10 Essential Investor Tips For Successful Investing

Trading and investing into the financial markets has never been more popular. More and more people are starting to see the benefits of taking a little time to, first invest in themselves through a trading and investing education, but also using that knowledge on the financial markets.

Whilst traders may take quicker positions and investor will most likely be holding positions for much longer, perhaps months or even years. So, if you fancy investing into the financial markets successfully, and profit from companies you already know about like Google, Facebook or Microsoft, then these are the ten essential things that an investor must do and know before they start. Let’s take a look…

1. What are your goals?

It sounds simple but many people start investing into a trillion dollar market without any type of plan which, let’s face it, is essentially a gamble. Whilst it can be very simple to invest profitably for the long-term you must define your goals as this will align your expectations correctly, so you don’t kick yourself in the teeth if you don’t hit a million dollars in one day. For example, knowing whether you are investing for the next five or twenty-five years can make a huge difference to how you decide to invest. Continue reading “10 Essential Investor Tips For Successful Investing”

Work Until You’re Dead?!

Many Americans are on a financial pace to have to work until they are dead. According to the Employee Benefit Research Institute, the median amount workers nearing retirement age have saved is a mere $77,000 and the median salary for that age group is $61,000. What’s even worse is that 50% of the private sector population doesn’t even have a retirement plan! How did this happen?

First, many Americans believed that Social Security would be there in the end. Social Security is already paying out more than it is bringing in. Given that the first wave of Baby Boomers is starting to retire, this situation is only going to be worse. Social Security most likely won’t make it through the 40 million plus Boomers set to retire over the next decade, nor will it be there for future generations.

Second, many Americans believed that their company would provide a pension for their retirement. The reality is that only about 11% of the private sector is actually covered by a pension. The combination of company paid pensions and Social Security was supposed to provide the Baby Boomers with sufficient income through their golden years.

Unfortunately, most Americans failed to have an effective plan B. Continue reading “Work Until You’re Dead?!”

Value Investing and the Value Trap

The value investing strategy hinges on finding the stocks of fundamentally sound companies which are trading at a discount to their true or intrinsic worth. That situation can transpire for all sorts of reasons. A stock (business) can be unpopular with investors because it’s temporarily out of fashion, is going against a general market trend or it’s off the market’s radar. But they’re not the only reasons why a stock can be cheaper than it really should be: stocks can be undervalued for other and more worrying reasons.

The fundamentals

To determine if a stock is undervalued or not, value investors analyze a company’s financial fundamentals. They’ll scrutinise a range of ratios including – but not limited to – Earnings Per Share, PEG, P/E Ratio, Dividend Yield and Payout Ratio, Book Value, Price / Book, Price / Sales Ratio and Return on Equity. No matter how meticulous the analysis, sometimes some of these ratios can be misleading, one of the main culprits being Earnings Per share (EPS). EPS is widely considered to be one of the more important ratios because it shows how much of the company’s profit is apportioned to each share. But the fact is that when EPS figure increases it doesn’t always follow that the profit increasing accordingly. Although two companies may have very similar EPS, one of them may need substantially more shareholder’s capital to generate the same EPS. Out of the two, the most appealing option for the value investor would be the business requiring less capital.

The Margin of Safety Continue reading “Value Investing and the Value Trap”

The True Value of Investing

Warren Buffett, a popular investor and one of the world’s wealthiest people once said: “Someone’s sitting in the shade today because someone planted a tree a long time ago.”

And you can have your spot under the shade too – through careful and prolific investments.

Though the current economic conditions may still seem unstable, the benefits of investing rings true in any market, and in any time.

Making investments means putting your money in something that would make it grow. Simply put, it’s also equivalent to making your hard-earned money work for you. Unlike saving your money in a bank, investing is focused more on getting returns.

Starting to invest though, is more than just about having the money. It is not just about knowing where to concentrate investing either. Continue reading “The True Value of Investing”

Technical Charts – Secrets of the Pros

Technical charts are among the best tools used by professional traders to make a good profit out of their investments. These charts help the trader recognize some patterns and trends in the prices so they can make wise predictions based on technical analysis. It is not just a beginner’s way of getting a feel for the market; even professional or experienced traders refer to their charts before making a major trading decision.

What are these charts like?

A technical chart is basically a graphical representation of how a security or commodity is doing in the market for a certain period of time. A trader may refer to existing charts that are based on recent trading history of the currency of interest. Fortunately, the Internet offers some of these technical charts. If the trader keeps close watch of the market, he or she can plot the points himself or herself. Of course, the trader can make use of a special software that can generate the graphs on the computer. The trader only needs to supply the data needed and pick what type of technical chart he or she prefers.

What can technical price charts do? Continue reading “Technical Charts – Secrets of the Pros”

Three Ways to Invest in Gold and Silver

Making the decision to start investing in precious metals is a smart one, but it is only the first step. The next decision you will need to make is how to purchase your gold and silver. You have more than one option, each with its own advantages and disadvantages. In this article I’ll cover the three basic ways you can start adding gold and silver to your investment portfolio.

