Wednesday, December 23, 2009
The modern-day yardstick of wealth is an illusion perpetuated and encouraged by the marketing departments of the world's luxury-good makers.
The luxury brands have done a remarkably good job at convincing poor people to act like rich people by buying their products. The thing is, though, truly rich people fuel their consumption from their investment income.
In other words, they would never dream of tapping into their principal wealth to fund their lifestyle.
So I will tell you here and now, I don't care how much money you make -- and I know some readers of The Tycoon Report make a lot of money -- if your investments are not throwing off cash flow that is equivalent to at least your current expenses, then you are poor. You are just one flip of the coin away from living on the street.
What Does it Mean to be Wealthy?
Being wealthy has nothing to do with a set dollar amount or what car you drive or which labels you sport.
If the income and/or returns of your investments are more than twice the amount of your annual living costs, then you, my friend, are wealthy.
If you own a business and make millions of dollars, but the business will fail if you are not in it, then all you have is a very highly paid job.
Real wealth is about securing a stream of income for yourself that consistently throws off returns that are at least double your annual living expenses.
A Big Salary Doesn't Automatically Make You Rich
Getting rich takes a lot more than just securing a big income. Many who aspire to be multimillionaires stumble at this point.
They work hard, get promoted or build their businesses and start earning large amounts of money. but these "would-be" millionaires fail to fulfill their true wealth-building potential at this point.
You see, they get seduced by the illusions of wealth as portrayed by the aforementioned luxury-goods marketing machine that they see in magazines and on television.
Don't get me wrong; if you have a large income, you have a huge leg up over the person earning an average income. But if the odds hold true, then you are could blow that big advantage by overspending.
Are You an Aspirational Spender?
Aspirational spenders are above-average-income earners who yearn to possess the lifestyle of the truly wealthy but do not earn enough money to do so.
Instead, they employ credit card and home equity loan debt to acquire the trappings of wealth -- fancy cars, vacation homes, designer purses, designer suits etc.. They actively pretend (self-delude is a better word) that they are rich. This becomes an all-consuming pantomime of self-delusion, as more and more money is required to fuel this facade of wealth.
The aspirational spender typically earns between $100,000 and $150,000 per year. This is 2 1/2 to 4 times greater than the national average income.
In fact, it is more than enough of an income to get wealthy on within a 10-15 year period.
But these people never do develop real wealth.
Their incomes continue to grow, and they make terrific employees and are usually very good at their jobs, but their desires are always one step ahead of their income.
The Key to Developing Real Wealth
Many years ago, I read a book titled "The Richest Man in Babylon" by George S. Clason. In that book, I learned that I would never be able to satiate every single material desire that I have.
So, instead of trying to fulfill as many of my "wants" as possible, I started getting very picky about which "wants" I chose to indulge ... which "wants" I chose to postpone and which "wants" I chose to abandon.
Once I fully accepted that I'll never have every single thing that I may wish to possess, it was like a great weight was lifted off my shoulders; it was very freeing. It also allowed me to better appreciate what I already possessed.
But the most important thing it did was get me off the spending carousel and onto the road to living beneath my means ... and start saving and investing, which is the real route to obtaining large-scale sustainable wealth.
Your Desired Future is Just a Decade Away
Wealth can be created from any starting level; it is not income-dependent. However, in this article I want to highlight how much easier it is to get rich if you already have a large income.
It really doesn't matter which vehicle you use to create your wealth -- whether it be real estate, stocks, commodities, options or your own business. Any success that you find in any investment endeavor will be meaningless if you continue to spend more than you earn.
It is only when you start living beneath your means that you will truly be on the road to real wealth-creation.
If you earn over $150,000 a year, you have absolutely no excuse for not being rich!
What's the secret? All you have to do is live on 30% of your gross income and invest the rest.
Your 15-Year Plan to a Lifetime of Riches
At $150,000, assuming a 35% tax rate, your take-home pay would be a shade under $100,000.
If you want to get rich, start by simply living on $50,000 and investing the other $50,000. Do that for 10-15 years and you will be rich, period.
If you can average just a 12% compounded annual growth rate over 10 years, you'll have a shade under a million dollars.
Over 15 years, you'll have over $2 million -- two million dollars that is growing at 12% per year is more than enough money to last a lifetime.
That's it; pretty simple right?
Are You Ready to Sacrifice What You Want Now for What You'll Need Later?
So, what is the real way to measure personal wealth? The yardstick is whether our investment income covers our living expenses.
If it does, then you are well-off. If your investment income is 2x or more greater than your annual income, then you are well and truly rich!
I know I have now lost 99% of you. The thought of the relative deprivation that such living would require is probably too difficult for many of you to face squarely.
And that's OK; not everyone possesses the necessary discipline that it takes to acquire true wealth.
Don't beat yourself up about it. But, by the same token, don't fool yourself into thinking that you are rich just because you have a big salary, a shiny Benz and a nice sprawling McMansion.
We both know you are one pink slip away from financial Armageddon.
I'm here to tell you that you don't have to live that way anymore.
Downsizing is only painful when you are not emotionally prepared for it. Once you make the decision to be "for real" rich instead of "pretend" rich, the decision to downsize instead of "super-size" will be an easy one.
Downsizing Your Spending = Super-Sizing Your Wealth
Don't squander the opportunity that you've been given by being blessed with the ability to earn a large income. You have a huge edge over every other person earning less than you. You blow that edge when you over-spend and under-save.
Remember -- even if you win the lottery or increase your income dramatically, but refuse to spend less than you earn and refuse to save and invest surplus capital -- you will never be rich.
You will never experience true financial freedom, and you will always be at the mercy of your spending habits, your employer and the economy.
It's always a good time to re-evaluate your financial plan, but especially with the dawn of a new decade just around the corner, there's no time like the present to plan to become a millionaire. You'll thank yourself in 2020!
Thursday, December 31, 2009
Wednesday, December 30, 2009
Your Blueprint For Retirement by Teeka Tiwari
Wednesday, December 30, 2009
At no other time since the 1970s has it been so in vogue to be frugal. An entire generation of Americans will leave this decade behind, indelibly imprinted by the trauma caused by their over-spending.
Exercising fiscal caution and self-restraint are no longer the social taboos that they once were in the 1980s, 1990s and '00s. The good news is that this is the very skill that one needs in order to become rich.
Outside of those with trust-fund-fueled wealth, I've never met a rich person who didn't get there by spending less than what they earned.
Just by changing this one thing in your life will get you on the road to creating a tangible net worth for yourself.
It sounds so simple -- almost too simple.
But you know what? Life really isn't that complicated, and making money isn't that difficult once you have the basic principles down.
It's That Simple ... and Just as Hard to Get Started
Spending less than you earn is rule No. 1. You've got to get this one wrestled to the ground first.
