[ Pobierz całość w formacie PDF ]
in which you will find yourself, as well as to accommodate any new ideas you yourself will
come up with.
Plain English
Picking an investment strategy is the process of determining what information will
be most important in your stock selection, how many of each stock you will
purchase, and even how and through whom you will purchase that stock.
An exhaustive list of investment strategies is impossible because they are as individual as
the people who employ them. Stories circulate about people who pick their investments by
using dart boards, astrology, and (so I've heard) even monkeys. As a new investor, however,
you should be aware of some of the more popular (and saner) methods people employ for
investing in their stocks:
The recommendation strategy
The research strategy
Buy and hold
Dollar cost averaging
Constant dollar averaging
Mix and match as you see fit; take what you want and leave what you don't like. In the world
of investing, the only right answer is yours.
I l@ve RuBoard
I l@ve RuBoard
Recommendations
When people learn you have begun your investment career, "experts" will begin to crawl out
of the woodwork. In all fairness, a significant number of recommendations you receive will
have true merit. People who discuss the companies they work for are certainly in a better
position to discuss their internal structures than the average person on the street.
TIP
A recommendation is advice or information, sometimes unsolicited, received from
other people who may possibly have better insight into the stock than you do.
Furthermore, your friends and family may be able to provide real insight into a company and
its products and services with which you may be unfamiliar. When deciding whether to invest
in Home Depot, for example, I asked a friend of mine who is an engineer to tell me of his
experiences with them. I write financial books; I couldn't hang drywall if it came up and
introduced itself to me. After our discussion, however, I felt much better about my final
decision.
I asked my brother for much the same kind of information before making an investment in a
video game stock. I don't play video games, but he does extensively. My discussions with him
enabled me to make an intelligent decision about which games were hot, which systems had
problems, and what innovations were being anticipated by consumers.
The other side of the coin is best illustrated by a great commercial currently running on
television. A young guy walks up to a very distinguished gentleman in an art gallery and
whispers to him, "I overheard your stock recommendation last week and put all my money in
XYZ stock." The older gentleman replies, "Good for you. They will be the only company
authorized to produce Widgets once the Martians take control of Earth," as his nurse leads
him back to the home.
The moral is obvious: Recommendations are a wonderful source of information as long as
you know their source and the recommender's expertise on the subject.
TIP
Which recommendations merit further research and which are duds? Ask the
recommender, "Why do you recommend this company?" If the person has a
concrete reason (personal experience with the stock, product, or service), I'll look
into it. If the person answers, "Someone told me it was a good investment," it's a
dud.
I l@ve RuBoard
I l@ve RuBoard
Research
Research is a vague term, and it could include pretty much anything. Asking people to share
their experiences is research, so is requesting a copy of the company's annual report.
Checking the general press is research, as is digging up evaluations of the stock on the
Internet. As a result, a precise definition of "research," one that applies to every stock and/or
investor, is difficult to give.
That does not mean that research in itself is impossible to determine, but rather that each
individual investor needs to determine for himself or herself which "research" pertains to the
type of investment decisions he or she is evaluating. Besides asking my brother for his
insight into video games, I also checked the total sales of video games per year in the United
States on the Internet. I read several articles on the system that was being launched and its
implications on the video game market. And I number crunched the stock in question with the
formulas we've just learned in Lesson 12, "Evaluating Stocks," immediately after each of
the company's previous new product launches.
Any investment decision you make should require some research. The extent is really up to
you, but the time you are willing to contribute toward being ultrafamiliar with your investment
decision correlates absolutely with the investment's success. By cheating on investment
research time, you are ultimately cheating yourself. Make no mistakes about it; this kind of
cheating will cost you cold hard cash.
I l@ve RuBoard
I l@ve RuBoard
Buy and Hold
Read this section twice. Buy and hold is a wonderful strategy for any newcomer to the market
and is equally attractive to investors of any experience level. Basically, buy and hold works
like this: Since the inception of stock markets, the value of the stocks being traded has
eventually risen almost without exception. This passive strategy, buy and hold, works on the
principle that if you purchase a stock and let it sit where it is long enough, you will eventually
realize a profit. Whether that means 5, 10, or 20 years is uncertain, but remembering that
your investments are part of a larger goal, it's pretty certain you'll see a profit before your
dream becomes accessible and you are therefore ready to sell your shares.
