The Bull Hunters Guide

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

Social Bookmarks:

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

Social Bookmarks:

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

Social Bookmarks:

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

Social Bookmarks:

We’ve covered a lot of investment tips in this blog so far, and the majority of them have dealt with the idea that you shouldn’t be motivated into making sweeping changes to your portfolio or overall investment strategy as the result of panic. In other words, we’ve stressed weathering the storm, because this is one of the most important lessons that a beginning investor can learn to set his or herself apart from the total amateurs. Today, however, we’re going to shift gears a little bit and start dealing with that part of the stock market that tends to get everyone excited: the fast-paced fluctuation.

Buy and hold forever?

We’re going to bust a piece of conventional wisdom right now. It used to be the case that there were certain stocks out there that one could buy and hold forever. So called blue chip investments that would continue to grow and grow throughout the life of the investor, providing a constant return and a continuous source of reliable growth. However, those were simpler times.

Changes to the marketplace

Nowadays, industries are much more competitive and there are many more fish in the sea. The internet represents a whole new arena upon which corporations do battle, and it has so far proven to be one that can change the face of the entire market in both positive and negative ways. It’s a different world, and it’s one that’s in constant shift. New technologies come and go (or come and stay) with a much greater frequency than they used to, and the old adages just simply don’t hold. Even the best investment can wither over time, and even if it doesn’t totally turn over and start producing losses for you, it could very well be the case that your money would easily be producing better results elsewhere.

Watch your investments

As such, always watch all your investments. Don’t take some for granted and just assume they’re doing well because they’re your “safe” ones. Actually look and analyze, all the time. Staying on top of the game and know how each stock you own is moving at any given time is the line that separates the uncertain, hesitant investor from the confident, successful one.

See you next week for part 7 of Basic Investment Strategies.

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

Social Bookmarks: