If you are lucky enough to have access to capital, either personal or IRA money, you may never have to work again. That is correct, David Disraeli stands and says that anyone can learn to invest for profit in stocks, provided you meet a dozen criteria, are disciplined and can learn to de-emotionalize yourself from your money. This is easier said than done. Before I provide you with the rope that you can use to lift yourself from the daily grind into a cozy stream of income, I must warn that this same rope can hang you. I would further say that most people will hang. I have met very few people, or at least lay people who trade for a living over a long period. That said, I can show anyone, even those who choose not to trade themselves how to improve whatever it is that they are doing with regard to investing.
Everyone knows someone who is day trading. We are all bombarded by systems, seminars, books, software, and conflicting opinions on tv, the internet and the local pub. Over the past thirty years, I have been a broker, investment adviser, trader, portfolio manager, securities analyst and entrepreneur. I have made clients money switching mutual funds around, in individual stocks, distressed junk bonds and dabbled in futures and options. My advice to anyone wanting to make money in their jammies is to use a portion of their savings to begin. By far the most success I have seen is from good old long term investing in diversified portfolios. Today everything is different in the market.
I am not nearly as confident as I once was that the buy and old method will still provide for one’s future. In fact I am very nervous. The good news is that buy and hold is just one strategy. There are as many investment methods as there are stars in the sky. So how do you settle on one (or two)?
I will begin by standing 10,000 above the market. There are only two types of stock investment strategies, under which all strategies fit: Fundamental or Technical – period. A fundamental investor like Warren Buffet is concerned with a company’s earnings, balance sheet, earnings growth potential, valuation, industry and more. The idea is to find opportunities that other investors have not found or at least opportunities you think will perform. Technical analysis in strict terms is based on behavior, not fundamentals. Every stock fluctuates around some sort of trend. Technical analysts are attempting to find buy and sell opportunities by analysing the behavior of stocks and pretending to know when it is going to move up or down. I use the word pretending because no one know the future but there are tools that can help a trained eye spot opportunities. Yes some investors use both methods.
The system I use personally has not changed in 25 years since it was taught to me by a broker buddy who primarily traded his own account but liked being in a brokerage office and I assume had other clients. He only traded futures, but the method works on anything that moves, from mutual funds to currencies, and hogs. I realize that there are many methods that work which I could use but I have learned, as you must, to ignore a great deal of noise from all sources. This is like trying to listen to a conversation with a friend with a soft voice in a noisy restaurant. You have to ignore all but one source of input. Some can, others can’t. A wise man once said, if you don’t know who your are, the stock market is the last place to find out. Underneath that short quip is the message that investors are people and people are different and every investor has an investment personality whether he/she is aware of it or not.
For a free coaching session, call David Disraeli at 512-464-1110.