The Game of Crisis Investing
You can hardly ever open a newspaper or catch the news on radio or TV without hearing about the latest crisis. So no matter what the latest dilemma may be, if we are to come out ahead of all our current crises and all of our future crises investment-wise, we need a game plan - a game plan that will see us through the upcoming trials we are guaranteed to face.
Like any game, we first have to know the strategy of the game and its rules.
The Strategy: Watch for and capitalize on the constant but varying crises of the future by buying when others are panicking, and selling when others are greedily buying.
The Rules: Just because your neighbor panics doesn't mean you have to. There's an old saying in investments: "Bulls make money, and bears make money, but pigs and sheep get eaten." When the markets go down it is not necessarily a signal of disaster. It can simply be a signsl that the "Sunday drivers" are out - not the professionals.
Remember...for every stock sold in "panic" someone else bought that very same stock!
A good rule to follow is always diversify. By this I mean more than just between stocks and bonds. Rather than investing and gambling on one stock in one industry, buy the whole industry. You can do this easily with ETFs.
Learn the "ins and outs" of dollar-cost-averaging. This strategy says simply that when an investment you own goes down in value, especially through no fault of its own (such as a political crisis) take a re-look at it. If it's still a solid stock, industry or country, then add to your portfolio and thereby reduce your average cost. Then the shares won't have to go back to where you bought them for you to break even or make a profit.
There's an old saying that makes good sense: "To be master, you must learn what the masters do - then do what the masters have learned." This means you learn the whats and whys of how institutions and "insiders" invest. The institutions can be tracked through Standard & Poor's and Value-Line, both of which you can find in any good library.
Monitoring insider trading activity can be easily learned by reading, "Investing In and Profiting from Legal Insider Transactions, by Edwin A Buck, and published by the New York Institute of Finance.
A good Rule of Thumb to follow: Don't invest in any stock without first knowing what the institutions and the company's insiders are doing with respect to the stock in question. All things being equal, when they buy, you buy; when they sell, you sell. Simple enough?
You may also want to set up a tracking system of current top industries and be a "grave watcher" so to speak, because sooner or later, they all get a black eye.
You can count on the fact that there will always be some crisis or another. The only difference among these is how we react. We can freeze up and wait for "it" to clear up - only to see a new crisis in the headlines predicting still gloomier doom!
So forget about waiting for a perfect investment at the perfect price and at the perfect time - because it's not going to come! Instead, all you need is a game plan that will allow you to decide in advance what you will do during the crisis. It can be likened to emergency services - our police, doctors, and firefighters all know what emergency actions to take before the emergency. They're prepared, and so should you be!
* * * * *
Like any game, we first have to know the strategy of the game and its rules.
The Strategy: Watch for and capitalize on the constant but varying crises of the future by buying when others are panicking, and selling when others are greedily buying.
The Rules: Just because your neighbor panics doesn't mean you have to. There's an old saying in investments: "Bulls make money, and bears make money, but pigs and sheep get eaten." When the markets go down it is not necessarily a signal of disaster. It can simply be a signsl that the "Sunday drivers" are out - not the professionals.
Remember...for every stock sold in "panic" someone else bought that very same stock!
A good rule to follow is always diversify. By this I mean more than just between stocks and bonds. Rather than investing and gambling on one stock in one industry, buy the whole industry. You can do this easily with ETFs.
Learn the "ins and outs" of dollar-cost-averaging. This strategy says simply that when an investment you own goes down in value, especially through no fault of its own (such as a political crisis) take a re-look at it. If it's still a solid stock, industry or country, then add to your portfolio and thereby reduce your average cost. Then the shares won't have to go back to where you bought them for you to break even or make a profit.
There's an old saying that makes good sense: "To be master, you must learn what the masters do - then do what the masters have learned." This means you learn the whats and whys of how institutions and "insiders" invest. The institutions can be tracked through Standard & Poor's and Value-Line, both of which you can find in any good library.
Monitoring insider trading activity can be easily learned by reading, "Investing In and Profiting from Legal Insider Transactions, by Edwin A Buck, and published by the New York Institute of Finance.
A good Rule of Thumb to follow: Don't invest in any stock without first knowing what the institutions and the company's insiders are doing with respect to the stock in question. All things being equal, when they buy, you buy; when they sell, you sell. Simple enough?
You may also want to set up a tracking system of current top industries and be a "grave watcher" so to speak, because sooner or later, they all get a black eye.
You can count on the fact that there will always be some crisis or another. The only difference among these is how we react. We can freeze up and wait for "it" to clear up - only to see a new crisis in the headlines predicting still gloomier doom!
So forget about waiting for a perfect investment at the perfect price and at the perfect time - because it's not going to come! Instead, all you need is a game plan that will allow you to decide in advance what you will do during the crisis. It can be likened to emergency services - our police, doctors, and firefighters all know what emergency actions to take before the emergency. They're prepared, and so should you be!
* * * * *
posted by Bob Moser at
8:02 PM
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