Quote for the day

"Patience is not simply the ability to wait - it's how we behave while we're waiting." - Joyce Meyer

Quote for the day

"Before you react, think. Before you spend, earn. Before you criticize, wait. Before you quit, try." - Ernest Hemingway

Quote for the day

"All the great things are simple, and many can be expressed in a single word: freedom, justice, honor, duty, mercy, hope." - Winston Churchill

Quote for the day

"When you face difficult times, know that challenges are not sent to destroy you. They're sent to promote, increase and strengthen you." - Joel Osteen

Quote for the day

"The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge." - Paul Tudor Jones

Quote for the day

"If you can believe it, the mind can achieve it." - Ronnie Lott

Quote for the day

"When you discover your mission, you will feel its demand. It will fill you with enthusiasm and a burning desire to get to work on it." - W. Clement Stone

The Nuts And Bolts Of Dividend Growth Investing

By Sree (thetaoofwealth.wordpress.com)


This post contains the keys ideas to understand and carry out dividend growth investing.

 

1. Dividends are distributions by a corporation to its owners. Usually, what is distributed is money… cash. Occasionally, dividends are paid in shares rather than cash.

2. Many companies increase their dividends every year. These are “dividend growth” companies. They are the companies you want to own if you’re following a dividend growth strategy.Many dividend growth companies are well-known names, what many would call “blue chip” companies. Stock prices are not an indicator of whether a stock is a dividend growth stock. Whether a company is a dividend growth company is a function of corporate policy and practice, not the market.Dividends are discretionary.How much to pay (if anything), and whether to increase the amount from last time, are decided by the company’s management and board, not by the market.

3. The 5-year Rule simply says that a company must have raised its dividend for at least 5 consecutive years before I consider it as a dividend growth stock. A 5-year track record is certainly not the only evidence you might seek, but it is an important part.If a company does not have at least a 5-year streak of raising its dividends, I consider it ineligible for consideration as a dividend growth investment. I won’t buy it.I want companies that are clearly devoted to keeping their dividend growth streaks alive and have the financial strength to do so.The 5-Year Rule helps me identify them.

4. Compounding means earning money on money already earned. Compounding accelerates the rate at which dividends accumulate, like a snowball rolling down a hill.The term for compounding dividends is “dividend growth rate”(DGR).The dividend growth rate is independent from the dividend yield.A company with a low yield may have a high DGR, and vice-versa.

5. A constant annual percentage increase in a company’s dividends causes your dividend income to increase at a growing rate. This is called compounding. This snowball effect is the first layer of compounding in dividend growth investing.You can add a second layer of compounding that accelerates your dividend stream even faster.You do this by reinvesting the dividends.Your dividend income, which is growing anyway, grows even faster if you reinvest dividends.

6. Yield is one of the most common measurements in stock investing. Do you know what it is? Yield is the one-year percentage return on your investment from the dividend.The formula is Yield = 12 Months’ Dividends / Price.Yield on cost is kind of like yield, except that instead of using current price in the equation for yield, we use the original amount spent. Yield on Cost = 12 Months’ Dividends / Original Price.So as the dividend flow increases, the yield on cost goes up relentlessly.

7. The myth is that when the market does badly, dividends dry up. It just isn’t true.The fact is that dividends and the market are independent from each other.Total Return = Price Changes + Dividends. There are at least three “softening factors” that you get from dividend growth stocks: steady incoming cash, smoother ride through bear markets and faster recovery times. All of these softening factors help you to hold on to dividend growth stocks during times of market turbulence.

8. It is very realistic and possible to create a portfolio that will return, in dividends alone, the historic total return of the stock market, and to achieve this in 10 years or less.This goal is known as 10 by 10: That means generating a yield on cost of 10% within 10 years of when you start the portfolio.The 10 by 10 goal is achievable because of two factors: The initial yields on the stocks you buy, plus the dividend growth rates of those stocks. For example, a stock yielding 5% when you buy it will reach 10% yield on cost in 10 years if it increases its dividend 7% per year.You can get to the 10% yield goal even faster if you reinvest dividends.All of the above is true even if the current yield of your portfolio flat-lines, as it probably will (due to the increasing dollar value of your portfolio). The yield on cost will continue to march relentlessly higher as your companies raise their dividends, and as you reinvest them.

