The Bull Hunters Guide

Glad to have you with us again. We’ve been discussing the wisdom of Warren Buffett and why he’s a smart guy because he likes common sense investment options.

To continue this subject, we’re going to start covering specifics and get into some things you can learn from applying his strategies to your investment portfolio.

Because of the aura Warren Buffett exudes in the media, there’s legions of drones who worship his every move and copy them exactly. While you may see some success this way, it’s ultimately counter-productive and just plain foolish if you don’t realize what the gentleman is doing, and why.

Making Money The Warren Buffett Way

Warren Buffett makes his money by following what he thinks and sticking to the basics based on his own careful observations. You should do this as well by using your mind - and not his, when choosing to invest.

Warren Buffett - The Worlds Greatest Money Maker Pt2

Of course, The Omaha native has good investment strategies, so you should make a conscious effort to learn from them. A simple summarization of Buffett’s stock market philosophy can be found in a humorous and blunt explanation he gave in 1987. Basically, he said, “I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty.” Does that really need any further explanation? The concretes have changed, but the basic idea applies to his entire approach towards investments.

Since he doesn’t jump at rapid changes, Warren Buffett has cultivated a sense of patience that could only try the nerves of the most stout investor. There’s a golden rule to his methodology, in that he’s totally ruthless when it comes to persistence.

If you’re going to start making money in a way that’s guaranteed, you’re going to have to do it the slow, hard - but successful way of investing slowly in timeless industries and waiting it out.

That’s all the time we have for now but part four of the wisdom of Warren Buffett is only right around the corner! While you’re here, read other entries on how your can improve your investments and develop a better success mentality for investing.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2010

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We’re glad to have you back with us! We’re going to be discussing that most impressive giant of stocks, the unstoppable colossus of investment fortune, the shining avatar of unbelievable success, Warren Buffett.

To get gets started, we’re going to strip him of his halo. Warren Buffett is just your average man. Nobody intrinsically special, he’s basically like you or us in that he’s a human being doing his best to make good decisions in this crazy but wonderful global economy.

“How can you say that!?! Look at his successful portfolio!!”, you may be exclaiming right now. It’s easy. Buffett is an average man, yes. Which is both true and an absurd claim to make. Is that even possible? Most definitely. As an ordinary human being, Warren Buffett put forth the hard work and patience necessary to become extraordinary by believing in common sense.

Warren Buffett - How To Read Stocks

Called the Oracle of Omaha, there’s no mystical soothsaying with this man. He doesn’t deal with advanced scientific systems, or highly complex abstract numerical formulas. Not one to cloud his vision with smoke and mirrors, Warren Buffett made a sage out of himself by paying attention to basic human nature and mustering the unbreakable willingness to pursue a very simple and mundane path for investment potential.

Most investors today buy into all sorts of incredible investment contraptions, hoping to capitalize quickly due to high-risk payoffs. There are so many investment methods and stock pursuit options, it can make your head dizzy!

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2010

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Welcome back. We’re glad you enjoy reading advice on how to invest wisely. Continuing from where we left off in part four of developing the success mentality for investing, we’re going to move towards covering another critical thinking skill that applies to ensuring that your investments are always sensible choices.

It’s Not All About Crunching Numbers

A lot of amateur investors are often told that they should bury their head in the market journals and utilize mathematical formulas for determining successful investment strategies. This is something basic that works, but it can only take you so far. In fact, crunching numbers is only useful when you couple it with what those numbers represent the real world.

Changing values can alert you to opportunities and risks, but they don’t necessarily tell you what those opportunities or risks are. When it comes to making those brilliant choices that the best investors are famous for, it often boils down to evaluating and paying close attention to business practices, employee behavior, and press correspondence.

Pay Attention To The Company Behind The Stock

This mindset is called qualitative evaluation, and it’s basically a matter of inferring changes and deducing market reactions to the things that occur with the key players and participants behind stock-based companies. Very much like being a detective, you have to be willing to forget the numbers and investigate the idiosyncrasies of a company and its behavior.

