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Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Secrets to Successful Investing- Special

News_Letter / Learning to Invest Jun 08, 2008 - 12:03 AM GMT

By: NewsLetter

News_Letter

Many small investors seem to repeatedly make the same old mistakes of either getting on board of a trend just as the trend ends or holding onto to losing investments in the hope of an eventual bounce back.

Therefore this weeks newsletter has a mix of education as well as up to date examples of strategies that illustrate how investors need to gear their thought processes towards key elements of successful investing which include :


The Market Oracle Newsletter
May 12th , 2008            Issue #14 Vol. 2

Secrets to Successful Investing- Special


Dear Subscriber,

Many small investors seem to repeatedly make the same old mistakes of either getting on board of a trend just as the trend ends or holding onto to losing investments in the hope of an eventual bounce back.

Therefore this weeks newsletter has a mix of education as well as up to date examples of strategies that illustrate how investors need to gear their thought processes towards key elements of successful investing which include :

Focus on the Fundamentals

The dot com bubble was a clear example of where many investors ignored the fundamentals and were subsequently penalized with losses of more than 90% on many of the stocks that failed to have any fundamentals in support of high price earnings ratios.

One of the keys to long-term success in portfolio building is to focus on companies that provide consistent earnings growth backed by strong fundamental outlook for their sectors. For instance over recent years the Oil sector is a clear example of having strong long-term price fundamentals in the face of peak oil, which has resulted in companies providing consistently strong year on year earnings growth. This coupled with the third key factor of consistent growth in dividend payments contributes to solid portfolio gains in the long-run.

Another sector that exhibits strong long-term fundamentals is Water utilities. Yes these sectors are unlikely to experience booms of the likes of the dot com boom, but neither are they likely to experience something along the lines of the dot com bust. So focus on strong long-term fundamentals to deliver consistency in portfolio growth.

Don't Get Emotionally Attached to your Investments

Gold seems like an apt example at the moment of investors getting carried away with emotional attachments to the precious metals stocks. It did not take a genius to realise that when gold surged beyond $1000 that it was primed for a significant correction, this has happened and saw gold decline to below $850. A dispassionate view on gold would have had gold investors taking profits by the use of stop-loss. How many failed to reduce exposure to gold as it fell and triggered technical sell signals ?

Investors need to have mechanical triggers for both entry in terms of adding to positions, and exit in terms of banking profits and preventing losses so as to avoid emotional attachment to positions. Without these investors may give up much of the gains made on the upside on the way down.

This weeks Special is a 30-day trial to MarketWatch Hulbert interactive tool for researching and rating the performance of investment newsletters and advisors.

The Hulbert Financial Digest anonymously subscribes to more than 180 newsletters, and follows over 500 model portfolios, monitoring each newsletter's buy-sell recommendations as they issue them. Following a strict set of computational rules, the HFD computes the risk-adjusted performance of all portfolios of 5, 10, 15, and 20 years.

Your corporate earnings watching analyst,

Nadeem Walayat,
Editor of The Market Oracle

In This Issue
  1. Why Most Investors Fail and How to Invest Successfully
  2. Investment View From China: The Secret Path to Profits
  3. Your Essential Chinese Investing Toolbox
  4. Top 10 Global Investment Trends to Follow for the Next 18 Months
  5. Junior Gold Mining Stocks in the Midst of Fear Driven Sentiment Storm
  6. Patience is an Successful Investor's Virtue
  7. Seven Ominous Crises: How to Protect Your Portfolio and Profit!
  8. Can You Profit From The Rice Shortage?
  9. Crude OIl Hits $119- Ways to Profit From Peak Oil
  10. How the Economy Really Works- Inflation, Money Supply and the Velocity of Money
1. Why Most Investors Fail and How to Invest Successfully

By: John_Mauldin

This week I am in South Africa and am not as connected as I would like to be due to meetings and slow Internet, so we are going to look at some material from my book, Bull's Eye Investing, which I think is more pertinent than ever. And since lately there has been rather large growth in the readership, there are a significant number of new readers for whom this material will be fresh. When I originally wrote much of this, the markets were coming out of the bear phase of 2001-2. I am adding a few comments in [brackets]. I trust you will find value as we look at the problems that investors face in the struggle to maximize portfolio value.

Read Article

2. Investment View From China: The Secret Path to Profits

By: Keith_Fitz-Gerald

BEIJING, CHINA - Whether you're trying to invest profitably in the region here, or are just trying to understand what's going on, there's a single secret that will virtually guarantee your long-term success.

