Connect with us

News

3 Components Needed for Beating the Market

Published

on

[ad_1]

Time to look back

2004 is over, now we are in 2005. This is time to seriously

look at performance of your personal investment, such as

mutual fund, or individual stocks holdings, etc. Does your

fund beat index last year? Does it beat index over past many

years? How are you doing with your own stock investment

comparing to SP&500 index?

If the answer is “great”, well congratulations. You have

your own way of beating market and making big money already.

If the answer is “not so great”, or “failed to beat index”.

You have got a problem. You need to look deeper into the

investment strategy you used or your fund used. You can not

pretend that there is no problem when in fact there IS a

problem. I know there are just so many people out there that

can not face this. Let’s face it, Almost everyone, include

myself have ego that we JUST do not want to admit failure or

mistake or any hint of it. Here comes the 1st Component

below.

Component # 1 – ego, gut, perseverance

Value investing or investing in general is all about

psychology, ego, attitude, and gut.

Investing is serious business. It is our money, our life

savings at stake. Sometimes biting the bullet with pain to

trash the ego is worth the pain if that makes you more

money. Ego is one thing that we must avoid in stock market

investing business in order to make big money ahead. You can

not hide, you have to compare your own performance of past

many years to SP&500 index. Of course, I am not saying that

you should be comparing every month. It is OK to make some

mistakes, here and there for certain months. However, it is

NOT OK if the performance year over year has been bad. You

have got to change if that is the case.

Although ego is something you should all avoid, perseverance

is something you must treasure if you want to be that

marathon winner. When you finished your due diligence and

you have calculated your risk reward ratio and intrinsic

value, go for it and stick with it. Do not be scared of

negative comments or negative press, even if the source is

from a famous author or from your close family. Value

investing is lonely business. I know this for years. I have

been criticized over past many years for numerous reasons,

for not beeing able to sell at top, for not beeing able to

buy at bottom, for picking a risky bankruptcy related stock,

or for buying a low float small cap stock , blah blah. You

know what? in the end, my investment performance is better

than most of folks out there in the market, including those

“pro” mutual fund managers.

I have got comments like this before: “Blast, I like your

method, I know you are making big money. But, I can not do

as you are doing. I can not hold. Especially bad news hit, I

just have to sell, and my performance sucks”.

Well, if he/she do not have gut to hold like I hold during

bad time, she/he can not make big money with value

investing. One can be all right in paper, right with value

calculation, right with timing of purchase. However, if you

can not fight against panic during minor negative news, you

are out in the investing marathon.

Component # 2 – right method

Many investment methods are flawed, period. This is

especially true for many short term oriented trading

methods. Many mutual funds preach long term holding for

their fund investors, but the fund managers themself engage

in short-term trading like mad men. Performance of many

momentum based growth funds or tech funds looked horrible

for past 5 years. The reason for that is very simple: the

investing method itself. Growth investing or short term

trading sometimes can be very speculative and dangerous.

Wall street has famous theory that “the more risk, the more

reward”. Therefore, yeah, growth funds are risky, but if you

want to have more reward, you have to chase risky stuff.

Wrong. The truth actually is “the more risk, the less

reward”.

I know I am going to be hammered by saying above

non-conventional statement. I put out below example to back

up my point.

Las Vegas is world famous place for gambling. As an average

investor, you visit Las Vegas looking for opportunities to

make big money with $50,000 investing capital. Let’s assume

the theory “the more risk, the more reward” is correct.

Where are the riskiest opportunities out there in LV? Of

course, Gambling. The potential reward can be astonishingly

high. Black jacket, slot machine all have huge potential

with 1000% or even more within minutes. You can make

millions if you are lucky with your $50,000 principal at

slot machine. Actually, it is FACT there are small group of

gamblers who made millions in gambling in LV.

However, If you are sensible person, you know the answer. As

high as the potential reward can be, the most likely result

from gambling with $50,000 principal at LV is WIPEOUT. You

lose all your hard-earned money.

