The Bull Hunters Guide

Ever hear of those “fantasy sports” leagues? People meet up on websites or even in person to build their own fantasy sports team comprised of all their favorite team members from all the various teams throughout the actual league. Then, every time a game is played in real life, the performance of the players who are involved in each person’s fantasy team are evaluated and an overall value is given to each fantasy team. At the end of the season, the fantasy team that contains the most valuable players is announced as the winning team.

The Fantasy Stock Market

Some people, it seems, like to play fantasy stock market. They do an awful lot of speculating in “what ifs” and it tends to take time away from their actual investing. This is especially true of those individuals who can never seem to let go of a stock once they sell it. We’ve all probably met someone like this. They had a poorly performing stock so they decided to sell all their shares in it. But now, they check the status of that stock more obsessively than when they actually owned it! Even though it can’t possibly affect them now which direction the stock takes, they have to know how it’s doing anyway, they have to know if they made the right choice. What if they didn’t? What if they would have been better off holding on for a little while longer?

Learn To Let Go

Letting go is one of the most important lessons to learn in the stock market. The fact is that you’re going to pick some duds over the course of your career as an investor, and when you do, you need to just forget about them and move on. If you’re constantly looking backwards and dwelling on your mistakes and whether or not they were really as bad of mistakes as you thought they were will prevent you from doing what every real investor needs to do: look ahead to the future.

Stocks Poor? Ditch It!

If you have a poorly performing stock that’s causing you grief, sell it and let that be the end of it. If you happen to come across a report of how it’s performing, fine, but don’t bother to seek it out. You’re just wasting your time. You might as well try to keep tabs on every single stock in the exchange! Instead, focus on those stocks in which you still have an actual investment, and those on which you’re thinking about investing in the near future. They are the areas that are really worth your attention and concern.

See you next week for part 11 of Basic Investment Strategies.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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Investing should be a long term activity. To really get the most out of it, it must become an integral part of your life and daily routine. Therefore, today we’re going to be talking about the concept of “dollar averaging” or consistent investment of a specific set fee over a long period of time.

Dollar averaging investments

Many people view this as something like “paying the bills”, and if that helps you to think about it and remember to do it, more power to you. But what dollar averaging really is, is a personal commitment on your part to continuously feed money into your investments on a regular basis, rather than just letting them sit and do what they will. Think about it. If you were using a regular savings account instead of the stock market, would you just rely on the accruing interest, or would you continue to put money into it when you could, week by week, or month by month? Almost certainly, you’d want to invest in the wiser of the two options, the second one. The stock market is no different.

Set aside some money out of your monthly income (it doesn’t matter how much it is, just however much you’re comfortably willing to part with), and then invest that into your portfolio. This should be the same amount of money each and every month, and it is a practice that has a lot of non-obvious benefits.

Your stake in a company

Firstly, if you’re investing the same amount of money each and every month into your stocks, it’s easier to draw some conclusions about the direction that those stocks will go in. For instance, if you know you’ll be investing x amount into a stock next week, that’s something you can depend upon. You will be able to say that you have x stake in a company, without really wondering about whether that stock is going up or down. Regardless, your value is increasing, and you have more to work with in order to maximize your total profits.

Secondly, it’s a good practice because it keeps you actively engaged with the market. During slow periods, people might sometimes forget to check on the status of their investments for several days at a time. This could easily lead to disaster. However, if you’re continuously investing into your portfolio, it’s always fresh in your mind, and the incentive to check it is always looming. It keeps your investments growing and keeps you on your toes.

See you next week for part 10 of Basic Investment Strategies.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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Sorry! I forgot to click the publish button for part 9 of Basic Investment Strategies last Monday night. I had just driven 2300 km with my sons to visit my mother… no excuse, I know. I will go and publish it now.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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This is probably another one of those common sense tips that tends to be overlooked and swept under the rug in favor of the latest “hot tip” or whatever happens to have come down the pipe. Nevertheless, these tips have been around for a reason: they’re important, and their wisdom bears repeating. This time around, we’re going to talk about the old adage of sticking with what you know.

Get the best results from what you know

You’ve probably heard this advice given most often in conjunction with the exercise of writing, under the pretense that by writing about the topics that one is most intimately familiar with, one can produce the best results. The same applies to investing. If you put money into industries that you don’t know the first thing about, you’re going to get into trouble and fast. Suppose that you open up your morning news paper to the technology section and read about Company X having developed an all new standard for etching circuits onto the surface of a microchip, one that can double the number of circuits of past chips. If you know nothing whatsoever about computer chips, then you wouldn’t know exactly what this meant for Company X. You wouldn’t be able to (accurately) speculate as to what it meant for them in terms of near future stock market activity and your hands would be tied. Everyone knows that following an industry’s developments is one of the best ways to know what’s going to happen in its corresponding market presence, so it pays to invest in those industries that you understand well enough to follow.

Satisfaction from investments

Furthermore, you’ll have the advantage of feeling more passionately about your investments, and you’ll derive a greater emotional satisfaction out of working with them. After all, part of the appeal of the stock market is that it’s a lot more fun than just letting your money sit in a bank somewhere! If you have an investment in a company that you used to work for, for instance, or a company that produces a product you use on a daily basis and feel a personal fondness for, you’ll have more invested than just your money. This isn’t just sentimentalism, either; the more you personally care for a company and its products, the more carefully you’ll be inclined to follow the trends that affect it, and ultimately affect your investment.

See you next week for part 9 of Basic Investment Strategies.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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This week, we’re going to cover another one of those “common sense” strategies that nevertheless always seem to be so helpful. The real problem with common sense is simply that: it’s common. It’s always right there, out in the open, so as time passes, people tend to overlook it. A pretty ironic situation, really. In light of that, let’s take a look at one of the bits of conventional stock market wisdom that really needs to be driven home, especially for young investors.

Compounding growth

Like with any other type of savings, compounding growth is more or less the end all and be all of investment. What starts as a 1000 dollar investment that gains 10 percent becomes a 1100 dollar investment. If it hits that same growth again, it becomes a 1210 dollar investment, and then a 1331 dollar one. Simply put, the longer you have your money working for you in some type of investment, the more growth it can achieve.

As such, it is critically important to start investing in the market as early as you can. Young investors need to take a look at the idea of diversification and find some way to balance that virtue with the virtue of having a few core stocks that you tend to keep with you over the life of your portfolio (always keeping an eye on them, of course).

Early means more time to profit

Investing early has another meaning as well: if you invest your funds early in the life of company, they will have more time to spend with that company as it matures and develops. If it goes on to be a successful company, you will have maximized your earnings by investing in them as early as you possibly could.

Remember, the real name of the game here is compounding. Receiving a gain on money that you invest is exactly equivalent to investing that new larger amount. As your initial investment grows, so to does the potential for future growth on that investment. Developing a long term strategy can help you go a long way.

See you next week for part 8 of Basic Investment Strategies.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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