The Bull Hunters Guide

Investment scams aren’t limited to the fast paced interaction of bulletin boards, of course. Newsletters are another popular way to scam unsuspecting investors who are looking for a valuable tip on where to put their money next.

Newsletters Can Be A Scam

There are a lot of stock pick sites out there. Not surprisingly, each one claims to have the best strategy or formula when it comes to picking stocks. One of the most popular features of these sites is that they offer periodic newsletters, sometimes as often as one a day.

Some of these newsletters are legitimate, and actually offer the unbiased market advice that they claim to offer. However, just as many or even more of them are written by companies under the guise of a third party pseudonym to boost and promote their own stock!

Obviously, this can lead to all sorts of trouble. A legitimate company that was doing well in the marketplace through honest means would have very little reason to artificially inflate the value of their stock through disseminating disinformation in a newsletter. Any company with a future would also be wise enough to realize that this tactic is only setting themselves up for failure in the future.

In addition to the artificial inflation by paid companies, newsletters are also a popular place to run the pump and dump scam, offering what looks like a valuable tip, but is actually intended to ruin the investors who are duped into acting on it.

Newsletter Advice Things To Check

When you get an online newsletter that offers what looks like good advice, make sure of a few things. First, ensure that you actually subscribed to this newsletter. If it comes from an unknown source, you should delete it immediately, because it’s certain to be spam, and therefore certain to be a scam or at least a terrible waste of time.

Secondly, make sure that the newsletter you subscribed to accurately discloses who paid them to write it, how much they were paid, etc. Federal law requires this, so those newsletters who skirt around it are probably looking to hide something.

Lastly, proper grammar is critical. A professional newsletter might have a single typo, but it definitely won’t be full of misspelled words, use all capital letters, or endless streams of exclamation points.

See you next time when we talk about actual investment fraud.

See you next week for part 5 of Investment Scams.

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

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As we mentioned last time, we’re going to talk about the various kinds of scams that you might run into the world of investing; scams designed to separate you from your hard earned cash with false promises. The internet has given the people who perpetrate these scams a new lease on life by providing them with the anonymity needed to operate in secret and the technological means to target a much wider number of people than ever before.

However, just because the technology has advanced, the basic scams themselves are still fairly old. That’s the one thing that we have going for us when it comes to spotting investment scams: there are really only a few basic types of scam out there, and they just tend to get repeated over and over. Here are the most frequently seen:

The Pyramid Scheme

This is a scheme wherein money is solicited from investors in order to pay off previous investors who are now expecting to receive a return. Of course, such a scheme will eventually implode when the money coming in from new investors is insufficient to cover what is owed to the old investors.

Pump and Dump

This is a practical wherein a group of people purchase a stock, almost at random. They buy a large number of shares, and then they go about recommending that stock to as many as they can, usually thousands of other investors. When those people buy the stock, there is a sudden spike in the value of the stock. The duped investors will lose when the spike is followed by the inevitable fall, but those in the know will sell their holdings during the high point of the stock, thus making off with lots of profit.

In general, one should also beware of trades that take place in off shore accounts, because this is usually done to avoid operating in the jurisdiction of local law enforcement. They almost always are looking to hide something.

Next time, we’ll begin to take a look at some of the schemes in greater detail, beginning with the bulletin board scheme.

See you next week for part 3 of Investment Scams.

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

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Last time in this blog, we began to discuss the CANSLIM method of choosing stocks. Something of a complex system for choosing, CANSLIM involves the study of 7 different criteria in an attempt to pick stocks that are most likely to generate profits for the investors. It differs from other systems in that it doesn’t depend very much on forecasting an uncertain future, but rather on the objective analysis of the current status of a stock. That’s why it has to cover so many variables, and consequently, why we needed to split it up over two entries!

Last time, we mentioned that CANSLIM has to take into consideration the current and annual earnings of a stock, as well as how the company is adapting and making changes in the marketplace, whether it be in terms of new management, new products, or just new policies on how they will conduct business. That covers the CAN part.

Supply, Demand and Leader

The S in CANSLIM stands for “Supply and Demand”. This is a very basic rule of economics that applies to all economic markets and should be very well understood by all investors, even beginning ones. How supply and demand relates to CANSLIM is that CANSLIM strategies hold that, overall, it’s easier for smaller companies to show greater profits. This is because larger companies require a greater demand in order to push the kind of supply that should show huge profits.

The L in CANSLIM stands for “Leader or Laggard”. This refers to the fact that a CANSLIM strategist asserts that one should look at the difference between those companies that lead the market and those that lag behind. Investors are always looking for the next big thing, which is just another way of saying that they’re looking for those companies that lead the market. In order to determine this, one should look for stocks that perform better than 75% of their competitors in the same industry.

