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So Long For a While!

November 18th, 2010

Folks, I want to take this opportunity to thank you for subscribing to my blog. And I want to give special thanks to those of you who have added your comments, both supportive and contradictory. It’s flattering to know that others think enough about what you have to say to not only welcome it into their mailboxes every week, but to digest and think about it.

This will be my last post for a while—perhaps for quite some time. And, this evening’s broadcast will also be my last for a while as well, as I’m also going to take a sabbatical from my on-line “radio” show. Both of these activities have been labors of love. But they have both consumed considerable time, energy, and thought—resources that I’ve decided to apply exclusively to a couple of other things.

The first is a very exciting, new project whose mission is to promote financial literacy. As most of you who have known me for a while know, this is—and has been—a passion of mine for some time. And, I’m going back to school to acquire some skills in the graphic arts and video field that I can apply to this project. And I’m looking  forward to both the education and the constructive result.

I’m also going to play a more active role in helping my wife, Dianne, with her business. She’s been doing a fantastic job as it is; but it’s time for me to be more actively supportive than I have been. I think this will be fun as well.

So, thanks again for both your interest in my effort to help you be more successful investors, and your indulgence when I’ve occasionally drifted off target to rant a bit.

I’ll keep my Web site open at http://www.financialiteracy.us. The archives for this blog will remain there for anyone to prowl around in and refer to. And, there’s no need to unsubscribe, should you want to know about it when or if I should start back at it again.

Best wishes and so long for a while!

Current Events, Food for Thought, Fundamental Investment Views, How to Invest, Investment Concepts, NAIC Veterans' Lounge, Stock Market Shams, Successful Investing

There, there. It’s gonna be okay!

November 9th, 2010

I’d like to provide something of a ray of sunshine to those who, while usually stalwart and rational investors, may have become dismayed by the current investment climate.

You simply cannot  judge the investment climate by the state of the stock market. Instead, I look at the number of companies whose shares are available on the major exchanges that meet my rigid requirements for sustained sales and earnings growth and for their ability to sustain healthy profit margins.

For that purpose, I consult the result of screening the database of companies provided by ICLUBCentral and NAIC for those which meet or exceed the “Acceptable” Take Stock Quality Index. In normal times, and until the recent market collapse, only about 150 companies, give or take 10, met those criteria. This meant that, of the more than 9,000 publicly-traded companies, fewer than 2 percent warranted my investment interest. When this recession was at its worst, that number of shares declined to only 32! There is no question but that the recession decimated the number of companies that could meet those strict guidelines. Happily, that number is once again commencing to grow.


Reminder: Join me on Take Stock with Ellis Traub, this Thursday evening at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. This week, we’ll talk about the stock market and what the election results may or may not do to it. Dial “1″ to jump into the conversation.

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Smoke and Mirrors, or Facts?

October 12th, 2010

I was exploring some ideas for my watch list, and one of the companies that surfaced was Ebix (EBIX), a world-wide provider of custom software solutions for the insurance industry. It was recently ranked the third-fastest growing company in the world by Fortune magazine.

Now I’ve said many times that those who trade stocks and bet on the stock market are confused and bewildered. Nor do they have a clue as to what any stocks will do tomorrow. And, of course, that confusion is compounded by the contribution that technical analysis makes to the mix. As an example to bear out my conviction, I would offer the following two excerpts about Ebix from the Investors Business Daily, each appearing within three days of the other.

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Five reasons why my way works

October 5th, 2010

My mission, when I started this blog, was to persuade my readers that “investing,” is not what the securities industry has spent gazillions convincing everyone it is: betting on the stock market, which is risky and unpredictable. Rather, “investing” is a simple means of earning money with your money. It can make you wealthy and is virtually risk-free. For at least this week, we’ll return to our roots and stick to the mission, both in this post and in Thursday’s on-line “radio” show.
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Time to Choose Sides

August 10th, 2010

When it comes to the stock market, you’re either a gambler or an investor. You simply can’t be both. Gambling and investing are two entirely different things. And, they’re mutually exclusive.

You either think like most folks do, that investing is betting on the stock market—with, at best unpredictable, at worst disastrous, results. Or you understand that it’s putting your money to work for you in successful businesses—letting it earn more for you with little or no risk. You just can’t have it both ways.

In fact, as it happens, one group usually buys from, or sells to, the other.

Over the past 25 years, I’ve had the joy of knowing a whole lot of folks who not only “got it,” but were eager to share their convictions and their knowledge with others. So grateful were they to have learned from other willing mentors, they took pleasure in passing it on. But I can no longer find them. No longer does there seem to be anyone whose convictions—that they were right and the rest of the world wrong—move them to stand up and be counted.

It would be tragic if this commonsense, simple and successful approach to investing were to be lost to the world! But it will be, unless those of us who know what we know have enough conviction go out of our way to take sides and speak up.

It’s well past time we screamed bloody murder because a greedy and unscrupulous securities industry continues to get away with enticing the public into thinking they can get something for nothing—which is exactly what trading and buying stocks for the short term is, and what the whole business of derivatives and other speculative activity involves.

