Friday, 30 June 2017

Top 50 Rules to Investing - Rule : 25

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Top 50 Rules to Investing

Rule : 25 

Forecasts are Useless.

Why Stock Market Forecasts Are Useless

If I could turn back time, I would make a fortune -- not because I'd buy every great stock early (although that would sure help), but because I'd warn myself of the most dangerous pitfall investors face.

The trap that has cost me the most money is taking stock market forecasts seriously. Analyst earnings estimates and macroeconomic predictions can cost you dearly if you base investment decisions on them. Let's talk about why stock market forecasts are useless and what you should listen to instead.

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Top 50 Rules to Investing - Rule : 27

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Top 50 Rules to Investing

Rule : 27

When It's Time to Act, Don't Hesitate.

Your Family’s Investment Strategy: Why It’s Time to Take Stock

Feeling less than confident about your family’s investment strategy?  Trying to help adult children make the most of their portfolios?

You’re not alone—especially if your kids were born during the 1980’s or 1990’s. Recent data shows many Americans are still a little market leery, almost a decade removed from the 2008 downturn. Specifically, according to surveys from and Capital One/ShareBuilder, we know:

93% of Millennials express both a distrust of the markets and a lack of investing knowledge.39% of Americans ages 18-29 list “cash” as their preferred method of investing, when it comes to money they won’t touch for 10 years. 

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Top 50 Rules to Investing - Rule : 28

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Top 50 Rules to Investing

Rule : 28

Expert Investors Care About Risk, Novice Investors Shop for Returns.

In a haste to make a quick buck from the market, retail investors tend to overlook the fundamentals of the company they're planning to invest in. Some investors buy shares without sparing time to gather the basic information about the company, most importantly the product or service that the company sells and the probable future for that business.

"Retail investors get carried away by a management's overoptimistic speeches, tentative expansion plans and are always biased towards short-term play, never wanting to miss the current surge in the price of the stock," says Hemindra Hazari, head of research, Karvy Stock Broking.

Investors should look at companies that have consistently delivered earnings growth and good corporate governance. Never invest in a firm without understanding the dynamics of the business.

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Top 50 Rules to Investing - Rule : 29

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Top 50 Rules to Investing

Rule : 29 

Don't Lose Money

What Does Warren Buffett REALLY Mean By “Never Lose Money”?

One of the most widely quoted pearls of wisdom of legendary investor Warren Buffett is: “Rule No. 1: Never lose money. Rule No. 2: Don’t forget rule No. 1”.

At first sight, this seems to contradict another of the great man’s gems: “Unless you can watch your stock holdings decline by 50% without becoming panic-stricken, you should not be in the stock market”.

However, the contradiction can be reconciled if we recognise that there’s a difference between seeing a decline in the value of your portfolio and losing money. Doubtless, if you sell out in a panic when stock markets have plunged by 50%, you’ll lose money — certainly on your recent purchases. But if you hold through the downs of the market ideally buying more shares when prices are low — you should make money in the long run.

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Top 50 Rules to Investing - Rule : 30

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Top 50 Rules to Investing

Rule : 30 

You Can Learn More from Your Bad Moves than Your Good.

10 Reasons You Should Never Own Stocks Again

I’m really bullish on stocks and the economy but I don’t think most people should waste their money investing in stocks. You might as well flush it down the toilet. Or throw a big party. We already went over that. And please don’t buy a home. Just relax a little bit if you have some extra money.

I’ve been writing about stocks for almost ten years now. The first time I ever got paid for writing anything was a check for $200 I got from when I wrote in late 2001 about stocks that were trading for less than the cash they had in the bank. I never cashed the check.

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Thursday, 29 June 2017

Top 50 Rules to Investing - Rule : 32

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Top 50 Rules to Investing

Rule : 32 

Stocks Fall More Than You Think and Rise Higher than You Can Possibly Imagine.

How Falling Stock Prices Can Make You Rich

One of the most popular topics among new investors is how to deal with falling stock prices. Everyone talks a good game but the moment quoted market values decline, panic is not uncommon. I've seen it many times in my life. In periods building up to stock market highs, people on even conservative investment forums begin discussing the so-called prudence of a 100 percent equity asset allocation, suddenly thinking they have no business investing in bonds or maintaining reasonable cash reserves.