Mining Stocks. The first way is the simplest and the most common. This is how your investment advisor would probably advise you to invest in gold and silver, by buying the stock of companies that explore and mine precious metals. When most people think of investing they think of buying stocks, bonds and mutual funds through either their 401K or Individual Retirement Accounts (IRA’s), which makes this option seem like an easy choice. There are several gold and silver mining companies whose stocks are traded on one of the stock exchanges. There are also mutual funds that specialize in various segments of the mining industry – gold, silver, platinum and even the more exotic metals. Buying gold by investing in mining stocks is an indirect way of diversifying into the precious metal field and it has the advantage of being easy and familiar – buying one stock is just like buying any other.

As the demand for hard assets increases this can be a very profitable way to diversify your investment portfolio and take advantage of the relative strengths of the precious metals market. The chief disadvantage is that individual mining stocks often move with the general stock market which might not correspond with the price of the metal. The situation might arise where gold and silver are rising in price while the mining stocks are going down. Continue reading “Three Ways to Invest in Gold and Silver”

A Beginners Guide to the Gold Market

Throughout the human history, gold was considered to be one of the most reliable and valuable currency. It clearly established its domination over other currencies irrespective of the cultures and empires that prevailed. Gold was often referred to as an international currency and it still remains that way even today. This wide popularity has turned the gold market into a very lucrative investment sector for people across the world. They have made direct and indirect investments into this sector. This has also caused the entry of a large number of online websites and established companies into the gold market.

A general fact to note here is that the gold price is not determined by a single nation or community. Therefore, gold was able to put up a consistent performance throughout these years. Consistency is one factor that has always been a trade mark of gold currency. So, many international traders use gold as their currency. All these unique advantages that gold possess has made people to make decisions in favor of gold investment. Since, this is a highly complicated market one would require the assistance of experts.

Even though, investment in gold is relatively safe, it is not free from all potential dangers and risks. One should be well prepared and informed before setting out to invest in this market. There are various forums and discussion boards on the internet where one can obtain a lot of vital information on the trends and throbs of the gold market. People who have prior experience with other investment markets would soon discover that the gold market is entirely different from the others. Continue reading “A Beginners Guide to the Gold Market”

The Limit and Stop-Loss Orders – Making Good Use of Market Orders

Are you planning to invest your money in trade? You might be considering futures trading as one of the options for your business venture. However, before fully participating into the futures trading system, it is important to read and search through information that can be useful once you start your trade. Specifically, in the futures market, two major concepts about orders have to be understood by traders. These two concepts include limit and stop-loss orders.

How Does Limit and Stop-Loss Orders Work?

Stop-loss orders are used at a certain price and if the market price amounts to the order price, the order will be considered as a limit order. Hence, stop-loss orders are intended to limit or regulate the amount that a specific trade can lose, which is usually done by making a trade exit if the target price is reached. For instance, an investor may enter a long trade of $4,000 and would place a stop-loss order on $3,950. From this price range, the trader will make a risk in speculating the commodity in fifty points less. If the price will be less that $4,000, the trader will exit in the trade and limits the loss. Stop-loss orders are generally used in futures trading to regulate the loss and manage risks if the trader is in doubt of his price speculation. Continue reading “The Limit and Stop-Loss Orders – Making Good Use of Market Orders”

Why Macro Trading?

Like most investors we started out as plain vanilla stock traders. Initially we did value investing and then over time gravitated more over to momentum/CANSLIM investing with a twist. We wanted higher and more consistent returns so we kind of blended some value principles into the momentum investing and ended up with a GARP-growth at a reasonable price methodology. By demanding at least some value we were able to lower our risk profile quite a bit and didn’t really give up any of our gains. In fact the equity curve was very smooth for some time.

Of course most good things come to an end and we found that in the summer of 2000 we were getting tired of being almost entirely out of the market and not being able to make money. So we started doing a lot more work into who and what was making money. In the stock arena some of the value guys were starting to do well and the short sellers of course did great. But what really got our attention was when we looked at different markets and hedge fund performance tables. The number one strategy was global macro trading and we saw several well known names on the list. Bruce Kovner at Caxton, Paul Tudor Jones at Tudor, and Louis Bacon at Moore were all doing well with smooth equity curves. Continue reading “Why Macro Trading?”

Using Macro Trader Themes in Your Investments

The average investor suffers from many problems. They pay higher fees, they get less information, they aren’t as educated in regards to investments, etc. Basically they are for the most part at a huge disadvantage to the professional investor. One of the great issues is that of not having and sticking to a vision. Most investors think that their portfolio is structured well and that they are in a good position to profit from their long term views. The truth is that most of the time the portfolio has drifted so far away from the original idea that an outsider looking in would have no idea what the investor is going for.

Say for instance that you have a long term view that emerging markets will continue to grow. How can you assemble a portfolio to take advantage of this? And how do most investors drift from this? Most investors will put together the portfolio and then the moment that one of the positions is down they will sell it and then go find some new stock that they just saw on TV. What happens is that over the span of a few months their portfolio is not represented of their long term views.

So how do you assemble and manage a portfolio to profit from your long term views? Well taking the example of emerging market growth you would look at going long several of the different emerging market country ETFs. You might buy some Brazil, Russia, India, China, Chile, South Korea, etc. Or you might just buy an emerging market ETF and then buy some of the individual country ETFs where you see even more opportunity. Continue reading “Using Macro Trader Themes in Your Investments”