Investing Tips Information

When is the best time to sell your stocks in the stock market?  I am surprised at how many people just hold on to their stocks and think that they will go up forever. In this article I will share with you a strategy that I feel is the best way to minimize your risk in the stock market.

As most of you will know, the stock market goes up and down due to greed and fear. A classic example of this was the rapid rise and fall of the Nasdaq in the late 90’s and early this century. It was commonly known as the “Nasdaq Bubble”. 

In the period between 1996 and 2000 the Nasdaq rose from 600 to 5000.  Many companies rose massively in value on the stock market just on pure speculation. They had not even made any earnings at all (pet.com was a classic example of this). Millionaires were being created at a rapid rate as the value of the stocks rocketed up.

However, early in 2000 reality set in and the Nasdaq crashed to 2000 within months. Over the next 2 years the Nasdaq fell further to the 800 mark. Many of the relatively instant millionaires lost all or most of their money quicker than they earned it. This was when the Nasdaq bubble burst.

So how could many of these investors avoid losing most of their funds?  The trick is to invest in a smarter manner. If you a genius in the stock market, then you may have read the warning signs and then sold near the top. However, many so called technical analysis experts lost significant money on the Nasdaq due to greed.

In my opinion, once your stock, say stock A, has doubled in value then you should sell half of that stock and invest the other half elsewhere (perhaps stock B). This means that you no longer have any risk with stock A (you basically have created a free trade). If you have done your homework with stock B, then hopefully you can sell half of that stock when it doubles too and buy stock C with the revenue. So the process continues. I also sell half of stock A again when it doubles again, but that is not necessary and just a personal choice. You may also want to spend some of the returns in another form of investment.

So imagine if you had used this strategy during the Nasdaq bubble. If you had used this strategy with stocks invested in the Nasdaq and hence put half your earnings into other sectors of the stock market or other investing sectors, then you would be doing pretty well financially now.

I hope that you take this strategy into consideration when you next enter the stock market. Please do not let greed ruin your destiny and wealth creation.

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I could relate to some of the things that Kent wrote about in this article with respect to financial advice. I have already mentioned in previous posts about the importance of budgeting, planning and goal setting with respect to successful investing, but Kent has mentioned some other interesting points. I can totally relate to number seven, which was one of the main reasons for my divorce. I hope that you find the article below useful.  

1. Negative Spending
Have you created a budget and do you stick to it? If not, you may be spending more money than you make. People who have created a budget have a good idea of their monthly income and expenses and can accurately diagnose their financial condition. Other signs of negative spending include the inability to pay off credit cards each month and spending money on fun things before you have paid for necessities.

2. No Rainy Day Fund
Do you have little or no money in savings accounts, retirement plans, and investment portfolios? When something breaks, or difficult circumstances such as unexpected medical expenses or a job loss happens you must draw down what little savings you have and go deeper into debt.

3. Too Much Debt
Do you have so much debt that you are having difficulty meeting your expenses each month? Are you ‘borrowing from Peter to pay Paul’? You may have re-financed your home or consolidated debt to get cash to pay for other debts (maybe more than once). Re-financing or consolidation can be a very good tool to help you, but the ultimate goal must be to reduce debt.

4. No Plan
Do you have a written financial plan, to help you plan for unexpected things and future goals? A comprehensive financial plan used to be difficult to come by unless you had substantial assets, but with a financial plan you can take control of planning your future.

5. Optical Rectitus
The condition in which your optical (eye) nerve gets crossed with your rectal (anal) nerve and you see the world through a crappy disposition. You can choose to be negative or positive. Whichever one you choose will set the course for your life. You can either make the best of what you have, or be a victim of circumstances and spend your life blaming others for your situation. Having a positive attitude creates the state of mind for success and overall health.

6. Self-Centeredness
You live mainly for yourself without thinking of the world around you. You buy things that please you alone, and then you don’t share. For instance, what good is it to buy a new gas grill then never have a cookout? You are enjoying your holiday meal without even a thought about donating to a soup kitchen or food pantry. Your children are enjoying opening their holiday gifts, but you didn’t think about donating a gift for a needy child. You don’t give money and time away. You spend your time and money on yourself, or on those in your very small circle. You will find liberation if you think of others and ‘higher things’ before thinking about yourself. Giving money away can be the best “investment” in how you feel about yourself and the world around you

7. You and Your Spouse Don’t See Eye-to-Eye on Money
Perhaps one of you is a procrastinator and spender and the other is a saver and has a ‘get-er-done’ attitude about finances. This problem can be overcome, but it requires a lot of work from both of you. Financial counseling may be in order in extreme situations. Sometimes separate checking accounts, but joint savings and investments can help. Creating and sticking to a budget is essential so that the ‘spender’ isn’t always blamed for financial difficulties. Also, remember that a lot of marriages break up over fighting about financial matters. The small amount of time planning and working through financial responsibilities is well worth marital harmony.

