April 2007

Today is the “One Day Blog Silence“, so this will be my only post today, please take some time to visit the One Day Blog Silence website. I will be back tomorrow with new posts, keep in touch and stay tuned!


Economists report that a college education adds many thousands of dollars to a man’s lifetime income – which he then spends sending his son to college”. – Bill Vaughn

He that is of the opinion money will do everything may well be suspected of doing everything for money”. – Benjamin Franklin

funny_money.jpgOur incomes are like our shoes; if too small, they gall and pinch us; but if too large, they cause us to stumble and to trip”. – John Locke

I‘m so naive about finances. Once when my mother mentioned an amount and I realized I didn’t understand, she had to explain: ‘That’s like three Mercedes.’ Then I understood”. – Brooke Shields

If hard work were such a wonderful thing, surely the rich would have kept it all to themselves”. – Lane Kirkland

Someone stole all my credit cards, but I won’t be reporting it. The thief spends less than my wife did”. – Henry Youngman

There’s no reason to be the richest man in the cemetery. You can’t do any business from there”. – Colonel Sanders

Financial Joke:
A tour guide was showing a tourist around Washington, D. C. The guide pointed out the place where George Washington supposedly threw a dollar across the Potomac River. “That’s impossible,” said the tourist. “No one could throw a coin that far!” “You have to remember,” answered the guide. “A dollar went a lot farther in those days.”

Being successful:
A successful man is one who makes more money than his wife can spend. A successful woman is one who can find such a man.

nightmare.jpgThe day trader’s ultimate objective is to trade expensive and volatile stocks on the Stock market sand profit from the small intra-day price movement. The day trader may make many trades in a single day, holding onto stocks for only a few minutes (or hours), and almost never overnight. Day traders are short-term price speculators. They are not investors, and they are not gamblers.

Day trading is however a mentally and psychologically challenging activity and is by no means meant for everyone. Day trading is essentially speculation and day traders essentially only do that: day trading.

Day trading is not investing. The day trader’s time frame of analysis is rather short: one day. Their only intent is to exploit the stock’s intra-day price swings or daily price volatility. Unlike stock investors, day traders do not seek long-term value appreciation.

Stock volatility is generally a rule of the market rather than an exception. Most stock prices move up or down in any given day due to a variety of external factors. Even if the market is relatively calm, there are always stocks that are volatile. Day traders seek to identify a stock that has a trend and then go with that trend. “Trend is a friend” is a common motto among day traders.

Consequently there are plenty of day trading opportunities. It is not common to see a day trader executing many, sometimes as many as 100, trades in a single day. On the other hand, an investor’s time frame is much longer. Investors seek a much larger price movement than earn the desired rate of return. That takes time.

In short, day traders seek to extract an income from intra-day price volatility by trading the stock frequently, while the investors seek a long-term capital appreciation.

The biggest problem though is that as human beings, we seek instant gratification and instant rewards. A lot of us don’t have the patience or foresight for long-term trading.

There are different philosophies on how to play this game, none of which are wrong (unless you go out and buy you’re favorite player just because… that’s just ignorant). I just say to each their own and good luck to all.

cramer125.jpgHuman’s are rational beings. We have the most developed brain among all species. However, in spite of all this, we are foremost governed by his emotions. It is said, man is ruled more by the heart than his mind. And these emotions, more often than not, play a huge role in man’s investments too. This is the sole reason, say, why the same person at one time might want to invest in the stock market, while at another time might find the same too much of a risk.

Investors may also feel attached towards a specific company and continue owning the stock without regards to its fundamental. For example, you might like Google’s search engine so much that you decide to buy the stock at $ 350 without doing any research. You figure that Google’s search engine is so much better that buying the stock will give you profit, right? Wrong. Now, I am not here to bash Google as an investment, but analyzing an investment goes beyond the products and companies. Most investors can identify good companies and products. It is quite easy. You know that a BMW is a better car than a Ford.

Emotions often also control the company one is investing in. Generally brand loyalties come into the picture here too. Example, if someone prefers purchasing his sportswear from Nike, he may want to invest in its stocks too, although the Reebok stocks may be doing far better. It is always better to conduct a proper research and check the latest trends rather than blindly following your heart. Keep in mind that you are currently dealing with the stock market and not the super market.

Google is a good search engine, probably the best that is ever produced so far. Sure, you probably pay more for Google than other generic search engines. But, please don’t over pay. You invest in Google to profit from it not because you like its products.

So, how do we eliminate emotion from our investing decision? We can’t eliminate it completely but there are certainly tools that might help. One is to calculate the fair value of a common stock that you are investing in. I covered this plenty of times but basically, the fair value of an investment is dependent upon the streams of profit generated by it. In the long run, if company A earns more than company B, then company A will be valued more than company B..

