One of the biggest risks to your retirement is facing a bear market during the early years after you stop working. If you must sell stocks in a falling market, you risk depleting your nest egg at exactly the moment you need it — leaving you with too little savings to cover your needs for your retirement.
More from Bankrate.com:
• 7 Investment Strategies That Defy Downturn
• U.S. Credit Rating slide: What It Means
• Fear of Losing Money Can Set Investors Back
If you withdraw regular amounts from your portfolio to cover your living expenses during a market downdraft, you must sell more shares at a lower price. It's essentially the reverse of dollar-cost averaging, which is what you did during the accumulation phase when you invested money at regular intervals. Dollar-cost averaging involves buying more shares when the market is down or fewer shares when it's up.
"You're liquidating a portion of the portfolio and locking in those negative returns and creating some very bad outcomes," says Stephen Horan, head of private wealth management for the CFA Institute and co-author of "The New Wealth Management."
"We call that sequence-of-return risk," he says.
In such a scenario, it's best to leave stocks alone to recover from the loss and to draw instead on the fixed-income portion of your portfolio. Retirement experts recommend employing one of the top five fixed-income strategies to ensure enough income in a bear market. Following are the pros and cons of each method.
CD ladder
A solid fixed-income strategy begins with calculating your bare-bones expenses and looking at what you will receive from Social Security and any defined-benefit pension. Next, choose a vehicle to ensure enough income each year to make up the difference.
One simple option is to design a CD ladder, such as a combination of one-, three- and five-year CDs, the principal amounts of which will cover your income needs in case stocks fall, says Rick Rodgers, a Certified Financial Planner in Lancaster, Pa. If thestock market is up, you can reinvest funds from the maturing CDs in higher-rate CDs rather than spending the principal.
"You're never going to make money in fixed income; that's not the purpose of it. After taxes and inflation, it's break-even at best," Rodgers says. This is particularly true in these times of low yields.
"When the market is going up, I am going to be overweighted in stocks so I will be selling some stocks and putting it into fixed income," says Rodgers. "It smooths out the ups and downs."
The downside of a CD ladder: low yields, no upside as the market fluctuates and continual effort to reinvest maturing CDs, says Lynn Mayabb, CFP, a senior managing adviser at BKD Wealth Advisors in the Kansas City, Mo., office.
Don't let CD penalties prevent you from withdrawing your cash early, though. Weigh the penalty against the potential gain or need, Mayabb says.
Bond ladder
If you're looking for a little higher yield, consider creating a ladder of bonds with sequential maturities. "Having that money come due on a regular basis eliminates the need to have a lot of money sitting in cash," Rodgers says.
The two key risks to investing in bonds are interest rates rising and credit quality declining. "We address both of those issues by laddering it. Each one of those bonds that makes up the bond ladder is different," he says.
It's a good idea to stick with highly rated bonds and stable companies, and be sure to monitor your picks for any decline in quality.
One danger of a bond ladder is that you can inadvertently shift the asset allocation of your portfolio if you don't manage carefully, Horan says. As the front of the ladder matures, the makeup of your investments shifts. On the plus side, you've guaranteed enough income for the critical first years of retirement, which "set the initial path" for your retirement portfolio, he says.
For an individual investor, a properly diversified bond ladder is likely to be too much work, says Carlo Panaccione, CFP and founder of the Navigation Group in Redwood City, Calif. A good financial planner can set this up for you, but you generally need a minimum of $100,000 to construct a properly diversified bond ladder.
Variants on bond ladders
"Sometimes a bond ladder doesn't always make sense, depending on what the yield curve looks like," Mayabb says. Often, the middle-term maturities tie up your cash longer but fail to reward you with higher rates.
Instead, she favors a barbell approach, in which you divide your money equally between short-term bonds and those with 10- to 15-year maturities, skipping intermediate-term bonds altogether. "Those are the sweeter spots for getting the rates."
Or consider laddering the coupon payments on a bond, rather than the bonds themselves, Horan says. For instance, if you need $50,000 each year, you could buy a five-year bond with a 5 percent coupon and $1 million face value. At the end of the five years, you'd get $1 million back.
It may be more efficient to find a single bond with the desired payment structure, rather than piecing together five different bonds in a laddered structure, he says.
As with a traditional bond ladder, these variants may also suffer from a lack of diversification and need to be monitored for credit quality, says Panaccione.
Floating-rate fund
If all this seems like too much work, consider investing in a floating-rate fund -- also called a bank-loan fund -- which holds a variety of bonds or bank loans with adjustable rates, giving you exposure to a range of credits. "In fixed income, you have to be realistic about how closely you're willing to watch" credit quality, Panaccione says. "If you're not willing to review things on a regular basis, don't buy individual bonds."
Unlike individual bonds, floating-rate funds have no maturity date, so you can lose principal if market fluctuations cause fixed-income investments to drop in value. "I don't like bond funds because they don't guarantee my principal," Rodgers says, while conceding that they can be a good choice in some cases. "For the individual investor who's not using an adviser, they should be using a bond fund."
Focus on the total return of your portfolio, rather than the rise or fall in a particular fund, says Anthony Valeri, CFA, a senior vice president and market strategist at LPL Financial in San Diego. Liquidity is an issue, since these bonds don't trade on an exchange. "If we have a recessionyou'll see price declines" in floating-rate funds, Valeri says.
Annuity
The classic strategy for ensuring a stream of income in retirement, of course, is purchasing an immediate annuity. This insurance product guarantees that you will receive a stream of payments for as long as you live.