Sadly, most of the Western world's population will absolutely refuse to do this. And you can't really blame them because, everywhere you look, you get bombarded with images and programs that promote a utopian world of effortless and consequence-free consumption of luxury goods.
Our first step is to wake up from this media-fueled hypnotic dream. Learn how to channel your desire to spend your hard-earned dollars into fueling your wealth-accumulation goals rather than your wealth-dissipation goals.
That's easy to say and very difficult to do.
Going against the crowd is always a challenge but, if you don't do it now, you will be doomed to an old-age fraught with financial terror and humiliation.
You've got to find a way to make that real for yourself. Do what you need to do to motivate yourself to make that lasting change to your spending habits.
A Creative Visualization Exercise
Imagine your income as a great river and, instead of pouring those life-giving waters over fertile fields of investments, you simply dump it into the open sea.
That's exactly what you do when you overspend. You siphon away the future life-giving potential of your income.
Once those dollars are spent, they are never, ever coming back again.
But a dollar invested will come back in the form of investment returns again and again and again. In time, those returns will be greater than your income.
Start Saving Your Savings
Clothes, furniture, vacations, restaurants, fancy cars, timeshares, vacation homes, remodeling projects, alcohol and cigarettes all need to come under the axe. These are areas where you can save a ton of money.
But, you may ask, where's the joy of living without a bottle of Jack and carton of Marlboros?!
I feel you; I really do. It's a simple decision called delayed gratification.
The question to ask yourself is, "Do I take a little deprivation now in order to never experience deprivation again in the future? Or do I take no deprivation now and nothing but deprivation in the future?"
It really comes down to those two choices.
I used to read articles like this as a teenager and scoff at the author. "But I make a ton of money" I would think to myself. "Why do I have to be cautious in my spending?"
It wasn't until a decade later that I learned that what you earn is immaterial if you consistently spend more than you earn!
I call it high-functioning poverty, when any speedbump in your earning ability essentially puts you in the poorhouse.
I'm telling you, friends -- it's no way to live.
Your Roadmap to a Financially Healthy Retirement
The way I see it, there are five keys to wealth-building:
1. Spend less than you earn.
2. Expand your income; work diligently, and continue to get better at what you do. Do more than what you are paid to do and, soon, you will be paid more for what you do. Meanwhile, your saved money/investments will be growing, providing another income source.
3. Get clear as to exactly how much money and the type of lifestyle that you want, and when you want it. Visualize yourself already in possession of that wealth and that lifestyle.
4. Successfully invest your surplus earnings -- 12% per year is enough to fund your retirement over a 20-year period; 20% per year will make you rich. Find a safe way to run your money at a high rate of return. (Read more on this below.)
5. Make your wealth last -- withdraw no more than 40% of your net annual gains each year to live on after reaching your principal and/or time frame goal. Alternatively you can withdraw 2%-4% of your total account value per year as retirement income.
Remember, saving your money is only part of the recipe; it's not enough to bake the whole cake. You've got to find a way to make your money grow by at least 12% per year and, preferably, by 20%-plus.
Find Your Favorite Ways to Make Money -- There are Plenty to Choose From!
There are many ways to do this: mutual funds, stocks, options, Exchange-Traded Funds, real estate, buying and selling collectibles and/or employing an excellent money manager.
You name it; there is always a way to make money.
The key here is not to be afraid to just let your savings sit in a money market account until you've become very sure and very confident of how you will grow your money.
Take the time to become an expert in managing your own money.
You've got to find a wealth-creating endeavor that speaks to you and your interests. Again, it could be investing in real estate or stocks, or buying and selling vintage Rolexes on eBay.
Turn an Income Stream into a River of Profits
Think about this as one example. If you bought just one income-producing property this year, then another income-producing property every three years after that, you'd have 11 income-producing properties after 30 years.
At year 30, the first house would be paid off and, every three years thereafter, another house would be completely paid off.
The income from 11 houses plus 30 years of accumulated equity will fund your retirement for the rest of your life, and it will do so with dignity. You'll be filthy rich with a great big fat monthly income.
Real estate investing offers one of the most-accessible ways to create a massive ongoing income stream as well as large net wealth.
But its not going to just happen for you without a ton of work. And that's the ugly truth of it.
(To learn more about real estate investing, Tycoon's resident real estate expert Ethan Roberts has a ton of great information for you on our Web site. Click here to access his article archives.)
Anticipating Your Heart's Desires Can Pay off in Spades
It takes effort to get rich -- lots of effort, inconvenience and self-sacrifice.
But once you've put your work in, you reach a point where the income from your wealth-producing efforts begins to eclipse the income from your job. And this fuels you to do more as your dreams starts to become a reality.
You find yourself infused with more energy than you ever thought you could experience. You become possessed by an overriding determination and will to win.
It's a truly glorious feeling!
So there you have it; my New Year's gift to you -- a blueprint for wealth-creation and a dignified retirement.
But remember, don't beat yourself up if you don't have it in you to do what it takes to get rich; not many people do. It takes focus, self-sacrifice and a STRONG VISION to get and stay rich.
When you are ready to make that change, the opportunity will still be there ... just don't take too long! The quicker you start, the quicker you'll be able to kick back and enjoy the fruits of your labor.
At no other time since the 1970s has it been so in vogue to be frugal. An entire generation of Americans will leave this decade behind, indelibly imprinted by the trauma caused by their over-spending.
Exercising fiscal caution and self-restraint are no longer the social taboos that they once were in the 1980s, 1990s and '00s. The good news is that this is the very skill that one needs in order to become rich.
Outside of those with trust-fund-fueled wealth, I've never met a rich person who didn't get there by spending less than what they earned.
Just by changing this one thing in your life will get you on the road to creating a tangible net worth for yourself.
It sounds so simple -- almost too simple.
But you know what? Life really isn't that complicated, and making money isn't that difficult once you have the basic principles down.
It's That Simple ... and Just as Hard to Get Started
Spending less than you earn is rule No. 1. You've got to get this one wrestled to the ground first.
Sadly, most of the Western world's population will absolutely refuse to do this. And you can't really blame them because, everywhere you look, you get bombarded with images and programs that promote a utopian world of effortless and consequence-free consumption of luxury goods.
Our first step is to wake up from this media-fueled hypnotic dream. Learn how to channel your desire to spend your hard-earned dollars into fueling your wealth-accumulation goals rather than your wealth-dissipation goals.
That's easy to say and very difficult to do.
Going against the crowd is always a challenge but, if you don't do it now, you will be doomed to an old-age fraught with financial terror and humiliation.
You've got to find a way to make that real for yourself. Do what you need to do to motivate yourself to make that lasting change to your spending habits.
A Creative Visualization Exercise
Imagine your income as a great river and, instead of pouring those life-giving waters over fertile fields of investments, you simply dump it into the open sea.
