Laying the foundation one block at a time

 

 

 

Well if you are reading this blog, you already have access to everything that the pros on Wall St. have.  The internet provides everyone including you and me, up to date and real time information on every aspect of the investing market.  A good education in the stock market is only the beginning to a greater return on investments. Investing opportunities happen which ever way the market moves.   And you should get this in your head right now, the market always moves.  We don’t always know whither its going to go up or down or stay flat, but rest assure it is going to do something.  The advantage of being an educated investor is that it doesn’t matter which way it moves.  The reason is because while stocks go up, somewhere stocks are also going down at the same time.  I think I saw where about 80% of all the money is controlled by mutual or hedge funds.  But unlike the big boys, we can move our money in and out quickly and beat the market with the same information.  Sounds easy but with an educated foundation in how the market works, anybody can do it in a relatively short time.

The question for us is where do we start?  Well like everything else we build, we start with a solid and strong foundation because you can’t build a mansion on an outhouse foundation. But with one block at a time, you can lay the ground work so that over time you can build up a foundation fit for a king and his mansion.  Did you go to college after high school? And if you did, why did you continue going to school?  Well duh, to get an education and a better paying job, same as everybody else! If you think about it, an education is by its self an investment. What you get in return on that investment is up to you. The goal of getting a return on investment is how a market investor makes money.  So if you educate your self on investing, you have the potential to reap the greatest returns on your best investment ever, your education.  Basically, you can make money while learning how to make more money……

Over the next few weeks, The Treestand Investor’s goal will be to help form an educational foundation for hunters (and anyone else) so that we can begin our journey into becoming a business owner. Topics will include information on where to start and the best sources on the internet to get started.  Please know that I’m a beginning investor myself. And I welcome any information that maybe useful for others as well as myself.  Don’t be afraid to contact me to share your thoughts, ideas and questions. We are all here to learn and to build a strong solid foundation, one block at a time. 

 

IBD’s 20 Rules for Investment Success

While on vaccation over the summer I was reading an Investor’s Buisness Daily paper and came across this list of IBD’s 20 Rules for Investment Success.  This is food for thought for anyone trying to educate themselves in the investing world.

 

 

Investors.com

 

These rules aren’t based on our personal opinion or those of Wall Street’s experts. IBD built detailed models of all the most successful stocks every year from 1980 to 2005. We analyzed their common characteristics, what factors existed before these very best companies had huge advances and how these factors changed when the stocks topped. So these rules represent how the market actually works.

 

If all 20 fact based rules are carefully followed (not just the ones you like), your investment results can materially improve.

 

1. Consider buying stocks with each of the last three years’ earnings up 25%+, return on equity of 17%+ and recent earnings and sales accelerating.
2. Recent quarterly earnings and sales should be up 25% or more.
3. Avoid cheap stocks. Buy stocks selling for $15 to $100 or more.
4. Learn how to use charts to see sound bases and exact buy points. Confine buys to these points as stocks break out on big volume increases.
5. Cut every loss when it’s 8% below your cost. Make no exceptions so you’ll avoid any possible huge, damaging losses. Never average down in price.
6. Follow selling rules on when to sell and take profits on the way up. Review “When to Sell and Take a Profit” in “How to Make Money in Stocks.”
7. Buy when market indexes are in an uptrend. Reduce investments and raise cash when general market indexes show five days of increased volume distribution.
8. Read IBD’s Investor’s Corner and Big Picture columns to learn how to recognize important tops and bottoms in the market indexes.
9. Buy stocks with a Composite Rating of 90 or more and a Relative Price Strength Rating of 85 or higher in the IBD SmartSelect Corporate Ratings.
10. Pick companies with management ownership of stock.
11.  Buy mostly in the top six broad industry sectors in IBD’s New High List.
12. Select stocks with increasing institutional sponsorship in recent quarters.
13. Current quarterly after-tax profit margins should be improving near their peak and among the best in the stock’s industry.
14. Don’t buy because of dividends or P-E ratios. Read a story on the company. Buy the No.1 Company in an industry in earnings and sales growth, ROE, profit margins and product quality.
15. Pick companies with a superior new product or service.
16. Invest mainly in entrepreneurial New America companies. Pay close attention to those with an IPO in the past eight years.
17. Check into companies buying back 5% to 10% of their stock and those with new management (what is management’s background?).
18. Don’t try to bottom guess or buy on the way down. Never argue with the market. Forget your pride and ego.
19. Find out if the market currently favors big-cap or small-cap stocks.
20.  Do a post-analysis of all your buys and sells. Post on charts where you bought and sold. Evaluate and develop rules to correct your major mistakes. It’s what you learn after you know what you’re doing that’s vital. That’s how to improve you results.

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