The downside: You pay a premium for that guarantee and lose control of your assets forever.
"I've done annuities this year only because of clients demanding them," Panaccione says. The insurance companies are "probably investing in what you would've invested in and charging you a premium. Is that what you need to sleep at night? Then it's probably worth paying the premium."
If you're married, the question of an annuity becomes more complicated. You can buy a joint life and survivor annuity for a smaller payout, or opt for provisions that guarantee some portion of your payment goes to your spouse if you die. But it will cost you, Mayabb says.
By choosing an annuity, you lose the flexibility of changing your mind. "Once you annuitize, those assets are no longer yours," she says. "With a bond ladder, CD ladder or investment account, if something happens and you need $20,000, you go sell something."
Sunday, August 14, 2011
What to buy your sweetheart for her happiness | www.ibibz.com
Coming up with the perfect Christmas present for your significant other can be daunting, especially when you've been dating such a short time that you're not quite familiar with the eccentricities of his or her music taste but you still want to impress with an unexpectedly thoughtful and insightful gift that will buy you a few more weeks, at least.
Flowers and chocolates, a la Valentine's Day, are very sweet, but they pretty much prove you don't know your honey at all, unless she's super into exotic buds or something. If you don't happen to be dating a horticulturist, don't go this route. Here's a quick-and-dirty list of our top picks for new couples:
A book -- Unless your lover is an English major, you probably can't go wrong with a classic that has something to do with romance. Go with "The Unbearable Lightness of Being" or "Love in Time of Cholera." It gives you the perfect chance to hint at your deeper, tortured, artistic side, and you get to write a sappy inscription. (Hint: If you haven't read the book, stay away from comparing you and your sweetie to the characters. Fiction authors are not to be trusted with your relationship.)
A soulful hits compilation -- Even if it's not his style, no one is going to balk at a sexy collection of slow-danceable love songs (at least not to your face). It gives the two of you a chance to get close, and if the cheese factor is over the top, y'all can laugh about it together and then put on something good.
Massage oil -- Ok, you might want to be careful with this one, but if you play your cards right, it's a great gift. If you're ready to take things to the next level, it implies that it's time to get physical. If you're not, this present can come off as a little presumptuous, but you can always backtrack and offer up a neck-and-shoulder massage to smooth things over.
No matter what gift you go with, the fact that you're putting some effort into it bodes well for the future of your union. Don't be afraid to dive in and find something your new love will really like -- just take our advice and stay away from gift cards!
Flowers and chocolates, a la Valentine's Day, are very sweet, but they pretty much prove you don't know your honey at all, unless she's super into exotic buds or something. If you don't happen to be dating a horticulturist, don't go this route. Here's a quick-and-dirty list of our top picks for new couples:
A book -- Unless your lover is an English major, you probably can't go wrong with a classic that has something to do with romance. Go with "The Unbearable Lightness of Being" or "Love in Time of Cholera." It gives you the perfect chance to hint at your deeper, tortured, artistic side, and you get to write a sappy inscription. (Hint: If you haven't read the book, stay away from comparing you and your sweetie to the characters. Fiction authors are not to be trusted with your relationship.)
A soulful hits compilation -- Even if it's not his style, no one is going to balk at a sexy collection of slow-danceable love songs (at least not to your face). It gives the two of you a chance to get close, and if the cheese factor is over the top, y'all can laugh about it together and then put on something good.
Massage oil -- Ok, you might want to be careful with this one, but if you play your cards right, it's a great gift. If you're ready to take things to the next level, it implies that it's time to get physical. If you're not, this present can come off as a little presumptuous, but you can always backtrack and offer up a neck-and-shoulder massage to smooth things over.
No matter what gift you go with, the fact that you're putting some effort into it bodes well for the future of your union. Don't be afraid to dive in and find something your new love will really like -- just take our advice and stay away from gift cards!
Saturday, August 13, 2011
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Friday, August 12, 2011
COMMODITY,MCX TRADING TIPS
GET DAILY 5 TO 10 % ASSURED PROFIT FROM JUST 2 INTRADAY CALLS,SUBSCRIBE TO INTRADAY BLASTER PACKAGE,OR GET AT LEAST 20 POINTS ASSURED DAILY FROM JUST I CALL IN NIFTY FUTURES,SUBSCRIBE TO NIFTY SURE SHOT PACKAGE.For More Details Mail:- info@tradetoprofit.in, admin@tradetoprofit.in call : +91-9990323428,9910664620.
COMMODITY-DAILY
DETAILS:-
1-TIPS ARE PROVIDED FROM METAL AND ENERGY SEGMENT
2-DAILY 1-2 CALLS ARE PROVIDED
3-FULL FOLLOW UP CALLS TILL OPEN POSITIONS
4-ACCURACY= 90 %
- TIPS ARE PROVIDED BY SMS AND ALSO ON YAHOO MASSANGER SERVICE.
- PREMIUM SMS SERVICE THAT IS GURANTEE OF INTIME DELIVERY OF EVERY TIPS. (WITHIN 6 SECONDS)
- ALL TIPS ARE PROVIDED DURING LIVE MARKET HOURS.
- PROPER ENTRY EXIT STOPLOSS MESSAGES ARE PROVIDED TILL OPEN POSITIONS.
- MORE THAN 90 % ASSURED ACCURACY.