That's exactly what you do when you overspend. You siphon away the future life-giving potential of your income.
Once those dollars are spent, they are never, ever coming back again.
But a dollar invested will come back in the form of investment returns again and again and again. In time, those returns will be greater than your income.
Start Saving Your Savings
Clothes, furniture, vacations, restaurants, fancy cars, timeshares, vacation homes, remodeling projects, alcohol and cigarettes all need to come under the axe. These are areas where you can save a ton of money.
But, you may ask, where's the joy of living without a bottle of Jack and carton of Marlboros?!
I feel you; I really do. It's a simple decision called delayed gratification.
The question to ask yourself is, "Do I take a little deprivation now in order to never experience deprivation again in the future? Or do I take no deprivation now and nothing but deprivation in the future?"
It really comes down to those two choices.
I used to read articles like this as a teenager and scoff at the author. "But I make a ton of money" I would think to myself. "Why do I have to be cautious in my spending?"
It wasn't until a decade later that I learned that what you earn is immaterial if you consistently spend more than you earn!
I call it high-functioning poverty, when any speedbump in your earning ability essentially puts you in the poorhouse.
I'm telling you, friends -- it's no way to live.
Your Roadmap to a Financially Healthy Retirement
The way I see it, there are five keys to wealth-building:
1. Spend less than you earn.
2. Expand your income; work diligently, and continue to get better at what you do. Do more than what you are paid to do and, soon, you will be paid more for what you do. Meanwhile, your saved money/investments will be growing, providing another income source.
3. Get clear as to exactly how much money and the type of lifestyle that you want, and when you want it. Visualize yourself already in possession of that wealth and that lifestyle.
4. Successfully invest your surplus earnings -- 12% per year is enough to fund your retirement over a 20-year period; 20% per year will make you rich. Find a safe way to run your money at a high rate of return. (Read more on this below.)
5. Make your wealth last -- withdraw no more than 40% of your net annual gains each year to live on after reaching your principal and/or time frame goal. Alternatively you can withdraw 2%-4% of your total account value per year as retirement income.
Remember, saving your money is only part of the recipe; it's not enough to bake the whole cake. You've got to find a way to make your money grow by at least 12% per year and, preferably, by 20%-plus.
Find Your Favorite Ways to Make Money -- There are Plenty to Choose From!
There are many ways to do this: mutual funds, stocks, options, Exchange-Traded Funds, real estate, buying and selling collectibles and/or employing an excellent money manager.
You name it; there is always a way to make money.
The key here is not to be afraid to just let your savings sit in a money market account until you've become very sure and very confident of how you will grow your money.
Take the time to become an expert in managing your own money.
You've got to find a wealth-creating endeavor that speaks to you and your interests. Again, it could be investing in real estate or stocks, or buying and selling vintage Rolexes on eBay.
Turn an Income Stream into a River of Profits
Think about this as one example. If you bought just one income-producing property this year, then another income-producing property every three years after that, you'd have 11 income-producing properties after 30 years.
At year 30, the first house would be paid off and, every three years thereafter, another house would be completely paid off.
The income from 11 houses plus 30 years of accumulated equity will fund your retirement for the rest of your life, and it will do so with dignity. You'll be filthy rich with a great big fat monthly income.
Real estate investing offers one of the most-accessible ways to create a massive ongoing income stream as well as large net wealth.
But its not going to just happen for you without a ton of work. And that's the ugly truth of it.
(To learn more about real estate investing, Tycoon's resident real estate expert Ethan Roberts has a ton of great information for you on our Web site. Click here to access his article archives.)
Anticipating Your Heart's Desires Can Pay off in Spades
It takes effort to get rich -- lots of effort, inconvenience and self-sacrifice.
But once you've put your work in, you reach a point where the income from your wealth-producing efforts begins to eclipse the income from your job. And this fuels you to do more as your dreams starts to become a reality.
You find yourself infused with more energy than you ever thought you could experience. You become possessed by an overriding determination and will to win.
It's a truly glorious feeling!
So there you have it; my New Year's gift to you -- a blueprint for wealth-creation and a dignified retirement.
But remember, don't beat yourself up if you don't have it in you to do what it takes to get rich; not many people do. It takes focus, self-sacrifice and a STRONG VISION to get and stay rich.
When you are ready to make that change, the opportunity will still be there ... just don't take too long! The quicker you start, the quicker you'll be able to kick back and enjoy the fruits of your labor.
Tuesday, December 22, 2009
WAT Christmas gathering - talk by Conrad
THE NEXT BUBBLE HAS STARTED
- S&P 500 has always been weighted with stocks that will lead to the next bubble.
- S&P is currently heavily weighted with healthcare and pharmaceutical stocks. However this is mainly due to these stocks being recession proof.
- The current PE ratio of the S&P 500 is 140.
- The global asset bubble (commodities) is just beginning and its going to be a huge bubble.
- Bond yields are flattening.
- Employment is still sinking
- Credit contagion is spreading to other countries. (Dubai, Greece)
- Asia is NOT immune.
- The recent rally in the dollar is because people feel that there is nothing safe to buy and hence is going for safety.
On a lighter note:
- There were no DFDM in November and December, indicating that there may be no nasty surprises.
- Oil run is starting now.
Sectors and stocks to watch (from the annual cycle of stocks/commodities):
Consumer – BEN, AB
Natural gas – Spikes in Sept and Oct and does a double bottom in July and August
Gold peaks in December
Grains – corn rallies from Oct to Jun (ADM, MON, CAG)
Sectors to watch in 2010:
Pharmaceuticals
Biotech ( STEM, GERN, JNJ) – watch out for JNJ in Feb and Apr due to the approval of cancer drug
Defense & Aerospace
Agriculture
Oil & Gas
Metals
- S&P 500 has always been weighted with stocks that will lead to the next bubble.
- S&P is currently heavily weighted with healthcare and pharmaceutical stocks. However this is mainly due to these stocks being recession proof.
- The current PE ratio of the S&P 500 is 140.
- The global asset bubble (commodities) is just beginning and its going to be a huge bubble.
- Bond yields are flattening.
- Employment is still sinking
- Credit contagion is spreading to other countries. (Dubai, Greece)
- Asia is NOT immune.
- The recent rally in the dollar is because people feel that there is nothing safe to buy and hence is going for safety.
On a lighter note:
- There were no DFDM in November and December, indicating that there may be no nasty surprises.
- Oil run is starting now.
Sectors and stocks to watch (from the annual cycle of stocks/commodities):
Consumer – BEN, AB
Natural gas – Spikes in Sept and Oct and does a double bottom in July and August
Gold peaks in December
Grains – corn rallies from Oct to Jun (ADM, MON, CAG)
Sectors to watch in 2010:
Pharmaceuticals
Biotech ( STEM, GERN, JNJ) – watch out for JNJ in Feb and Apr due to the approval of cancer drug
Defense & Aerospace
Agriculture
Oil & Gas
Metals
Sunday, December 20, 2009
WAT Christmas gathering - talk by David Caploe
Method to untangling and understanding this multi-dimensional/fast-moving crisis:
CRITICAL THINKING
Ability to evaluate competing accounts of the same situation.
Crisis in US has 6 distinct but inter-related aspects:
1) Financial
2) Economic
3) Ideological
4) Political
5) Intellectual
6) Media
- All countries either sell to the US to sells to countries that sell to the US.
- Solution to the crisis depends on the “good faith and credit” of all governments.
- At the moment, the biggest economic problem is that the political system in US had been broken.
US political system is in a state of advanced breakdown:
- Totally hijacked by corporate interests at the micro level, where votes of Senators and Representatives nakedly reflects the desires of their biggest campaign contributors in a way that would make even Karl Marx at his crudest blush with embarrassment.
- And at the macro level, completely unconstrained by a public discourse in which the most transparent nonsense is taken seriously.
Obama’s Biggest Mistake: “Bribing Middlesmen”
4 biggest issues:
1) “too big to fail” banks
2) Healthcare debate fiasco
3) Collapse of housing market
4) Mystifying “double down” in Afghanistan
Fundamental problem of the economy at this time is political.
Note: Everything that we need to know is in the NY Times. But we have to know where to look and how to read.
CRITICAL THINKING
Ability to evaluate competing accounts of the same situation.
Crisis in US has 6 distinct but inter-related aspects:
1) Financial
2) Economic
3) Ideological
4) Political
5) Intellectual
6) Media
- All countries either sell to the US to sells to countries that sell to the US.
- Solution to the crisis depends on the “good faith and credit” of all governments.
- At the moment, the biggest economic problem is that the political system in US had been broken.
US political system is in a state of advanced breakdown:
- Totally hijacked by corporate interests at the micro level, where votes of Senators and Representatives nakedly reflects the desires of their biggest campaign contributors in a way that would make even Karl Marx at his crudest blush with embarrassment.
- And at the macro level, completely unconstrained by a public discourse in which the most transparent nonsense is taken seriously.
Obama’s Biggest Mistake: “Bribing Middlesmen”
4 biggest issues:
1) “too big to fail” banks
2) Healthcare debate fiasco
3) Collapse of housing market
4) Mystifying “double down” in Afghanistan
Fundamental problem of the economy at this time is political.
Note: Everything that we need to know is in the NY Times. But we have to know where to look and how to read.
Wednesday, December 16, 2009
The Mind of an Achiever by Charles Faulkner (as written in the book The New Market Wizards by Jack Schwager)
I was just reading the book The New Market Wizards by Jack Schwager and i got to Charles Faulkner's interview. Charles is an expert in NLP and one part of the interview particularly struck me so much that i just want to write it out and keep it on the record.
During college, Charles was working as an orderly in the elderly patients sections of the hospital ward. Over the course of 3 years, he spoke to hundreds of people who were near the end of their lives. He asked these people how their lives had been, what they liked about their lives and what they regretted, if any.
In Charles' own words:
"I found out that falling in love at nineteen was important. I found out that the willingness to take risks into the unknown, like leaving one's small hometown, was important. On the other hand, just simply retiring because of age was something many of them felt was the biggest mistake of their lives.
One thing that really struck me was that not one of these people said they truly regretted anything they had actually done-what they regretted was what they had not done. They regretted that they had wasted their lives on petty pursuits. They hadn't identified their important values and then done everything they could to fulfill them. The lessons i learned from this experience was the same one emphasized years later in NLP: If we don't live true to our values and fulfill them, we experience disappointment and emptiness."
I totally agree with all the points that he said in the book. When i was lying in the hospital 8 years and 1 month ago and thinking that i might not walk out again, those were the exact thoughts that were going through my mind. I did not regret a single thing that i did, but there were deep regrets for countless things that i had not done. So i made up my mind to fight the supposedly incurable illness and continue living so that i can do those things. It's amazing what we can do when we are really determined.
And i agreed that everyone should take time off to work and live in a foreign country for at least 2 years of your life. Also, if you love what you do, it's foolish to retire. I love what i do so much that i hope i can sleep less so that i can have time to do more.
Lastly i realised that i had fallen in love with the girl who would become my wife when i was at 19. But i only got the courage to ask her out many years later after my brush with death. Btw, asking her out and marrying her was 2 of the things that i had regretted doing.
During college, Charles was working as an orderly in the elderly patients sections of the hospital ward. Over the course of 3 years, he spoke to hundreds of people who were near the end of their lives. He asked these people how their lives had been, what they liked about their lives and what they regretted, if any.
In Charles' own words:
"I found out that falling in love at nineteen was important. I found out that the willingness to take risks into the unknown, like leaving one's small hometown, was important. On the other hand, just simply retiring because of age was something many of them felt was the biggest mistake of their lives.
One thing that really struck me was that not one of these people said they truly regretted anything they had actually done-what they regretted was what they had not done. They regretted that they had wasted their lives on petty pursuits. They hadn't identified their important values and then done everything they could to fulfill them. The lessons i learned from this experience was the same one emphasized years later in NLP: If we don't live true to our values and fulfill them, we experience disappointment and emptiness."
I totally agree with all the points that he said in the book. When i was lying in the hospital 8 years and 1 month ago and thinking that i might not walk out again, those were the exact thoughts that were going through my mind. I did not regret a single thing that i did, but there were deep regrets for countless things that i had not done. So i made up my mind to fight the supposedly incurable illness and continue living so that i can do those things. It's amazing what we can do when we are really determined.
And i agreed that everyone should take time off to work and live in a foreign country for at least 2 years of your life. Also, if you love what you do, it's foolish to retire. I love what i do so much that i hope i can sleep less so that i can have time to do more.
Lastly i realised that i had fallen in love with the girl who would become my wife when i was at 19. But i only got the courage to ask her out many years later after my brush with death. Btw, asking her out and marrying her was 2 of the things that i had regretted doing.
Sunday, December 13, 2009
Swing Out Sister - Break Out
I was driving when i heard this song. Really thought the singer was singing about the Dow and S&P. Take a look at the lyrics and then the charts for the Dow and S&P. Enjoy the song while the indexes continue to trade in a range.