9. The reasons why you should be a dividend growth investor are:

• Dividends bypass the market.Corporate dividend policies rarely go haywire.
• Dividend investing can relieve obsession over market volatility. You partner with your businesses, sharing in its success over the long term.
• Dividends are real cash. It’s cash in your pocket.
• Dividend investing provides ongoing feedback about your investment. A dividend increase can normally be interpreted as a positive sign that management has confidence in the company’s prospects.
• The best dividend growth companies are outstanding businesses.It requires an outstanding business to increase dividends for many years in a row. Weak businesses simply cannot do it.
• Dividends increases continue even when stock prices decline.
• You do not have to sell the stock to get the dividend.
• Dividend payouts rise over time.This is the most powerful aspect of dividend growth stocks.
• Dividend stocks tend to be less volatile.Dividends have gentle trends that are fairly predictable.
• Your principal can grow too.Both dividend growth and price growth come from a common source: earnings growth.If the company is committed to annual dividend increases, they can make those happen even if they hit a bad patch for a year or two on the earnings front.So the dividend stock investor potentially gets positive returns from both sources of total return: dividends and price appreciation.
• Historically, dividend growth stocks have outperformed the market in total returns.
• You can reinvest dividends to accelerate the compounding effect.This builds wealth at an accelerating pace.
• Rising dividends protect against inflation.
• It requires no more money to acquire a portfolio of stocks that pays a dividend stream of 4% than to acquire a portfolio of stocks that must be sold piecemeal to generate the exact same 4%.This  is the amount often recommended to be “safe” to withdraw from a retirement portfolio.

10. When you are a dividend growth investor, you receive quarterly dividends from each company (monthly from some). If you are retired, you can take that rising cash stream as income and use it to pay your everyday expenses. What most dividend growth investors do if they don’t need all the cash is reinvest the dividends.There is no “right way” to reinvest dividends. You can allow the dividends to accumulate to a certain predetermined amount and then invest it in a stock you consider fairly valued or undervalued in a selective manner. This allows you to buy undervalued stocks and to buy any stock rather than the same stock.You compound your money by reinvesting the dividends to purchase more dividend growth shares.

Quote for the day

"Throughout my financial career, I have continually witnessed examples of other people that I have known being ruined by a failure to respect risk. If you don't take a hard look at risk, it will take you." - Larry Hite

Financially Fit Test

Here are ten questions that can measure how financially fit you are in your personal finances.

Grading scale:

No = 0

I’m halfway there = 1

Yes = 2

1. You can pay off off your credit card debt any time you want to or have zero credit card debt.

2. You have three to six months of living expenses saved for emergencies.

3. You have at least two consistent streams of income.

4. You save 10% or more of your income each month.

5. You have a six figure net worth.

6. You own cash flowing assets.

7. You own your home outright or with a mortgage at a locked in rate.

8. You own stocks, cryptocurrencies, or investment real estate.

9. Are you compounding your gains in your investment portfolio by letting it grow or reinvesting dividends?

10. Do you have a career that gives you upside growth in income potential?

11. Do you work to learn and grow more than you work just for a paycheck?

12. Are you always looking for a better opportunity with a promotion or by changing jobs?

13. Is your goal financial independence from a job more than owning big houses and new cars?

14. Is your car paid off or do you have another form of transportation?

15. Do you have a written budget or naturally self controlled spending habits that are less than you make?

0-10 score you may not have financial peace.

10-20 score you are on your way to financial peace.

20-30 score you already have a high degree of financial freedom, keep going!

Source: www.newtraderu.com

Quote for the day

"Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen." - Winston Churchill

Quote for the day

"Trading is not for the dabblers, the dreamers, or the desperate. It requires, above all, one steadfast trait of dedication. So if you are going to trade, trade like you mean it" - Rod Casilli

Quote for the day

"It's not always easy to do what's not popular, but that's where you make your money. Buy stocks that look bad to less careful investors and hang on until their real value is recognized." - John Neff

3 Rules for Safe Trading Strategies

Rule 1: Never trade with borrowed money.

It's called "leverage" or "margin." Your trading strategies use money you borrow from your broker. Some people even max out their credit cards, or take out home loans. Don't do it!

It sounds so tempting -

*Put up only a little money. Your broker puts up the rest. * You make bigger profits. Get returns on the borrowed money as well as your own.

Until the roof falls in -

* Losses are multiplied as much as profits. If you lose, your loss is much bigger.
* If prices go down, the stock you bought with borrowed money is no longer worth enough to be collateral for the loan.
* Your broker can demand more money as collateral. That's a "margin call."
* If you don't have it, he can sell your stock.
* You lose almost everything.
* "Margin calls" can wipe you out.
* Meanwhile, you have to pay interest on the loan.

Buy shares with your own money, and you can ride out a price dip. Buy shares with borrowed money, and a price dip gets you a margin call. The added profit potential is more than canceled by the added risk.

Smart trading strategies are safe trading strategies. Don't use "leverage."

Rule 2: Always take part of your winnings off the table.

At a Las Vegas casino, if someone wins at craps, they might "let it all ride." They keep betting everything they have - what they came with and what they've won. You know the end of the story. They win big - until they lose it all.