Plain English
Buy and hold is an investment strategy whereby an investor purchases a stock and
leaves it alone. Buy and hold usually implies that dividends will be reinvested in
subsequent purchases of the stock.
For a buy and hold strategy, you would want to consider stock in companies that have the
potential to be around for the long term. Consider blue chip stocks or stocks with good growth
potential to achieve this. In addition, instead of collecting dividends, newer investors should
seriously consider reinvesting their dividends into subsequent stock purchases. Many
companies will execute these subsequent purchases without adding sales loads, making the
investment even better. In addition, by negating broker fees and allowing compound interest
to perform its magic on the initial investment and its subsequent dividend reinvestments,
even the most novice investor is better placed to realize a profit.
Finally, the most important benefit of the buy and hold strategy is almost certainly not having
to spend an inordinate amount of time researching and following other investments. The buy
and hold strategy is often referred to as the buy and forget it strategy for that very reason. As
a new investor, you will have your hands full becoming familiar with the entirety of the market.
Rather than make several different investments over time, you are bound to do better by
thoroughly researching one investment and "letting it ride." Your broker will hate you because
his or her commission is based on the number of total trades you perform, but your banker is
going to love you as you keep those brokerage fees in your own account in the bank.
TIP
The magic of compound interest works on the principle that your subsequent
profits are reinvested to later increase the amount of your interest. It's a circular
phenomenon, but it really works as demonstrated in the table.
Table $10,000 Investment Growth Utilizing Compound Interest
Interest Rate 5 Years 10 Years 15 years 20 Years 25 Years
5% $12,763 $16,289 $20,790 $26,533 $33,864
8% $14,693 $21,589 $31,722 $46,610 $68,485 [ Pobierz całość w formacie PDF ]
zanotowane.pl doc.pisz.pl pdf.pisz.pl ocenkijessi.opx.pl
in which you will find yourself, as well as to accommodate any new ideas you yourself will
come up with.
Plain English
Picking an investment strategy is the process of determining what information will
be most important in your stock selection, how many of each stock you will
purchase, and even how and through whom you will purchase that stock.
An exhaustive list of investment strategies is impossible because they are as individual as
the people who employ them. Stories circulate about people who pick their investments by
using dart boards, astrology, and (so I've heard) even monkeys. As a new investor, however,
you should be aware of some of the more popular (and saner) methods people employ for
investing in their stocks:
The recommendation strategy
The research strategy
Buy and hold
Dollar cost averaging
Constant dollar averaging
Mix and match as you see fit; take what you want and leave what you don't like. In the world
of investing, the only right answer is yours.
I l@ve RuBoard
I l@ve RuBoard
Recommendations
When people learn you have begun your investment career, "experts" will begin to crawl out
of the woodwork. In all fairness, a significant number of recommendations you receive will
have true merit. People who discuss the companies they work for are certainly in a better
position to discuss their internal structures than the average person on the street.
TIP
A recommendation is advice or information, sometimes unsolicited, received from
other people who may possibly have better insight into the stock than you do.
Furthermore, your friends and family may be able to provide real insight into a company and
its products and services with which you may be unfamiliar. When deciding whether to invest
in Home Depot, for example, I asked a friend of mine who is an engineer to tell me of his
experiences with them. I write financial books; I couldn't hang drywall if it came up and
introduced itself to me. After our discussion, however, I felt much better about my final
decision.
I asked my brother for much the same kind of information before making an investment in a
video game stock. I don't play video games, but he does extensively. My discussions with him
enabled me to make an intelligent decision about which games were hot, which systems had
problems, and what innovations were being anticipated by consumers.
The other side of the coin is best illustrated by a great commercial currently running on
television. A young guy walks up to a very distinguished gentleman in an art gallery and
whispers to him, "I overheard your stock recommendation last week and put all my money in
XYZ stock." The older gentleman replies, "Good for you. They will be the only company
authorized to produce Widgets once the Martians take control of Earth," as his nurse leads
him back to the home.