I know I don’t exactly give you the best solution to the problem. Emotion is hard to ignore. I am not immune to that. But following your emotion will cost you a lot of money. Don’t follow the herd and keep your focus on the fair value of your stock and you will do really well.

You need to realize that no matter how hard we try we cannot completely eliminate our emotions from playing a role while investing. But what we can do is apply equal amounts of common sense and logic. Always be aware that it is your finances that are going to be affected in this venture. Calculate the fair value of a common stock that you are investing in. The fair value of an investment is based upon the profit generated by it.

If, for a considerable period, organization A does far better than organization B, A will surely be far more valued than B. While investing, avoid the herd mentality, stay calm and always go in for the firm with the better fair value. This will ensure that you are a happy investor, earning high profits on your investments.

Penny Stocks are usually priced below a dollar and trading with them is fickle and risky game. While Penny stocks look like they follow the “more bang for your buck” principle, having a lot of penny stocks is very risky. Penny stocks are also referred to as small caps and micro caps. As with all trading, penny stock trading has its ups and downs. Penny stocks can give your large profits over a short time; they can also give you huge losses in the same short time.

pennies2.jpgBecause of the high risks and alluring prices of penny stocks traders should be mindful of a few things. If you see that there are stocks for less than a cent, you shouldn’t invest. In the penny stock market, any thing less than a penny isn’t worth investing. You will never gain anything from a stock under a penny. In fact, it is just like the regular stock market except you buy stocks for much less, that’s why you should treat the penny stock market like any other investment.

You need to know every thing and I repeat EVERYTHING about the company and the stock that you are purchasing. With proper investing, you should be able to benefit from quick gains from the penny stock market. So be careful when buying stocks that have uneven ownership distribution.

The only way to be successful with the penny stock market is to know what companies to invest in through research.
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mistakes.jpgWhy Acting on Price can be a Mistake.

Buy low and sell high is the ultimate guide to successful stock investing. It is also the reverse of what many investors do. It’s not that investors start out to do that, but too often, they use price, and in particular price movement, as their only signal to buy or sell.

Stocks that have gone up recently, especially those with a lot of press, often attract even more buyers. This obviously drives the price up even higher.

People get excited about what they read and see and want a part of the action. They jump into a stock that is already trading at a premium – they buy high.

Experienced traders can make money jumping in and out of a stock that’s caught the public’s attention, but it’s not a game for the inexperienced and it’s not investing.

There’s risk involved and tax consequences along with other issues that mean most investors should leave this activity to short-term traders.

For most investors, trying to grab a piece of the latest flashy stock, usually means paying too much (buying high).Bad Decision: The other side of the market is when a stock has fallen; most investors may want to sell along with the rest of the market. If you go by price alone, this can be a bad decision (sell low).

There are many reasons a stock’s price drops and some of them have nothing to do with the soundness of the investment. That’s why if you only follow price you may miss an opportunity.

After a stock’s price has fallen can be a great time to buy (buy low) if you have done your research on the company.

If all you know about a stock is the price, you may (and likely will) make investing mistakes. Remember, if a stock has had a good run up it may be time to sell, not buy (sell high). Similarly, if a stock has dropped like a rock, it may be a good time to buy rather than sell (buy low). You won’t know what to do unless you understand a lot more about the company than its stock price.

si_smart_inves_simple.gifVery few investors make money in the stock market.

Look at where your account is today compared with what you had at the beginning. Don’t count what you have added during that time or interest income. Most folks are still running a loss.

Your broker, if you are unlucky enough to have one, will assure you that the market always comes back and you are in for the long haul. So don’t worry, be happy.

If you were one of the few (about 1%) who had a broker or financial planner that actually knew how to protect your money you would not have lost a huge portion of your portfolio from 2000 to 2003.

So, you have to learn to protect yourself! It is a lot easier than you think and most brokers are not even aware of it.

It was time to buy. Divide the portfolio into 10 equal parts. Select 10 mutual funds that have quit going down and are now going up and buy these. This doesn’t have to be done all in one day. Spread it out over the next 2 or 3 months as good equities present themselves.

Here is the key. Don’t lose money. Laugh out loud, thats what you do. Place a 10% stop loss order on each fund that was purchased and as each fund advances raise the stop every month. The investor has 10 separate positions with a 10% risk on each one. If the selection of the fund was poor and it goes down instead of up the loss is one percent (1%) of the total portfolio.

The investor has been smart enough to diversify into several sectors so the chance of losing in all 10 positions is very small. Do not buy individual stocks. Few investors are capable of choosing company stocks. Let the mutual fund manager do that. As stops are hit, find other good equities that are going up. When the market turns down you will be in cash as you will have been stopped out of all positions with nice profits.