What’s as important, is convincing the public that there is a better way, and that there are some of us who are ready, willing, and able to show them how.



Reminder: Join me on Take Stock with Ellis Traub, this coming Thursday evening at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. Dial “1″ to join the conversation. Share your point of view on this topic.

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A Time for Giving

December 24th, 2009

gold_wrapped_gift-thumb-600x422Whether you celebrate Christmas, Hanakkuh, Kwanzaa, or whatever, there’s an almost universal commonality among faiths—and non-faiths—that this is the season to give.

In that spirit, I’ve spent some time putting together as concise a summary of our investment approach as I could. And, because it’s so simple, I’ve been able to cram everything I think anyone needs to know about investing into my thirty-minute broadcast on Take Stock with Ellis Traub this evening at 7:30PM Eastern (6:30PM Central).

As you know, my intent is to separate as many folks from “the herd” as I can; and I’m hopeful that this offering might help them to understand why our way works and the herd’s doesn’t. Read more…

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Are Investment Clubs Still Relevant?

December 8th, 2009

art.investment.clubAs typically happens, interest in investing declined in lock-step with the Dow. But there are signs that some color is returning to the cheeks of a nearly moribund body of amateur investors.

Many investment clubs—microcosms of that larger body—attest to the same phenomenon in their ranks. Members lost interest as the market value of their clubs’ portfolios seemed to evaporate while they stood helplessly by; and many clubs lost members or, worse, fell by the wayside.

In view of this, the question must arise in the minds of some whether clubs are even relevant any more.


Reminder: Join me on Take Stock with Ellis Traub, this Thursday evening at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. This week: Listen to my guest, IRVING ROTH, talk about how his 21st Century Investment Club weathered the storm.


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Diversification versus Diversification

December 1st, 2009

eggs-in-one-basket__1226944359_5742All of us know that it’s not smart to put all of our eggs in one basket. It just makes good sense.

What makes no sense to me. after all these years of being  advised to diversify by industry and by company size, is the potential dilution of return that this practice produces. So I quit doing it! For the same reason I don’t invest in index funds or EFTs.

I’m looking for a return of as close to 15% as I can get. Therefore I invest in companies whose operations are capable of consistently producing the highest earnings growth possible. And, once I own them, I’m happy to let their managements do their jobs and keep that performance rockin’ until they can’t do it any more.

Diversification, for me, is nothing more than having enough of those excellent companies in my portfolio.

Warren Buffet says that six are enough for him because, once he’s found that many good companies, he’d only dilute his return by adding others that are not quite so good. I find it more comfortable to have at least eight, but no more than fifteen in my portfolio.  I don’t dig into the research nearly as diligently as he does [understatement of the week], so I accept a little sacrifice in my return, just to have enough to cover me when the inevitable Enrons and Worldcoms come along to prove that the “rule of five” works.

Any other effort to diversify by market sector or size—to compensate for down markets—tends to produce a lackluster return over time. Certainly investing in indexes, EFTs, or other broad “market baskets”—even mutual funds—guarantees you  no better than the average return, which is lousy, compared with the performance of the undiluted cream of the crop!

You don’t need to compensate, you just need to be patient!

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Asset Allocation: Is it Necessary or Effective?

October 29th, 2009

Asset_allocation Asset allocation is a device used by investors and financial planners to populate a portfolio with an appropriate mix of investment vehicles selected from a smorgasbord of stocks, bonds, and occasionally other investments, each deemed to carry with it a uniquely predictable degree of risk.

Its goal is to optimize the return on the portfolio while taking into account  that investor’s tolerance for risk. And, risk aversion is analyzed using such factors as the point the client has reached in her life cycle, her current and future responsibilities, her earning capacity—as well as the nuances of his or her character and personality.

The assumption is that there is an inverse relationship between risk and return; and, the more aggressive the portfolio—one invested primarily in common stocks—the more risky it is.

Few amateur investors have the experience or know-how to apply asset allocation without the help of a professional. And, considering the view that most amateurs have of “investing,” the expense of such a professional might easily be justified. But….


Reminder: Join me on Take Stock with Ellis Traub, Thursday evening at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. Dial “1″ to join the conversation.
This week: What’s your portfolio really worth?


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Ten Ways to Tell if an “Investor” Belongs to The Herd

October 13th, 2009

human-herd

First of all, let me make it clear that I absolutely love the herd!

They are those wonderful gamblers who provide us with most of the bargains we come across when we actually invest. So, while I’ve chosen to dedicate myself to trying to convert as many herd-members as possible to become solid and successful investors, I would hate to think of what this investing arena would be like without them!

Before I say anything, you’ve got to know that I was once very much the herd-member. So I can speak with some authority.

That said, here are ten ways you can tell if someone runs with the herd:


Reminder: Join me on Take Stock with Ellis Traub, Thursday evenings at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. Dial "1" to chat. This week we’re going to talk about "risk," and why there should be none.


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