Daily chart of the Dow
Daily chart of the S&P
Swing Out Sister - Break Out lyrics
When explanations make no sense
When every answer's wrong
You're fighting with lost confidence
All expectations come
The time has come to make or break
Move on don't hesitate
Breakout
Don't stop to ask
Now you've found a break to make at last
You've got to find a way
Say what you want to say
Breakout
When situations never change
Tomorrow looks unsure
Don't leave your destiny to chance
What are you waiting for
The time has come to make your break
Breakout
Don't stop to ask
Now you've found a break to make at last
You've got to find a way
Say what you want to say
Breakout
Don't stop to ask
Now you've found a break to make at last
You've got to find a way
Say what you want to say
Breakout
Some people stop at nothing
If you're searching for something
Lay down the law
Shout out for more
Breakout and shout day in day out
Breakout
Breakout
Don't stop to ask
Now you've found a break to make at last
You've got to find a way
Say what you want to say
Breakout
Don't stop to ask
Now you've found a break to make at last
You've got to find a way
Say what you want to say
Breakout
Lay down the law
Shout out for more
Breakout and shout day in day out
Breakout
Breakout
Breakout
Lay down the law
Shout out for more
Breakout and shout day in day out
Daily chart of the Dow
Daily chart of the S&P
Swing Out Sister - Break Out lyrics
When explanations make no sense
When every answer's wrong
You're fighting with lost confidence
All expectations come
The time has come to make or break
Move on don't hesitate
Breakout
Don't stop to ask
Now you've found a break to make at last
You've got to find a way
Say what you want to say
Breakout
When situations never change
Tomorrow looks unsure
Don't leave your destiny to chance
What are you waiting for
The time has come to make your break
Breakout
Don't stop to ask
Now you've found a break to make at last
You've got to find a way
Say what you want to say
Breakout
Don't stop to ask
Now you've found a break to make at last
You've got to find a way
Say what you want to say
Breakout
Some people stop at nothing
If you're searching for something
Lay down the law
Shout out for more
Breakout and shout day in day out
Breakout
Breakout
Don't stop to ask
Now you've found a break to make at last
You've got to find a way
Say what you want to say
Breakout
Don't stop to ask
Now you've found a break to make at last
You've got to find a way
Say what you want to say
Breakout
Lay down the law
Shout out for more
Breakout and shout day in day out
Breakout
Breakout
Breakout
Lay down the law
Shout out for more
Breakout and shout day in day out
Wednesday, December 9, 2009
Market Analysis for 12/09/2009
Dow daily charts
S&P daily charts
I’ve deleted all the other indicators so that we can see the tight trading range of the market. The market is such that it had the bullishness in the market is running out (after a prolonged bull market since March 09) but the bearishness (to cause a correction) is not enough to tank the market yet. Hence it is consolidating in anticipation of the next major news.
I believe we will be seeing a market correction soon. I am not calling for a turn of sentiment from a bull to a bear market as yet because the signs of this rally continuing after a dip/correction are still strong. We might just see a Santa Claus rally this year.
However whichever way the market breaks out of within this tight trading range will be the direction that I will be trading in.
S&P daily charts
I’ve deleted all the other indicators so that we can see the tight trading range of the market. The market is such that it had the bullishness in the market is running out (after a prolonged bull market since March 09) but the bearishness (to cause a correction) is not enough to tank the market yet. Hence it is consolidating in anticipation of the next major news.
I believe we will be seeing a market correction soon. I am not calling for a turn of sentiment from a bull to a bear market as yet because the signs of this rally continuing after a dip/correction are still strong. We might just see a Santa Claus rally this year.
However whichever way the market breaks out of within this tight trading range will be the direction that I will be trading in.
Monday, December 7, 2009
What I believe by Jimmy Koh (adapted partly from The New Market Wizards by Jack D. Schwager):
1) The markets are not random because they are based on human behavior and human behavior especially mass/herd behavior as seen in the stock markets are not
random. It has never been and it probably never will be.
2) The efficient market hypothesis is total rubbish and any academic who claims otherwise is an idiot.
3) There is no Holy Grail or grand secret to the markets. There is only hard work, discipline and consistency.
4) There are a million ways to make money from the markets. The difficult part is you have to stick to one and obey only the rules of that one method.
5) There is only one constant in the markets and that is change.
6) The secret to success in the markets lies not in discovering some incredible indicator or elaborate theory. The secret to success lies within you. In fact, I know of people who had traded profitably without any indicator.
7) I believe good traders are not born as but nurtured.
8) To excel in trading requires a combination of talent and extreme hard work; the same combination required for excellence in any field. Those seeking success by buying the latest program or by following the latest tip, will never find the answer because they haven’t understood the question.
9) Being a good trader is a matter of hard work, skill (which comes after lots and lots of hard work) and discipline, NOT luck.
10) Success in trading is a worthy goal but it would be worthless if it is not accompanied by success in your life and shared with your loved ones.
random. It has never been and it probably never will be.
2) The efficient market hypothesis is total rubbish and any academic who claims otherwise is an idiot.
3) There is no Holy Grail or grand secret to the markets. There is only hard work, discipline and consistency.
4) There are a million ways to make money from the markets. The difficult part is you have to stick to one and obey only the rules of that one method.
5) There is only one constant in the markets and that is change.
6) The secret to success in the markets lies not in discovering some incredible indicator or elaborate theory. The secret to success lies within you. In fact, I know of people who had traded profitably without any indicator.
7) I believe good traders are not born as but nurtured.
8) To excel in trading requires a combination of talent and extreme hard work; the same combination required for excellence in any field. Those seeking success by buying the latest program or by following the latest tip, will never find the answer because they haven’t understood the question.
9) Being a good trader is a matter of hard work, skill (which comes after lots and lots of hard work) and discipline, NOT luck.
10) Success in trading is a worthy goal but it would be worthless if it is not accompanied by success in your life and shared with your loved ones.
Wednesday, December 2, 2009
Long Term Investment report by Chris Rowe
Markets Will Trade Flat For Decades -- Here's How to Profit From It
Tuesday, December 1, 2009
By the year 2019, your retirement will be worth exactly the same amount as it's worth today -- at best...
Nearly 73 million Americans (or just under 50% of our working population) have a 401(k). But the average 401(k) has a balance of $45,519, and 46% of all 401(k) accounts have less than $10,000. Hardly enough for retirement.
The result? You'll see a reduced standard of living at retirement.
"Don't sweat it! I've got time!"
Oh, really? Sorry to tell you, but the next 10 or 20 years will be a period of long-term consolidation for the stock market -- meaning, it will ultimately trade sideways and end up in the same place it started.
If you're like most retirement account holders, you're passive, your 401(k) is largely tied to the general stock market, and you're still in shock, trying to digest what recently happened and what the future holds.
You're not alone. We are right in the middle of a "transitional period" for the economy and virtually all financial markets, so investors are experiencing the highest level of confusion we have seen in generations.
Don't think we will recover and just move on as usual -- just forget about that.
Banks are rehabilitating their balance sheets (by not doing any significant lending), and the sector is in the process of de-leveraging. As a result, you're going to see lower growth, lower investment and nominal GDP.
There are solutions to this nightmare of a problem, but unfortunately, only some of you will have the understanding you'll need to adapt to the new economy, and the new market opportunities.
Take a good, hard look at the chart below.