For example, in 2002, during a Ciena Corporation conference call, Gary Smith, their CEO, was talking. A very festive event, Smith maintained a jubilant attitude regarding the future of his company. However, some individuals recognized Smith’s unusual usage of the term”difficult” and his tone of voice when talking about the economic landscape for telecommunications.

While most basic investors would never have paid attention to this, the shrewd purveyors of fortune knew that this indicated troubled times ahead for the company. Sure enough, almost half of the stocks were sold off only months after the conference, despite optimism.

Always pay attention to what affects your stock directly. Numbers are representations, so you should turn to what they represent and pay attention to the happenings of businesses and the people that run them. This concludes today’s lesson. Don’t leave us however, as we still have more to cover for this series!

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2010

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As mentioned earlier today, my last post before I went to Hong Kong covered The Federal Reserve. Prior to that article, we’ve been talking about the most fundamental investment strategies that every investor needs to know in order to have a complete and well rounded portfolio.

While you probably won’t make use of each and every one of these, it still pays to know about them, so that if the opportunity ever arises, you can apply your knowledge in a way that will earn you profit.

Closed End Funds

This time, we’re going to talk about closed end funds. Closed End Funds are essentially investments that are tied to a specific number of shares in a particular security, such as a company or a technology. The shares are traded in the same manner as stocks, but because there is a specific number of shares being dealt with at the same time, and this figure never varies, it also shares some features of the mutual fund.

The point of investing in a closed end fund actually varies from fund to fund, so it’s something you’ll need to pay close attention to. As a general example, some closed end funds are intended to serve as an easy way for one to have Diversification within their portfolio beyond a particular industry or region, while others are set up to profit from dividends rather than actual movements in the value of the underlying security.

Supply And Demand

Whatever the case, if you do decide to engage in Investing in closed end funds, you can do so very easily. Most brokers deal with them, and you can buy and sell them exactly like stocks. In many cases, even the same fees apply.

The only real drawback is that because there are a fixed number of shares, your ability to profit is tied more to the supply and demand of the market as a whole rather than the movement of the security. Keep this in mind and realize that, for all its strengths and low risk, the closed end fund isn’t a get rich quick scheme.

See you next week for part 2 of Investments.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2009

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The tip we’re going to cover this time deals with fads and trends and what effect they really have on particular stocks and the market as a whole. You often hear of people “analyzing” stocks by looking at their past performance and trends, in hopes of gleaning some bit of insight into how the stock will perform in the future. Despite the conventional wisdom, this is by and large a waste of time.

The Gamblers Folly

Ever hear of the Gambler’s Folly? Imagine a guy watching a Roulette wheel in Las Vegas. He sees it come up black an astonishing ten times in a row. He might say to himself, “That’s it. Statistically speaking, red is bound to come up next, the odds favor it!” and put all his money down on red, certain that it’s time had come. However, imagine as well that a different man who had not been watching the wheel just now walked up for the first time. Would it be more reasonable for him to bet on red as well? Of course not.

The reality is that each time the wheel is spun, there is a perfectly equal chance of whether it will come up red or black, and what colors have come up on the previous ten spins have absolutely nothing to do with influencing that outcome. The stock market, of course, isn’t just a game of chance, but the point still stands: past performance is a very unreliable indicator of future performance. There are just way too many variables involved in the market at any given time to think of things that way.

The Next Big Thing In The Market

Nevertheless, you’ll always hear people talking. They might go on and on about some great new technology or service that has been seeing astonishing gains recently. It’s “the next big thing“, they’ll say, and people tend to buy into it in droves.

However, the cold fact is that once people are talking about a stock, it’s probably already too late for you to get in on it. The reason they’re talking about it is the good past performance it’s had, and as we’ve just seen, that’s no way to judge a stock. Therefore, resist the temptation to look at past performance and follow fads in investing. You’ll never get ahead that way.

Instead, take the time to learn about the factors that really do influence the market and study them. It’s the only way to formulate a predictive strategy that can be called anything close to accurate.

See you next week for part 4 of Basic Investment Strategies.

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

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