An ordinary 33 percent or so drop — and historically, that's business as usual from time to time — and suddenly they're gone, swearing off everything from individual stocks to index funds. I've told you this before and I'll tell you it, again: If you live an ordinary life expectancy, you will see your entire equity portfolio decline from peak-to-rough by 50 percent or more at least once, possibly thrice or more. The individual components will fluctuate much more wildly than the portfolio as a whole, to boot. It is the nature of the asset class. It cannot be avoided and anyone who tells you otherwise, be they a financial advisor or mutual fund salesman, is either lying or incompetent. There is no equivocating or qualification when it comes to the academic data. You don't have to invest in stocks to get rich so if this bothers you, accept that you don't deserve the returns they can generate and be fine with it.

That said, I want to talk about falling prices; how you, as an investor, should think about them if you know what you are doing and buying good assets. To do that, we need to back up and talk about stocks more generally for a moment.

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Top 50 Rules to Investing - Rule : 33

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Top 50 Rules to Investing

Rule : 33

Very Few People Have Had Great Success Short Selling, Even in Bear Markets.

Majority of States Have Very Few Stock Market Investors

Stock market movements make headlines every day. How many people invest in stock markets in India? Which state has most stock market investors in India? Mint has analyzed statistics from the Bombay Stock Exchange (BSE) to answer some of these questions.

The BSE data used unique client codes to identify the number of stock market investors in each state and union territory. It identified 3.23 crore registered stock market investors in total. All investor accounts are linked to a demat account, though there maybe duplication, for example with one demat account connected to investor accounts with more than one brokerage. A total of 98.7% of these had clear state/union-territory wise data. It was not defined for 4.29 lakh investors. This works out to less than 7% of India’s 48.18 crore-strong workforce. The exchange updates the data daily. The analysis used numbers from 20 February 2017.

Maharashtra alone accounts for more than one-fifth of India’s stock market investors. Gujarat, Tamil Nadu, West Bengal and Uttar Pradesh are the other top five states in terms of percentage share in total stock market investors. These five states account for a little less than 60% of India’s stock market investors. Most of India’s states and union territories have a smaller share in total number of stock market investors than their share in population.

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Top 50 Rules to Investing - Rule : 34

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Top 50 Rules to Investing

Rule : 34

You Can't Know Everything About Everything.

10 Things You Absolutely Need To Know About Stocks

This post is for the average Joe, trying to put a few dollars to work in the market or take more control over his or her investments. These 10 ideas, tips and topics should be a good primer for your stock market education. They aren't all you need to know, and won't guarantee success, but they're a good starting point for any investor.

Buy Low, Sell High

Sounds so simple right? And yet investing is a rare part of our financial lives where things getting cheaper feels like a bad thing. Few consumers are lamenting cheaper prices at the pump amid the collapse in oil prices over the last year and a half, yet a moderate market fall is treated as the death knell for the bull market.

These are facts that are not mutually exclusive: the current bull market will end, and over almost any long-term horizon stocks have proven to be beneficial investments that generally grind higher.

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Top 50 Rules to Investing - Rule : 35

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Top 50 Rules to Investing

Rule : 35 

Since You Can't Know Everything, Seek Out Specialists Who Know Their Areas.


Want to know how to invest in stocks, but don’t know where to start? This is a situation many face and use to put off investing. I heard the question during my time in the online brokerage industry and hear it regularly today. I learned many things while working in the brokerage industry, but what I saw more than any circumstance or event was investors not knowing how to invest in stocks and ultimately derailing their investing goals or their retirement planning as a whole.

I don’t necessarily blame investors for their ignorance. No matter what we know, there’s always more to learn when it comes to investing and, if you haven’t been fortunate to have a parent, relative or boss teach you how to invest in stocks, how would you know where to start?

Lord knows I have my own weaknesses, so I can empathize with investors who just don’t know where to start. However, I have come to realize that knowing how to invest in stocks is not really difficult, per se, but it does require a little bit of homework.

If you are new to investing in stocks and would like a primer then I recommend you checking out my learning to invest page as it has a number of posts all meant to help you start investing in the stock market. For now though, let’s cover how to invest in stocks when you don’t know where to start.

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Top 50 Rules to Investing - Rule : 36

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Top 50 Rules to Investing

Rule : 36 

If a Company's Sales are Shrinking, the Business isn't Growing Anymore.

What to Do When Your Sales Conversions Start Shrinking

Most companies experience a temporary slump during their existence. But don’t panic.

Take practical steps to move your company forward. When sales start declining, be mindful of what’s going right and what needs improvement.

As an ecommerce business, it may be time to upgrade your website. Research shows that “63% of marketers optimize websites based on intuition and best practices.”

Work with your team to enhance the customer experience. From changing calls-to-action to adding trust verifications, run experiments to correct your challenges.

Start earning more sales today. Keep reading to learn your next steps.