Using trading strategies like a Las Vegas gambler is a recipe for disaster.

People think "big trades make big money." They want to do the biggest trades they can. So they pile all their winnings into their next trade.

* That works until they lose. Then they lose big because they "let it all ride."

But smart trading strategies are safe trading strategies.

* An investor's job is to lower his risk. The lower his risk, the closer he gets to safe money.

The best trading strategies grow your portfolio slowly.

* Re-invest part of your share trading profits. 50% is a good amount.
* Set aside the rest. It will keep you safe in hard times.
* Take 50% of your profits even if you don't want to close a trade.
* With a $10,000 profit, take $5,000 immediately, and leave the rest invested.
* The $5,000 you saved cushions you against a later fall in the stock.

Rule 3: Don't buy more when the price is falling.

What are your trading strategies when the price falls?

* Panic and sell at once - always bad.
* Hold on and hope - always bad.
* Stick with the Exit Strategy you decided in advance, and sell if and when the price falls enough - smart.
* Buy more - often bad.

Buying more when the price is falling feels smart -
* Lower your average cost.
* Get more of a good stock.

But remember that smart trading strategies are safe share trading strategies. Buy when the price is falling and you raise your risk.

* Increasing the size of your position raises your risk - automatically.
* The falling price gives you negative feedback about the stock even as you raise your risk.
* "Markets can stay irrational longer than you can remain solvent." ~ John Maynard Keynes.
* You assume the stock will bounce back soon. It may not.

Most people buy more of a falling stock because they don't want to be wrong. Don't let ego ruin your trading strategies.
Good - safe - investing.
By - Dr. Bob Rubin, Editor
Article Source: http://EzineArticles.com/6247454

Quote for the day

"Stocks are bought not in fear but in hope. They are typically sold out of fear." - Justin Mamis

The Safer Way To Average Down

If a share price falls, do you have a plan?

Many novice investors, and some experienced ones, have a tendency to "average down" on a stock that falls in price, on the basis that they are picking up additional shares at an "even better price". Yet most professional traders regard averaging down as a cardinal sin, amounting to throwing good money after bad.

The irony is that the trading (in the form of spread betting) method of betting "per point" can lead us in the direction of a safer way for investors to average down.

The lure of averaging down
If you buy £10,000 worth of a stock at 100p-per-share and it falls by 50%, you will need a subsequent 100% rise in order to take you back to break-even.

If you pick up another £10,000 worth of the stock at the lower 50p-per-share, you are holding £15,000 worth of stock which cost you £20,000. So you need only a 33.33% recovery to take you back to break-even on your combined holding.

This is why investors like averaging down, and when it comes to pound-cost-averaging into an index tracker... it might just work.

The problems of averaging down
The first problem of averaging down in this way is that, when making your second investment, you doubled your value-at-risk from £10,000 to £20,000.

The second problem of averaging down (specifically on a single stock) is that a share that has fallen by 50% can easily fall by another 50%; so then you have to do it again, and this particular stock becomes a magnet for funds that might be better deployed elsewhere.

Each time you invest an additional £10,000, it's another £10,000 that you stand to lose entirely when the company goes bust -- and lately, quite a few seem to do just that!

Pounds-per-point averaging down
If you place a £100-per-point spread bet on a stock priced at 100p-per-share, you are risking £10,000 as in the investment case. If subsequently you average down by placing the same size £100-per-point spread bet on the same stock, when it has fallen to 50p-per-share, you are risking only £5,000 the second time around. If it falls by 50% again, and you place another same size bet, this time you are risking only £2,500 more.

Personally I wouldn't go betting £100-per-point on a 100p stock, but it mirrors the investment case and demonstrates that pound-per-point averaging down incurs less additional risk at each turn.

Equal shares averaging down
What I've demonstrated, using the spread betting analogy, is the equivalent of investing in an equal number of shares (rather than making an equal monetary investment) at each turn.

With the stock at 100p-per-share, an investor can buy 10,000 shares for £10,000. When the price falls to 50p-per-share, the investor can average down on another 10,000 shares for just £5,000... and so on. The more the price falls, the less additional risk you are taking when you average down... if you purchase the same number of shares each time.

The downside of the upside
This is no Holy Grail, of course, because you are taking on less downside risk at the expense of lower upside potential.

Assuming just one round of averaging down, you will have bought 20,000 shares (now worth £10,000) for £15,000, so you'll need a 50% recovery to take you back to break-even rather than the 33.33% recovery required in the equal-value-invested averaging down.

The safer way to average down
So what if your profit potential is not so great? You still have more profit potential than if you hadn't averaged down at all, and by the third round I personally would rather have a total of £17,500 at risk than a total of £30,000 at risk. I would also rather have scaled into the position in this way than to have invested the full £17,500 at the original higher price.