Institutional Sponsorship and Market direction

The I in CANSLIM stands for “Institutional Sponsorship”. This means that a CANSLIM strategist looks for companies that demonstrate some kind of sponsorship from important and well-backed institutions. This is generally a sign that an industry has faith in a company, and that it’s going to be around, generating profits for the long haul.

The M stands for “Market Direction”. This means that a CANSLIM strategist must look not only at the stock in question, but at the entirety of the market in question. Whether or not the market as a whole is moving up or down has a big effect on the profitability of a stock. Even if all the other six factors seem sound, the company will probably not succeed and generate profits in a failing market.

Phew. That’s it for CANSLIM. Next time, we’ll continue our look at the most popular stock picking strategies out there. We’re nearly at the end, folks! Until then, happy trading!

See you next week for part 9 of Stock Picking Strategies.

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

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This is the last post for a while to cover the topic of basic investment strategies. In the coming installments, I’ll branch out into more diversified topics and try to get a little more in depth into each one. In the meantime, I hope you’ve enjoyed this series on basic stock market strategies and I sincerely hope that they’ve improved your ability to successfully invest in the market and see good returns.

Please refer your friends to this blog so they also can enjoy a free way of improving their investment knowledge. Now, back on topic: Basic Investment Strategies.

Reinvesting your interest

For this article, I’ll cover a tip that more people need to take advantage of in order to keep the cycle of their investment going. Namely: reinvesting the interest.

First of all, never draw from your portfolio for spending money unless it’s absolutely necessary. You should have a separate savings account for matters such as that, and it’s from here that you draw when you need to travel, or make repairs to your home, or things of that nature. Your portfolio is a long term investment, and drawing from it early is a blow that will strike you much later down the road, with a force magnified many times over.

Moreover, because it’s a long term investment, avoid the trap of seeing the interest generated by your investments as “free money”. Sink it right back into your investments by buying more shares, so that the cycle can continue and that your payouts will grow larger and larger.

Check the balance of your portfolio

Try and keep a schedule going where you regularly check the cash balance of your portfolio, and when it hits a certain amount, spend some time looking around and buy new shares, either in new holdings or more in ones that you already have a stake in.

By treating your investments in this way, you are ensuring that your profits are maximized because the interest will continue to compound over the years (and usually at a rate much, much higher than typical means of savings such as bonds and savings accounts). Your portfolio will thank you for it.

Thanks for hanging around for the 12 week series of Basic Investment Strategies. I sincerely hope you have enjoyed it. Please leave a comment in this blog if you appreciate the effort and I will reward you with plenty more stock market investment strategies.

Join me next week as we start our trek into some more in-depth investment topics: Stock Picking Strategies.

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

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In my excitement the latest release of my Internet Marketing ebook, I managed to totally forget my Bullhunter blog. My apologies! Maybe I can cheer you up with this video on my motivational blog >> It is guaranteed to make you laugh. Now, onto the topic: Basic Investment Strategies.

Underlying stock market needs

In any type of activity, there are always those people who seem to need to “keep up with the Joneses”. If the neighbors buy a new car, they have to buy a new one, and preferably one that’s more expensive, with fancier features. If the neighbors get new golf clubs, guess what? They’ve got to have them as well. No one is really sure what drives this sort of behavior, but it’s obvious that there’s some sort of underlying need for these people to prove themselves to those individuals with whom they are interacting. When these people become involved with the stock market, it’s just a disaster waiting to happen.

The serious investor

How many times have you heard the phrase serious investor used to describe someone who has sunk nearly all of their assets into the stock market? Don’t fall into this trap! The seriousness of an investor is measured by the amount of thought and care they put into managing their portfolio, not the actual dollar amount that they’re playing with. Some people never seem to get this message though. In an attempt to be taken seriously, they just keep on sinking in more and more money, regardless of the potential consequences.

What do you hope to gain by investing?

What ends up happening to these people, inevitably, is that a loss hits them, and they lose way more than they are comfortable with losing. In their desire to look serious or to be taken seriously by others, they failed to ask themselves the question of what they hoped to gain by investing. Some people are okay with a loss of 20% on their investments. Some can even handle 50%. Others might run screaming at a mere 10% loss. All of this is fine so long as you’re honest with yourself about how deeply you want to swim in this pool. Don’t go out further than you’re comfortable with, and you’ll never get into trouble that you can’t get out of.

See you next week for part 12 of Basic Investment Strategies.

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

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