Investment Articles

In October of 2008, very near what I believed was the bottom of the market crash, it became apparent to me that the market was likely to be setting itself up for a snap-back crash UP. Let me explain why I believed that and why I wrote these words, at that time, in my weekly newsletter to my clients...

Only 5 other times in history, had the market plummeted so severely in a consolidation period. Each and every time, the rebound was very nearly as precipitous and significant as the preceding crash.

Generally, fear sets in when a decision is made without fully understanding the risk. This is clearly to be expected, as many investors do not know how to measure or quantify risk in their stock investments.

I manage a total portfolio of stocks. I invest in these stocks with my personal funds. Each week, as I plan to make changes to the portfolio, I notify my subscribers, in advance, with a list of the trades I plan to make. The name of the portfolio is the TurnerTrends portfolio. This is not a theoretical exercise. I make real trades with real money in my management of this portfolio.

You would never buy a car without doing some reasonable analysis on the available models and measuring the features available with your personal likes, dislikes and overall cost of ownership.

But, it is amazing how many investors will buy a stock just because of hearsay or worse... a hot tip.

Market timing is an important component of the TurnerTrends investment strategy. However, market timing is often the scapegoat used by investors that buy high and sell low. We believe market timing can be an excellent decision-making tool when you get ready to buy long or sell short. Without properly timing the market, you could do all the right things at the wrong time and still lose your shirt.

If your life’s savings is primarily tied up in mutual funds (and many investors have mutual funds as their primary investment vehicle), then I am sure you have been reading and watching the news about the mutual fund industry. Mutual fund scandals and illegal activities are almost commonplace.

We strongly support a disciplined approach to investing. But, just what is a disciplined investment strategy?

Disciplined investing requires that you find or establish an investment strategy that you can believe in, and then stick with that strategy even when the markets go against you. This involves the attempt to eliminate or significantly reduce human emotions, which can play deceptive tricks on the unwary investor. Emotion leads investors to buy high and sell low.

We all like to think of ourselves as individuals. We like to think of ourselves as astute observers who make up our minds on issues based on sound reasoning and thoughtful analysis. Most of us try to avoid being a part of what’s known as the “Herd Mentality”. Being a part of the herd is only a good thing if you are at the front of the herd. Most of the herd is generally much farther back from the few leaders at the front. This analogy certainly holds true for investing in the stock market.