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Top 50 Rules to Investing - Rule : 37

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Top 50 Rules to Investing

Rule : 37 

Real Estate Cycles are Not the Same As Stock Market Cycles.

Understanding the Real Estate Cycle

The American housing market has officially crossed the line from correction to stabilization. After stabilization, the phases are recovery and revival. Small-business owners should take a close look at real estate investment opportunities over the next few years, since this is when the money is really made.

As you can imagine, timing the real estate cycle is critical to achieving big returns on investment. In future submissions of this column, we'll discuss the other strategic objectives, like picking winning markets, purchasing properties, increasing value by improving property, and more. This edition is dedicated to the market cycle, how it works and where we are in it.

Visualizing the cycle in its entirety is the easiest way to grasp its predictability. But in order to see the pattern you have to zoom way out, because one pulse of a property takes 12 to 15 years.

Consider the following two cycles of median home prices. The first, from 1983 to 1996, started with the economy in rough shape. Then an economic boom pulled real estate and the DOW way up. It was a big party, everyone was making money, and then banks got a little crazy with their lending standards and the whole thing went off the rails--stock market crash, massive bank failure, real estate market correction and a serious recession. (Does any of this sound familiar?)

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Top 50 Rules to Investing - Rule : 38

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Top 50 Rules to Investing

Rule : 38 

Investing in what's Popular Never Ends Up Making You Any Money.

How to Invest Money When You Don't Have Any

For months after college, my job was to sit in a windowless warehouse with dozens of other schlubs and type summaries of meetings dictated to me over the phone. The shift went from midnight to 6 AM. I'd eat the free Dominos my employer provided, slowly erode my insides with Red Bull, and slip into a fugue state while transcribing the alien-sounding phrases spat out by the MBAs on the other end of the line.

I never learned about "mutual funds" or "index funds" or "money market accounts"—it all seemed as relevant to my broke-ass existence as theology is to a goat. But these days I wonder if I missed out on a chance to turn a bad job into the equivalent of night business school. I've become increasingly aware that, like a lot of twentysomethings, I don't know what the hell I'm doing when it comes to money. A $3 coffee will turn into a $30 coffee thanks to interest payments on my credit card. I'll wake up after a night out with a crumpled receipt for pizza in my pocket and worry I just overdrew my checking account. I've contemplated simply stopping payment on my laughably unmanageable student loans.

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Top 50 Rules to Investing - Rule : 39

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Top 50 Rules to Investing

Rule : 39

Know Your Investment Edge, and Don't Stray Too Far From It.

What Is Your Investing Edge?

The market wants you to believe that you don’t have an investing edge. It’s simply not in the interest of the industry that you do your own investing because without fees, Wall Street would soon turn into something like the image above and with the bull long gone.

However, we’re all different and you should find an investing edge that best suits you and your investing goals. The beauty of investing is that it isn’t one size fits all.

On Sunday, Investiv founder, Shane Rawlings, described how a trader can have an investing edge and make exceptional returns even if they are right only 30% of the time. In today’s article, I’ll dig more into various kinds of investing edges and describe what my investing edge is and how it has given me exceptional returns in the last 15 years.

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Top 50 Rules to Investing - Rule : 40

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Top 50 Rules to Investing

Rule : 40

Bear Markets Begin in Good Times. Bull Markets Begin in Bad Times.

Bear Market

What is a 'Bear Market'

A bear market is a condition in which securities prices fall and widespread pessimism causes the stock market's downward spiral to be self-sustaining. Investors anticipate losses as pessimism and selling increases. Although figures vary, a downturn of 20% or more from a peak in multiple broad market indexes, such as the Dow Jones Industrial Average (DJIA) or Standard & Poor's 500 Index (S&P 500), over a two-month period is considered an entry into a bear market.

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Top 50 Rules to Investing - Rule : 41

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Top 50 Rules to Investing

Rule : 41

Neglected Sectors Often Turn Out to Offer Good Values.

Investor ASlert: Value Investing is Staging a Comeback

As 2016 rang in, a bevy of Wall Street strategists made a prediction: Value investing will stage a comeback. With the first quarter now in the books, it looks like they were right.

Value investing beat growth for the first quarter of the year rather handily in key stocks and in the exchange traded funds that both small investors and many institutions use as proxies for style and sector bets.

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Top 50 Rules to Investing - Rule : 42

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Top 50 Rules to Investing

Rule : 42

Buy Value Stocks That are Priced Less Than Their Underlying Assets are Worth.