If you are a rich investor with multi-million dollar capital

looking for investment opportunities in Las Vegas. Certainly

casino company stocks and bonds or private offering might be

worth looking. However, the sad news is that no matter for

stocks or bonds or private offerings, the investment reward

is only around 10% to 20% yearly. Well, maybe it is not so

sad at all. 10% or 20% of return is certainly a lot safer

than gambling. Which reward is better, 10% – 20% return or

wipeout?

Well, I know you may want to protest against my above

example. Stock market can not be as bad as Casino, right?

It depends. Although casino gambling does not provide real

investment opportunities as stock market provides, sometimes

stock market can be even worse than casino due to insider

manipulation, cheating books, etc. Over the past couple of

years, I have heard so many negative news from stock market:

Enron, Worldcom, mutual fund scandals, market timing, etc.

But I have not heard of news of slot machine cheating by Las

Vegas Casino company. Casino does not need to cheat to make

money, the odds are against gamblers. Although stock market

does offer real investment opportunities for

businessman-like investors, stock market is also a place for

gamblers to place their bet just like a Casino.

In stock market, the odds are against speculators.

Well, I know you may have more questions. Why Casino bonds

or stock offerings or even private offering is only offering

10% to 20% returns?

Casino business is just another business. Numerous academic

study has shown that in US history of past many decades,

majority of companies can not maintain more than 20% of

return on equity over the long run. Many companies are

operating under loss, a negative return on equity. If you

read books on Warren Buffet method of Philip Fisher method,

you will know that they are experts in identifying those

small group of high return on equity stocks. But for most

companies, they are not as good as the stocks in which

Buffet or Fisher invested.

Competitive economics is also at play here. If a company can

make more than 20% of return consistently, the competition

will heat up and more smart businessmen will enter this

field to drive down the return.

If you think of value investing as special kind of business,

you will realize how hard it is to maintain 20% return for

the long run, as Warren Buffet achieved over past 50 years.

Very few investors can do that. Value investing business is

just as competitive as other business. Let’s face it, if

value investing is not competitive and easy to make big

money consistently, many smart business guys out there in US

will liquidate their own company and start their investment

firm instead.

Component # 3 – right tools – new way to find great picks

Peter Lynch mentioned many methods to get the stock leads

and identify the big winners in his book “One up in Wall

Street”. Tips from wife, tips from friends can land you the

great stock idea. Although his methods are very valid, there

are new ways to find that great pick in this internet stage:

Software Data Mining.

It is quite fortunate that I am a data mining expert myself.

If you are good at data mining, you can do yourself well

too. You can design and fine-tune your data mining tools to

get the leads you want and make big money by getting ahead

of crowds.

A successful value investor really has to find great pick

ahead of big guys and move fast in order to make big money.

In this internet stage, big guys such as mutual funds or

hedge funds really have no advantage over small guys or

small firms such as BlastInvest. At BlastInvest, we do stock

data mining with our in-house software just as good as those

big guys, if not better. Sarbane Oxley new law also helped

individual investors and small firms like BlastInvest a lot

because most of public companies now disclose information to

public and to big institutions simultaneously through

conference calls or press releases. Insiders now also have

to report insider buying and selling within couple of days

of transaction instead of several months before. Whenever

insiders buy or sell, You need to know that immediately

within a few days. You want to buy when insiders buy and you

may want to sell when insiders are selling too.

Don’t despair if you do not know how to program software

yourself. There are lots of tools and services out there to

help you out. Here I want to talk about the most useful

tools out there.

(1) Valuation screening tool. You need at least one tool for

screening against value metrics for you. Yahoo stock

screening is very useful tool and it is free.

(2) Insider buying tool. This is must-have tool to get you

the latest insider buying stocks. There are many offering

there, fee-based or free. We offer free insider-buying

weekly service as well at BlastInvest.

(3) Strategy screen. Validea.com offers an interesting stock

screening tool that can screen based on methods of Ben

Graham, Warren Buffet, or Peter Lynch. It has limitations

too. I have used it and found that its Warren Buffet tool is

not working well and its Ben Graham strategy screening is

only looking for “defensive” type of stocks, not the

“enterprising investor” type of stocks. My BIRTP newsletter

is really geared toward “enterprising investor” type of

stocks rather than “defensive investor” type of stocks.

