| |
| |
|
|
Stocks and Mutual Funds |
|
Diversification
Wall Street's watchword has always been diversification, but what does it mean and why do they say it? The standard Wall Street definition is flexible because each broker or financial planner will vary the portfolio based on your age and income. They say that the younger you are the more risk you should take and the older you are the less risk. They design a group of individual stocks, mutual funds and bonds to fit your personal profile and inclination toward risk. For a young guy under age 35 they will put you into more high flyer type stocks, hardly any mutual funds and no bonds. As you go over 40 they start adding bonds to your mix and nearing retirement you will find a huge portion in bonds. Their goal is to have your money fully invested at all times and hope for a return of about 12% annually. Why a little here, a little there? Because they have no idea how to make money so they hope that one segment of this hodgepodge will make enough to money to offset losses in the other area. They never look at each group separately for its performance and they NEVER tell you to sell anything at a loss so you can move into an area that is earning better profit. Wall Street brokerage houses really have no idea how to make money. Their job is to make commission. These portfolios that have been designed for all the little investors were made that way so they would not be sued by dissatisfied clients. If you complain about poor returns they say everyone does it this way. Brokers have been taught this type of thinking for so long they think it is right and any other approach is heresy. If you want to do it differently you have to do it on your own. Why do these financial geniuses want you to be fully invested? If you had cash in your account you might take it out. And mutual fund managers never want you to take your money because they get paid by the amount of money in the fund, not on the investment return. Some investors write nasty letters to fund managers. Folks, save the postage. There is only one thing they understand - when you move your money elsewhere. Rule One: Don't buy any individual stocks. You are not qualified and probably don't have the time to find issues that are going up. Rule Two: Buy only no-load mutual funds at a discount broker. Which ones? Only those that are going up and outperforming 99% of all other funds for the past 6 and 12 months, no longer. When they quit going up, diversify by moving your money to a better fund. Rule Three: Learn to time the market so you will not be caught in big downdrafts. Even the best funds go down then. Your broker will tell you can't do this because he doesn't know how.. It can be done. There will be times when you are 100% in cash. These three simple rules are my answer to diversification, but will never be taught by Wall Street. Al Thomas' 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 at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know. Copyright 2005 al@mutualfundstrategy.com; 1-888-345-7870
MORE RESOURCES:
Stocks-Mutual-Funds - Google News |
|
|
|
RELATED ARTICLES
The Surgeon General The Surgeon General of the United States says that smoking cigarettes is harmful to your health. It is printed on every pack of smokes you buy. 8 Penny Stocks to Avoid There are many good penny stock investments available, which could turn a small amount of capital into a small fortune very quickly. However, to discover these you need to know what to look for and what to avoid. Oil Stocks CHK WLL - What Is Their Worth? (1) CHK stock price $16.74, NAV $32. Buy and Hold: How to Perpetuate Your Investment Losses A recent cartoon in my daily newspaper showed two guys sitting in a bar. One is saying to the other: "I did learn something from my broker. The Bottom? Every day I hear someone on CNBC proclaim that "this is the bottom" and you should get in there and buy all those "bargains". "The valuations of the DOW stocks are a steal. Stock Market Course .... Day Trader Online Seminar ... Can You Generate Profits Trading from Home? When it comes to stock market trading it PAYS to have more knowledge than the rest of the pack. Pure gold can be harvested in each profitable trade that you accomplish. Its A Duck If it walks like a duck, quacks like a duck and looks like a duck it must be a duck.In the stock market if there are more buyers than sellers, more stocks are going up than down and the trend of the general market is higher it must be a bull. Mindset In 1960 an engineer working for a watch company in Switzerland discovered that a small crystal would vibrate at a constant rate. He found this was so accurate that it could be used to calibrate time so he took it to company management and said it would make an entirely new kind of watch that had no springs and no gears. Perfect Storm Having lived aboard a sailboat for 2 years I was stricken when I saw the movie "PERFECT STORM". I know these are things you want to avoid at all costs. The Next Bull Market We are already in it, but you can't see it. It doesn't look like the one we had in '99. Market Psychology Today we are inundated with tons of information about the economy, stocks, government agencies and foreign governments. They show us charts and graphs of the increase/decrease in oil production over the last 5 years, the amount of maple syrup produced in Vermont for the past century, the time it takes to bounce a signal off the moon and all kinds of other nonsense that we can live without. Staying Sane While Wall Street Crashes Everybody is riding the Wall Street Roller coaster. Even if you are not invested, the headlines scream out one word: PANIC!It's hard not to join in the panicking. Box Of Chocolates Ever have one of those sample boxes of candy? Each little piece is beautifully wrapped in colorful foil or decorated with an interesting design. Taste just one. Look Out The Window Quick, look out the window. It's raining. The Stock Market Doesnt Care if You are a Beginner?. Get Prepared to Succeed at Trading Stock trading remains a very competitive field and the stock market doesn't care if you are an experienced stock trader or an aspiring one. The rules and the trading opportunities are the same for all of us, so either youre going to make money when you pick a stock and make a trade, or you are going to lose some of it in favor of the more seasoned traders. Investing in Stocks and The Game of Monopoly To begin, you might look at playing the stock market as though you were playing a game of Monopoly. That's right; for playing the stock market 'game' is not unlike playing a game of Monopoly. Its A Bull, Its A Bear, Its Suptertrader! The higher the market goes the more confusing are the "experts". In the September 14 issue of Investor's Business Daily newspaper we find the great prognosticators such as:Sheldon Jacobs, editor of No-Load Fund Investor newsletter quoted that he is recommending having more cash in your portfolio. Oil Stocks As A Long Term Investment The demand for world oil is increasing while world reserves are decreasing. This is a known fact. Trading Tips No 5: Stock Trading Curve Drawdown and Commitment All stock trading and investing methods must deal with the inevitable drawdown from the most recent peak in one's stock trading curve to a bottom before reversing and making a new high. Seasoned systems traders are well familiar with the drawdown phenomenon and the importance of drawdown as a percentage of annual average returns in evaluating a trading system. Duck Duck! No I don't mean a quack, quack. I meant get down, look out for a huge blob of brown stuff is heading your way.
|
||||||||||||||