8. Either Trust Too Much or Don’t Use Advisors at all
You assume that anyone can make financial decisions and that everything will work out in the end. You don’t keep up with the news so you were unaware of things such as predatory lending practices on your ‘interest only’ mortgage or the 400% interest you paid to the ‘Get Cash Now’ store. You are certain that the odds are truly in your favor to win this time so you are buried in magazines that you bought to increase your chances to win. Your basement is filled with products that you will sell someday; you just had to get the minimum amount so that you could be an official distributor and save more money. Remember, if it seems too good to be true it probably is.

Have you put off seeking help from financial, insurance, legal and tax advisors. Many people procrastinate to the detriment of their financial condition. We all have to pay taxes and we all need insurance and a will. Perhaps you don’t want to make the hard decisions that they may tell you to make (like saving more money and buying insurance, or delaying the purchase of things you want now). Tax and legal advisors may save you money and legal entanglements.

9. Living Large
Do you spend money on homes, cars, vacations, or hobbies at or a level above your income bracket versus a notch or two below? Bigger homes, and cars, more sophisticated appliances or whatever you buy, will cost more to purchase, fuel, maintain and insure. The nicer vacation spot will cost you more for your lodging, meals, and for everything else while you are there. Have you ever allowed warm fuzzy feelings to dictate the purchase of a pet without properly budgeting for all of the expenses it would entail? Don’t buy anything if you can’t afford all of the expenses that will come with it.

10. Laziness
For some, the desire to pay bills, budget, and plan finances falls somewhere below getting a root canal without anesthesia. Sometimes procrastination or a desire to avoid difficult topics (like thinking about your death for Life Insurance or creating a Will) can keep you from achieving your dreams.

Being successful with the money you have is not easy or quick and there are no short cuts. Continue to educate yourself about financial matters and obtain and follow a financial plan. If you work hard to achieve the goals laid out in your plan and avoid these mistakes you will be well on your way to funding your dreams.

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Below is an article written by Rama about investing in Biotechnology. I have some investments in biotechnology through Landau Securites using managed funds. This way I get access to biotec stocks from around the world, selected from managers who are rated very highly in the world. Anyway, read the article below and you may see why investing in Biotech related stocks is a good thing to do.

Investing in Biotechnology - Benefits

The benefits of biotechnology investing

Man has been looking since ages to find newer cures and bring about a marked advancement in the filed of medical applications. In the last few years, biotechnology has contributed significantly towards this field.

There have been significant developments in biotechnology making it one of the most lucrative investment options. Yes, biotechnology investing is considered to be the future by many investment experts.

Most venture capitalists today are looking at biotechnology companies in a different light. The opportunities for investors to generate impressive revenue growth are one of the prime reasons why this has happened.

Also the trend to spend till we get the best in health care is another reason. Man does not like to compromise when it comes to good health and biotechnology has been one of the chief gainers of this principle.

Why Biotech?

There are many small biotech companies who are waiting for that golden opportunity. Some of these companies have displayed their flair and skill in just a few years of their existence.

With the right investors these companies can work wonders. Who knows, the drug for Alzheimer’s or cancer might just be underway in some of these companies.

From a business point of view, such a drug can be the single factor that will power you from rags to riches.

But biotechnology investing is not that easy. It is a task that requires a set of special skills so that you can spot the best company instantly.

Finding the right company to invest

There are many companies who will make the job of biotechnology investing easier for you, the investor.

These companies have the scientific, medical and financial experts who will analyze most biotech companies giving you comprehensive advice on which company to invest in.

With just a clinical trial, these analysts will help you determine what future prospects the company holds.

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Most people only invest in their own country.  This may be a safer option in some cases, but many of the potential big gains can be made by investing offshore. Just look at the massive increases, China, India and Russia has had over the past 5 years or so. I personally believe that investing offshore should be part of your portfolio strategy and I do so via Landau Securities. The article written by Stephen shows why Thailand may be a good place to invest in.

Thailand - An Exotic And Investment Goldmine 

Why Invest in Thailand?

