BACK ON TRACK

Posted By: TimoStevens (Wealth Sage, 2009)

Discussed here are ideas to help you get your investment plans back up again!

(1) Abandon the popular averages;

Over the past years, all of the major averages are grossly negative or just beginning to get back toward their best past levels. At the same time, the stock exchange advance/decline line has been extremely positive. Additionally, the last time averages were up, issue breadth was totally negative.

(2) And the bases of investing, again, are what?;

Most investors confuse Quality with analyst expectations and think that Diversification means getting one of every product type that's out there. In fact, they are basic risk minimization tools that every investor needs to use.

(3) Appreciate the power of income;

Base income just has to grow every year, for a person to have any hope of keeping up with inflation. Growing Market Value is inflationary; particularly with respect to hat size, and income paves the road toretirement income.

(4) Buy Low, Sell Higher;

Profitable company stock prices fluctuate just like unprofitable ones. The difference is that the former are much likely to move back up again. Buy quality at lower prices but, set a reasonable (10% or so) profit-taking target... and pull the trigger. Reload, and do it again!

(5) Embrace the working Capital Model;

For both portfolio Asset Allocation and Performance Evaluation, use the cost basis of your holdings as opposed to their Market Value. This is the only way to use short time periods (a year being the shortest for anything at all meaningful) for any kind of analysis.

(6) Fall in love with volatility, not securities of any kind;

Market volatility is one of the few things that you can be certain about. Use it wisely and it will shorten your road to investment success.

(7) Remember Peak-to-Peak and Trough-to-Trough;

There was a time when tests like these where the only valid (market value) tests of an investor's understanding. Well, they still are! But then, there's never a correlation between the calendar year and any market, interest rate or economic cycle.

(8) Corrections are every bit lovable as rallies;

Profit-taking is much more fun, and much easier decision-making than buying stocks while in the throes of a falling Equity Market. Yet, one is just the flip side of the other.

(9) Understand the Investor's Creed;

In a rising market, you should be selling more than buying, resulting in a growing cash position. And in a falling market, you should be buying more than selling, resulting in a smaller cash position.

Nevertheless, if you run out of cash while the market is still falling, you are doing it right. In the same way, if you feel stupid having taken your profits and the market is still foaming, your brilliance will not be rewarded.

(10) Investing is not a competitive event;

It's all about you: your money, your risk tolerance, your goals and your objectives. It doesn't matter what the others are doing, why and how. There is no average, index or benchmark that can be compared to the Market Value changes of a properly diversified portfolio.

Excerpted From: Ten New Investment Concepts, Steve Selengut - www.buzzle.com.