| Many Investment Gurus, with a straight face | | | | expectation comes with an assumption of some |
| and a gleam in their eye, will insist that | | | | form of risk... there are several, and its |
| successful investing is a function of | | | | "in there" in all investments. In Equities, |
| expansive research, skillful market timing, | | | | set a reasonable profit target and take less |
| and detailed technical analysis. Others | | | | if you can get it quickly. With income |
| emphasize fundamental information about | | | | investments, never say no to a profit equal |
| companies, industries, and markets. But | | | | to a year's income, or 10% if you like round |
| trends and numbers are secondary to a | | | | numbers. There are always new investment |
| thorough understanding of the basic | | | | opportunities, and there is no such thing as |
| principles of Investing and Management, and | | | | a bad profit... or a good loss.* Examine |
| their interrelationships. The ingredients for | | | | Market Value numbers at intelligent |
| a successful investment portfolio are these: | | | | intervals. Frequent examination is stressful |
| stubborn belief in the Quality, | | | | and non-productive. There are no averages or |
| Diversification, and Income trinity from | | | | indices that compare with a properly |
| Investments 101, and operations that employ | | | | diversified Investment Portfolio, |
| the Planning, Leading, Organizing, and | | | | particularly if your Equity selections are |
| Controlling skills introduced in Freshman | | | | screened for Quality and Income. Investing is |
| Management. Here are some things to keep in | | | | a long-term endeavor, and neither Shock(sic) |
| mind while you season your experience with | | | | Market symbols nor current yields operate on |
| patience and marinate your investment process | | | | a calendar year schedule. Look at market |
| with discipline:* A viable Investment Program | | | | peaks and troughs over significant time |
| begins with the private development of an | | | | periods that include "cycles"... and do |
| Investment Plan. The first step is the | | | | separate your analysis by class.* Avoid what |
| identification of personal goals and | | | | the crowd is doing and shun investment |
| objectives and a time frame for goal | | | | products. Consumers buy products; Investors |
| achievement. The end result should be a near | | | | buy securities. The crowd is driven by the |
| autopilot, long-term and increasing, | | | | very emotions that you must learn to control. |
| retirement income. Asset Allocation is used | | | | Stay focused on your plan; analyze your |
| to structure the portfolio so that it | | | | annual income and trading statistics. Buy and |
| operates in a goal directed manner. The | | | | hold creates more real tax problems than real |
| finished Plan must be flexible in design, | | | | millionaires, and gimmicks and fads last just |
| based upon reasonable expectations, simple in | | | | slightly longer than spring fashions. Always |
| structure and operation, and easy to | | | | buy good stuff on bad news and sell into good |
| supervise.* Use a "cost based" Asset | | | | news announcements.* Don't try to save the |
| Allocation Model. Although most of the | | | | world with your investment decisions. Never |
| Investment World operates on a Market Value | | | | limit your investment opportunities |
| basis for everything from performance | | | | artificially. Votes work better when it comes |
| analysis to Asset Allocation and | | | | to changing your world, and corporations |
| Diversification decision modeling, you will | | | | should not be the targets of your political |
| improve your long-term results and stay | | | | hates... get rid of incumbents, state and |
| within your allocation and diversification | | | | local, until there are changes in the tax |
| guidelines better by using a system based | | | | code, social security, tort law, |
| upon Working Capital. This widely unknown | | | | environmental issues, etc. In the meantime, |
| Asset Allocation "model" takes the hype out | | | | invest with your head, not your heart. The |
| of daily stock market reporting and keeps the | | | | business of a capitalist society is...* Keep |
| income investor's focus on appropriate | | | | in mind that you need Income to pay the |
| statistics.* Control your emotions, among | | | | bills, and that your cost of living in |
| other things. Clearly, fear and greed are the | | | | retirement will be higher than you think. If |
| two that require the most control in the | | | | you insist on some income from every Equity |
| investment environment... particularly in | | | | security you ever own, and beat-the-bank |
| these days of a reckless media, Internet | | | | income from income securities, you will |
| empowered scam merchants, high-speed | | | | obtain two important things: An annually |
| information gathering/processing, and cheap | | | | increasing cash flow that will rise at a rate |
| personalized trading capabilities. Love and | | | | greater than most normal inflation rates, and |
| hate need to be dealt with as well, but there | | | | a higher quality investment portfolio for |
| are fewer out-of-body influences on these. | | | | better long-term investment performance. (If |
| Only strictly disciplined decision makers | | | | you use a cost based Asset Allocation model |
| need apply for your Investment Management | | | | with at least 30% invested in income |
| position... and you may not be the ideal | | | | securities and no open end Mutual Funds or |
| candidate. Investment Management is a | | | | Index ETFs.) Never settle for tiny short-term |
| continual responsibility, not a weekend and | | | | yields or get hooked on those that are |
| occasional evenings avocation.* Avoid | | | | unsustainably high.* Investing is not a |
| hindsightful analysis, and uninformed (or | | | | competitive event, ever. You don't need to |
| salesperson) criticism. It is painfully | | | | beat the market. You need to accomplish a set |
| comical how hindsight has taken over in our | | | | of personalized goals. Not even your twin's |
| society... in sports, finance, politics, and | | | | portfolio should be the same as yours. The |
| the professions, everywhere... everyone you | | | | faster you run, the less likely it is that |
| hear is second-guessing and finger pointing. | | | | you will succeed over time. Big risks, |
| No one is willing to take responsibility for | | | | foolproof gimmicks, and exotic computer |
| their own actions and everyone is willing to | | | | programs occasion more failures than success |
| sue whoever coulda', woulda' or shoulda' | | | | stories. Remember the Investment gods? They |
| prevented whatever happened. Investors cannot | | | | created Stocks and Bonds... only Stocks and |
| afford to be Little League crybabies. Make | | | | Bonds!* Avoid Unrealized Gains, Embrace |
| one of the three basic decisions (which are?) | | | | Volatility, Increase Annual Income, and |
| and don't look back. No person or program can | | | | remember that all key investment moments are |
| predict the future, and your portfolio | | | | only visible in rear view mirrors. Most |
| requires management today. The playing field | | | | unrealized gains become Schedule D realized |
| for the investment game is uncertainty.* | | | | losses. As of today there has never been a |
| Establish a profit-taking target for every | | | | correction (rally) that has not succumbed to |
| security you purchase. The purpose of | | | | the next rally (correction). Only an |
| investing is to make more money than you | | | | increasing income level can beat back |
| could in a guaranteed, non-negotiable | | | | inflation... a bigger market value number |
| instrument. This larger money making | | | | just doesn't do it. |