1. TAKE CALCULATED RISK:
Every venture that will make us money carries with it some amount of risk. We cannot escape it. The challenge is how to minimize the risk. Taking calculated risk means taking into consideration, how much you want to invest, knowing the ripe time to enter and the time to exit.
2. SAVE AND INVEST:
This is time tested strategy that can make anybody, no matter your income level, to be financially independent. With the time value of money and the power of compound interest, you will see a small consistence saving invested overtime transforming into a fortune.
3. SHOP FOR VALUE:
Buy only that which has value for your money.
4. MINIMIZE YOUR EXPENSES:
Buy only what is neccesary and avoid living on luxury. Avoid consumer debt. You can borrow to buy asset, but don't borrow to buy liabilities.
Thursday, August 28, 2008
Saturday, August 16, 2008
BEAR MARKETS: Gift From The Financial Gods
Although we saw a furious short-term rally late last week, we have entered into official bear markets territory as of early this month. (Bear markets are defined as a drop of 20% or more from a previous high.)
This is a good thing. Legendary investors understand this. Ordinary investors don't.
If you haven't spent much time buying stocks getting excited about a bear market doesn't just sound counter-intuitive, it sounds nuts. After all, how can you feel appreciative watching the value of your life-savings grind lower?
But try thinking like a chess player, a few moves ahead.
Every stock investor knows that you're supposed to buy low and sell high. Bull markets give you a chance to sell high. Bear markets give you a chance to buy low.
If you want to prosper during the next bull market - the one that will propel the averages to new highs in the years ahead - now is your chance to pick up some bargains…
Investors - Don't Let Bear Markets Scare You
Unfortunately, too many investors are lulled into complacency during bull markets and scared out of their wits in bear markets. So they do just the opposite, buying high and selling low.
Yes, the market has fallen sharply over the past nine months. And it may fall further in the weeks ahead. Still, this is an enormous opportunity for long-term investors. Too bad most of them don't see it that way.
As Jason Zweig wrote in last weekend's Wall Street Journal, "The people who so far this year have yanked $39 billion out of U.S. stock funds, and $6 billion out of exchange-traded stock funds, do not understand this. But if you are still in your saving and investing years, a bear market is a gift from the financial gods - and the longer it lasts, the better off you will be. Instead of running from the bear, you should embrace him."
Dr. Jeremy Siegel, author of "Stocks for the Long Run," concurs. Last week he spoke at FreedomFest in Las Vegas, pointing out a few essential facts.
U.S. stocks are undeniably cheap, selling at just 15 times prospective earnings. That's the cheapest the stock market has been since 1991.
Take any rolling 5-year period over the last 200 years, and stocks have outperformed bonds and bills 70% of the time.
Take any 10-year rolling period and stocks outperformed approximately 80% of the time.
Yet we just finished one of those odd 10-year periods when stocks have actually done considerably worse. With stock dividends reinvested, the S&P 500 has compounded at a scant .65% over the past decade. History shows that when investors buy after a long period of underperformance, they are generally well rewarded.
Bear Market Stocks Return 5.6% Annually
For example, in the last long bear market, 1969 to 1982, stocks returned just 5.6% annually. But that mauling set us up for an 18-year bull market where stocks compounded at 18.5% a year, enough to turn $10,000 into more than $200,000.
Bear in mind, no one when can tell you when the next bull market will begin, how long it will last, or how high the market will ultimately go.
But, as you have probably heard your entire life, the shortest route to financial freedom is to own a business. And it is safer to own a portfolio of businesses than a single one. Hence, every long-term investor needs exposure to stocks. When do you get to buy them cheap? During a bear market.
At Berkshire Hathaway's annual meeting in May, Warren Buffett said "I would offer you a significant sum of money if you could give me the opportunity for all of my stocks to go down 50% over the next month." Why? He knows he owns great businesses. He would like to own them even cheaper.
Legendary investor John Templeton, who died last week, often said the four most expensive words in the English language are "this time it's different." He also said the best bargains are found at the point of "maximum pessimism." You don't get maximum pessimism during bull markets. You get them when the world looks like it's falling apart.
Times like now, for instance. Govern yourself accordingly…
Good Investing,
Courtesy of Alexander Green
This is a good thing. Legendary investors understand this. Ordinary investors don't.
If you haven't spent much time buying stocks getting excited about a bear market doesn't just sound counter-intuitive, it sounds nuts. After all, how can you feel appreciative watching the value of your life-savings grind lower?
But try thinking like a chess player, a few moves ahead.
