Archive

Archive for April, 2009

Virus Wanted!

April 30th, 2009

virusAs you know, we’re out to “change the world.” And to do that, we need lots more readers to get the message—to understand what “investing” really is (as opposed to what they’ve been led to believe it is).

Today’s news is full of the dangers of spreading disease from person to person. But there are good viruses too! And that’s exactly what we need here! This message needs to go “viral.” It needs to be so exciting and interesting that new folks, young folks, hear about it and are captivated and excited about it, and motivated to recommend it to their circle of friends—and they to theirs. Read more…

Investment Concepts , , , , , , , , ,

Buying a Stock: Step 4 – Buying It

April 28th, 2009

alphabet-blocks-thumb.jpgWe now want to purchase the stock we selected. And, if we were populating a new portfolio, we could have gone right down the list of candidates, confirming the quality, evaluating the price as we did with FDS, and putting them all on our shopping list.

Of course, you can use whatever broker you’re accustomed to. However, I’d like to take this opportunity to introduce you to a new and special kind: a folio brokerage or “window trader.” This is one that saves money by combining all of its clients orders into one, filling what “sell” orders it can with its own clients’ “buy” orders and vice versa, going to market periodically with a large single order of shares remaining to be bought and sold, and finally distributing the shares among its clients electronically using fractional shares. This is called “Window Trading” and the savings are passed right along to the client. Read more…

How to Invest , , , , , , ,

Now it’s the Banks…Again?

April 28th, 2009

rob_peterThis morning’s newspaper carried a story on the front page saying the only thing holding up recovery of the housing market is the banks.

Their point was that there are plenty of people ready to buy. Home prices are less than half of what they were at the peak of the bubble. The government has provided the banks with plenty of cash to lend. But the banks won’t relax their stringent requirements to qualify the borrowers.

Wasn’t it Yogi Berra that said, “It’s deja vu all over again!”? Read more…

Food for Thought , , , , , , , , , , , ,

Great Rules for Acquiring Wealth

April 23rd, 2009

Moses The National Association of Investors Corporation (NAIC), a non-profit organization whose volunteers teach individuals (and investment clubs) to invest successfully, offers a set of rules that should be a mantra for all who are interested in acquiring wealth. They are:

  1. Invest a fixed amount regularly – promotes discipline and results in dollar-cost-averaging
  2. Invest only in good quality growth companies – can double your money every five years
  3. Reinvest your gains – puts the magic of compounding to work for you.
  4. Diversify – only enough to prevent you from being vulnerable [See earlier post, “Are there Recession-Resistant Companies to Invest In”]
    They’re simple enough to follow; and those who have done so diligently and conservatively have found that they work well.

Is there any reason why you couldn’t put these to work for yourself?

Fundamental Investment Views, Investment Concepts, NAIC Veterans' Lounge , , , ,

Buying a Stock: Step 3 – Evaluating the Price

April 22nd, 2009

alphabet-blocks-thumb.jpgAs a result of Step 2, I’ve found that Factset Systems (FDS) is the clear front-runner for consideration as my next stock to buy. I used StockCentral’s on-line Take $tock software to confirm that the company’s Quality Index of 10 was justified on the basis of FDS’s track record of sales and earnings growth and the trend in profit margins.

All I have to do at this point is note the “Buy Price” (the highest price at which I could buy the stock and still meet my goal of doubling my investment every five years) on the same page to see that the current price of around $48 (as of this writing) is well below the “Buy Price” of $73.42. [See, I told you this was even easier than the second step! You didn't even have to click your mouse to get this answer!]

It’s always a good idea to heed the “Mood Indicator’s” admonition. So, I check the recent news items carefully to make sure the public, whose interest in the stock has cooled, might not know something bad about the company that I don’t know. And, I’m satisfied that today’s low price is nothing more than the temporary result of “the herd’s” depression.

Next step: Buy it!

How to Invest, Investment Concepts , , , , , , , ,

The Stock Market Game: Fight it or Fix it!

