How can you make heaps of money from the stock market while keeping risks to the minimum?
I always believe that you should never put your money in something you do not know about eventhough everyone is dumping their money in this particular stock and prices are rushing like mad.. That would be speculating or gambling. Sounds weird. Remember the internet bubble where a lot of investors buy internet stocks like crazy just because they had been going up and up.
Warren Buffett would never gamble or speculate. He would not invest in something unless he is sure or certain of what he is investing in. The common theory is that higher risks = higher returns. However you can turn the situation to your advantage by doing research on the companies you are investing in, like warren buffett and yet make higher returns.
Warren Buffett once said 'Rule number 1, never lose money'. This is the main concept for value investing. He also said that I would rather be certain of a good result than hopeful of a great one. Wise words for value investors indeed.
So what are Warren Buffett's secrets? Below are some of his criterias
1. Identify companies with high and growing ROE
2. Identify companies with 15% growth or more in earnings
3. Identify companies with high profit margins
4. Identify companies with book value growing regularly
5. Identify companies with debt/equity ratio of 50% or lower
6. Identify companies with high intrinsic value
The criterias I have identified above can be easily identified nowadays on popular sites like moneycentral.msn.com or other popular investment software. The most important criteria of value investing is margin of safety... So how do you guarantee a margin of safety?
The secret is actually very simple. To invest in companies, sectors or industries that you are knowledgeable about. It is also known as your circle of competence. You will need to know about the relevant industries that affect the industries that these value companies are in. You will also need to know the safety, stability and tax rates of the country and which the company is in.
You should also have a well diversified portfolio, selecting stocks in industries which you specialised in.
It all boils down to the 2 simple rules of investing.
1. Never lose money
2. Do your research/homework before you invest
Check out more articles and tips at http://bewarrenbuffett.com
Tuesday, September 11, 2007
How Can you Make Heaps of Money From the Stock Market While Keeping Risks to the Minimum?
Mutual Fund Investing: Etfs and Index Funds Versus Actively Managed Mutual Funds
There are two distinct schools of thought when it comes to investing in mutual funds. One group, which I will call, “Asset Allocators”, utilizes what is commonly referred to as a top-down mutual fund investment approach. The top-down approach emphasizes the big picture by first examining the economy and condition of the broad financial markets and then evaluating individual mutual funds based on standard financial measures of comparison.
At the extreme, asset allocators may not even invest in mutual funds, believing that exchange traded funds (ETFs) are reasonable substitutes for actively managed mutual funds. Investors use ETFs for a variety of reasons but the most important and logical basis for using these financial instruments is their normally low costs, tax-efficiency, style purity as well as their specialized focus. There are many ETFs that emphasize individual parts of the market such as financials, technology and healthcare. The asset allocator who believes that technology will perform well over the next year and does not want to pay an active mutual fund manager to get this exposure would buy a technology ETF.
Asset allocators may also use index funds as a substitute for actively managed mutual funds. Index funds normally offer investors low costs, style purity and tax efficiency. Index funds strive to replicate the performance and characteristics of common benchmarks such as the S&P 500 Index and the Russell 2000 Index. Not all index funds are clones of their respective benchmarks. Some mutual fund companies design index funds to replicate the performance and characteristics of a benchmark without actually holding all of the securities in that benchmark.
The pure asset allocators prefer ETFs and index funds over actively mutual funds on the theory that mutual fund managers cannot outperform benchmarks on a consistent basis. To an asset allocator, it makes no sense to pay a mutual fund manager to under perform its benchmark. There are many financial planners and other investment professionals that utilize this approach. The use of ETFs and index funds is actually a reasonable approach if one of your goals is to create a low cost structure for your clients. On the other hand, it is not very client friendly for investment professionals to use these low cost financial instruments while still charging high fees.
Mutual Fundamentalists and Actively Managed Mutual Funds
The second group, which I will call, “Mutual Fundamentalists”, care very little about the broad market and invest almost entirely based on the fundamentals of each particular mutual fund. These somewhat rigid investors might not entirely ignore the economy and market conditions, but these issues do not drive their investment processes. Mutual fundamentalists focus on factors such as the historical performance and risk attributes of different asset classes, expenses, volatility, and especially portfolio manager and analyst backgrounds. For many mutual fundamentalists, quality of management is the most important factor when evaluating a mutual fund.
Mutual fundamentalists fully acknowledge that some passive investment strategies make sense for specific investment categories, but vigorously disagree with a blanket statement asserting that active portfolio management has no value because portfolio managers cannot outperform benchmarks. Mutual fundamentalists believe that there will always be a large group of portfolio managers who have the ability to outperform benchmarks, but that investors need to do their homework in order to find them.
Combining Asset Allocation and Mutual Fundamentalism
A better approach to mutual fund investing might be to combine the best attributes of asset allocation and mutual fundamentalism. With this approach, you could get the best of both worlds. You would have the opportunity to take advantage of changing market conditions and also have the option to select the best low cost mutual fund managers within your favored asset classes.