The equal-number-of-shares (or equal pounds-per-point) approach to averaging down is an example of an anti-Martingale strategy, which is safer than the equal-value-invested approach to averaging down, and which in turn safer than the Martingale strategy of averaging down ever bigger amounts at each turn. I do hope you weren't considering the latter, as it can require infinitely deep pockets!

Foolish bottom line
Scaling into a position by averaging down can be more beneficial and less risky than investing all in one go. It can be made even less risky by purchasing equal numbers of shares rather than making equal-size investments in each round. This comes at the expense of lower profitability, but I did tell you that this was the safer way to average down and not the more profitable way.

I prefer the safety-first approach to looking after the downside and letting the upside look after itself. Why? Because companies can (and do) go bust, and then you've lost the lot!

BY Tony Loton
http://www.fool.co.uk/news/investing/2011/12/07/the-safer-way-to-average-down.aspx

Quote for the day

"There's no shame in losing money on a stock. Everybody does it. What is shameful is to hold on to a stock, or worse, to buy more of it when the fundamentals are deteriorating." - Peter Lynch

Quote for the day

"The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor." - Jesse Livermore

20 Golden Rules for (Day) Traders

Want to trade successfully? 

Just choose the good positions and avoid the bad ones. Poor trade selection takes a heavy toll as it bleeds your confidence and wallet. You face many crossroads during each market day. Without a system of discipline for your decision-making, impulse and emotion will undermine skills as you chase the wrong stocks at the worst times.

Many short-term players view trading as a form of gambling. 

Without planning or discipline, they throw money at the market. The occasional big score reinforces this easy money attitude but sets them up for ultimate failure. Without defensive rules, insiders easily feed off these losers and send them off to other hobbies.

Technical Analysis teaches traders to execute positions based on numbers, time and volume.
This discipline forces traders to distance themselves from reckless gambling behavior. Through detached execution and solid risk management, short-term trading finally "works".

Markets echo similar patterns over and over again. 

The science of trend allows you to build systematic rules to play these repeating formations and avoid the chase:

1. Forget the news, remember the chart. You're not smart enough to know how news will affect price. The chart already knows the news is coming.

2. Buy the first pullback from a new high. Sell the first pullback from a new low. There's always a crowd that missed the first boat.

3. Buy at support, sell at resistance. Everyone sees the same thing and they're all just waiting to jump in the pool.

4. Short rallies not sell offs. When markets drop, shorts finally turn a profit and get ready to cover.

5. Don't buy up into a major moving average or sell down into one. See #3.

6. Don't chase momentum if you can't find the exit. Assume the market will reverse the minute you get in. If it's a long way to the door, you're in big trouble.

7. Exhaustion gaps get filled. Breakaway and continuation gaps don't. The old traders' wisdom is a lie. Trade in the direction of gap support whenever you can.

8. Trends test the point of last support/resistance. Enter here even if it hurts.

9. Trade with the TICK not against it. Don't be a hero. Go with the money flow.

10. If you have to look, it isn't there. Forget your college degree and trust your instincts.

11. Sell the second high, buy the second low. After sharp pullsbacks, the first test of any high or low always runs into resistance. Look for the break on the third or fourth try.

12. The trend is your friend in the last hour. As volume cranks up at 3:00pm don't expect anyone to change the channel.

13. Avoid the open. They see YOU coming sucker

14. 1-2-3-Drop-Up. Look for downtrends to reverse after a top, two lower highs and a double bottom.

15. Bulls live above the 200 day, bears live below. Sellers eat up rallies below this key moving average line and buyers to come to the rescue above it.

16. Price has memory. What did price do the last time it hit a certain level? Chances are it will do it again.

17. Big volume kills moves. Climax blow-offs take both buyers and sellers out of the market and lead to sideways action.

18. Trends never turn on a dime. Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers.

19. Bottoms take longer to form than tops. Greed acts more quickly than fear and causes stocks to drop from their own weight.

20. Beat the crowd in and out the door. You have to take their money before they take yours, period.

Source:http://www.tradingday.com

Quote for the day

"Investing is the intersection of economics and psychology." - Seth Klarman

How to Select the Best Stock

Selecting the best stock for investment is not a simple procedure. We will have to study and analyse a few facts before we invest in some stocks. It is too vast a subject to give a clear cut idea, the analysis of the following criteria will help you in selecting the best available stocks.