It's a chart of the Dow Jones Industrial Average from 1965 (when it was at 874) through 1981 (when it was at 875).
So, you could have held a portfolio of stocks that mimicked the Dow for 16 years, and you would have made 1 point.
That’s a long time to wait for a point!
It's almost a certainty that the stock market, for the next 16 years, will look similar to the the chart above (from 1965-'81). That's FINE, and could be a very profitable market to play in, as long as you aren't considering the "buy and hope" strategy that worked for the last quarter-century.
If you read the report we wrote in the end of 2006, "Tycoon's 7 for '07," we told you, in detail, what was going to happen in terms of the mortgage/real estate bubble leading to a credit crisis.
If you missed out on that opportunity, don't worry. Tycoon has a clear picture of what's going to happen next, and will be showing our readers and students how to make "Quantum" returns -- not only by explaining what asset classes hold the most strength and when, but more importantly, by training you and educating you so YOU can find it for yourself.
What are "Quantum returns"?
Well, in 1970, Jim Rogers and George Soros founded the "Quantum Fund." During the following 10 years, the portfolio gained 4,200% while the S&P 500 advanced about 47%.
It's all about trading in the right asset classes, and having just a BASIC understanding of technical analysis. There are simple and easy-to-understand strategies that you can use to know when to be bullish on a market as it's advancing, and even profit when it's declining.
We're going to bring you the education you need to make sure you aren't one of the MAJORITY of people who will have a stock account worth the exact same amount as it was 10-20 years prior.
And by the way, we have never had a period of time where the government prints lots of cash (as it has just done), that wasn't followed by inflation.
The U.S. is likely going to end up seeing runaway inflation.
So, even though most people will end up with the same amount of money in absolute terms, the fact is that the money might be able to buy you half as much stuff!
Not Convinced?
Look at the chart below that dates back to 1901. It's clear that long periods of economic expansions are followed by long periods of consolidation (trading sideways).
What's more interesting is that, if you compare the booms (green) to the consolidation periods that followed (red), you can see that, after very long-term stock market advances, the market generally takes about twice as long to consolidate!
You can even look at the boom and consolidation period within the 1929-'54 "consolidation period" (if you want to call it that), and you can see that the huge gain from 1933-'37 (yellow) took nearly three times as long to consolidate (blue).
Even if the recent expansion, from the early 1980s to the recent 2007 top, takes HALF as much time to consolidate (as opposed to the historic 1.7 to 2.88 of the time), we wouldn't revisit the 2007 high until 2019.
Some of those reading this article can't envision a market that doesn't advance over the long term. Who can blame you? Many of you weren't watching the market prior to 1981.
But the 24-year trend occurred because of corporate profits that were largely a function of cheaper and cheaper financing, and higher and higher leverage, combined with increasingly complex financial innovation and loose regulation.
This enormous bull market was also launched after a transition to low inflation and declining interest rates, beginning in the late '70s.
Here's what you have to do.
Now that we are IN THE MIDDLE OF the "worst crisis since The Great Depression," you are going to have to do something that investors haven't had to do in 40 years. ...
You're going to have to shift your mindset away from the way you've been trained to view the stock market over the last 25 years (for some, including me, that's as long as you can remember investing), and adapt to the new stock market -- one similar to the market from 1966-'83, or perhaps a better parallel would be the 1937-'38 period.
After a three-year stock market massacre (from late 1929 to late 1932), we had a massive 4.5-year rebound. The market would rally off of vast government expenditures and monetary kayos.
It was an artificial recovery (similar to what we are seeing today). The economy went downhill again beginning in 1937-'38 (followed by a brief rally and another four-year sell-off) because we didn't encourage private enterprise.
And the reason I think this time frame is a better comparison is because now we are seeing the same thing:
We have interest rates at nearly zero (and a strong fight by global governments to keep that intact for as long as possible), and massive economic stimulus by the government into the economy. (So, the gains are artificial, and Uncle Sam will eventually stop the massive "stimulus" that's causing the "stabilizing economic mirage.")
As a side note, notice the three colorful squiggly lines in the chart. They represent the market's price-to-earnings (P/E) ratio (the multiple to earnings that the stock market is priced at) at 10 (green: historically undervalued), 15 (blue: historically fair value) and 20 (red: historically overvalued).
When high growth is expected, the market trades at higher P/E ratios. When lower growth is expected, the market trades at lower P/E ratios.
So notice how, after 1938 -- the period in which the government propped up the economy (just like today) -- investors weren't willing to pay high multiples-to-earnings, with the exception of an 18-month period.
Sure, we have fiscal stimulus working in our favor, now. And we see early signs of a rebuilding cycle in play as well. But there is no motivation for the last key ingredient needed for stock market strength: private demand, whether it be consumption, exports or investment.
Now that the "expansion" phase had ended, it appears we will transition through a new period -- a revised version of globalization, re-regulation and de-leveraging -- and that's not the right environment for the economic airplane to take off.
Even when the current economy is seeing GDP growth quarter-over-quarter, the big picture is the United States becoming totally addicted to the current policy framework.
What you'll see, just like the late '30s - early '40s, is massive reliance on the government, followed by fiscal policy tightening to fight the inevitable inflation, and a country where private enterprise has been completely discouraged.
To put it simply, here's an analogy: The economy doesn't REALLY pick up again until the kid, who always had mommy and daddy paying his way, decides he is uncomfortable enough to get up and start a business of his own.
What the heck do we do?
Never fear!
Being forced to have your retirement account pegged to one of the major stock market indices such as the S&P 500 or Dow-30 is a thing of the past! This isn't the old days where your financial hands are tied!
There are plenty of other asset classes that will give us explosive opportunities, and if the stock market is your place of comfort, or if your 401(k) plan is restricted to the stock market, that's perfectly all right, too. You can make huge profits by TRADING the stock market instead of the "buy and hold" strategy that worked for the last few decades.
Before the roaring '90s, the stock market was a place that seemingly was meant for wealthy Tycoons only. We won't go back to that way of thinking, simply because of the access to information and education that you now have at your fingertips.
Tomorrow's market will be a place for different kinds of Tycoons! And you're one of them. ...
Look again at the chart from 1965-'81. What do you see?
I see nine opportunities:
4 major long-term downtrends (red arrows) -- profitable for bearish positions.
4 major long-term up trends (green arrows).
And perhaps the best part: one zig-zagging sideways trend -- a premium-collector's dream (think options).
Most individual investors will look at their retirement accounts and regular accounts in the next 10-20 years, and the value won't be much different from today's value.
You, on the other hand, can make "Quantum returns" in the same time frame, if you know how to view and trade the market.
(Remember, Jim Rogers and George Soros made 4,200% from 1970-'80 when the market gained 47%.)
How'd they do that?