The moral is obvious: Recommendations are a wonderful source of information as long as
you know their source and the recommender's expertise on the subject.
TIP
Which recommendations merit further research and which are duds? Ask the
recommender, "Why do you recommend this company?" If the person has a
concrete reason (personal experience with the stock, product, or service), I'll look
into it. If the person answers, "Someone told me it was a good investment," it's a
dud.
I l@ve RuBoard
I l@ve RuBoard
Research
Research is a vague term, and it could include pretty much anything. Asking people to share
their experiences is research, so is requesting a copy of the company's annual report.
Checking the general press is research, as is digging up evaluations of the stock on the
Internet. As a result, a precise definition of "research," one that applies to every stock and/or
investor, is difficult to give.
That does not mean that research in itself is impossible to determine, but rather that each
individual investor needs to determine for himself or herself which "research" pertains to the
type of investment decisions he or she is evaluating. Besides asking my brother for his
insight into video games, I also checked the total sales of video games per year in the United
States on the Internet. I read several articles on the system that was being launched and its
implications on the video game market. And I number crunched the stock in question with the
formulas we've just learned in Lesson 12, "Evaluating Stocks," immediately after each of
the company's previous new product launches.
Any investment decision you make should require some research. The extent is really up to
you, but the time you are willing to contribute toward being ultrafamiliar with your investment
decision correlates absolutely with the investment's success. By cheating on investment
research time, you are ultimately cheating yourself. Make no mistakes about it; this kind of
cheating will cost you cold hard cash.
I l@ve RuBoard
I l@ve RuBoard
Buy and Hold
Read this section twice. Buy and hold is a wonderful strategy for any newcomer to the market
and is equally attractive to investors of any experience level. Basically, buy and hold works
like this: Since the inception of stock markets, the value of the stocks being traded has
eventually risen almost without exception. This passive strategy, buy and hold, works on the
principle that if you purchase a stock and let it sit where it is long enough, you will eventually
realize a profit. Whether that means 5, 10, or 20 years is uncertain, but remembering that
your investments are part of a larger goal, it's pretty certain you'll see a profit before your
dream becomes accessible and you are therefore ready to sell your shares.
Plain English
Buy and hold is an investment strategy whereby an investor purchases a stock and
leaves it alone. Buy and hold usually implies that dividends will be reinvested in
subsequent purchases of the stock.
For a buy and hold strategy, you would want to consider stock in companies that have the
potential to be around for the long term. Consider blue chip stocks or stocks with good growth
potential to achieve this. In addition, instead of collecting dividends, newer investors should
seriously consider reinvesting their dividends into subsequent stock purchases. Many
companies will execute these subsequent purchases without adding sales loads, making the
investment even better. In addition, by negating broker fees and allowing compound interest
to perform its magic on the initial investment and its subsequent dividend reinvestments,
even the most novice investor is better placed to realize a profit.
Finally, the most important benefit of the buy and hold strategy is almost certainly not having
to spend an inordinate amount of time researching and following other investments. The buy
and hold strategy is often referred to as the buy and forget it strategy for that very reason. As
a new investor, you will have your hands full becoming familiar with the entirety of the market.
Rather than make several different investments over time, you are bound to do better by
thoroughly researching one investment and "letting it ride." Your broker will hate you because
his or her commission is based on the number of total trades you perform, but your banker is
going to love you as you keep those brokerage fees in your own account in the bank.
TIP
The magic of compound interest works on the principle that your subsequent
profits are reinvested to later increase the amount of your interest. It's a circular
phenomenon, but it really works as demonstrated in the table.
Table $10,000 Investment Growth Utilizing Compound Interest
Interest Rate 5 Years 10 Years 15 years 20 Years 25 Years
5% $12,763 $16,289 $20,790 $26,533 $33,864
8% $14,693 $21,589 $31,722 $46,610 $68,485 [ Pobierz całość w formacie PDF ]