Whichever approach you choose, do not let mutual fund expenses weigh your returns down. Most asset allocators and mutual fundamentalists agree that high cost investments should be avoided whenever possible.
Learn How to Trade Forex Cuerrencies Like a Pro. Find What Works for You
Well, you have you decided to seek your fortune in the fantastic world of Forex currency trading?
You aren't alone, and you have probably wondered if all the myriads of "How to Make Your Fortune" books out there and the seminars you hear about have any merit? You probably also wonder about the advisability of opening an account with a Forex broker and putting up some risk capital?
Read almost any article on the subject of investing and you will get the sense that even though they point out the risk of failure, their 'tools' and/or strategies will turn you into a BIG winner!
Well Good luck! Although there are many excellent programs out there that DO work as advertised, what they don't tell you is: WHAT is going to WORK for YOU?
Every one of the Forex guru's approach to this learning task is a "one size fits all" approach. Unfortunately (or fortunately depending on your take on this) we are NOT alike in most ways. Only the greed/fear syndrome seems fairly constant amongst all participants.
We all have different attitudes, likes, dislikes, wants, needs, ad infinitum. So, what would appear doable for one may be totally impossible or total confusion to another.
Some have the patience to watch grass grow and take their profits at mowing time, while others need the thrill of the daily hunt and kill to bring home the bacon. And then there are all those that fall somewhere between these extremes.
There is probably truth in most any of the myriad of 'how to's' out there, but you will have to search out and find what works for you. Remember what works for me won't necessarily work for you. Also know that the crowd is usually wrong so you have to find something that few others are doing.
Now, I know that I haven't given you much of substance to this point. But here is what I do recommend.
If the Forex markets appeal to you, start purchasing and reading the various sources that you come across. Most all have a money back guarantee. If they don't, forget them. Find what appeals to you and reject what doesn't make sense and get your money back. Test and utilize what makes sense to you.
Open a practice account with a broker. Most brokers have free practice accounts that you can actually trade using the actual data feeds and trading platforms that actual traders use. You actually get experience in trading and get the 'feel' of how it works.
A word of warning: Although the results you get from this 'practice trading' mirrors precisely what you would have made with real money, it does not account for the 'greed/fear' syndrome. Only risking real money that you have earned will expose you to that evil beast.
The emotions of fear, greed and ego have ruined more trading accounts than any other factor. Just look at how people get trampled out of the stock market when it takes a dump, while those with a sound investment plan just dollar cost average their way to success in the long haul ignoring the inevitable downturns.
Believe it or not, you will find that which resonates with you will work and won't cost you an arm and leg to find it. Do NOT put out your money for expensive training programs unless they also have a guarantee. Remember, they are selling information and there is no guarantee on the time you might waste on their program(s). Your time IS valuable.
I have been profiting in the Forex markets for some time, but I know that what I focus on is not what 90% of Forex traders look at. I won't 'advertise' it as a 'system' since I know that most woundn't get it, nor should they, but it works for me.
There are just too many ways that do work for those that take the time, perseverance and energy to find what works for them. Some may stumble on what works for me, and succeed but that would just be a coincidence.
For resources and more info on the Forex markets take a look at http://profit-in-forex.com. I think that YOU can succeed in this money maker as well as anyone! I feature the best Forex resources that makes sense to me, but understand, what makes sense to me might be rubbish for you and vice versa.
You just have to find what make sense and works for you! Happy hunting!
Helpful Bankruptcy Advice
It seems that financial problems are occurring more commonly today than ever before. Before you make any quick decisions you should explore all of your alternative options to bankruptcy. There are laws that are changing to make bankruptcy difficult in certain areas because there are massive amounts of bankruptcies occurring.
There are so many places that offer bankruptcy advice to those who seem to be on the road to filing. You should consult a highly qualified representative from a well-known company to help you understand all of your problems and options. These companies have a main objective that is to help you deal with the complications involved in handling your financial issues.
You can find companies that offer you several options that you didn’t even know were available. One such option is the IVA that basically gives you the ability to write off your debt in less than five years.
With this option you are required to create a legal contract between you and all of your creditors. The CVA also requires that you and your creditors create a contract. You still may have to provide a settlement or create a compromise while you cease trading.
If you feel that you are headed towards bankruptcy then you should locate an administrator to give you quality advice and help you with your financial issues. An administrator will help you manage your company’s affairs, business, and property. It is always important to invest in a well-qualified administrator.
Another important option for you is liquidation. This may keep you from having to file for bankruptcy. Liquidation allows you to sell of all of your assets in an attempt to pay off your existing debts. If this option still will not clear up your financial issues than bankruptcy is the only alternative by getting your debts legally discharged.
