School of Hard Knocks 02 (Jan 10 - Jan 13)

Re: School of Hard Knocks 02 (Jan 10 - Dec 11)

Postby winston » Sat Sep 03, 2011 7:06 pm

Continue ...

6. Not Enough Indexing

There is not enough time to recite many of the studies that prove that most managers and mutual funds underperform their benchmarks.

Over the long-term, low-cost index funds are typically upper second-quartile performers, or better than 65-75% of actively managed funds.

Despite all the evidence in favor of indexing, the desire to invest with active managers remains strong. John Bogle, the founder of Vanguard, says it's because, "Hope springs eternal. Indexing is sort of dull. It flies in the face of the American way [that] 'I can do better.'"

Index all or a large portion (70-80%) of all your traditional asset classes. If you can't resist the excitement of pursuing the next great performer, set aside a portion (20-30%) of each asset class to allocate to active managers.

This may satisfy your desire to pursue outperformance without devastating your portfolio.
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Re: School of Hard Knocks 02 (Jan 10 - Dec 11)

Postby winston » Sat Sep 03, 2011 7:08 pm

continue ...

7. Chasing Performance

Many investors select asset classes, strategies, managers and funds based on recent strong performance. The feeling that "I'm missing out on great returns" has probably led to more bad investment decisions than any other single factor.

If a particular asset class, strategy or fund has done extremely well for three or four years, we know one thing with certainty: We should have invested three or four years ago. Now, however, the particular cycle that led to this great performance may be nearing its end.

The smart money is moving out, and the dumb money is pouring in. Stick with your investment plan and rebalance, which is the polar opposite of chasing performance.


Conclusion

Investors who recognize and avoid these seven common mistakes give themselves a great advantage in meeting their investment goals.

Most of the solutions above are not exciting, and they don't make great cocktail party conversation. However, they are likely to be profitable. And isn't that why we really invest?

http://sg.finance.yahoo.com/news/7-Comm ... 0.html?x=0
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Re: School of Hard Knocks 02 (Jan 10 - Dec 11)

Postby winston » Sun Sep 11, 2011 7:39 am

TOL:-

Do you have what it takes, to make it in this "investment business" ?

Can you continuosly
1) find out what's going on,
2) think of an investment angle and
3) then pick the right time to execute it ?

Do you really have the passion for this business ?

Do you really think that investment is rocket science and not hard work ?

And whenever you stumble, are you willing to learn from the situation, tpick yourself up and then go on to your next investment idea ?
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Re: School of Hard Knocks 02 (Jan 10 - Dec 11)

Postby winston » Thu Sep 15, 2011 8:57 am

TOL:-

If you are using logic, you are probably late to the party ... :?
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Re: School of Hard Knocks 02 (Jan 10 - Dec 11)

Postby winston » Fri Sep 23, 2011 6:37 am

The Ten Crash Commandments by Joshua M Brown

You want to survive this crash and the next one? Then follow Downtown Josh Brown's Rules for Surviving a Crash:

1. Acknowledge that its a crash. Once we're past down 10% in the Dow Jones Industrial Average from wherever the peak was (yes, the Dow is a way better crash gauge than the S&P 500), you can stop saying correction and start saying crash. Better to be wrong in hindsight on the nomenclature.

2. Pencils Down! Whatever trendlines or individual stock research you were working on needs to be shelved for the moment. Your drawings and calculations will not work here.

Correlations always get jiggy in crashes, stocks become commoditized like bushels of wheat that must be liquidated regardless of the underlying businesses.

3. Don't listen to "stockpickers" or sell-side equity analysts. They are only looking out from within their own little bubble and they cannot comprehend the other little bubbles around them let alone the whole bathtub. There'll be a time to "know your stocks" but this ain't it.

4. Ignore the asset-gatherers and the brokerage firm strategists, their job is to calm markets and soothe investors.

5. Make sacrifices by reducing stock exposure by beta and volatility. This is my iron-clad rule. The moment you recognize the crash, kick the small caps, biotechs, emerging markets etc. You must separate your feelings for a particular asset class, sector or individual stock and recognize that the higher the volatility, the worse they're gonna act in the short-term.

5a. Also, margin balances must get cleaned up immediately, take the losses, I don't care.

6. Make two lists. The first list everyone knows about and talks about - the "if they get cheap enough I'll buy it at that price" shopping list. Fine, but don't forget the "things I will sell on the next bounce.

7. [b] Watch sentiment more closely than technicals or fundamentals.
Pay attention to the squishier things in a crash moreso than you would normally. Are people screaming in pain? Or are they still looking for a bottom? Or have they given up entirely? There is no math to this, a lot of it is "feel".