Brokers don’t know much more that you do (and I’m not kidding). This simple strategy will spread risk, prevent large initial losses and prevent giving back profits as they are made.

stock_rally1.PNGIf you’ve never invested in stocks before and are about to buy some for the first time, you should understand what to look for and what factors to consider when selecting a stockbroker. It can be a good idea to use a stockbroker for an active management of your stocks or mutual fund portfolio. Most investors will use a stockbroker at one time or another.

First of all, what is a stockbroker? Well, I’m not really sure… 😉 …just kidding. A stockbroker is an intermediary between you and the stock market, which is an exchange where shares of stock in public companies are openly traded. When you buy or sell a stock, also known as a “security,” you must place the order through a broker, who then transacts your business by placing the order on the market.

I personally use a discount broker only to carry out my order, I am willing to listen to a full-service broker’s story but in the end invariably the decision is mine. If you have done your homework, trust me a broker doesn’t know much more than you.

A discount broker is someone who gives you zero advice, and just executes your market orders for you, but does nothing else. Therefore, a discount broker usually doesn’t collect commissions. Instead, they usually charge a flat annual fee and are paid a salary. Internet brokers such as Etrade or Ameritrade are discount brokers that work on commission. They allow you to place your market orders online, and the website itself is the broker. Internet brokers usually charge a much smaller commission than anyone else.

If you use the services of your bank there are some facts to consider. When you talk about the options you have to invest your money, they will certainly recommend the funds they control themselves. Do they recommend other banks portfolios? I don’t think so. If you go to a car dealer that sell Ford, do they recommend you to buy a Lexus?

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I was tagged by Shane (zoomstart) to join in on a meme, who in turn was tagged by Rob (yack yack). This is not the first time I have participated in a meme, the first one was Blog Apocalypse. This one as the heading says is the challenge to write a post about why I blog. You know how these things work. You write whatever the meme calls for and then you tag 5 more people to do the same thing to keep it going.

22.jpgWe all have our own special ways how we relax, and that includes me.

This photo here depicts one of the two ways how I relax — throw caution to the winds and be totally carefree!

My other way of relaxing is — you guessed it — blogging.

I was stuck in Bahrain’s notorious traffic once again the other evening, and I found my thoughts wandering to blogging, and why I do it. Several explanations popped into my head, including money-making, impressing my new boss, or my neighbour’s teenage daughter, killing time, a reason to learn PHP and CSS, what not.

All my expertise in lying to myself wouldn’t help me accept any of these explanations. There was something else. And just as the traffic started moving again, the answer came to me.

You see, an artist likes to see his signature on his painting. A writer is passionate about his name in print. A copywriter will stare at his creative ad for ages. All of them have something in common — they are expressing themselves.

I see a kind of quiet satisfaction when something I have to share is made public for others to read — whether they accept it or reject it, that’s none of my business. My concern is for the serene happiness it gives me when I hit the bed every night.

I asked myself, if my goal was to make $15,000 per month from blogging, and if someone offered to pay me the same amount every month for doing nothing, would I stop blogging?

No, I wouldn’t. Certainly not. It’s not about money. It’s something money can’t satisfy. In my case, it’s simply called passion. A passion for expression.

Now I am Tagging Zakman, Jag , Boston Brat , Christy’s Coffee Break , Adam

Until next time, Cheers 😀

A woman proudly told her friend, “I’m responsible for making my husband a millionaire.” “Well what was he before he married you?” the friend asked. “A billionaire.”

061117_ask_for_money2.gifA dollar per point
A professor was giving a big test one day to his students. He handed out all of the tests and went back to his desk to wait. Once the test was over the students all handed the tests back in. The professor noticed that one of the students had attached a $100 bill to his test with a note saying “A dollar per point.” The next class the professor handed the graded tests back out. This student got back his test, his test grade, and $64 change.

A man being mugged by two thugs put up a tremendous fight! Finally, the thugs subdued him and took his wallet. Upon finding only two dollars in the wallet, the surprised thug said “Why did you put up such a fight?” To which the man promptly replied “I was afraid that you would find the $200 hidden in my shoe!”

When people ask me if I have any spare change, I tell them I have it at home in my spare wallet.” – Nick Arnette.

Ever wonder about those people who spend $2 apiece on those little bottles of Evian water? Try spelling Evian backward” – George Carlin.

There were times my pants were so thin I could sit on a dime and tell if it was heads or tails.” – Spencer Tracy.

Any man who has $10,000 left when he dies is a failure.” – Errol Flynn.

It is pretty hard to tell what does bring happiness; poverty and wealth have both failed.” – Ken Hubbard.

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