And I'm going to tell you what that secret is.

Read Article

3. Your Essential Chinese Investing Toolbox

By: Money_and_Markets

If you read my Money and Markets column on a regular basis, you're probably interested in the lucrative investment opportunities that can be found in Asia and particularly China.

One of the most common questions I receive from readers is HOW to research both the Asian economies and individual companies. The language barriers and lack of media coverage in the U.S. lead many investors to believe the task is daunting. But it's a lot easier than you think ... if you know where to look!

Read Article

4. Top 10 Global Investment Trends to Follow for the Next 18 Months

By: William_Patalon_III

There's an old Wall Street adage that tells us that "the trend is your friend." And there's a witty bit of wisdom we've developed here at Money Morning to help guide our readers and us that says: "Go global or go home."

Combine those two and you'll discover that you've got yourself one very strong investing strategy - if you choose the right trends, that is.

Read Article

5. Junior Gold Mining Stocks in the Midst of Fear Driven Sentiment Storm

By: Zeal_LLC

While recent activity in the gold stock sector has caused many of its battle-hardened investors to capitulate, the tried and true speculators still holding strong in the junior-gold-stock realm are feeling beaten and bloodied.

As a speculator in junior gold stocks I have not been immune to the carnage in this small sector either. And it's not difficult to hear the wailing and gnashing of teeth. The juniors are in the midst of a fear-driven sentiment storm that is fierce and unforgiving.

Read Article

6. Patience is an Successful Investor's Virtue

By: Hans_Wagner

Patience is one of the most difficult skills to learn as an investor and trader. The best investors and traders understand the importance of patience. As one of Warren Buffett's rules of investing states:

"The Stock Market is designed to transfer money from the Active to the Patient." The best returns come from those who wait for the best opportunity to show it self before making a commitment. Those that chase the current hot stock are destined to loose more than they gain. Remain active in your analysis looking for quality companies at discounted prices, but be patient waiting for them to reach their discounted price before buying.

Read Article

7. Seven Ominous Crises: How to Protect Your Portfolio and Profit!

By: Money_and_Markets

Sean Brodrick writes: Many of the investment trends I talk about tend to play out over an extended period of time — for example, the long-term price gains in food and energy. But I see at least seven different crises that could rock your world over the next 12 months.

My intention is not to scare you. I simply want to raise your awareness today, and give you different ways you can profitably hedge your portfolio against these threats.

Read Article

8. Can You Profit From The Rice Shortage?

By: George_Kleinman

How do we know when irrational exuberance has unduly escalated asset values?--Alan Greenspan, 1996

Rice was in the limelight this past week. Costco and Sam's Club limited the amount of rice customers could buy because of the irrational exuberance of its rice customers. The rice chart below (this is a fairly thin market that's not too actively traded in the futures) looks like an accelerated rocket ride to the moon. Historically, these kinds of moves always seem to end poorly.

Read Article

9. Crude Oil Hits $119- Ways to Profit From Peak Oil

By: Martin_Hutchinson

Venezuelan President Hugo Chavez said a few months ago that if the United States invades Iran , we could expect to see oil at $200 a barrel. With oil already approaching the $120 mark, we may get there even without invading Iran.

[Perhaps President Chavez could be tempted out of his chaos-causing rule in Caracas with the offer of a rich and perk-filled oil-analyst's job at Goldman Sachs Group Inc. ( GS )].

Read Article

10. How the Economy Really Works- Inflation, Money Supply and the Velocity of Money

By: John_Mauldin

The late and great Milton Friedman told us that inflation is always and everywhere a monetary phenomenon. But there is an asterisk to his equation that we need to examine, namely, the velocity of money. Sometimes a fast-growing money supply is not as inflationary as you might think. Then we will take quick looks at why the banking sector is in for more and larger rounds of write-offs, as well as note that the housing industry is in a hole but is gamely digging itself deeper.

Read Article

For more indepth analysis on the financial markets make sure to visit the Market Oracle on a regular basis.

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(c) 2005-2008 MarketOracle.co.uk (Market Oracle Ltd) - The Market Oracle asserts copyright on all articles authored by our editorial team. Any and all information provided within this newsletter is for general information purposes only and Market Oracle do not warrant the accuracy, timeliness or suitability of any information provided in this newsletter. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We recommend that independent professional advice is obtained before you make any investment or trading decisions. ( Market Oracle Ltd , Registered in England and Wales, Company no 6387055. Registered office: 226 Darnall Road, Sheffield S9 5AN , UK )

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