com/?expert=David_Van_Knapp
http://EzineArticles.com/?Investing-Versus-Trading---A-False-Dichotomy&id=504801
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