HAPPY TAX DAY!
By show of hands, how many people have been watching my "twice-a-week" market wrap up? I told you I'd summarize the market in a 5 minute video twice a week for you (on Monday afternoons and Thursday afternoons). If you missed yesterday's video, click here to check it out. It's still applicable.
We have a BIG Wall Street company reporting earnings each day before the market opens for the rest of the week. Are you ready? JP Morgan, Merrill Lynch and Citigroup will report Wednesday, Thursday and Friday respectively. After GE's disappointment from its finance division Friday, Wachovia's disappointment yesterday, and Washington Mutual's disappointment a week earlier, how can anyone feel comfortable?
What are you going to do? You don't know? It's okay.
The most successful investors in the stock market aren’t always invested in stock. They’re only invested when the odds weigh heavily in their favor.
You must have the discipline to know when to stay out! For most people, this is one of the easiest concepts to grasp, yet the hardest to follow. Believe me, this isn’t something that you’ll learn in this course (or any other course). This is something that comes with experience. It’s something that most people have to learn several times throughout their investment life.
To further stress my point, since I started in the business, I’ve witnessed 10, 20, even 50-year Wall Street veterans re-learning this lesson and admitting it to me. The stock market has a way of sucking the ego right out of any soul, no matter how big the head is - or was. Imagine a 65-year-old, egotistical – and understandably so – and successful fund manager admitting this to an 18-year-old kid (me, when I first went to work on Wall Street).
People ask: “When do I know when it’s the right time to be in or out?” The answer is: If you’re asking that question, it’s time to stay out.
What about the declining U.S. Dollar? Sitting in cash can actually turn into a loss when compared to foreign currencies. Click here to read an article talking about how to park your money in ETFs with exposure to foreign currencies. It's as easy as buying a stock.
One way to beat the dollar is to sell naked put options one strike price below the price of the foreign currency ETF of your choice. To read about selling naked puts, click here.
Otherwise, find an account or stable investment vehicle that offers you a nice interest rate. You can look at Treasuries, Certificates of Deposit, money market accounts or a bank or broker offering a relatively high-yielding interest rate.
The point is to sit in something safe while you wait for trades with a high probability of success to present themselves. If, after nine months of waiting in a money market account, you invest at the right time for a three-month portfolio increase of 20%, you’re probably beating the market’s return.
There will be plenty of times when you don’t find trades, and times when you can honestly say to yourself that you feel the odds are heavily stacked in your favor. If you always have “good trades/investments”, then you aren’t screening hard enough. I would estimate that 99% of individual investors don’t spend enough time on the sidelines. Keep your standards high, and be willing to sit on the sidelines for as long as necessary.
Savvy investors are willing to sit in a risk-free interest bearing account for years if need be, and you should get comfortable with taking the same stance. What’s likely tied for first place on the individual investor’s list of most common mistakes is the notion that if you’re not in the market, you’re not making money. Anxious and over-eager investors force trades at the wrong time, mainly because they’re afraid of missing the next big gain. After taking a 30% loss on the first trade, they find a trade that actually does make a lot of sense, and they make 50% on it. The problem is that’s only a net gain of 5%.
Fear of missing the next winner is a killer. Professional investors know that cash is a trade too.
By show of hands, how many people have been watching my "twice-a-week" market wrap up? I told you I'd summarize the market in a 5 minute video twice a week for you (on Monday afternoons and Thursday afternoons). If you missed yesterday's video, click here to check it out. It's still applicable.
We have a BIG Wall Street company reporting earnings each day before the market opens for the rest of the week. Are you ready? JP Morgan, Merrill Lynch and Citigroup will report Wednesday, Thursday and Friday respectively. After GE's disappointment from its finance division Friday, Wachovia's disappointment yesterday, and Washington Mutual's disappointment a week earlier, how can anyone feel comfortable?
What are you going to do? You don't know? It's okay.
The most successful investors in the stock market aren’t always invested in stock. They’re only invested when the odds weigh heavily in their favor.
You must have the discipline to know when to stay out! For most people, this is one of the easiest concepts to grasp, yet the hardest to follow. Believe me, this isn’t something that you’ll learn in this course (or any other course). This is something that comes with experience. It’s something that most people have to learn several times throughout their investment life.
To further stress my point, since I started in the business, I’ve witnessed 10, 20, even 50-year Wall Street veterans re-learning this lesson and admitting it to me. The stock market has a way of sucking the ego right out of any soul, no matter how big the head is - or was. Imagine a 65-year-old, egotistical – and understandably so – and successful fund manager admitting this to an 18-year-old kid (me, when I first went to work on Wall Street).
People ask: “When do I know when it’s the right time to be in or out?” The answer is: If you’re asking that question, it’s time to stay out.
What about the declining U.S. Dollar? Sitting in cash can actually turn into a loss when compared to foreign currencies. Click here to read an article talking about how to park your money in ETFs with exposure to foreign currencies. It's as easy as buying a stock.
One way to beat the dollar is to sell naked put options one strike price below the price of the foreign currency ETF of your choice. To read about selling naked puts, click here.
Otherwise, find an account or stable investment vehicle that offers you a nice interest rate. You can look at Treasuries, Certificates of Deposit, money market accounts or a bank or broker offering a relatively high-yielding interest rate.
The point is to sit in something safe while you wait for trades with a high probability of success to present themselves. If, after nine months of waiting in a money market account, you invest at the right time for a three-month portfolio increase of 20%, you’re probably beating the market’s return.
There will be plenty of times when you don’t find trades, and times when you can honestly say to yourself that you feel the odds are heavily stacked in your favor. If you always have “good trades/investments”, then you aren’t screening hard enough. I would estimate that 99% of individual investors don’t spend enough time on the sidelines. Keep your standards high, and be willing to sit on the sidelines for as long as necessary.
Savvy investors are willing to sit in a risk-free interest bearing account for years if need be, and you should get comfortable with taking the same stance. What’s likely tied for first place on the individual investor’s list of most common mistakes is the notion that if you’re not in the market, you’re not making money. Anxious and over-eager investors force trades at the wrong time, mainly because they’re afraid of missing the next big gain. After taking a 30% loss on the first trade, they find a trade that actually does make a lot of sense, and they make 50% on it. The problem is that’s only a net gain of 5%.
Fear of missing the next winner is a killer. Professional investors know that cash is a trade too.
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