Mysterious Thailand is Asia’s top tourist destination, offering a top class tourist industry at very affordable prices, a magnet for visitors, emigrators and property investors alike. In many major locations in Thailand, the local economy relies heavily on tourism and increased property investment in these locations is now the perfect news for domestic economic growth and good capital returns.

Natural and Cultural Factors

1. Once an exotic and expensive long haul destination, Thailand is now also a sophisticated tourist destination with a universal appeal, with holidays very competitively priced.

2. For thousands of people who have worked in Asia for many years, Thailand is a very attractive retirement destination, in which the living environment will feel familiar.

3. Retirement visas are available for foreigners over 50 years of age.

4. Thailand has good schools, an efficient health care system and it is seen as a friendly country in which to live or visit.

5. Thailand offers beautiful mountains, dense forests and stunning beaches, a tropical climate and cities teeming with culture and colour which draw visitors back each year.

6. Warm weather for winter holidaymakers. Peak season is between November and February.

Economic Factors

1. The relatively undiscovered nature of Thailand means that property prices here remain far below those in the more established European markets, although they are growing quickly and strongly (around 10-15% a year).

2. Thailand is the largest growth market in Asia. Some businesses choose Thailand as a regional base from which to keep their employees working all around Asia.

3. Thailand has recently attracted significant foreign investment. It has become one of the Asian economic leaders and is one of the fastest-growing economies in the region.

4. The completion of the Suvarnabhumi-Bangkok International Airport (SBIA) is expected to spur growth in commercial property markets in eastern Bangkok as well as make Thailand even more accessible by air. Thailand is one of the cheapest places to fly to in Asia.

5. The country has strong business links with China and has an excellent infrastructure as well as world-class facilities in many resort towns.

6. Property is much cheaper in Thailand than elsewhere and an increase in overseas interest in property purchase has helped to create an economic recovery in Thailand. Property investors who bought post 1999 have witnessed impressive capital growth, particularly in major cities.

7. Rental potential is great, due to increased government spending luring growing numbers of tourists.

8. No capital gains tax for private investors, and low ongoing taxes.

9. Today foreigners are regarded by the government as a big investment opportunity in Thailand.

Summary

Thailand remains less exploited in the property investment sector than many other areas and for this reason prices are far below those in more established European markets. However in many areas, prices are moving upwards at a rate of approximately 10-15% per annum.

There are undoubtedly some very attractive investment options to be found in certain locations of Thailand and, according to world experts, Thailand’s economy is undergoing a steady growth spurt. While improvements to Thai property investment provisions continue, a symbiosis with the tourist economy and the real estate economy, will allow mutual growth at unprecedented levels.

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The concept of risk versus reward is the basis for investing. The same system of risk versus reward can be translated to almost every part of life. When you analyze a situation, you can determine the possible risks and rewards of doing something and decide what the best course of action is for you.

You probably have heard of the saying “If it seems too good to be true, it probably is”. This statement is so true. I have seen people lose life savings by investing it into financial scams. Conversely, there are others that take very little risks and find themselves falling behind the inflation rate. Determining your risk versus reward strategy for investing is a key factor to success.

The first thing investors of all types need to learn is that while the investment may be a fun and exciting thing to do, there is always a chance, no matter how slim, that you could lose every single dollar you invest. That is one kind of risk. The other kind is the risk of not meeting your investing goals that you have set for yourself. This is a dilemma that every investor must walk, determining your risk while trying to earn the reward.

The risk associated with investing can be caused by many different factors. Things like general economic conditions, the rising or falling of interest rates, management skills, world issues, disasters and inflation are just a few factors that can cause an investment to rise or fall.

Your age is a key factor in what you should invest in. If you are close to retirement, then you should not take many high risk strategies as you have little time to recoup your losses. Conversely, younger people can afford to take larger risks in investing, as they have their whole life to make it back up.  I know of people close to retirement now that have much of their investments tied into superannuation funds. They had a choice whether to go with cash or non cash. It amazes me that some of them, with a few months to go, still did not have their superannuation fund in cash. Every time the stock market takes a plunge, they are worried that it may crash and that their hard earned Super fund will dwindle in size. If they had their superannuation in cash, then any stock market fluctuations would not matter, so they could work their last few months stress free.

Doing proper research can make an investment a far lesser risk for the possible return in revenue. If you research the history, management skills and legality of an investment, and find them to be sound, then you may have an investment that will perform well with less risk.

Analyzing risk versus reward is a huge part of investing and if you are having trouble figuring out how much risk to take, ask for help. You don’t want to enter into investing with a blurry picture. The more you know about your personal situation, the better off you’ll be.

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