* Earnings Per Share(EPS) and PE Ratio
* Book Value Per Share
* Debt Equity Ratio (Divide Total Debt by Total Equity)
* Current Ratio (Divide Current Assets by Current Liabilities)
* Profit Margin (Divide the Net Profit with Revenue)
* Return on Capital Employed and Return on Equity
* Dividend History
* Profit Growth
* Cash Flow Details
* Business Segment and Growth Potential
* Size of the Company
* Competitive Advantage In the Market
* Brand Value and Product Differentiation
* Goodwill
* Market Scenario
* Economic Strategy of the Company
* Economic Atmosphere of the Place of Main Operation of the Company
* Political Influential Factors of the Country

These are the criteria that help you in selecting the best available stock. However, it does not mean that the all of these criteria must be favorable for a stock for being eligible. You can leave out some criteria or give more weight age to the other favorable criteria over the adverse ones, depending upon the time period you are planning to held the shares or how much risk you are ready to undertake.
Source:http://kevin-peter.hubpages.com

Quote for the day

"The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge." - Paul Tudor Jones.

Quote for the day

"A 10% decline in the market is fairly common—it happens about once a year. Investors who realize this are less likely to sell in a panic, and more likely to remain invested, benefitting from the wealthbuilding power of stocks." - Christopher Davis

Quote for the day

"The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go." - Benjamin Graham

Quote for the day

"The function of economic forecasting is to make astrology look respectable." - John Kenneth Galbraith

Quote for the day

"In trading, you have to be defensive and aggressive at the same time. If you are not aggressive, you are not going to make money, and if you are not defensive, you are not going to keep the money." - Ray Dalio.

Inflation Explained

What's Inflation?
Inflation is divided into two types: Price Inflation and Monetary Inflation, the first type (about prices) is when there is a rise in the general level of prices of goods and services over a period of time, the second type (monetary) is when there is a rise in the quantity of money in an economy. Both types are in many times interrelated, and both have negative effects on the economy and individuals.

Effects of Inflation
Most effects of inflation are negative, and can hurt individuals and companies alike, below is a list of "negative" and “positive” effects of inflation:

Negative effects are:
- Hoarding (people will try to get rid of cash before it is devalued, by hoarding food and other commodities creating shortages of the hoarded objects).

- Distortion of relative prices (usually the prices of goods go higher, especially the prices of commodities).

- Increased risk - Higher uncertainties (uncertainties in business always exist, but with inflation risks are very high, because of the instability of prices).

- Income diffusion effect (which is basically an operation of income redistribution).

- Existing creditors will be hurt (because the value of the money they will receive from their borrowers later will be lower than the money they gave before).

- Fixed income recipients will be hurt (because while inflation increases, their income doesn’t increase, and therefore their income will have less value over time).

- Increased consumption ratio at the early stages of inflation (people will be consuming more because money is more abundant and its value is not lowered yet).

- Lowers national saving (when there is a high inflation, saving money would mean watching your cash decrease in value day after day, so people tend to spend the cash on something else).

- Illusions of making profits (companies will think they were making profits while in reality they’re losing money if they don’t take into consideration the inflation rate when calculating profits).

- Causes an increase in tax bracket (people will be taxed a higher percentage if their income increases following an inflation increase).

- Causes mal-investment (in inflation times, the data given about an investment is often deceptive and unreliable, therefore causing losses in investments).

- Causes business cycles (many companies will have to go out of business because of the losses they incurred from inflation and its effects).

- Currency debasement (which lowers the value of a currency, and sometimes cause a new currency to be born)

- Rising prices of imports (if the currency is debased, then it’s purchasing power in the international market is lower).

"Positive" effects of inflation are:
- It can benefit the inflators (those responsible for the inflation)

- It be benefit early and first recipients of the inflated money (because the negative effects of inflation are not there yet).

- It can benefit the cartels (it benefits big cartels, destroys small sellers, and can cause price control set by the cartels for their own benefits).

- It might relatively benefit borrowers who will have to pay the same amount of money they borrowed (+ fixed interests), but the inflation could be higher than the interests, therefore they will be paying less money back. (example, you borrowed $1000 in 2005 with a 5% fixed interest rate and you paid it back in full in 2007, let’s suppose the inflation rate for 2005, 2006 and 2007 has been 15%, you were charged %5 of interests, but in reality, you were earning %10 of interests, because 15% (inflation rate) – 5% (interests) = %10 profit, which means you have paid only 70% of the real value in the 3 years.

Note: Banks are aware of this problem, and when inflation rises, their interest rates might rise as well. So don't take out loans based on this information.

- Many economists favor a low steady rate of inflation, low (as opposed to zero or negative) inflation may reduce the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reducing the risk that a liquidity trap prevents monetary policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control the size of the money supply through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.

- Tobin effect argues that: a moderate level of inflation can increase investment in an economy leading to faster growth or at least higher steady state level of income. This is due to the fact that inflation lowers the return on monetary assets relative to real assets, such as physical capital. To avoid inflation, investors would switch from holding their assets as money (or a similar, susceptible to inflation, form) to investing in real capital projects.

