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