Every stock investor knows that you're supposed to buy low and sell high. Bull markets give you a chance to sell high. Bear markets give you a chance to buy low.
If you want to prosper during the next bull market - the one that will propel the averages to new highs in the years ahead - now is your chance to pick up some bargains…
Investors - Don't Let Bear Markets Scare You
Unfortunately, too many investors are lulled into complacency during bull markets and scared out of their wits in bear markets. So they do just the opposite, buying high and selling low.
Yes, the market has fallen sharply over the past nine months. And it may fall further in the weeks ahead. Still, this is an enormous opportunity for long-term investors. Too bad most of them don't see it that way.
As Jason Zweig wrote in last weekend's Wall Street Journal, "The people who so far this year have yanked $39 billion out of U.S. stock funds, and $6 billion out of exchange-traded stock funds, do not understand this. But if you are still in your saving and investing years, a bear market is a gift from the financial gods - and the longer it lasts, the better off you will be. Instead of running from the bear, you should embrace him."
Dr. Jeremy Siegel, author of "Stocks for the Long Run," concurs. Last week he spoke at FreedomFest in Las Vegas, pointing out a few essential facts.
U.S. stocks are undeniably cheap, selling at just 15 times prospective earnings. That's the cheapest the stock market has been since 1991.
Take any rolling 5-year period over the last 200 years, and stocks have outperformed bonds and bills 70% of the time.
Take any 10-year rolling period and stocks outperformed approximately 80% of the time.
Yet we just finished one of those odd 10-year periods when stocks have actually done considerably worse. With stock dividends reinvested, the S&P 500 has compounded at a scant .65% over the past decade. History shows that when investors buy after a long period of underperformance, they are generally well rewarded.
Bear Market Stocks Return 5.6% Annually
For example, in the last long bear market, 1969 to 1982, stocks returned just 5.6% annually. But that mauling set us up for an 18-year bull market where stocks compounded at 18.5% a year, enough to turn $10,000 into more than $200,000.
Bear in mind, no one when can tell you when the next bull market will begin, how long it will last, or how high the market will ultimately go.
But, as you have probably heard your entire life, the shortest route to financial freedom is to own a business. And it is safer to own a portfolio of businesses than a single one. Hence, every long-term investor needs exposure to stocks. When do you get to buy them cheap? During a bear market.
At Berkshire Hathaway's annual meeting in May, Warren Buffett said "I would offer you a significant sum of money if you could give me the opportunity for all of my stocks to go down 50% over the next month." Why? He knows he owns great businesses. He would like to own them even cheaper.
Legendary investor John Templeton, who died last week, often said the four most expensive words in the English language are "this time it's different." He also said the best bargains are found at the point of "maximum pessimism." You don't get maximum pessimism during bull markets. You get them when the world looks like it's falling apart.
Times like now, for instance. Govern yourself accordingly…
Good Investing,
Courtesy of Alexander Green
Thursday, July 3, 2008
SOME USEFUL ADVICE FOR NEW & SMALL INVESTORS
1. Best Way To Start:
Though I don't know how much you want to start with, but as a new or small investor, it is better to start in a way that will minimize cost to you. I will advice you to start with public offers. In this way, you will not pay commision to anybody. Another thing, it will be easy for you to manage. If your portfolio grows then you can start buying through the secondary market.
2. Buying Strategy: If you are saving and investing i.e. buying on regular intervals, say monthly, quarterly or yearly for long term. Then it will not be easy for you to be buying shares of different companies each time you want to invest. If you continue like that, in five to ten years time you will not be able to monitor the perfomances of the numerous companies. There is nothing wrong in buying more shares of a company you already had in your portfolio e.g. I bought fidelity bank in 2005 at N2.50 and bought it again in 2007 at N8. I also bought oceanic bank in 2004 at N5.30 and bought it again in 2006 at N16.50. So there is nothing wrong in buying more shares of companies you already own their shares. It will even help you to minimize cost.
3. Bank Account: As an investor in the nigeria stock market, you are required to maintain a current account in the event you want to sell your shares or receive a dividend warrant. If you sell your shares, you will only be paid with a cheque which you can only pay in a current account, the same for dividend warrant. To save cost, you can now pay in cheques into special savings account like ESA A/C BY OCEANIC BANK, IPSA A/C BY INTERCONTINENTAL BANK. Other banks has similar accounts with different names. Just ask and compare their terms. With this savings a/c, you will not pay C.O.T and the opening procedure is not cumbersome as current a/c.