8. Abandon any hope or intention of catching the bottom. You won't and it is unnecessary. No one will carry you out on their shoulders if you manage to do it but you will definitely get carried out on a stretcher if you get it really wrong with your own capital. Keep in mind that time becomes more important than price... not where will it end but when?

9. Suspend disbelief. "Bank of America could NEVER be a $5 stock!" "How could Bear Stearns possibly go out of business, its a hundred-year-old firm!" "No way this stock should trade at 5 times earnings, it's a Dow component!" "How could the market go down 5% four days in a row?"

Guys, anything can happen in a crash, there are machines making the trades and they have no respect for the prestige or standing of a particular company. This is both gut-wrenching to behold and great for the level-headed who eventually got to buy Wells Fargo in the teens or Apple in the $100s once the bottom was in.

10. Stop being a know-it-all and shut up. If you are telling people a price or a support line where the selling will end, you are only kidding yourself. Have a guess based on your discipline and research, but don't act like you're talking facts.

Things tend to overshoot through reversion to the mean trendlines or fair value estimates on their way back to stasis.


http://www.thereformedbroker.com/2011/0 ... mandments/
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Re: School of Hard Knocks 02 (Jan 10 - Dec 11)

Postby winston » Thu Sep 29, 2011 4:22 pm

How they manipulate the stock market in China

Employees of Chinese brokerages, fund managers, and company executives are among those engaged in illicit activities, ranging from falsifying numbers on listing prospectuses to insider trading, the industry sources said.

These disclosures about how the markets are being manipulated follow a Reuters investigation into accounting fraud at Chinese companies listed in North American exchanges.

FALSE IPO DATA

One of the most common of the illegal stock trading practices is including false figures for revenue and other data on IPO prospectuses, said one senior manager with a brokerage firm based in eastern China.

"It's just a bunch of bosses meeting up and filling in the forms. 'What kind of price do you want? We'll get you that price,'" said the source, who asked not to be identified for fear of repercussions.

"Often it's because someone's kid is doing a certain business, so if I help him with an IPO now, he might help me with something else down the road."

Another practice involves collusion between company executives and major institutional investors. They get together ahead of a planned secondary share offering, and agree to ensure the company's share price performs well enough to attract demand for the offering.

The investors then dump the shares after the offering when the share price has reached a high enough level. Along the way, commentators help talk up the stock among retail investors amid well-timed releases of positive news on the company, said another industry source, again on condition of anonymity.

"We'll set it up for them. Everyone will get together in a room and work out a schedule," the source said. "We'll know when the stock will reach a certain point, and set a target for when those involved will aim to get out."

The misuse of private trading accounts by mutual fund managers is a practice, which like that of "black mouths," is common enough to have been given a colorful nickname in Chinese: "rat trading."

The rats are fund managers who buy securities in their own personal trading account ahead of large purchases of the same security by their fund house, hoping to profit from a rise in the share price from their firm's larger transactions.

The CSRC has been especially cracking down on this practice because it is holding back the development of the mutual fund industry. In one illustrative case, the regulator meted out punishment to Huang Lin, former money manager at Franklin Templeton Sealand Fund Management Co in Shanghai.

"You have some pretty creative accounting techniques that Chinese companies often use," said Kent Kedl, managing director of Greater China and North Asia with consultancy Control Risks.

"Some will have one set of books internally, one set of books for the tax authorities, and another one to potentially show investors. It's a pretty common thing."

"You really need to do your own due diligence," she said. "Not only talking to the companies, but going to talk to their competitors, their enemies, their suppliers -- the people who conduct business with them," she said. "That's really the very reliable source."

"Once you log in, you're getting screen shots of your desktop every three or seven seconds. But what's the reality? Everybody's got three mobile phones because their line is recorded, so they use their mobile phones. And it happens a lot."

The problem is part of a much larger China syndrome. Whether it's food safety or rampant counterfeiting, those who want to cheat or cut corners will usually find a way around any restrictions, because enforcement resources are so woefully inadequate.

Many retail investors shrug off the inherent disadvantage they face, with so many insiders privy to so much information that they are not. That includes the chronic leaking of important economic data, prompting the statistics agency to crack down on the practice this year.

Source: Reuters US Online Report Top News

http://www.newsmeat.com/news/meat.php?a ... &buid=3281
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Re: School of Hard Knocks 02 (Jan 10 - Dec 11)

Postby winston » Wed Oct 05, 2011 9:20 pm

Sometimes You Can't Help But Make Money… We're Near Those Times Now By Dr. Steve Sjuggerud
Wednesday, October 5, 2011

Sometimes in life, you can't help but make money…

If you were a real estate broker in 2006, you couldn't help but make money… Crawl out of bed, answer the phone, and poof! There's another quick big commission on the other end of the line.