The secret to making "Quantum returns" is to stop believing in "the market." If someone asked you what "the market" is doing, you'd probably tell them about an index of 30 stocks known as "the Dow Jones Industrial Average."
Most investors, who are unsophisticated, believe they are at the mercy of this basket of securities.
GET THAT OUT OF YOUR HEAD RIGHT NOW.
You can free yourself financially if you understand two things:
1. Understand that financial markets are broken down into many different categories.
You can trade stocks, bonds, currencies, etc. If you find, at the time, that equities (stocks) are where the strength is, the first thing you would do is find out which of the global markets are the strongest (U.S., China, Brazil, etc.).
Then you should find out if the strength is in large-cap stocks, mid-cap stocks or small-cap stocks.
If it's in large-cap stocks, is the strength in large-cap value or large-cap growth? If it's large-cap growth, is it in financials, energy, technology, etc? If the strength is in large-cap growth tech, would that be in software, semiconductors, computers, Internet, etc.?
Zooming back out, you have to view the financial market as a place that offers you many choices. You don't have to be in stocks. For instance: When we experience runaway inflation, you'll make huge Quantum returns in commodities.
2. Understand how to identify where the strength or weakness is found.
Whether the strength is in stocks, commodities, bonds or currencies, you can use basic technical analysis to spot the trend. And the trends you'll find will usually stay intact for a significant period of time.
You don't have to find strength in a group to make money -- you can make just as much money by identifying weakness.
If you have a 401(k) that's very restrictive, only allowing you to invest in a hand full of equity funds, don't sweat it! Once you understand how to view the market (one that offers you many choices on where to put your money), you'll know how to work that angle, too.
You can chose to invest in the funds, offered by the 401(k) plan, that are more likely to show the most relative strength. And when the market starts reversing lower, you can move out of that fund and into a money market account (which is similar to cash) until strength returns.
Transition to your richest days yet.
Use the current economy's "transition period" that I mentioned to educate yourself on how to break down the market. Make "Quantum returns" and don't sit there with your retirement at the mercy of a couple of indexes that are known as "the market." Those indices are nothing more than a distraction that are being used to manipulate market psychology like shaking shiny keys to distract a kitten.
Don't fall for it. Don't let them play you. Start studying and play the markets.
Tuesday, December 1, 2009
By the year 2019, your retirement will be worth exactly the same amount as it's worth today -- at best...
Nearly 73 million Americans (or just under 50% of our working population) have a 401(k). But the average 401(k) has a balance of $45,519, and 46% of all 401(k) accounts have less than $10,000. Hardly enough for retirement.
The result? You'll see a reduced standard of living at retirement.
"Don't sweat it! I've got time!"
Oh, really? Sorry to tell you, but the next 10 or 20 years will be a period of long-term consolidation for the stock market -- meaning, it will ultimately trade sideways and end up in the same place it started.
If you're like most retirement account holders, you're passive, your 401(k) is largely tied to the general stock market, and you're still in shock, trying to digest what recently happened and what the future holds.
You're not alone. We are right in the middle of a "transitional period" for the economy and virtually all financial markets, so investors are experiencing the highest level of confusion we have seen in generations.
Don't think we will recover and just move on as usual -- just forget about that.
Banks are rehabilitating their balance sheets (by not doing any significant lending), and the sector is in the process of de-leveraging. As a result, you're going to see lower growth, lower investment and nominal GDP.
There are solutions to this nightmare of a problem, but unfortunately, only some of you will have the understanding you'll need to adapt to the new economy, and the new market opportunities.
Take a good, hard look at the chart below.
It's a chart of the Dow Jones Industrial Average from 1965 (when it was at 874) through 1981 (when it was at 875).
So, you could have held a portfolio of stocks that mimicked the Dow for 16 years, and you would have made 1 point.
That’s a long time to wait for a point!
It's almost a certainty that the stock market, for the next 16 years, will look similar to the the chart above (from 1965-'81). That's FINE, and could be a very profitable market to play in, as long as you aren't considering the "buy and hope" strategy that worked for the last quarter-century.
If you read the report we wrote in the end of 2006, "Tycoon's 7 for '07," we told you, in detail, what was going to happen in terms of the mortgage/real estate bubble leading to a credit crisis.
If you missed out on that opportunity, don't worry. Tycoon has a clear picture of what's going to happen next, and will be showing our readers and students how to make "Quantum" returns -- not only by explaining what asset classes hold the most strength and when, but more importantly, by training you and educating you so YOU can find it for yourself.
What are "Quantum returns"?
Well, in 1970, Jim Rogers and George Soros founded the "Quantum Fund." During the following 10 years, the portfolio gained 4,200% while the S&P 500 advanced about 47%.
It's all about trading in the right asset classes, and having just a BASIC understanding of technical analysis. There are simple and easy-to-understand strategies that you can use to know when to be bullish on a market as it's advancing, and even profit when it's declining.
We're going to bring you the education you need to make sure you aren't one of the MAJORITY of people who will have a stock account worth the exact same amount as it was 10-20 years prior.
And by the way, we have never had a period of time where the government prints lots of cash (as it has just done), that wasn't followed by inflation.
The U.S. is likely going to end up seeing runaway inflation.
So, even though most people will end up with the same amount of money in absolute terms, the fact is that the money might be able to buy you half as much stuff!
Not Convinced?
Look at the chart below that dates back to 1901. It's clear that long periods of economic expansions are followed by long periods of consolidation (trading sideways).
What's more interesting is that, if you compare the booms (green) to the consolidation periods that followed (red), you can see that, after very long-term stock market advances, the market generally takes about twice as long to consolidate!
You can even look at the boom and consolidation period within the 1929-'54 "consolidation period" (if you want to call it that), and you can see that the huge gain from 1933-'37 (yellow) took nearly three times as long to consolidate (blue).
Even if the recent expansion, from the early 1980s to the recent 2007 top, takes HALF as much time to consolidate (as opposed to the historic 1.7 to 2.88 of the time), we wouldn't revisit the 2007 high until 2019.
Some of those reading this article can't envision a market that doesn't advance over the long term. Who can blame you? Many of you weren't watching the market prior to 1981.
But the 24-year trend occurred because of corporate profits that were largely a function of cheaper and cheaper financing, and higher and higher leverage, combined with increasingly complex financial innovation and loose regulation.
This enormous bull market was also launched after a transition to low inflation and declining interest rates, beginning in the late '70s.
Here's what you have to do.
Now that we are IN THE MIDDLE OF the "worst crisis since The Great Depression," you are going to have to do something that investors haven't had to do in 40 years. ...
You're going to have to shift your mindset away from the way you've been trained to view the stock market over the last 25 years (for some, including me, that's as long as you can remember investing), and adapt to the new stock market -- one similar to the market from 1966-'83, or perhaps a better parallel would be the 1937-'38 period.