Important Bankruptcy Advice
If you are headed towards bankruptcy or have creditors bothering you at all hours of the night then you should know that there is a much easier approach to dealing with your financial situation. There are many options that you ha before having to take on the stigma of bankruptcy.
If you are one of the many people who are seeking bankruptcy information and advice then there are many companies that are more than capable of helping you. These companies offer you multiple options for resolving your financial issues prior to heading off to bankruptcy court. If you find that you have entered bankruptcy there are a few things that you should be aware of.
The first thing that you should do when you are heading towards bankruptcy is pay off as many creditors as you can with your business assets. You need to set up meetings with an administrator or liquidator who can help you divide up all of your remaining assets so that you can resolve issues with your creditors in order of priority.
If you feel that you are near bankruptcy then you want to please as many creditors as possible. You want to pay special attention to the creditors with the most importance. Find an administrator or liquidator who can help you come up with a fair resolution that will make all of the companies involved happy.
Even after you have paid off your creditors with your remaining assets by means of liquidation you may still need to file for bankruptcy. In this type of case you may find that some of your creditors will need to be included in this bankruptcy. None of these creditors will receive any money from you. You are trying to get your remaining debt discharged so that these creditors won’t bother you any more.
Sell More, Get More, Go Offshore
Imagine being open to a wider market with more products to sell without having to pay sky-rocketing taxes! Isn’t it too good to believe? But that’s how it is with offshore eCommerce—it’s just magic. You get to sell more, find more and grow more if you’re planning to have an offshore business. This has its thrilling advantages, which explains why it is so popular in today’s world.
With offshore eCommerce, you can sell as many products as may be is available in the world. In fact, sometimes you will be able to sell more products from offshore than what you do from within the bounds of the strict legalities of your country. The sale of life-saving drugs (LSDs), for instance, is banned in the US but you are legally free to buy them from an online marketer and have it delivered in the US.
There are many such products which find its access closed in one country but can be procured via an offshore business. Handicrafts, regional tokens, certain food items, and clothing fall under this list of products which can be resold online and with profit. The Latin Americans, in particular, make the most of it by selling local products. The Asians closely follow suit in this practice. Africans use their native handicrafts in the international businesses. And there are more people’s groups involved in extracting the benefits of offshore eCommerce everyday.
Every country you visit, you can keep an eye on unique products, which you can sell online or make a part of your offshore company and earn money against it. Being in a Free Trade Zone, you get to sell products tax free, thus reaping higher margins on profit. You can buy products from anywhere in the world and have them sold offshore online to the rest of the planet. This means that you do not have to pay tax to the US government for products sold online from US.
Offshore eCommerce has umpteen benefits in its folds. If you are selling products which are manufactured in a nation different from yours, you can still have it shipped and carry on all the operations from offshore, or through your offshore website. You money gets accumulated into your offshore banking account. You can keep your profit, pay back the manufacturer and handle every single step of the sale comfortably online. And all these, without having to pay any taxes!
There are endless possibilities in offshore businesses. You get to sell more, earn more and prosper more even when you are only virtually operational. That’s the biggest advantage. However, before setting up a company or an offshore residence or heading straight for tax-free profits, ensure you are free from all legal restrictions of your country.
Understand your Currencies
In the forex markets, it is important to understand the nature of the currencies you are trading. It is worth knowing the characteristics of the currency pairs, since each of them exhibit distinct identities. There is a fact that most of the currencies might exhibit similar movement patterns, which can help a trader confirm price movements. Trader can look at two pairs of currencies that have almost similar or completely opposite price movement patterns to get better predictions. Let take an example of the close relation between the EUR/USD & USD/CHF.
The price movements of these two currency pairs are absolute mirror images. In short, they have an inverse relationship. If EUR/USD is rallying, then USD/CHF should have downward movement, and vice-versa.
How can traders take advantage of this? The most obvious fact is that one must not trade both the currencies at the same time. If one is long the EUR/USD, logically one should not be long the USD/CHF at the same time, since the USD/CHF would have a downward movement.
Neither is it wise to take opposing trades on these two pairs, because if the trade goes wrong, then the trader would incur losses in both the trades (although the trader also might have double profit if the trade goes right, but anyway, in forex trading, we focus on how to not get loss first).
Ideally, one should trade either of the two pairs. The best way to take advantage of this fact is to cross-check a trade by looking for confirmation factors on the other pair. If a trader is planning to take a long position in the EUR/USD, he can look for a similar short setup on the USD/CHF. If such an opposite setup is present in the USD/CHF, it only adds further credence to his long EUR/USD trade. It is just a check.
There are other currency pairs also which exhibit a close relation. This fact serves as a good rule of thumb to estimate the movement of the particular currency. Thus it is worth studying these relationships to gain a higher edge in the market. As you know, sometimes a basic knowledge can also serve as a turning point between failure and success.
Visit his site http://www.profitguideforex.com/ for more details