Low Priced Stocks To Buy In India In 2017

What are low priced stocks? Are penny stocks low priced? In stock investing it is important to define ‘low price’. General understanding is, Rs.100 and greater than Rs.50. But it can be different in case of stock investing. A stock which is trading at Rs.100 can be considered cheaper than a stock trading at Rs 50.This is a reason why expert investors never looks at market price of stocks in isolation. The trading price that we see can often be very misleading. This is one reason why expert investors always perform ‘stock valuation’ before buying one. It is the result of stock valuation that one can identify Rs.100 stock as cheaper than Rs.50 stock.

Low priced stocks are those stocks which are trading at discount to its intrinsic value. But it is not easy to estimate intrinsic value of stocks. There is an easier alternative available to check if stocks can be tagged as low priced stocks. We can use financial ratios to evaluate if a stock is trading at cheaper price. These financial ratio is a great tool for common people who are not very conversant with analyzing financial statements.

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Top 50 Rules to Investing - Rule : 43

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Top 50 Rules to Investing

Rule : 43

There's Usually Only One Reason Corporate Insiders Buy Stock.

Fewer Corporate Insiders Are Buying Their Own Stocks Than At Any Point In 29 Years

If 'everything is awesome' then someone will have to explain to us why corporate executives are buying their own firms’ shares at the slowest pace in at least 29 years.  According to the Washington Service, there were a total of 279 insider buyers in January, the lowest since 1988.  Moreover, the number of sellers has also grown in recent months, pushing the ratio of buyers to sellers in February to its lowest since 1988 as well.

Meanwhile, Ned Davis Research points out that insider selling has been elevated enough to trigger his firm's in-house bearish signal for 11 weeks in a row, the longest stretch since 2014.

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Top 50 Rules to Investing - Rule : 44

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Top 50 Rules to Investing

Rule : 44

Don't Miss a Good One by Being Too Concerned With the Exact Price You Pay.

Key Benefits of Investing in Equities

1. Capital Gains Over the Long-Term

Historically, equities have provided some of the strongest after-tax investment returns over the long-term. By owning equity in companies with growth potential, investors have the opportunity to benefit from capital gains as the asset grows in value over time. Investors enjoy unlimited participation in the earnings of the firm. Of course, investors cannot expect the company to pay out all its profits in a form of a dividend as this may come at the risk of future profitability and a lower share price.

2. A Good Source of Income

The dividend yield on equities is another important source of return. Unlike term deposits, dividends from equities can have inflation built into earnings where companies are able to pass cost increases onto customers.

3. Highly Liquid

Equities are traded on major stock markets around the world. They are highly liquid which means that they can be converted into cash quickly and with minimal impact to the price received. Unlike direct investments, there is relative ease in the transfer of ownership and the movement of equities.

4. Tax Advantages

The after-tax performance of equities is lifted by dividend imputation, a tax benefit not shared by other asset classes. The dividend imputation system allows investors who have been paid a dividend to take a personal tax credit (franking credit) since the company has already paid tax on the dividend.

5. Corporate Control

Equities come with certain rights including the voting rights to which the investors are entitled. The level of corporate control depends on whether the equity is classed as ‘ordinary’ or ‘preferred’ and on the size of your shareholding.

Ordinary shares represent the majority of shares held by investors. When you own an ordinary share of a company, you usually have one vote per share that entitles you to participate in the election of the board of directors.

Despite their name, preference shares have fewer rights than ordinary shares, except in one important area  dividends. Companies that issue preference shares usually aim to pay consistent dividends and preference shareholders have first call on dividends. In the event that a company is liquidated, preference shareholders have prior claim to assets over ordinary shareholders. This feature allows the company to raise capital from venture capitalists before it goes public because most venture capital deals are structured as preference shares.

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Top 50 Rules to Investing - Rule : 45

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Top 50 Rules to Investing

Rule : 45 

Avoid Popular Stocks, Fad Industries and New Ventures.

7 Stock Buying Mistakes And How To Avoid Them

Making mistakes is part of the learning process. However, it's all too often that plain old common sense separates a successful investor from a poor one. At the same time, nearly all investors, new or experienced, have fallen astray from common sense and made a mistake or two. Being perfect may be impossible, but knowing some of common investing errors can help deter you from going down the well-traveled, yet rocky, path of losses. Here are some of the most common stock buying mistakes.

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Top 50 Rules to Investing - Rule : 46

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Top 50 Rules to Investing

Rule : 46

Buy Shares in Businesses You Understand.

Basics Of Share Market Explained

To make sure we have enough funds to be prepared for the future. Simply earning and saving is not enough. Inflation  the price-rise beast  eats into the value of your money. To make up for the loss through inflation, we invest and earn extra. This is the investment fundament. The stock market is one such investment avenue. It has a history that goes way back to the 1800s.

Online Share Broking

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