Heck, still Validea is best kind of tool available at

affordable price in this category.

Final thought

If you follow up with my above 3 components

of value investing, you are on your path for financial

freedom.

However, if you can not do as I stated above, do not naively

believe that you can make big money alone in stock market

mainly by hunch. Buy the stock screening tools if necessary,

get the professional help from real experts and consider my

newsletter BIRTP as well.

[ad_2]

Source by Henry Lu

News

Where to Find Those Efficient and Hardworking Affiliates?

Published

on

[ad_1]

Everyone wants a hardworking affiliate, employee, associate, partner, or even spouse, and why not? It’s the next best thing to doing the work yourself. However with the massive outbreak of work and income opportunities available online, how can you beat everyone else and find that one (or more) ideal person who will make your online business explode with success? Here are some of the most ingenious and uncommon ways to snag the idea affiliates for your affiliate program

Direct Sales Agents

Direct sales people are really one of the most enterprising, hard-working individuals in business. They mostly work on commissions or rebates and are willing to literally go door-to-door offering their products to anyone and everyone they bump into. Imagine how much easier their job would be if they could be an affiliate and simply work via the Internet and a mobile device or desktop.

Also, most direct sales people tend to carry more than one brand in their product arsenal so signing up as an affiliate would be almost the same type of work but using a different approach.

Colleges and Universities

Many college kids would be interested in a part-time income opportunity if it would mean funds to help pay for their education, loan, or partying. All you have to do is make sure to offer them products they can endorse as a student.

Freelancers

Did you know that the U.S. Census Bureau’s latest annual report show that 75% of U.S. businesses used freelancers in 2011? Freelancers earned a whopping US$990 billion in 2011 which is a 4.1% increase from the previous year. The only industries where the number of freelancers decreased were in insurance, finance, and construction. Most probably your affiliate program isn’t a part of these 3 industries.

Furthermore, online business and finance experts are predicting the growth to increase incrementally every year even with an economy that is improving. People just want income security and more control over their earnings. With the spate of lay-offs, it’s understandable why many would prefer to work as an affiliate than as an employee.

Scout For Them At Affiliate Conventions

There are annual affiliate conventions held in different cities around the country. You should try to catch one when it is held somewhere near your location. The average turn-out for these types of conventions has increased regularly over the years. Last year, many of them were sold out weeks before the event.

Advertise!

The US Census Bureau has said that as of 2012, 15% of Americans are poor, 43% of young adults depend on their parents to some extent for money. Even more surprising is that the median income of young adults in 1982 was $31,583 and last year it was $30,604 for the same age group! Income is dropping and people are looking for ways to earn additional income outside of their 9 to 5 jobs. That’s where you can come in playing the hero and helping others realize their dream income.

Finally, go online and talk about your product. Make the affiliate marketers come to you and have the luxury of picking the best candidates. You will need some help in marketing your affiliate program so target a marketer who’s experienced in affiliate program and SEO.

[ad_2]

Source by Lina Stakauskaite

Continue Reading

News

Recession Is Here… Six Costly Mistakes Home Sellers Make During Recessions And How To Avoid Them

Published

on

[ad_1]

The U.S. is officially in a recession. What is a recession? A recession is a business cycle contraction or general economic decline due to significant drop in spending and other commercial activities. Most pundits and politicians will blame Covid-19 crisis for the recession, but even pre-Covid-19 the proverbial writing was on the wall.

The U.S. had over 120 months of economic growth, which was the longest expansion in the modern history. Other indicators, such as negative yield spread on treasuries (long term bonds having lower interest rates than short term T-notes), were pointing to an imminent change of the economic cycle and an impending recession. The only real question was: when and how bad?

Then Covid-19 came… If the cycle was going to change anyway, Covid-19 acted as a huge and unexpected accelerant to make the recession much more immediate and severe.

Inevitably during recessions all classes of real estate, including residential homes and condominiums, will be negatively impacted as lower consumer spending and higher unemployment rates affect real estate prices and marketing times.