After a three-year stock market massacre (from late 1929 to late 1932), we had a massive 4.5-year rebound. The market would rally off of vast government expenditures and monetary kayos.
It was an artificial recovery (similar to what we are seeing today). The economy went downhill again beginning in 1937-'38 (followed by a brief rally and another four-year sell-off) because we didn't encourage private enterprise.
And the reason I think this time frame is a better comparison is because now we are seeing the same thing:
We have interest rates at nearly zero (and a strong fight by global governments to keep that intact for as long as possible), and massive economic stimulus by the government into the economy. (So, the gains are artificial, and Uncle Sam will eventually stop the massive "stimulus" that's causing the "stabilizing economic mirage.")
As a side note, notice the three colorful squiggly lines in the chart. They represent the market's price-to-earnings (P/E) ratio (the multiple to earnings that the stock market is priced at) at 10 (green: historically undervalued), 15 (blue: historically fair value) and 20 (red: historically overvalued).
When high growth is expected, the market trades at higher P/E ratios. When lower growth is expected, the market trades at lower P/E ratios.
So notice how, after 1938 -- the period in which the government propped up the economy (just like today) -- investors weren't willing to pay high multiples-to-earnings, with the exception of an 18-month period.
Sure, we have fiscal stimulus working in our favor, now. And we see early signs of a rebuilding cycle in play as well. But there is no motivation for the last key ingredient needed for stock market strength: private demand, whether it be consumption, exports or investment.
Now that the "expansion" phase had ended, it appears we will transition through a new period -- a revised version of globalization, re-regulation and de-leveraging -- and that's not the right environment for the economic airplane to take off.
Even when the current economy is seeing GDP growth quarter-over-quarter, the big picture is the United States becoming totally addicted to the current policy framework.
What you'll see, just like the late '30s - early '40s, is massive reliance on the government, followed by fiscal policy tightening to fight the inevitable inflation, and a country where private enterprise has been completely discouraged.
To put it simply, here's an analogy: The economy doesn't REALLY pick up again until the kid, who always had mommy and daddy paying his way, decides he is uncomfortable enough to get up and start a business of his own.
What the heck do we do?
Never fear!
Being forced to have your retirement account pegged to one of the major stock market indices such as the S&P 500 or Dow-30 is a thing of the past! This isn't the old days where your financial hands are tied!
There are plenty of other asset classes that will give us explosive opportunities, and if the stock market is your place of comfort, or if your 401(k) plan is restricted to the stock market, that's perfectly all right, too. You can make huge profits by TRADING the stock market instead of the "buy and hold" strategy that worked for the last few decades.
Before the roaring '90s, the stock market was a place that seemingly was meant for wealthy Tycoons only. We won't go back to that way of thinking, simply because of the access to information and education that you now have at your fingertips.
Tomorrow's market will be a place for different kinds of Tycoons! And you're one of them. ...
Look again at the chart from 1965-'81. What do you see?
I see nine opportunities:
4 major long-term downtrends (red arrows) -- profitable for bearish positions.
4 major long-term up trends (green arrows).
And perhaps the best part: one zig-zagging sideways trend -- a premium-collector's dream (think options).
Most individual investors will look at their retirement accounts and regular accounts in the next 10-20 years, and the value won't be much different from today's value.
You, on the other hand, can make "Quantum returns" in the same time frame, if you know how to view and trade the market.
(Remember, Jim Rogers and George Soros made 4,200% from 1970-'80 when the market gained 47%.)
How'd they do that?
The secret to making "Quantum returns" is to stop believing in "the market." If someone asked you what "the market" is doing, you'd probably tell them about an index of 30 stocks known as "the Dow Jones Industrial Average."
Most investors, who are unsophisticated, believe they are at the mercy of this basket of securities.
GET THAT OUT OF YOUR HEAD RIGHT NOW.
You can free yourself financially if you understand two things:
1. Understand that financial markets are broken down into many different categories.
You can trade stocks, bonds, currencies, etc. If you find, at the time, that equities (stocks) are where the strength is, the first thing you would do is find out which of the global markets are the strongest (U.S., China, Brazil, etc.).
Then you should find out if the strength is in large-cap stocks, mid-cap stocks or small-cap stocks.
If it's in large-cap stocks, is the strength in large-cap value or large-cap growth? If it's large-cap growth, is it in financials, energy, technology, etc? If the strength is in large-cap growth tech, would that be in software, semiconductors, computers, Internet, etc.?
Zooming back out, you have to view the financial market as a place that offers you many choices. You don't have to be in stocks. For instance: When we experience runaway inflation, you'll make huge Quantum returns in commodities.
2. Understand how to identify where the strength or weakness is found.
Whether the strength is in stocks, commodities, bonds or currencies, you can use basic technical analysis to spot the trend. And the trends you'll find will usually stay intact for a significant period of time.
You don't have to find strength in a group to make money -- you can make just as much money by identifying weakness.
If you have a 401(k) that's very restrictive, only allowing you to invest in a hand full of equity funds, don't sweat it! Once you understand how to view the market (one that offers you many choices on where to put your money), you'll know how to work that angle, too.
You can chose to invest in the funds, offered by the 401(k) plan, that are more likely to show the most relative strength. And when the market starts reversing lower, you can move out of that fund and into a money market account (which is similar to cash) until strength returns.
Transition to your richest days yet.
Use the current economy's "transition period" that I mentioned to educate yourself on how to break down the market. Make "Quantum returns" and don't sit there with your retirement at the mercy of a couple of indexes that are known as "the market." Those indices are nothing more than a distraction that are being used to manipulate market psychology like shaking shiny keys to distract a kitten.
Don't fall for it. Don't let them play you. Start studying and play the markets.
Tuesday, December 1, 2009
Market Analysis for 12/01/2009
I’ll quickly type out my market analysis for Tuesday. I’m supposed to catch the 9.30pm movie 2012.
Futures are currently up due to optimism over the Dubai incident but we shall see how the market fares after the Pending Home Sales report are out.
Dow daily chart
NASDAQ daily chart
S&P daily chart
All three indexes are right below the lower band of my MOBO bands which also acts as support resistance lines. Currently they are the resistance that the indexes need to break above in order to continue to rally, failing which the indexes may move down to test the 50 day moving average. (the red line)
I believe there will be a market correction in the next few days. Whether the correction remains a correction or becomes a market meltdown remains to be seen.
Futures are currently up due to optimism over the Dubai incident but we shall see how the market fares after the Pending Home Sales report are out.
Dow daily chart
NASDAQ daily chart
S&P daily chart
All three indexes are right below the lower band of my MOBO bands which also acts as support resistance lines. Currently they are the resistance that the indexes need to break above in order to continue to rally, failing which the indexes may move down to test the 50 day moving average. (the red line)
I believe there will be a market correction in the next few days. Whether the correction remains a correction or becomes a market meltdown remains to be seen.
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