The first three effects are only positive to a few elite, and therefore might not be considered positive by the general public.

How to Survive Inflation?
Tips to avoid the negative effects of inflation are only suggestions and don’t constitute any legal advice, therefore you’re free to use your own judgment depending on circumstances, to be more prepared to face inflation effects you need to be aware of those effects, so if you haven’t done so, please read some of them above, here are some tips:
- Be wise when holding cash, whether in your home or in your savings account, if you’re earning 5% interest on the money you have in your bank, and inflation rate is 10% then you’re in reality losing 5% and not earning anything.

- Be careful when buying bonds, high inflation rates completely destroy the value of long-term bonds.

- If you have a variable-rate mortgage, fix it if you can find a good deal, have a low fixed interest rate or 0% interest if you can find one.

- Invest in durable goods or commodities rather than in money. Check out our commodities list.

- Invest in things that you're going to use anyway and will serve you for a long time.

- Invest for long-term capital gains, because short term investments tend to give deceptive results or sense of making profits while in reality you’re not making profits.

- Learn about bartering which is trading goods or services without the exchange of money (it was very popular in hyperinflation times).

- Manage wisely your recurring monthly bills such as (phone bills, cable TV...), it would help to reduce them or eliminate some of them.

-Same goes with ephemeral items (movies, restaurants, hotel rooms...) they’re not bad if you spend money on them in moderation.

-Ask yourself, do I really need these things I’m spending my money on? Think how much and how often you will need something before buying it.

-Use the money saving tips such as: you need to reduce your consumption of things that are rising rapidly in price (eg, gas) without having to reduce your consumption of goods that are rising less rapidly or even falling in price (eg, clothes).

-Buy only what you need, especially objects that have multi-tasks, and are considered durable goods.

The conclusion from all this is: You don’t have to live cheap, just live smart!

Money and Inflation
Money is considered a storage of value. Normally if you were to sell a car for 100 gold coins, you should be able to go back and change that money in for another car tomorrow or the next week or the next month. When money holds its value, people feel safe saving it. Inflation weakens the function of money as a storage of value, because each unit of money is worth less with the passing of time and increase of inflation, so people tend to spend money on something else which can play the role of “the storage of value”.

Other terms related to inflation are:
Deflation: a fall in the general price level.
Disinflation: a decrease in the rate of inflation.
Hyperinflation: an out-of-control inflationary spiral.
Stagflation: a combination of inflation, slow economic growth and high unemployment.
Reflation: an attempt to raise the general level of prices to counteract deflationary pressures.
Depression: a severe and prolonged recession characterized by inefficient economic productivity, high unemployment and falling price levels.
http://crisistimes.com/inflation.htm

Quote for the day

"Success is achieved and maintained by those who try and keep trying." - W. Clement Stone

Path to Success

The path to success is not a straight one, it is a winding road where adjustments must be made to continue moving in the right direction.

The 10 steps on the path to success.

1. Written goals: You must have goals to both guide your big decisions in life and tell your subconscious what to move towards. The power of written goals is something few people ever use. The first step on the path to success is writing down what you want over the short-term and long-term in all areas of your life: health, relationships, finances, spiritually and in your career. You can’t start your journey without a map of the territory your travelling to.

2. Model Success: To achieve your goals you need models of people who have already done what you want to do. Look at how they achieved it, what they did, what they read, the risks they took, and the systems they used. You must look for the principles and the context of their accomplishments. Use them as models to see what is possible, how much work and how long it took, and measure the cost.

3. Count the Cost: Understand what it will take to achieve your goals, the time, work, energy, effort, education, and risk. Know the cost before you begin. Before you go any farther you must be willing to pay the price for the success you want. If you aren’t then the journey stops and you find something you are willing to pay the price for. If you are willing to pay the price tag keep going.

4. Create a System: You need a systematic process that moves you closer to your goals each day. What do you need to do every day to be just a little closer to your goal? What should you read? Who should you study? What should you learn? How can you grow yourself into who you need to be? How can you grow your business, career, connections, work, or project in some way no matter how small. Compounding growth leads to huge accomplishments when done consistently.

5. Work Hard: Each day you must do the needed work to move yourself toward your goals. This is the most difficult part that ends most people’s journey to their own goals. Work is what separates goals from just wishes, hopes, and dreams. Work is putting in the effort to take the actions needed to move closer and closer to achievement each day. If it were easy everyone would do it.

6. Work Smart: Work alone is not enough, it must be working at the right things that matter. You need a feedback loop that allows you to see what moves you closer to your goals, what doesn’t, and what wastes your time and energy. You must track your progress and analytics and see the work that is meaningful. 80% of all results will likely come from just 20% of your actions, double down on what leads to results and stop doing what leads nowhere.