- 1 TARGET AND 1 STOPLOSS IS PROVIDED (NO PART PROFIT BOOKING SYSTEM)
- 1 TIME ENTRY AND 1 TIME TOTAL EXIT CALLS ARE PROVIDED
- WE DON'T RECOMMEND CAPITAL REQUIRED,BUT YOU SHOULD INVEST SUCH AMOUNT THAT CAN BE EASILY EXITTED.
- WE DON'T RECOMMEND OVERTRADING
- CALL FORMAT EXAMPLE - BUY SCRIPNAME AT 100 TARGET 110 SL 98
- IN CASE OF THE PACKAGE WHERE 2 CALLS ARE PROVIDED BOTH CALL MAY REMAIN OPEN AT A SINGLE POINT OF TIME.
- MAXIMUM 2 CALLS WILL REMAIN OPEN AT A SINGLE POINT OF TIME.
PRICING:-
(a)5 DAYS TRIAL RS 1000
(b)1 MONTHS RS 4000
(c)3 MONTHS RS 11000
(c)6 MONTHS RS 21000
(c)12 MONTHS RS 40,000
Commodity trading tips.
GET DAILY 5 TO 10 % ASSURED PROFIT FROM JUST 2 INTRADAY CALLS,SUBSCRIBE TO INTRADAY BLASTER PACKAGE,OR GET AT LEAST 20 POINTS ASSURED DAILY FROM JUST I CALL IN NIFTY FUTURES,SUBSCRIBE TO NIFTY SURE SHOT PACKAGE.For More Details Mail:- info@tradetoprofit.in, admin@tradetoprofit.in call : +91-9990323428,9910664620.
COMMODITY-DAILY
DETAILS:-
1-TIPS ARE PROVIDED FROM METAL AND ENERGY SEGMENT
2-DAILY 1-2 CALLS ARE PROVIDED
3-FULL FOLLOW UP CALLS TILL OPEN POSITIONS
4-ACCURACY= 90 %
- TIPS ARE PROVIDED BY SMS AND ALSO ON YAHOO MASSANGER SERVICE.
- PREMIUM SMS SERVICE THAT IS GURANTEE OF INTIME DELIVERY OF EVERY TIPS. (WITHIN 6 SECONDS)
- ALL TIPS ARE PROVIDED DURING LIVE MARKET HOURS.
- PROPER ENTRY EXIT STOPLOSS MESSAGES ARE PROVIDED TILL OPEN POSITIONS.
- MORE THAN 90 % ASSURED ACCURACY.
- 1 TARGET AND 1 STOPLOSS IS PROVIDED (NO PART PROFIT BOOKING SYSTEM)
- 1 TIME ENTRY AND 1 TIME TOTAL EXIT CALLS ARE PROVIDED
- WE DON'T RECOMMEND CAPITAL REQUIRED,BUT YOU SHOULD INVEST SUCH AMOUNT THAT CAN BE EASILY EXITTED.
- WE DON'T RECOMMEND OVERTRADING
- CALL FORMAT EXAMPLE - BUY SCRIPNAME AT 100 TARGET 110 SL 98
- IN CASE OF THE PACKAGE WHERE 2 CALLS ARE PROVIDED BOTH CALL MAY REMAIN OPEN AT A SINGLE POINT OF TIME.
- MAXIMUM 2 CALLS WILL REMAIN OPEN AT A SINGLE POINT OF TIME.
PRICING:-
(a)5 DAYS TRIAL RS 1000
(b)1 MONTHS RS 4000
(c)3 MONTHS RS 11000
(c)6 MONTHS RS 21000
(c)12 MONTHS RS 40,000
Thursday, August 11, 2011
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Risk, The Essence Of Investing
Abstract : Risk is compounded by ignorance, multiplied by gimmickry, and exacerbated by emotion. It is halved with education, ameliorated with cost-based asset allocation, and managed with disciplined: selection quality, diversification, and income rules--- The QDI.
Most investors incorrectly think of "risk" as the possibility that the market value of a financial asset might fall below the amount that he or she has invested in the asset. OMG, how could this be happening!
Think about it. The harboring of these misconceptions (that lower market price = loss or bad and/or that higher market price = profit or good) is the greatest risk creator of all. It invariably causes inappropriate actions within the large mass of individuals who are uninitiated in the ways of the investment gods.
Risk is the reality of financial assets and financial markets: the current value of all securities will change, from "real" property through time-restrained futures speculations. Anything that is "marketable" is subject to changes in market value. It is as the gods intended, and portfolios can be designed so that it just doesn't matter quite so much as you've been brainwashed into thinking.
What is abnormal is the hype surrounding market value changes and the hysteria such hype causes among investors. No way should a weak real estate market translate into near zero bank balance sheet entries --- it just doesn't compute, except when it is popular politics.
Similarly, the reality of financial-impact cycles (market, interest rate, economy, industry, etc.) just doesn't fit at all into the hindsightful, but popular and generally accepted, calendar year assessment mechanisms. Brainwashing again.
The amount, cause, frequency, range, and duration of market value change will always vary in an "I-don't-care-who-you-listen-to" unpredictably certain way --- the certainty being that the change in market values of investment assets is inevitable, unpredictable, and essential to long term investment success.
Without these natural changes, there would be no hope of gain, no chance of buying low and selling higher. No risk, no profits, and no excitement--- boring!
The first steps in risk minimization are cerebral, and involve developing an understanding of the fundamental economic purpose of the two basic classes of investment securities.