Here are the six costly mistakes home and other real property sellers make during recessions and how to avoid them:

Mistake #1: This will pass and real estate market will be hot again soon

First thing to remember is that real estate cycles are much longer than general economic cycles. Even if the general economy recovers, which eventually it always does, a typical real estate cycle takes as long as 10 to 15 years. The cycle has four key stages: Top, Decline, Bottom and Rise.

Let us consider the last real estate cycle, which lasted approximately 14 years:

  • 2006 – Prices hit the Top
  • 2006 to 2012 – Prices Decline
  • 2012 – Prices hit the Bottom (Trough)
  • 2012 to 2019 – Prices Rise*
  • 2020 – Prices hit the Top
  • 2020 to? – Prices Decline

*NOTE: In 2016 the national residential real estate price index reached its pre-recession 2006 peak levels. It took 10 years for the real estate market to recover.

The way to avoid this mistake is to recognize that real estate cycles take years to run and plan accordingly. Additionally, nobody knows for sure when the prices will hit the top or bottom until after the fact.

Mistake #2: Low interest rates will make the economy and real estate market rebound

Between 2006 and 2011 the interest rates (Fed Funds) were continuously cut by the Federal Reserve Board and went from low 5% to almost 0%. However, that did not stop the real estate recession and depreciation of property values.

Undoubtedly, low interest rates made the economic decline and real estate recession less severe and saved some properties from foreclosures, but it still took six painful years for the real estate market to hit the bottom and then four more years for the prices to go back to their pre-recession levels.

Some markets had never fully recovered. For example, residential home prices in some parts of California, Arizona and Nevada are still below their 2006 highs.

To avoid this mistake, one needs to realize that although low interest rates help stimulate the economy and the real estate market, they do not cure them.

Mistake #3: I don’t need to sell now, so I don’t care

If you do not need to sell until the cycle plays out, which typically is over ten years, then you will not be as affected, especially if you have a strong equity position, limited mortgage debt, and solid liquid assets.

However, it is good to keep in mind that “life happens” and either professional or personal circumstances can change and we may need to sell property before the downturn runs its course.

Furthermore, if a property has a mortgages and its value declines to the point being “upside down,” meaning the mortgage loan balance exceeds the value of the property, then the options of selling, refinancing or even obtaining an equity line of credit, will be significantly limited.

This does not mean that everybody should be rushing into selling their real estate if there is no need to do so, just keep in mind that circumstances may and often do change and property options will be affected, so plan in advance. As one wise proverb says: “Dig your well before your thirst.”

Mistake #4: I’m selling, but I won’t sell below my “bottom line” price

This is a common and potentially very costly mistake. Generally speaking, every seller wants to sell for the highest price and every buyer wants to pay the lowest price. That’s nothing new. When selling real estate, most sellers want to achieve a certain price point and/or have a “bottom line.”

However, it is important to understand that the market does not care what the Seller, or his/her Agent, think the property value should be at. The market value is a price a willing and able buyer will pay, when a property is offered on an open market for a reasonable amount of time.

Overpricing property based on Seller’s subjective value or what is sometimes called an “aspirational price,” especially in a declining market, is a sure first step to losing money. When a property lingers on the market for an extended period of time, carrying costs will continue to accumulate and property value will depreciate in line with the market conditions.

Additionally, properties with prolonged marketing times tend to get “stale” and attract fewer buyers. The solution is to honestly assess your selling objectives, including the desired time-frame, evaluate your property’s attributes and physical condition, analyze comparable sales and market conditions, and then decide on market-based pricing and marketing strategies.

Mistake #5: I will list my property for sale only with Agent who promises the highest price

Real estate is a competitive business and real estate agents compete to list properties for sale which generate their sales commission incomes. It is not unusual that Seller will interview several agents before signing an exclusive listing agreement and go with the agent who agrees to list the property at the highest price, often regardless if such price is market-based.

Similarly to Mistake #4, this mistake can be very damaging to Sellers, as overpriced properties stay on the market for extended periods of time costing Sellers carrying expenses such as mortgage payments, property taxes, insurance, utilities and maintenance.

Furthermore, there is the “opportunity cost” since the equity is “frozen,” and it cannot be deployed elsewhere till the property is sold. However, the most expensive cost is the loss of property value while the real estate market deteriorates.