7. Quantified Data: You need to study your competitors for what worked for them, their biggest successes and failures and the data behind them. In no time in history has more data been available to show what does and doesn’t work in any field or industry, MoneyBall is a great movie that teaches basic analytics and the use of data to optimize the value of money and time.

8. Quality and Value: In whatever you do you must create and deliver quality and value to be successful. You must be giving more to your customers, audience, students, or in your relationships than you are taking from or costing them. Even with goals for yourself you need quality food, quality thoughts, and quality exercise for health goals as an example. The cost you are paying must be worth the value you are getting. The cost you ask from others must be less than the value you are delivering. If your product is crap nothing else matters in business, you fail. If value is not there then relationships, business partnerships, employee motivation, and customers will be brief as they go looking for better opportunities.

9. Mindset: A positive mind and attitude can be an edge. Negativity can be a drain on your energy and ensure failure. If you don’t believe in yourself and your goal who else ever will? A growth mindset doesn’t guarantee success as there are many other variables but a negative mindset can almost guarantee failure.

 
10. Perseverance: Quitting ensures failure, trying longer increases the probability of success. If you are on the right track then pursuing your goals and not stopping will continue to rise your probability of success until it reaches 100% one day. “Our greatest weakness lies in giving up. The most certain way to succeed is always to try just one more time.” – Thomas Edison

If you know where you want to go, get on the path of success, and stay moving in the right direction, only time separates you from your goals.

Source:www.newtraderu.com

Quote for the day

"Courage doesn’t mean you don’t get afraid. Courage means you don’t let fear stop you." - Bethany Hamilton

Be Observers Of Stock Market, Not Predictors

Stock markets are unpredictable. Most will agree. Even then we all look for market predictions. There are people claiming to predict the markets. Sometimes they are right and sometimes they are wrong. When they are right they tell the whole world, and when they are wrong, they just simply choose to forget it.

In my view, it is almost impossible to predict the markets consistently. If someone WERE able to predict the markets, why would he or she even share it with you. She would be sitting on billions of dollars. A successful investor does not say "Come I will teach you how to make money like me".

In my view, to succeed for stock investing, we don't need to be predictors but observers. Stock investing is much like trying to swim. When the river is flowing down, it is necessary that one does not try to swim up, because if one does, one will face stiff resistance. Similarly, if the flow is up, one should be careful to try to swim upwards and not down.

Difference between predicting and observing:

Predicting:

a. When the market is rising, asking "Till what point will the markets rise"

b. When the market is falling, asking "At what point will the correction stop"

c. In a rising market, shorting the stocks/index at a point where you "think" there is resistance

d. In a falling market, buying stocks/index at a point where you "think" is the support

Observing:

a. When a market is rising, asking: are there signs that the trend is changing. If yes, what will be my strategy. If no, I will hold to my longs.

b. When the market is falling, asking, are there signs that the trend is changing upwards. If yes, which stocks will I buy when the trend changes.

c. In a rising market, watching for resistance. This means that if at a level the market finds difficulty to breakout, then considering that point as resistance.

d. In a falling market, watching for support. This means that if you find a level at which the market has already found support, then considering that point as support.

Too simplistic? What is the difference between the two you ask. The difference can be explained with an example.

If the markets have corrected by 20%, predictors would start buying the stocks and start averaging at each fall. Observers however will not buy the stock till the market actually stops, shows signs of stability and then shows some upwards movement. On getting their cue, the observer will buy into his position and keep the support as a stop loss point. There is just a small difference between these 2 techniques, but one that could have enormous implications on how much money you can make by stock investing.

Stock investing is not a game. Consider it a business with a certain risk and reward characteristics. If one plays it like a game one needs to be lucky to make money. If one treats it like a business, one needs to be just smart (with some luck).

By Aditya K Agarwal
Article Source: http://EzineArticles.com/940150

Quote for the day

"Success is not built on success. It’s built on failure. It’s built on frustration. Sometimes it is built on catastrophe." - Summer Redstone

Quote for the day

"Victory is sweetest when you’ve known defeat." - Malcolm S. Forbes

Quote for the day

"Be open to and welcoming of unforeseen events because those unplanned moments are often the seeds of spectacular opportunities in your life." - Pat Flynn

Quote for the day

"Life shrinks and expands on the proportion of your willingness to take risks and try new things." -  Gary Vee

Quote for the day

"Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this." - Dave Ramsey

Quote for the day

"Individual who cannot master their emotions are ill-suited to profit from the investment process." - Benjamin Graham

20 Ways To Decide It's Time To Sell

Bolton, Lynch, Woodford, Buffett and Graham tell you when to sell.

I'm considering what tips they'd give you for when to sell. Some of the advice is a little contradictory, but the common theme is to step back from what everyone else is doing, so that you can make your own mind up.