From the investors' perspective: (a) equity securities are expected to produce growth in the form of realized capital gains, and (b) income securities are expected to produce spendable (or reinvestable) income. But it isn't real growth until it's realized, or real income until it's received.
Alternative investments? These are the contracts, gimmicks, commodities, hedges, and other creative ideas that college textbooks used to call speculations. Once upon a time, fiduciaries, trustees, and unsophisticated individuals weren't allowed to use them. The stigma is gone, but the artificial demand adds risk to all markets.
They are especially risky for the millions of 401(k) and IRA investors who probably cannot explain the difference between stocks and bonds, from any perspective. Most investors have virtually no clue what is actually being done inside the products they select, and have even less of an interest in learning about it. They dance knee-jerk style to the daily media buzz.
Wall Street knows this, and takes advantage of it mercilessly. In spite of the recent financial crisis, pension plan fiduciaries (particularly in the public sector, go figure) are falling all over themselves to throw money at the very alternative and derivative speculations that crashed the market just months ago.
401(k) participants are force fed products du jour from self-serving providor menus that make little effort to identify risk, much less minimize it. Very few plans allow participants to develop an understanding of their investment choices with the only education provided by the product vendors themselves.
What ever happened to stocks and bonds, the building blocks of capitalism? Do investors recognize the financial interest they have in the very corporations their elected officials are encouraged to tax, constrain, and regulate into competitive mediocrity?
Another mental step in risk minimization is education. You just can't afford to put money into things you don't understand, or which the salesman can't explain to you in ordinary English, Spanish, French, whatever.
Of course you would prefer to skip this step and jump right into some new product athletic shoes that will hurdle you over the work and directly into the profits. How's that been working out for you? It was once written (somewhere): no work, no reward.
Risk is compounded by ignorance, multiplied by gimmickry, and exacerbated by emotion. It is halved with education, ameliorated with cost-based asset allocation, and managed with disciplined: selection quality, diversification, and income rules--- The QDI.
Real financial risk in equities boils down to: the possibility that a company's stock (that 30% share of your brother-in-laws' pizza parlor) will become worthless as management succumbs to economic forces, and/or mandated costs imposed by outside entities whose edicts must be complied with.
In debt-based securities, risk is: the possibility that the issuer of an interest bearing IOU (the money your spouse loaned her brother at 6% to start flinging pizza) stops or falls behind on its payment obligations and/or declares bankruptcy and wipes out both owner (shareholder) and creditor (bond holder) interests.
Here's an interesting risk in the securities markets, one that governments have cleverly refused to address for fairly obvious reasons. The "Masters of the Universe" routinely get paid obscene amounts of compensation for risking OPM (other people's money) perhaps a bit too cavalierly.
Company fails, shareholder interests become valueless, debt obligations are worthless, while the fat cats keep raking it in, even suing to preserve their bonuses. Boardroom corruption, and direct lobbying (another euphemism, for bribing) of elected officials are two additional risks that investors need to be aware of.
Most investors incorrectly think of "risk" as the possibility that the market value of a financial asset might fall below the amount that he or she has invested in the asset. OMG, how could this be happening!
Think about it. The harboring of these misconceptions (that lower market price = loss or bad and/or that higher market price = profit or good) is the greatest risk creator of all. It invariably causes inappropriate actions within the large mass of individuals who are uninitiated in the ways of the investment gods.
Risk is the reality of financial assets and financial markets: the current value of all securities will change, from "real" property through time-restrained futures speculations. Anything that is "marketable" is subject to changes in market value. It is as the gods intended, and portfolios can be designed so that it just doesn't matter quite so much as you've been brainwashed into thinking.
What is abnormal is the hype surrounding market value changes and the hysteria such hype causes among investors. No way should a weak real estate market translate into near zero bank balance sheet entries --- it just doesn't compute, except when it is popular politics.
Similarly, the reality of financial-impact cycles (market, interest rate, economy, industry, etc.) just doesn't fit at all into the hindsightful, but popular and generally accepted, calendar year assessment mechanisms. Brainwashing again.
The amount, cause, frequency, range, and duration of market value change will always vary in an "I-don't-care-who-you-listen-to" unpredictably certain way --- the certainty being that the change in market values of investment assets is inevitable, unpredictable, and essential to long term investment success.
Without these natural changes, there would be no hope of gain, no chance of buying low and selling higher. No risk, no profits, and no excitement--- boring!
The first steps in risk minimization are cerebral, and involve developing an understanding of the fundamental economic purpose of the two basic classes of investment securities.
From the investors' perspective: (a) equity securities are expected to produce growth in the form of realized capital gains, and (b) income securities are expected to produce spendable (or reinvestable) income. But it isn't real growth until it's realized, or real income until it's received.
Alternative investments? These are the contracts, gimmicks, commodities, hedges, and other creative ideas that college textbooks used to call speculations. Once upon a time, fiduciaries, trustees, and unsophisticated individuals weren't allowed to use them. The stigma is gone, but the artificial demand adds risk to all markets.
They are especially risky for the millions of 401(k) and IRA investors who probably cannot explain the difference between stocks and bonds, from any perspective. Most investors have virtually no clue what is actually being done inside the products they select, and have even less of an interest in learning about it. They dance knee-jerk style to the daily media buzz.
Wall Street knows this, and takes advantage of it mercilessly. In spite of the recent financial crisis, pension plan fiduciaries (particularly in the public sector, go figure) are falling all over themselves to throw money at the very alternative and derivative speculations that crashed the market just months ago.
