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Managing Investing and Stock Market Risks
Reduce your investing and stock market risks by:
Setting your sights on the long term, patiently riding with the ups and downs!
If you have the time to be patient, you can benefit from time diversification. The more numerous good years for stocks outweigh the bad, pulling your return up.
Thus, if you hold equities for many years, you can expect to realize significant positive growth in your wealth.
Weeding out your laggards!
Don't be too patient with laggards. This is the management risk referred to earlier. Underperforming the market benchmarks is a big risk to which many people are oblivious.
The more years you remain with a subpar performer, the greater the damage to your nest egg. Weed out funds that have lagged their peers over the past 18 to 24 months.
Avoiding hard-core market timing!
It's not uncommon for hard-core market timers to move between the extremes of 100% stocks during an up market to 100% cash when their indicators signal a major turning point in prices.
Market timing is especially easy to do with mutual funds. Resist the temptation. Participation in the best up months is far more important than avoiding the worst down months, and the really dramatic upward surges in stocks are unpredictable, of short duration, and few and far between. Market timers risk being in cash when the bull stampedes. Missing out can make a big difference in your long-run returns.
Being disciplined and using cost averaging!
Investing monthly in a specific stock is a great way to build wealth and cope with market ups and downs. Your fixed investments buy more shares when prices are down and fewer at higher levels.
Cost averaging can help people become more disciplined because it encourages investing during market nadirs when individuals otherwise might be too fearful. A particularly good strategy is to double up on your investments when prices are depressed, if you're able to. This will help enhance your long-term performance, by further reducing your average cost per share.
Copyright © 2005 I.E.C. Haramis
Ioannis - Evangelos C. Haramis was born in Greece in 1951 and he studied in Greece, USA and in Belgium. He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank.
Mutual funds and brokers are always preaching not to buy any fund with a high expense ratio. That is the annual costs of the fund to pay for trading of stocks within their portfolio, salaries, rent, telephone, analysts, etc.
Inverted Interest Rates
Inverted interest rates? What's that? Who cares? Even if you don't understand what Mr. Greenspan is saying (and almost nobody does) it is important to you because it could mean you might lose you job next year or have to cut back on some of the things you want to acquire.
Trading Education: The Best of Both Worlds!
I made my very first investment in the stock market when I was ten years old. Ever since then I have been hooked! Now I check out hundreds of trades each year with the same excitement andenthusiasm, and each time try to find that one market at the right time that could dramatically create wealth.
"Fears Only Enemy Is Action"
What a great statement!I just heard someone use it in the context of personal and financial success and it struck me as a brilliant summary of an issue we raise in the SMG Tutorials.Fear is a huge issue with a lot of traders.
Trend Trading - Trading Stocks Using Technical Analysis and Swing Trading Strategies
Peter is a professional trader, Paul is not. Peter has a tested, proven, written trading plan that he follows each time he enters a trade, Paul does not.
Smart Day Trading Strategies to Help You Make Money in the Stock Market
Stock trading can be a very profitable activity. You can make big amounts of cash in a short period of time.
Hill of Hope
Just about now everyone is confused as to which way the stock market is going to go - up or down. For the past 3 years it has been headed south, but the Wall Street experts have told us that the market never goes down 4 years in a row so this has to be an up year.
Are You A Stockaholic?
Today's society gives special recognition to alcoholics, sexaholics, binge-aholics, shopaholics, chocaholics and other "-aholics". What about stockaholics? Stockaholics are people who are overly obsessive about their stock market investments.
My Neighbor Got A New Car
I don't know what kind it is, but I saw it on TV running full speed along the shore (I don't live near the shore) throwing up spray or maybe it was that one climbing up the steep mountain trail thru the mud, rocks and snow. Very exciting.
Bull or Bear?
Cat or dog? Maybe Zebra. Shucks, I don't know, but my broker keeps telling me it is a bull and to buy this and that.
My Stock - Right or Wrong
We all know the expression, "My country, right or wrong", but have you ever thought about the stocks or mutual fund you own and said to yourself, "My stock - right or wrong" and held on to your position even as you saw your hard-earned money disappearing?This is the Buy N Hold strategy and, in case you haven't noticed, lost from 40% to 60% and more of investors' money from 2000 to 2003. Fortunately, for the past year stock markets around the world have gone up and folks have recovered about 25% to 30% from those low numbers.
During the month of January the Dow Jones Industrial Average, usually referred to as the DOW, had an almost 1,000 point range, most of it down and the average investor has yawned and said 'so what, this has happened many times before'.Is there any reason to worry now?The terrible event of September 11 shocked investors who sold heavily and then watched the market climb back to where it was on September 10.
Dividend Reinvestment Plans: Investing on Automatic Pilot
If you're like many investors who squander those small dividend checks from your stock portfolio, a Dividend Reinvestment Plan (DRP) might be just what you need. Just as its name implies, a Dividend Reinvestment Plan allows you to reinvest some or all of those dividends into more stock of the issuing company.
We have two candidates for president that have really different ideas on how to make the economy grow.Bush believes in the entrepreneurial approach.
The Stock Market - How Just One Question Will Tell You All You Need To Know About Your Stock Broker
Last time we looked at the real performance of the stock market (we used the Dow Jones as a reference point) and the apparent performance that makes the headlines and can be seen by a casual look at a chart or "ballpark" figures - briefly; the Dow went up, for example, less than 50 points between April 1999 and April 2005 - essentially 6 years with no growth!But behind that seemingly "becalmed" Dow there were at least 10 significant moves each and every year totalling many thousands of points!But did the Wall Street Moguls, the so-called "Masters of the Universe" make you any money from those huge movements? No.Of course they didn't!Here's how I know.
If you have talked to a stock broker or financial planner in the last few days I will bet they all agree that there are some great bargains out there and now is the time to start buying in anticipation that the market will go back up. You will also find agreement from the talking heads on CNBC and those talk radio station stock mavens.
Market Experience of a Naïve Stock Operator
Sometime in the third quarter of 1997, someone told me that I should play the stock market. Knowing nothing about the stock market, I turned to some colleagues to seem to know a lot about it.
What is a Mutual Fund?
Ever wondered what is a mutual fund? A mutual fund is a pool of money run by a professional or group of professionals called the "investment adviser."A mutual fund is a company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments.
Pamplona, the Wild Investment Bulls
You remember (they show it on TV every year) the running of the wild bulls in Pamplona, Spain. Some of the nuttier people get out their capes and stand in their path as they come roaring down the street.
Stock Investment Advice
Stock investment advice is easy to find. Do you get cold called by brokers with the latest investment tip? I have, as have countless others around the globe.
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