The Bull Hunters Guide

Over the last several entries in this blog, our topic of focus has been short selling. We’ve covered what short selling is, when it might be useful to you as an investor, how to conduct the transaction. We also discussed what risks are involved in the trade, and the lengths that some individuals go to in order to use short selling in a dastardly and destructive manner that goes a long way towards earning it a terrible reputation. In this entry, we’re going to do a brief review of what we’ve discussed in order to put a capstone on the short selling subject once and for all before we move on to a new topic next time.

Summing Up Short Selling

To reiterate, short selling is when one investor sells shares that he or she does not actually own, on the agreement that he or she will actually buy the shares at a later date. They make money on the transaction if the value of the stock falls in the interim, enabling them to buy it at a lower price than they sold it for. Of course, when the shorted share actually increases in value, the short seller loses money.

That means that short selling is a very high-risk transaction. On the one hand, the value of a stock can’t go below zero, so the amount that you stand to earn is limited, but there is no ceiling to how high the value of the stock can rise, so the amount you could lose on the transaction is theoretically limitless.

Many people consider short selling to be a dishonest or unethical approach to investing because of the necessity of “voting against the home team” that comes with it. Despite the criticisms, however, short selling is definitely here to stay, so it pays to know all that you can about it. In doing so, you can add it to your stable of strategies and use it in a responsible way that brings value to your portfolio.

Thank you for joining me for Short Selling you next time when we begin an all new discussion.

See you next week for part 1 of Investment Scams.

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

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Lately in this blog, we’ve been talking a lot about stock picking strategies. When you get right down to it, the whole essence of investing in the stock market boils down to being able to pick the right stocks at the right time. This is largely a matter based on “luck”, but that doesn’t stop people from trying to devise systems to make it more comprehensible and certain. And some of those systems, as we’ve seen, actually do make a lot of sense.

Handling Your Investments

Starting with this entry, though, we’re going to shift gears a little bit. We’re going to begin taking a more in-depth look at topics related to how to handle your investments once you’ve actually identified the stocks that you care to put your hard-earned money into.

The first of these techniques that we’re going to explore is known as short-selling. If you’ve been investing for a while, then there were probably a few occasions on which you just knew that a stock was about to collapse under its own weight. Maybe you wondered if it was possible to profit off of a situation like that, increasing the value of your portfolio substantially, even during a bear market?

Short Selling Is The Answer

Well, it’s entirely possible. What’s more, it’s something that is done every single day on the market by confident traders who know how to make the most of a “bad” situation. What makes it possible is short-selling.

Short selling works almost the complete opposite of a typical investment. When most people buy stocks, they try to buy at a low price, and then hold onto their investments as their value grows over a period of time. Once the value has risen, they sell their investments (hopefully for a profit). Short selling, however, is when your purchased stock earns you money only when its value goes DOWN!

How does it all work? We’ll take an in-depth look next time.

See you next week for part 2 of Short Selling.

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

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Hey there. Welcome once again to our series of posts covering some of the most popular and effective methods for selecting stocks. These methods have been documented and compiled over the years, and while they differ dramatically in terms of execution and philosophy, they all share the common element that, depending on who you ask, they work!

While every stock selection is something of a gamble, it’s our hope that by looking at these time-tested strategies, you’ll begin to gleam some idea from them of how winning stocks are usually chosen, and begin to develop your own strategy that will be effective for you.

Beating The Dow

Today, we’re going to look at what is probably one of the simplest methods in all of investing. This method was first presented in a book by Michael Higgins called “Beating the Dow”, and is commonly known as the “Dogs of the Dow” method. Selecting stocks by this method couldn’t be easier. You simply take a look at the top 30 companies with the highest dividend yields, according to the Dow Jones Industrial Average, and then spread your portfolio among the top ten.

That’s really all there is to it. You just check back every so often, perhaps every quarter, and make changes based on what you see, so that your portfolio always accurately reflects the top ten dividend yield stocks at any given time.

Depending On The Dividends

Clearly, this strategy is depending highly on the dividends that you’ll receive from the stocks in question, but it always takes into consideration the future potential of those stocks. The idea is basically that, if a stock is in the Dow top 30, it will typically be a strong stock with enough of a foundation to weather passing storms and eventually return to a position of prominence, whereupon you can sell it for an amazing profit. In the meantime, you just enjoy those dividend yields.

Well, that’s it for now. Told you it was a simple method. Next time, we’re going to wrap this series up by taking a look at the last method on our list: technical analysis. Stay tuned!

See you next week for part 10 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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