4. Regular Signature: In a situation, your share certificate is misplaced, missing or with incorrect information, the only remedy is to go to the register representing that company. The first thing they will request from you is your signature. And the moment it is not the same with the one in their computer, they will request bankers confirmation.You have to understand that bank confirmation cost between N2500 to N5000 depending on the bank.As a small investor, such an amount will not be easy for you. There were cases of people paying N5000 for an investment that worths N5000. Please, to avoid such, make sure you signed that signature you are used to. Also always photocopy the application forms of any public offer or private placement you buy. You should do the same with CSCS form. With photocopies you can easily refer back in case you are not sure. If you don't have a regular signature, it is better for you to use thumb print and initials. It is better than paying N5000. You can also consult a stock broker for more advice.
Tuesday, July 1, 2008
HOW TO BUILD A FORTUNE INVESTING IN STOCK
In our life's endeavour we work, sells, e.t.c. to make a living or to add to what we already have. But in stock market we are multiplying our money.
Stock market gives you the easiest route to financial freedom. It gives you the opportuinity to participate, no matter your income level.
TO LEARN HOW TO USE STOCK MARKET TO BE FINANCIALLY FREE, then order my manual " HOW TO BUILD A FORTUNE INVESTING IN STOCK MARKET " it comes with 2 months mentorship. you can contact me through my email : wealthmag08@gmail.com
Stock market gives you the easiest route to financial freedom. It gives you the opportuinity to participate, no matter your income level.
TO LEARN HOW TO USE STOCK MARKET TO BE FINANCIALLY FREE, then order my manual " HOW TO BUILD A FORTUNE INVESTING IN STOCK MARKET " it comes with 2 months mentorship. you can contact me through my email : wealthmag08@gmail.com
PENNY STOCK REPORT
Penny stocks are lowly priced stock, normally below N5 in the nigeria stock exchange. Some of these stocks are yesterday's blue chips, but due to one problem or the other, their prices was pushed down to penny stock level. Some on the other hand are small companies that are just coming to the market.
As any informed investor will tell you, penny stock are risky. Some of the companies are struggling financially. But as peter lynch said, "stock market is like a gamble,you only manage to tilt the odds in your favour". So, as pennystocks carries a big risk I will quickly add that it is highly profitable if you know how to pick a promising ones. Now lets see how you can spot a promising pennystock when many people are not looking in their direction.
HOW TO SPOT A PROMISING PENNYSTOCK
1. Restructuring programme:
Any pennystock company that is restructuring is worth looking into. The reason being that they are trying to fix an identified problem. e.g. UTC, UAC, JOHN HOLT.
2. New Investors:
For somebody or group of people to stake their money and manpower in a moribund company means they have strong believe and vision to take that company to the next level. e.g. ACCESS BANK, CHAMPION BREWERY.
3.Capital Injection:
Many pennystock companies are only suffering from lack of capital. Once they are able to come to the capital market to raise long term fund in the form of public offer, right issue or debenture stock, they will pick. And this will translate to increase earnings.
4. New Technology:
Our world is dynamic and so is the way we do things. There may be smart entrepreneurs with access to new innovatic products or services that may change the way certain things are done for the better.
5. Growth Trend:
If the stock is having upward growth in all its indices for sometime, then the stock is likely to do well.
As any informed investor will tell you, penny stock are risky. Some of the companies are struggling financially. But as peter lynch said, "stock market is like a gamble,you only manage to tilt the odds in your favour". So, as pennystocks carries a big risk I will quickly add that it is highly profitable if you know how to pick a promising ones. Now lets see how you can spot a promising pennystock when many people are not looking in their direction.
HOW TO SPOT A PROMISING PENNYSTOCK
1. Restructuring programme:
Any pennystock company that is restructuring is worth looking into. The reason being that they are trying to fix an identified problem. e.g. UTC, UAC, JOHN HOLT.
2. New Investors:
For somebody or group of people to stake their money and manpower in a moribund company means they have strong believe and vision to take that company to the next level. e.g. ACCESS BANK, CHAMPION BREWERY.
3.Capital Injection:
Many pennystock companies are only suffering from lack of capital. Once they are able to come to the capital market to raise long term fund in the form of public offer, right issue or debenture stock, they will pick. And this will translate to increase earnings.
4. New Technology:
Our world is dynamic and so is the way we do things. There may be smart entrepreneurs with access to new innovatic products or services that may change the way certain things are done for the better.
5. Growth Trend:
If the stock is having upward growth in all its indices for sometime, then the stock is likely to do well.
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