The Bull Hunters Guide

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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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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I came home from a 2 week trip to Fiji recently. I was inspired by a story told to me about a Buddhist Monk. It struck me that the 6 inches between our ears is the shortest path any of us have to striking it rich on the Stock Market. It is also the biggest hurdle anyone has to overcome to become truly successful as a trader.

Inspired by my own (good and bad) trading results, I decided to make the Mindset Mastery eBook available. I know that it will help peoples trading results, even though it doesn’t mention trading on the stock market anywhere. You’ll understand once you read it. Trading mentality is far more important than the strategies.

One day, in a beautiful south pacific resort called Malolo Island, my wife read me a story from her book. Hanging in a hammock, suspended between 2 coconut palms, she read out aloud the story of The Gambler. It has a striking resemblance to the thought patterns of some stock market traders I know. The monk wrote of this true story about a friend of his. I’m recalling this story from memory:

The Gamblers Lucky Number 5

One morning a man woke from a very vivid dream. 5 Angels had given him 5 pots of gold. Upon awakening he realized indeed there were no angels, nor any pots of gold.

At breakfast his lovely wife had made him 5 hardboiled eggs on 5 pieces of toast. Puzzled, he picked up the morning paper to discover that it was the 5th of May. Turning to the back page of the paper, he saw that the Ascot (five letters) races, in race number 5, horse number 5 was called “5 Angels“.

The signs were all there. He took the day off work and went to the races with $5,000. He went to bookmaker number 5 and placed it all on horse number 5 to win, in the fifth race. It truly was an omen, indeed. The dream came true. 5 Angels finished the race… in 5th spot!

What Does This Got To Do With The Stock Market?

Well, if I have you a bit dazzled about this topic; here’s my point. In life, including when investing, we get many signs and indicators of “how” or “what” to do. Sometimes we manage to turn, what is bleeding obvious and simple, into an absolute over analyzed mess. I see stock market traders make simple trades into something that would confuse a rocket scientist. It doesn’t have to be hard! The answer is many times right there in front of our noses. Trading mentality requires simplicity.

Horse number 5: “5 Angels“, in race number 5, on the 5th of May came in Fifth. That was the sign! He dreamt it. He was given all the clues but fell down in the end because…. he over-analyzed it. The dream delivered 5’s. Nowhere was there a 1 mentioned!

Gambling On Hermit Crab Number 5 in Fiji

That evening we were still in Fiji.  With the story fresh in our minds, my wife and I entered the Fiji Islands International Hermit Crab Race. It’s a tradition that is done for the tourists and is hilarious. I sponsored Hermit Crab number 5 with $40 (not $50) and out of 6 Crabs, it finished the race… in 5th spot! (I think crab number 6 died. It didn’t move much)

By the way, I was born on the 5th May and 5 is my lucky number… again the Hermit Crab came true to the lucky number: in 5th spot! Of course, I backed it to win.

Happy trading

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

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