It's the holiday season!
I live in New York and I am reminded of the holidays every day
because traffic comes to an absolute standstill.
People stand frozen as they look at the magnificent window
displays in the department stores.
If you are walking, it's great to just stop and take it all in.
If you're in the back of a cab, well, let's just say it gives
you a little extra time to think!
Given my business, it's not surprising that I think about the
different companies that benefit from the holiday season.
Each year there are going to be different companies that have a
break out holiday season and if you can anticipate who it will
be then you can profit from your foresight.
How?
Simple, just pay attention when you're doing your own shopping.
What is everyone trying to buy, what's sold out?
What are the hot items and who makes them?
Just by being out there and looking for gifts you are doing
research for the next great stock.
Look at Google, one of the greatest stocks ever.
As soon as it became an actual word in the dictionary, that
should have given us a clue as to the success it might have.
Now Google was a longer term and larger play but it's a great
example of how "buzz" about a particular product can lead to big
money in the stock market.
Let's use Starbucks as an example.
You're walking around shopping all day and you're freezing.
You pop into the nearest Starbucks for a hot cup of coffee
(first hint: it's conveniently located everywhere!).
There's a huge line (second hint: it's always crowded).
However, the line flies (third hint: efficiently run business).
Now you order some brand new flavor and it tastes unbelievable
(fourth hint: great product).
Now, not only did you just have a great cup of coffee during
your holiday shopping but you also researched a potential trade.
You can go to finance.yahoo.com and look up the symbol for
Starbucks.
It's SBUX.
Now you can look at what it's been doing lately and start to
anticipate what it will do.
You will then use technical analysis to determine what your
target entry point should be.
Congratulations, you have just researched your first stock and
it all started with your holiday shopping!
Once you begin to research and track stocks you can start to
develop a feel for how they move.
I hope you have a happy and profitable holiday.
Kind Regards,
Adam Mesh
http://www.adammesh.com/
Friday, January 28, 2011
Sunday, January 23, 2011
Friday, January 21, 2011
Six rules for investing, whatever the markets are doing
First, always insist on a margin of safety. In other words, don't just buy shares because they're slightly cheap, but because they look really good value. That way you've some protection if your initial forecasts prove too optimistic. And as the old stock exchange adage goes, once you've looked after the downside, the upside will look after itself.
Second, be patient. If you buy a cheap stock and the price refuses to rise, don't panic. You can't know when the market will recognise the share's true worth. It may take much longer than you expected. But value will out in the end.
And just as important, if you can't find an investment that gives you a comfortable margin of safety, then don't invest. As a private investor, you don't have to be chasing short-term performance targets - you can afford to wait for better opportunities.
Third, be contrarian. That may be a bit of a sound bite, but if you can buy when everyone else is panicking and selling out, and then unload your stock when the world is piling back in, you'll do far better than running with the herd.
Fourth, be fully aware about risk. The experts may dress this up using flash terms like volatility and standard deviation. Don't be fooled. Risk, says Montier, is the "permanent loss of capital, never a number". That's another way of saying that if you invest in a stock whose market cap is higher than the underlying company's real worth, you risk never getting all your money back.
Sometimes you can get caught out - a firm's real worth can drop (and no doubt someone will remind me about HMV). But if you've spread your investments across a diversified portfolio, the damage shouldn't be too bad.
Fifth, be wary about leverage, ie investments bought on borrowed money. And that applies to the companies whose shares you're holding. If their debts are high, how relaxed do you feel? Sure, some business - such as utilities with their predictable cash flows - can cope with high leverage. But when times get tougher, many firms can start to struggle with their interest bills. We look more closely at how to analyse this in the latest issue of MoneyWeek, out today. (Claim your first three issues free here if you're not already a subscriber.)
And finally - and this needs little explanation - never invest in something you don't understand. Pure common sense, you'd think. But it's amazing how many investors get sucked into stocks before they've worked out what the firms actually do.
These are all basic principles of 'value' investing.
http://www.moneyweek.com/investment-advice/how-to-invest/six-golden-rules-for-profitable-investing-10208.aspx
Second, be patient. If you buy a cheap stock and the price refuses to rise, don't panic. You can't know when the market will recognise the share's true worth. It may take much longer than you expected. But value will out in the end.
And just as important, if you can't find an investment that gives you a comfortable margin of safety, then don't invest. As a private investor, you don't have to be chasing short-term performance targets - you can afford to wait for better opportunities.
Third, be contrarian. That may be a bit of a sound bite, but if you can buy when everyone else is panicking and selling out, and then unload your stock when the world is piling back in, you'll do far better than running with the herd.
Fourth, be fully aware about risk. The experts may dress this up using flash terms like volatility and standard deviation. Don't be fooled. Risk, says Montier, is the "permanent loss of capital, never a number". That's another way of saying that if you invest in a stock whose market cap is higher than the underlying company's real worth, you risk never getting all your money back.
Sometimes you can get caught out - a firm's real worth can drop (and no doubt someone will remind me about HMV). But if you've spread your investments across a diversified portfolio, the damage shouldn't be too bad.
Fifth, be wary about leverage, ie investments bought on borrowed money. And that applies to the companies whose shares you're holding. If their debts are high, how relaxed do you feel? Sure, some business - such as utilities with their predictable cash flows - can cope with high leverage. But when times get tougher, many firms can start to struggle with their interest bills. We look more closely at how to analyse this in the latest issue of MoneyWeek, out today. (Claim your first three issues free here if you're not already a subscriber.)
And finally - and this needs little explanation - never invest in something you don't understand. Pure common sense, you'd think. But it's amazing how many investors get sucked into stocks before they've worked out what the firms actually do.
These are all basic principles of 'value' investing.
http://www.moneyweek.com/investment-advice/how-to-invest/six-golden-rules-for-profitable-investing-10208.aspx
Wednesday, January 12, 2011
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