401(k) participants are force fed products du jour from self-serving providor menus that make little effort to identify risk, much less minimize it. Very few plans allow participants to develop an understanding of their investment choices with the only education provided by the product vendors themselves.
What ever happened to stocks and bonds, the building blocks of capitalism? Do investors recognize the financial interest they have in the very corporations their elected officials are encouraged to tax, constrain, and regulate into competitive mediocrity?
Another mental step in risk minimization is education. You just can't afford to put money into things you don't understand, or which the salesman can't explain to you in ordinary English, Spanish, French, whatever.
Of course you would prefer to skip this step and jump right into some new product athletic shoes that will hurdle you over the work and directly into the profits. How's that been working out for you? It was once written (somewhere): no work, no reward.
Risk is compounded by ignorance, multiplied by gimmickry, and exacerbated by emotion. It is halved with education, ameliorated with cost-based asset allocation, and managed with disciplined: selection quality, diversification, and income rules--- The QDI.
Real financial risk in equities boils down to: the possibility that a company's stock (that 30% share of your brother-in-laws' pizza parlor) will become worthless as management succumbs to economic forces, and/or mandated costs imposed by outside entities whose edicts must be complied with.
In debt-based securities, risk is: the possibility that the issuer of an interest bearing IOU (the money your spouse loaned her brother at 6% to start flinging pizza) stops or falls behind on its payment obligations and/or declares bankruptcy and wipes out both owner (shareholder) and creditor (bond holder) interests.
Here's an interesting risk in the securities markets, one that governments have cleverly refused to address for fairly obvious reasons. The "Masters of the Universe" routinely get paid obscene amounts of compensation for risking OPM (other people's money) perhaps a bit too cavalierly.
Company fails, shareholder interests become valueless, debt obligations are worthless, while the fat cats keep raking it in, even suing to preserve their bonuses. Boardroom corruption, and direct lobbying (another euphemism, for bribing) of elected officials are two additional risks that investors need to be aware of.
Risk, The Essence Of Investing
Abstract : Risk is compounded by ignorance, multiplied by gimmickry, and exacerbated by emotion. It is halved with education, ameliorated with cost-based asset allocation, and managed with disciplined: selection quality, diversification, and income rules--- The QDI.
Most investors incorrectly think of "risk" as the possibility that the market value of a financial asset might fall below the amount that he or she has invested in the asset. OMG, how could this be happening!
Think about it. The harboring of these misconceptions (that lower market price = loss or bad and/or that higher market price = profit or good) is the greatest risk creator of all. It invariably causes inappropriate actions within the large mass of individuals who are uninitiated in the ways of the investment gods.
Risk is the reality of financial assets and financial markets: the current value of all securities will change, from "real" property through time-restrained futures speculations. Anything that is "marketable" is subject to changes in market value. It is as the gods intended, and portfolios can be designed so that it just doesn't matter quite so much as you've been brainwashed into thinking.
What is abnormal is the hype surrounding market value changes and the hysteria such hype causes among investors. No way should a weak real estate market translate into near zero bank balance sheet entries --- it just doesn't compute, except when it is popular politics.
Similarly, the reality of financial-impact cycles (market, interest rate, economy, industry, etc.) just doesn't fit at all into the hindsightful, but popular and generally accepted, calendar year assessment mechanisms. Brainwashing again.
The amount, cause, frequency, range, and duration of market value change will always vary in an "I-don't-care-who-you-listen-to" unpredictably certain way --- the certainty being that the change in market values of investment assets is inevitable, unpredictable, and essential to long term investment success.
Without these natural changes, there would be no hope of gain, no chance of buying low and selling higher. No risk, no profits, and no excitement--- boring!
The first steps in risk minimization are cerebral, and involve developing an understanding of the fundamental economic purpose of the two basic classes of investment securities.
From the investors' perspective: (a) equity securities are expected to produce growth in the form of realized capital gains, and (b) income securities are expected to produce spendable (or reinvestable) income. But it isn't real growth until it's realized, or real income until it's received.
Alternative investments? These are the contracts, gimmicks, commodities, hedges, and other creative ideas that college textbooks used to call speculations. Once upon a time, fiduciaries, trustees, and unsophisticated individuals weren't allowed to use them. The stigma is gone, but the artificial demand adds risk to all markets.
They are especially risky for the millions of 401(k) and IRA investors who probably cannot explain the difference between stocks and bonds, from any perspective. Most investors have virtually no clue what is actually being done inside the products they select, and have even less of an interest in learning about it. They dance knee-jerk style to the daily media buzz.
Wall Street knows this, and takes advantage of it mercilessly. In spite of the recent financial crisis, pension plan fiduciaries (particularly in the public sector, go figure) are falling all over themselves to throw money at the very alternative and derivative speculations that crashed the market just months ago.
401(k) participants are force fed products du jour from self-serving providor menus that make little effort to identify risk, much less minimize it. Very few plans allow participants to develop an understanding of their investment choices with the only education provided by the product vendors themselves.
What ever happened to stocks and bonds, the building blocks of capitalism? Do investors recognize the financial interest they have in the very corporations their elected officials are encouraged to tax, constrain, and regulate into competitive mediocrity?
Another mental step in risk minimization is education. You just can't afford to put money into things you don't understand, or which the salesman can't explain to you in ordinary English, Spanish, French, whatever.
Of course you would prefer to skip this step and jump right into some new product athletic shoes that will hurdle you over the work and directly into the profits. How's that been working out for you? It was once written (somewhere): no work, no reward.