If you were a day-trader in 1999, you couldn't help but make money… Crawl out of bed, turn your computer on, buy just about anything, and poof! You end the day richer than you started.

One of the best money-making lessons I've learned in life is this…

There are times when you'll make a fortune from simply existing – just being in the right place at the right time (like real estate in '06 or the dot-coms in '99).

And there are other times in life when, no matter hard you work, no matter what you do, you won't make any money. You're doing the wrong thing at the wrong time (like real estate and the dot-coms after they busted).

The first key is to recognize those good moments – the moments when you can't help but make money – and capitalize on them.

The second key is to KNOW that those moments WILL end. Know that day-trading, or house flipping, or whatever-is-next-ing… it won't last forever.

I was fortunate to learn this lesson early in my career by getting my butt kicked…

When I was 22, I started out as an international stockbroker. Within a few months, I was making more money than I ever imagined I would. The phones were ringing nonstop.

It was one of those good moments I'm talking about… I couldn't help but make money. But I wasn't smart enough to recognize it as a "good moment" yet.

After a couple months, the phones stopped ringing… The Hong Kong stock market fell something like 25% in two months. My income fell 90%. To make up the income, I was working harder than ever.

The brutal reality was, nobody was interested in foreign stocks anymore. I wasn't making enough to cover school and rent, much less food.

There was nothing I could do to fix it. Lesson learned the hard way… Make hay while the sun is shining.

So far, 2011 has been one of those times in the markets where, no matter what you do, you're not going to make any money…

Stocks are down. Commodities are down. Real estate is down. Gold is up… but nothing to write home about. Heck, if you'd simply moved to cash and gone sailing for the year, you'd probably have done better.

But times are about to change.

Back in March 2009, people thought the world was coming to an end. Just about all investments bottomed out in price. And no matter what investments you bought in March 2009, chances are, you doubled your money within two years.

I believe we're fast approaching a moment like March 2009, where no matter what you do, you'll make money.

Many major stocks around the world haven't been this cheap in a generation (except for the bottom in March 2009). Commodities are now cheap. Real estate is an extraordinary value. I wouldn't be surprised to see many different assets double within two years after this market bottoms.

Sometimes, no matter what you do, you can't make money… You're doing the wrong thing at the wrong time. You might as well be doing nothing, because what you're doing isn't going to work.

And sometimes, you can't help but make money… Throw a dart at a list of stocks and commodities, buy what the dart lands on, and you'll double your money in two years.

We're getting close to one of those times.

I will let you know here in DailyWealth when the time is here…

Source: Daily Wealth
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Re: School of Hard Knocks 02 (Jan 10 - Dec 11)

Postby kennynah » Wed Oct 05, 2011 9:33 pm

And sometimes, you can't help but make money… Throw a dart at a list of stocks and commodities, buy what the dart lands on, and you'll double your money in two years.


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Re: School of Hard Knocks 02 (Jan 10 - Dec 11)

Postby winston » Thu Oct 27, 2011 8:26 am

That’s a Money-Loser! Joshua M Brown

1. Buying out-of-the-money naked options:

2. Confusing your politics with your investing:

3. Playing the tertiary name. If there's a hot sector or an industry group of stocks you want to be involved with, try to only play the best or the second best names.

4. Hiring an options advisor

5. Private Placements

6. Currency trading

7. Listening to gut traders. The gut traders on TV, while colorful, are really just regurgitating things that make them sound smart - they are not helping you invest.

8. Confusing your time frame with someone else's.

9. Knee-jerk Contrarianism. "The market is all betting one way so of course I'm betting the other way." This works very well at major turning points, which are very rare.

10. Betting on Jockeys.

http://www.thereformedbroker.com/2011/1 ... ney-loser/
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Re: School of Hard Knocks 02 (Jan 10 - Dec 11)

Postby winston » Sat Oct 29, 2011 8:52 pm

These are the big mistakes most individual investors make when it comes to stocks…

• They don't know when to sell, so they sell at the bottom.

• They don't know how to value stocks, so they buy at the top

• They own stocks that are designed to fleece shareholders through constant dilution

• They suffer catastrophic losses because they don't diversify and only sell when a stock collapses – the so-called "buy and fold" approach

• They ignore income opportunities and thus don't enjoy compounding returns

• They buy mutual funds that are horribly managed and sell them during market panics.

Source: Growth Stock Wire
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