The Bull Hunters Guide

In part 3 of developing the success mentality for investing, we took the time to explain how panic can sap your ability to make good decisions and how near-term catalysts play an important role in determining stock value.

These two examples are only a couple of ways in which big-earners and successful investors think. Another good way of staying ahead of the curve and maintaining strong assets is to always stay flexible.

Investing - Establish A Fallback Position

Strong investors make the choice to pay careful attention to market dynamics and to know what’s going on at all times. This doesn’t mean that you should be looking at stocks every second of the day with an eagle eye and biting your nails over every fluctuation.

Rather, it simply means that in order to be certain your investments count, you should maintain an understanding of solid investment backups when your major stocks might take a dive. In other words, establish a fallback position in case your main investments cease to provide.

This plays upon the previous entry’s point in how near-term catalysts can affect stock prices. For example, say you invested in an automotive company. Take Toyota for instance. It’s doing pretty well, all things considered. However, gas isn’t really stabilizing at a price that is cheap, and it could just go up further in the future. Because of this, the sales of vehicles for any company will hurt due to the simple fact that people are driving less and looking at keeping cheap, economical vehicles.

A fallback position in this situation could mean finding a hedge by investing in an oil company. Bloated stock prices to be sure, but you know that if all else fails, people will essentially still need oil, which means you’ll retain the value of your investment.

The basic idea is that you have an escape plan for when things turn sour, or a method of mitigating risk when it builds and causes concern.

Thanks for reading this entry, we hope you have learned more about the successful mindset of the stock market elite. Keep checking back - there’s plenty more to cover on success mentality for investing.

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

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Hey there, we’re glad that you’re back! We’re off to a good start with this series. In part two of success mentality for investing we spoke about how panic is the worst thing that can happen to your state of mind, we’re now going to address future changes and what to look for before buying stocks.

The Philosophy Of Buying And Selling Stocks

It may seem that the classic investment philosophy of “buy low, sell high” is basically the golden standard when it comes to making a profit, but it’s hardly ever that simple. Just because a stock is low doesn’t mean that you should jump at it.

Likewise, if there are tremendously expensive stocks to purchase, then don’t be afraid of considering them when thinking about property to add to your investment portfolio.

It may not make sense at first, but there is very good judgment involved. The most successful investors always look for the looming factors that can suddenly adjust a stock value. In order words, they pay attention to near-term catalysts when considering selling or buying stocks.

It’s true that paying attention to advice telling you to invest for the longest term is very smart. However, there’s wisdom in looking at what’s coming up around the corner and knowing what to expect that could very well significantly adjust the value of the stock in question.

For instance, the stocks for automotive companies have been cheap this year. Especially GM, which is some of the cheapest you can look into. Buying stocks that are the cheapest may seem like a good idea. Not always so! Gas prices have gone up considerably, haven’t they? Factor in the fact that GM has largely focused on producing heavy inefficient SUVs and Trucks to push sales, then you can see how the two collide to produce devastating results. The price of gas is the “near-term catalyst” that you’re looking for.

The basic idea is to look at stock broadly and to know what affects it directly. Evaluating numbers is a great exercise in abstraction, but sometimes the best stock investment strategies involve simply considering obvious aspects of companies and the variables of their respective industries.

Having said all this, we’ve run out of time. Be certain to check back often, as we’re not done yet. Thanks for reading, and come back soon!

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

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