Risk is compounded by ignorance, multiplied by gimmickry, and exacerbated by emotion. It is halved with education, ameliorated with cost-based asset allocation, and managed with disciplined: selection quality, diversification, and income rules--- The QDI.
Real financial risk in equities boils down to: the possibility that a company's stock (that 30% share of your brother-in-laws' pizza parlor) will become worthless as management succumbs to economic forces, and/or mandated costs imposed by outside entities whose edicts must be complied with.
In debt-based securities, risk is: the possibility that the issuer of an interest bearing IOU (the money your spouse loaned her brother at 6% to start flinging pizza) stops or falls behind on its payment obligations and/or declares bankruptcy and wipes out both owner (shareholder) and creditor (bond holder) interests.
Here's an interesting risk in the securities markets, one that governments have cleverly refused to address for fairly obvious reasons. The "Masters of the Universe" routinely get paid obscene amounts of compensation for risking OPM (other people's money) perhaps a bit too cavalierly.
Company fails, shareholder interests become valueless, debt obligations are worthless, while the fat cats keep raking it in, even suing to preserve their bonuses. Boardroom corruption, and direct lobbying (another euphemism, for bribing) of elected officials are two additional risks that investors need to be aware of.
Most investors incorrectly think of "risk" as the possibility that the market value of a financial asset might fall below the amount that he or she has invested in the asset. OMG, how could this be happening!
Think about it. The harboring of these misconceptions (that lower market price = loss or bad and/or that higher market price = profit or good) is the greatest risk creator of all. It invariably causes inappropriate actions within the large mass of individuals who are uninitiated in the ways of the investment gods.
Risk is the reality of financial assets and financial markets: the current value of all securities will change, from "real" property through time-restrained futures speculations. Anything that is "marketable" is subject to changes in market value. It is as the gods intended, and portfolios can be designed so that it just doesn't matter quite so much as you've been brainwashed into thinking.
What is abnormal is the hype surrounding market value changes and the hysteria such hype causes among investors. No way should a weak real estate market translate into near zero bank balance sheet entries --- it just doesn't compute, except when it is popular politics.
Similarly, the reality of financial-impact cycles (market, interest rate, economy, industry, etc.) just doesn't fit at all into the hindsightful, but popular and generally accepted, calendar year assessment mechanisms. Brainwashing again.
The amount, cause, frequency, range, and duration of market value change will always vary in an "I-don't-care-who-you-listen-to" unpredictably certain way --- the certainty being that the change in market values of investment assets is inevitable, unpredictable, and essential to long term investment success.
Without these natural changes, there would be no hope of gain, no chance of buying low and selling higher. No risk, no profits, and no excitement--- boring!
The first steps in risk minimization are cerebral, and involve developing an understanding of the fundamental economic purpose of the two basic classes of investment securities.
From the investors' perspective: (a) equity securities are expected to produce growth in the form of realized capital gains, and (b) income securities are expected to produce spendable (or reinvestable) income. But it isn't real growth until it's realized, or real income until it's received.
Alternative investments? These are the contracts, gimmicks, commodities, hedges, and other creative ideas that college textbooks used to call speculations. Once upon a time, fiduciaries, trustees, and unsophisticated individuals weren't allowed to use them. The stigma is gone, but the artificial demand adds risk to all markets.
They are especially risky for the millions of 401(k) and IRA investors who probably cannot explain the difference between stocks and bonds, from any perspective. Most investors have virtually no clue what is actually being done inside the products they select, and have even less of an interest in learning about it. They dance knee-jerk style to the daily media buzz.
Wall Street knows this, and takes advantage of it mercilessly. In spite of the recent financial crisis, pension plan fiduciaries (particularly in the public sector, go figure) are falling all over themselves to throw money at the very alternative and derivative speculations that crashed the market just months ago.
401(k) participants are force fed products du jour from self-serving providor menus that make little effort to identify risk, much less minimize it. Very few plans allow participants to develop an understanding of their investment choices with the only education provided by the product vendors themselves.
What ever happened to stocks and bonds, the building blocks of capitalism? Do investors recognize the financial interest they have in the very corporations their elected officials are encouraged to tax, constrain, and regulate into competitive mediocrity?
Another mental step in risk minimization is education. You just can't afford to put money into things you don't understand, or which the salesman can't explain to you in ordinary English, Spanish, French, whatever.
Of course you would prefer to skip this step and jump right into some new product athletic shoes that will hurdle you over the work and directly into the profits. How's that been working out for you? It was once written (somewhere): no work, no reward.
Risk is compounded by ignorance, multiplied by gimmickry, and exacerbated by emotion. It is halved with education, ameliorated with cost-based asset allocation, and managed with disciplined: selection quality, diversification, and income rules--- The QDI.
Real financial risk in equities boils down to: the possibility that a company's stock (that 30% share of your brother-in-laws' pizza parlor) will become worthless as management succumbs to economic forces, and/or mandated costs imposed by outside entities whose edicts must be complied with.
In debt-based securities, risk is: the possibility that the issuer of an interest bearing IOU (the money your spouse loaned her brother at 6% to start flinging pizza) stops or falls behind on its payment obligations and/or declares bankruptcy and wipes out both owner (shareholder) and creditor (bond holder) interests.
Here's an interesting risk in the securities markets, one that governments have cleverly refused to address for fairly obvious reasons. The "Masters of the Universe" routinely get paid obscene amounts of compensation for risking OPM (other people's money) perhaps a bit too cavalierly.