During the last recession, we have seen multiple cases where overpriced properties stayed on the market for years and ended up selling for 25% to 40% below their initial fair market values.

The solution is to make sure that your pricing strategy is based on the market, not empty promises or wishful thinking.

Mistake #6: I will list my property only with Agent who charges the lowest commission

Real estate commission rates are negotiable and not set by law. A commission usually represents the highest transactional expense in selling real properties and is typically split between Brokers and Agents who work on the transaction

Some real estate agents offer discounted commissions, in order to induce Sellers to list their properties with them. But does paying a discounted commission ensure savings for the Seller? Not necessarily.

For example, if the final sales price is 5% to 10% below property’s highest market value, which is not that unusual, due to inadequate marketing, bad pricing strategy, and/or poor negotiation skills, it will easily wipe out any commission savings and actually cost the Seller tens of thousands of dollars in lost revenues.

The solution is to engage an agent who is a “Trusted Advisor,” not just a “Salesperson.” A Trusted Advisor will take his/her time and effort to do the following: 1) Perform Needs Analysis: listen and understand your property needs and concerns; 2) Prepare Property Analysis: thoroughly evaluate your property and market conditions; 3) Execute Sales and Marketing Plan: prepare and implement custom sales and marketing plan for your property; and 4) Obtain Optimal Results: be your trusted advocate throughout the process and achieve the best possible outcome.

Finding such a real estate professional may not be always easy, but it certainly is worth the effort and will pay off at the end.

In conclusion, this article has outlined six costly mistakes real estate Sellers make during recessions and how to avoid them. The first mistake is not understanding that real estate cycles are long and take years. The second mistake is a misconception that low interest rates alone will create a recovery. Another mistake is not realizing that circumstances may change and not planning in advance. Mistakes number four, five and six pertain to understanding the market value, proper pricing and selecting the right real estate professional.

By understanding and avoiding these mistakes, real estate Sellers have significantly better chances of minimizing the negative impact of a recession while selling their properties.

[ad_2]

Source by Robert W. Dudek

Continue Reading

News

Useful Tips To Build The Best Gaming Computer

Published

on

[ad_1]

Every gamer will want their computer to be the best gaming computer among their peers. Sometimes, with a little knowledge and tips and tricks, it is possible to build the best gaming computer and show it off to your peers. This article will show you how:

1) You can’t get the best gaming computer from computer retailers

If you want to get the best gaming computer, you have to build your own. Different gamers have different requirement for their gaming machine. Unless you are willing to pay a high price, you will not be able to buy a commercial computer that fulfills all your gaming needs. The only option you have is to build your own gaming computer.

2) You don’t have to be rich to build the best gaming computer

It is not necessary to burn a hole in your pocket to build the best gaming computer. With some due diligence, do some market research and compare prices around the marketplace. Merchant such as TigerDirect and NewEgg give regular discount to their products and you could save a lot of money if you catch them during their promotional period.

3) Most expensive parts do not have to be the best part

Sometime, the latest model or the most expensive model does not have to be the best part for your computer. It requires various components to work together to form the best computer system. When choosing a computer part, what matters is how well it can integrate with the rest of the components. Compatibility is more important than individual performance. What use is there if you spend lot of money on the latest quad-core processor and find that your motherboard doesn’t support it?

4) You don’t need to change the whole PC to own the best gaming computer

It is a misconception that you have to change the whole gaming machine to build the best gaming computer. If you already have a good barebone system, what you need to do is to upgrade the necessary parts and your gaming computer can roar back to life instantly.

5) Brand is important

Unless you want to see your computer system malfunction every few days, it is important that you purchase the parts from branded manufacturers with strict quality control. Motherboard brand such as Gigabyte, ABIT, ASUS are some quality brands that you can consider

If you follow diligently to the tips stated above. You will be on your way to build the best gaming computer. While price can be an issue, it is better not to scrimp on important computer parts such as motherboard, CPU, RAM and graphics card as it will cost you more to upgrade in the future.

[ad_2]

Source by Damien Oh

Continue Reading

Tags

Live Statistics

Trending