April 20th, 2009

Not long ago, after seeing one more newspaper article praising the virtues of The Stock gunfighterMe Market Game, I yanked my gun off the rack and fired yet another salvo at what I consider to be a terrible influence on our children.

The article probably mentioned that the program teaches our kids such things as short selling and using margin to leverage their hypothetical portfolios so as to help them better manage their pretend-$100K and increase the kids’ chances of beating their competitors. I view these things to be about on the same level as teaching them about the pass line on the craps table!

Nevertheless, in response to a comment on that post, I suggested that it might be time for me to quit complaining, talk to the folks who run it, and see if they might be receptive to some suggestions to perfect it. …and then I did it.

Read more…

Food for Thought, Stock Market Shams , , , , , , , , , ,

How About a Coalition?

April 16th, 2009

The main reason I’m putting so much time into this blog is because I believe it’s reallyI-177-0365 important to reverse public opinion about investing. Except for relatively few of us, almost everyone thinks investing is scary—a hazard to one’s financial health. They’ve either been burned or are close to someone who has. 

They know nothing of the benefits of owning shares of American industry which, no matter what the stock market does, continues to produce its goods and services and grow—and reward its owners. They think of investing only as betting on the daily ups and downs of the market and hoping they can buy low and sell high enough times to win some money.

But one or two of us blogging out here isn’t going to be enough to make a dent in public opinion unless we suddenly get very popular. What do we need to do for that to happen?

There might be another way. How about forming a coalition of all the organizations and individuals who stands to benefit directly from such a change in public perception. Together, we might be able to mount a campaign that could attract enough attention to get the job done. Let’s start a list of those we believe would benefit.

What do you think? Any ideas? Do you have enough interest to make it happen?

Food for Thought, Fundamental Investment Views , , , , , , , ,

Buying a stock: Step 2 – Confirming the Quality

April 15th, 2009

alphabet_blocks Well, we’ve taken the first step in our six-part series, intended to show you the simplest and quickest way to select and buy the shares of a good company. And, from that first step, we now can identify all of the stocks that would meet our criteria, sorted in order of quality. The next step is to confirm that the one we select deserves the Quality Index it was awarded.

Still in the screener, the first on the list is FDS, FactSet Research, with a Quality Index of 10 out of 10.  One click on the words, “Take Stock,” to the right, and voila! I’m looking at the company in that software. [If you should click on this link, you can see how it works for yourself; and, while you’re there, plug in any other symbols or names you might be curious about.] Read more…

How to Invest, Successful Investing , , , , , , , , , , , ,

How brokers get paid: Is there a better way?

April 14th, 2009

One of my big harangues has been that the securities industry benefits from the public’s SHAKE perception that betting on the movement of the stock market is what investing is all about. And, they have nurtured that belief since it all began because they make their money from both the buyers and the sellers every time there’s a transaction. The more transactions, the better—for them. Doesn’t this put the brokers at odds with the people they’re supposed to serve?

Admittedly, there will always be people who get a rush from gambling—looking for the big killing with the odds against them. But for most of us who want to invest to build up our assets and not risk losing our money, don’t you think it would be better if we rewarded the brokerages by giving them a fractional percent of the value of our portfolios annually for their services? Might they not start working harder to increase the value of our holdings instead of just wanting us to trade?

This is a great time to make some changes that could justify our building some confidence in that industry. What do you think?

Food for Thought, Stock Market Shams , , , , , , ,

Technamental Investing? What the Heck is That?

April 9th, 2009

The world of investing has been split into two very different camps: those who subscribe toHuh technical analysis and those who prefer fundamental analysis. The former boast that they couldn’t care less what business a company is in, how long it’s been in business, or anything else about it, except for the price its shares sell for and the number of shares that sell. They create colorful computer charts seeking patterns in the price and volume movement with which they might divine what the market will do next. Largely traders and short-term gamblers, they provide the securities industry with the bulk of its compensation because they are constantly watching the market and will buy or sell at the drop of a hat. Read more…

Fundamental Investment Views, Investment Concepts, Successful Investing , , , , , ,

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