Company fails, shareholder interests become valueless, debt obligations are worthless, while the fat cats keep raking it in, even suing to preserve their bonuses. Boardroom corruption, and direct lobbying (another euphemism, for bribing) of elected officials are two additional risks that investors need to be aware of.
Wednesday, August 10, 2011
How to select your trade ?
Successful trading is all about managing trades once you are in them, regardless of where they came from. I think a great trader could probably turn a profit taking random trades, as long as he manages them well. Now I do believe that finding quality chart patterns is essential, mostly because trading good setups in liquid stocks allows for the best risk/reward relationship on the front end. That is why I run my swing trading website – to highlight the best charts in the market for potential trades. My trade selection process is based on my ability to manage those trades, therefore I want to find only the best. Why not predetermine your stop in case you are wrong by taking the trades with a natural stop-loss nearby?
Having said that, let me touch on the last comment regarding stops. One of the first things I want to know before I take a trade is how much I am likely to lose in case I am wrong (and I will definitely be wrong some of the time). This helps me to determine two things: position sizing and profit expectation. If I am willing to lose $1000.00 on a trade and the natural stop is 1 point away, then a position size of 1000 shares will be obvious. Furthermore, if I want to keep my reward-to-risk relationship at 3 or 4 to 1, then I would look to pull at least 3 times my potential loss out of the trade on the profit side. This would be a 3 point profit for this example.
Now, how do I go about finding those trades? Each night I begin with all the stocks in the market and run some basic scans on them which filter out the low-dollar stocks and the low-volume stocks using TCNet, my charting software. Once I have the remaining list, which is typically about 1600 stocks, I sort that list by their close relative to that day's range. This simply means the stocks at the top of the list finished the day near their highs, and the stocks at the bottom of the list finished near their lows. Sorting by this helps me to first find my likely long candidates and then move on to the short candidates, as I typically like continuation plays. Once the list is sorted, I use the spacebar to screen each stock in pretty rapid succession. Going through the list takes me about an hour. Simply scrolling through so many stocks each night also helps keep tabs on the overall market health.
As I move through the list, I keep a finger on the "F" key and "flag" the stocks which are good enough for a closer look. After screening the big list, I am left with about 50 flagged stocks which I look closer at to determine my trade candidates which will be in the swing trading newsletter. It is at this point that I separate the good from the great. I want stocks which are able to move. A stock like MSFT which sees daily changes of only a few cents is just not a candidate. I want potential for a good, quick profit. I also want to find tight setups where my stop is nearby. A wide, sloppy chart will add slippage and make it more difficult to know when to exit. This is why I often overlook momentum stocks which have already broken out. Why make trading any more difficult than it already is?
Volume is the next thing I will really key in on, as it is the best true measure of activity and just what the "big boys" are doing. Does volume support the overall look of the chart? Has there been more activity lately than normal which may indicate a move is about to occur? If so, then that stock makes my list.
When looking for shorts, I want to see lower highs, downside volume and relative weakness to either the market or that particular stock's sector. This indicates to me that pressure remains on the stock and the path of least resistance is still down. Any stock that is unable to participate in market strength gets my attention quickly.
The next morning, I set alerts in my CyberTrader Pro trading platform which will trigger when the stocks from the newsletter meet their breakout prices. Most of the time, I set these alerts to actually get me into the trades automatically for at least a partial position. I also set up my watch lists in Trade-Ideas Pro, which helps me to gauge momentum and relative volume. Their product is excellent, and is an essential part of my trading.
As the day progresses, I keep a close eye on market activity (or inactivity it has seemed to be lately). If buying is strong and the futures are holding up well, I will add to longs in expectation of strength (vice versa for shorts). If the futures are flat and choppy, then I cut way back on my activity and grab a good trading book. Watching the market action with this in mind helps me select which trades are worth adding to and which are not.
From there, it is all a matter of execution and sticking with a good, disciplined trading plan. Cutting losers and keeping winning trades on my screen is the only remaining part of my job once I have found the trades, which is also the most important part!
How to select trade ?
Successful trading is all about managing trades once you are in them, regardless of where they came from. I think a great trader could probably turn a profit taking random trades, as long as he manages them well. Now I do believe that finding quality chart patterns is essential, mostly because trading good setups in liquid stocks allows for the best risk/reward relationship on the front end. That is why I run my swing trading website – to highlight the best charts in the market for potential trades. My trade selection process is based on my ability to manage those trades, therefore I want to find only the best. Why not predetermine your stop in case you are wrong by taking the trades with a natural stop-loss nearby?
Having said that, let me touch on the last comment regarding stops. One of the first things I want to know before I take a trade is how much I am likely to lose in case I am wrong (and I will definitely be wrong some of the time). This helps me to determine two things: position sizing and profit expectation. If I am willing to lose $1000.00 on a trade and the natural stop is 1 point away, then a position size of 1000 shares will be obvious. Furthermore, if I want to keep my reward-to-risk relationship at 3 or 4 to 1, then I would look to pull at least 3 times my potential loss out of the trade on the profit side. This would be a 3 point profit for this example.
Now, how do I go about finding those trades? Each night I begin with all the stocks in the market and run some basic scans on them which filter out the low-dollar stocks and the low-volume stocks using TCNet, my charting software. Once I have the remaining list, which is typically about 1600 stocks, I sort that list by their close relative to that day's range. This simply means the stocks at the top of the list finished the day near their highs, and the stocks at the bottom of the list finished near their lows. Sorting by this helps me to first find my likely long candidates and then move on to the short candidates, as I typically like continuation plays. Once the list is sorted, I use the spacebar to screen each stock in pretty rapid succession. Going through the list takes me about an hour. Simply scrolling through so many stocks each night also helps keep tabs on the overall market health.