Anthony Bolton might advise:
* Don't sell when the market looks at its absolute worst, because that will probably be the bottom.

* Ride out volatility, don't dip in and out of the market. It's too difficult to call.

* When the market's booming, the share price of your investment has followed and commentary is focused completely on the positive aspects of the company, you need to be at your most wary.

* Above all, sell when you see that the share is fully valued.

Peter Lynch would say:
* Don't sell because the economy looks bad. Always stay invested, because your profits do not depend on the economy as a whole.

* Sell your steadier holdings when their PEGs reach about 1.2 to 1.4 or when the long-term growth rate starts to slow.

* Sell fast growers when there appears to be no further scope for expansion or when expansion starts to produce disappointing sales and profits growth, or when the PEGs reach about 1.5 to 2.0.

* Sell asset plays when they are taken over, or when assets that are sold off fetch lower-than-expected prices.

Neil Woodford might recommend:
* You shouldn't try to make too many course changes. It's cheaper to hold shares for five or six years, on average...

* ...I said 'on average'. Don't ignore poor performers. Identify them and deal with them accordingly.

* Sell when the stock, which you bought because it was out of favour, becomes the darling of the market once more.

* In troubled economic times, stick with the companies that are financially sound. The market goes through periods where it believes in economic recovery and anticipates that by bidding up cyclical shares at the expense of defensive stocks. Don't be led by the market.

Warren Buffet would quip:
* The ideal holding period for a stock is forever. That doesn't happen very often in practice, but many good businesses stay fair value for ages, so you can hold for a considerable time.

* Consider selling when everyone is being greedy, not when they're fearful.

* Don't try to predict the direction of the stock market, the economy, interest rates or elections. It just distracts you from buying and holding good companies.

* Just because the crowd is selling it doesn't mean you should. You should sell when your data and reasoning say so.

Benjamin Graham might suggest:
* Don't be dictated to by Mr. Market. Sell when your holdings become way overvalued.

* Consider selling shares you've held more than two years, shares that have risen more than 50%, shares where dividends have been stopped, and shares where profits have dropped enough to make it over-priced by 50% based on earnings yield.

* Don't panic and sell shares as prices slide in a bear market -- consider buying more.

* If you're confident about what you're doing, you should hardly ever be forced to sell, nor should you care about the current price. You should act upon it just to the extent that it suits you.

By Neil Faulkner

www.fool.co.uk

Quote for the day

"Remember that the stock market is a manic depressive." - Warren Buffett

Do You Have The Top 3 Qualities of a Successful Investor?

Do you have what it takes to be a successful investor? Here are the three must have attributes of a successful investor, patience, optimism, and education. Without these three attributes you are doomed to failure.

1. Patience
In the short-term stock prices go up and down. In the long-term stocks prices rise and dividends increase. Recessions come and go, nothing lasts forever. We may have a small downturn in the economy that last a few months to a recession that could last a year or two. As an investor you must have the patience to ride out the downturn  You must have the patience to stay invested even when the media is telling you to sell. Selling when prices are low is exactly the wrong time to sell; this only solidifies your losses. Have the patience to ride out any dips, and be prepared to reap the rewards when stock prices go up.

2. OptimismA successful investor is an optimistic investor. You must believe and have faith that the world is getting better, and that the economy will improve. Otherwise there is no point in investing if you think the world is headed for a recession, depression, or just plain down the toilet. If you believe that things will continue to get worse then you are just better off keeping your money under your mattress. Believe that things will get better, be optimistic about the future, and invest for yourself by yourself. How do I know things will improve? I can't tell the future, but I do know that the economy has survived recessions, depressions, wars, natural disasters, the tech bubble, the credit crisis, national debt, and oil crises in the past. After each disaster the world has continued to move along, the economy has continued to grow. Be optimistic that the economy will continue to flourish in the long-term, and you too will flourish along with it.

3. EducationA successful investor is an educated investor. No one cares more about your money than you do, so you owe it to yourself to learn how to invest responsibility. Learn how to minimize your risk and learn how to maximize your returns. Without investing knowledge you are just guessing and speculating, you might be better off buying a lottery ticket. It's easy to sit back and not do anything, easy to relax and let the "experts" handle your money. But a life of ease will actually make you lose money in fees, and lost opportunity. Learning how to invest is not difficult, it just requires you to take the first step and begin your journey towards success.

Article Source: http://EzineArticles.com

Quote for the day

"You have to take risks. We will only understand the miracle of life fully when we allow the unexpected to happen." - Paulo Coelho

Quote for the day

"Do you want to have an easy life? Then always stay with the herd and lose yourself in the herd." - Friedrich Nietzsche

Quote for the day

"Expectation is the mother of all frustration." - Antonio Banderas