As I move through the list, I keep a finger on the "F" key and "flag" the stocks which are good enough for a closer look. After screening the big list, I am left with about 50 flagged stocks which I look closer at to determine my trade candidates which will be in the swing trading newsletter. It is at this point that I separate the good from the great. I want stocks which are able to move. A stock like MSFT which sees daily changes of only a few cents is just not a candidate. I want potential for a good, quick profit. I also want to find tight setups where my stop is nearby. A wide, sloppy chart will add slippage and make it more difficult to know when to exit. This is why I often overlook momentum stocks which have already broken out. Why make trading any more difficult than it already is?
Volume is the next thing I will really key in on, as it is the best true measure of activity and just what the "big boys" are doing. Does volume support the overall look of the chart? Has there been more activity lately than normal which may indicate a move is about to occur? If so, then that stock makes my list.
When looking for shorts, I want to see lower highs, downside volume and relative weakness to either the market or that particular stock's sector. This indicates to me that pressure remains on the stock and the path of least resistance is still down. Any stock that is unable to participate in market strength gets my attention quickly.
The next morning, I set alerts in my CyberTrader Pro trading platform which will trigger when the stocks from the newsletter meet their breakout prices. Most of the time, I set these alerts to actually get me into the trades automatically for at least a partial position. I also set up my watch lists in Trade-Ideas Pro, which helps me to gauge momentum and relative volume. Their product is excellent, and is an essential part of my trading.
As the day progresses, I keep a close eye on market activity (or inactivity it has seemed to be lately). If buying is strong and the futures are holding up well, I will add to longs in expectation of strength (vice versa for shorts). If the futures are flat and choppy, then I cut way back on my activity and grab a good trading book. Watching the market action with this in mind helps me select which trades are worth adding to and which are not.
From there, it is all a matter of execution and sticking with a good, disciplined trading plan. Cutting losers and keeping winning trades on my screen is the only remaining part of my job once I have found the trades, which is also the most important part!
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Tuesday, August 9, 2011
FRIENDSHIP
A true friend is someone you can be yourself around, and never have to try and put on an act, they are someone you share your deepest secrets with, laugh together at lifes treasured moments. Sometimes we laugh together for absolutely no reason at all.
This person knows everything about you and still loves you just the same!
You know you are truly blessed to find a friend this special at least once in your lifetime. Treasure all that you've been blessed with, a rare kind of friendship comes once in a lifetime.
I thank the Lord daily for the rare gift of your friendship and the blessing bestowed to share such a gift.
My only hope is to someday be the kind of friend you've always been to me! A true forever kind of friend!!
GOD BLESS YOU MY FRIEND!
Nifty trading tips.
www.tradetoprofit.in
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Monday, August 8, 2011
Rolex watches in kolkata
 | Rolex Mens Yellow Gold Yachtmaster II White Dial |
Product Description
Rolex Mens 18k Yellow Gold Yachtmaster Ii With White Dial. Features A 18k Yellow Gold Oyster Bracelet With High Polished Center Links And A 90 Degree Rotatable Platinum Ring Command Bezel.
Product Details
- Brand: Rolex
Rolex watches in Chennai
| | Rolex Mens Yellow Gold Yachtmaster II White Dial |
Product Description
Rolex Mens 18k Yellow Gold Yachtmaster Ii With White Dial. Features A 18k Yellow Gold Oyster Bracelet With High Polished Center Links And A 90 Degree Rotatable Platinum Ring Command Bezel.
Product Details
- Brand: Rolex
ROLEX WATCHES IN DELHI
 | Rolex "Cellini" Wrist Watch |
Product Description
ROLEX WATCH a.Model Cellini b.Model number: 6631 c.Serial number: W066353 d.18k yellow gold case e.Dial color: white f.Genuine Ostrich leather strap Rolex of Geneva g.18k yellow gold buckle h.Retail price $7,000.00 i.Condition: Used j. Purchased in 2006
Product Details
- Amazon Sales Rank: #143953 in Watches
- Brand: Rolex
- Model: WO66353
Features
- Genuine Rolex "Cellini" women watch
- 18K yellow gold
- Original "Rolex" Ostrich leather strap
ROLEX WATCHES IN MUMBAI
 | Rolex Submariner Black Index Dial Oyster Bracelet Mens Watch 116613BKSO |
| Price: | $11,995.00 |
Availability: Usually ships in 1-2 business days
Ships from and sold by IcedTime
Product Description
Stainless steel case with a stainless steel and 18k yellow gold oyster bracelet. Unidirectional rotating bezel bezel. Black dial with luminous hands and luminous dots hour markers. Luminiscent hands and dial markers. Date display at the 3 o'clock position. Automatic movement. Scratch resistant sapphire crystal. Case diameter: 40 mm. Water resistant at 300 meters/ 1000 feet. Rolex Submariner Black Index Dial Oyster Bracelet Mens Watch 116613BKSO.
Product Details
- Amazon Sales Rank: #85954 in Watches
- Brand: Rolex
- Model: 116613-BKSO
- Bezel material: Unidirectional Rotating Bezel
- Case material: Stainless Steel
- Dial color: Black
- Dial window material: Sapphire
- Movement type: Automatic
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