Inflikt

Here is a small summary of the three major approaches to investing:

1. Fundamental Analysis

Truly superior companies exist, are sometimes undervalued by markets, and can be identified by mostly financial research. Earnings and dividends, stock prices and markets can be adequately forecasted. All these can be identified by analysis of their financial statements. Buy where forecasted price is greater than current price by a satisfactory margin.

2. Technical Analysis

Patterns in past price behavior of a security in question and the overall market can be used to direct profitable trading strategies. Some technical analysts also refer to a company’s fundamentals in combination with its technical indicators.

3. Efficient Market Theory

No possible market-beating investment strategy exists. All information relevant to a stock’s long-term price performance, including information not publicly available, is already present in the stock price for any given period of observation.

And here are two more “truly real” ways to approach investing:

1. The Proud Way and

2. The Humble Way.

The proud way is for those who believe that they’re smarter than everyone else and can use their insights and abilities to make superior investment choices.

The humble way is for those who believe that they don’t know everything. This humble approach leads them to study what has worked over the long term and then use it.

The path to achieving investment success is in studying long-term results and finding a strategy or group of strategies that make sense.
This strategy is the humble way … And it does work!

Copyright © 2005 I.E.C. Haramis

haramis@greekshares.com
http://www.greekshares.com

Ioannis - Evangelos C. Haramis was born in Greece in 1951 and he studied in Greece, USA and in Belgium. He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank.

Let’s first understand what maniac
means. According to Webster a maniac is “mad;
raging with madness; raging with disordered
intellect”. You don’t know anyone like that, do
you?

There is a book that is still in
print today that was originally published in
1841 with the title Extraordinary and Popular
Delusions of Crowds by Charles Mackay. He
explains in rather horrific detail how people
were caught up in the madness of buying property
in the South Seas in 1720, the numismatic coin
craze of 1980 and the tulip bulb trading in
1637. You wonder how people could have been so
gullible to have bought a single tulip bulb or
land they would never see for huge amounts of
money. Could anything like this ever happen
again?

I was floor trader on the commodity
exchange in 1973 when the Hunt brothers drove
silver from $2.00 per ounce to $54. That mania
lasted a few months and quickly tanked to $6.00.
I took part in that mania. I was one of the
maniacs.

When it was taking place it seemed
like the thing to do and very few questioned the
sanity of those participating. In fact, if you
weren’t part of the crowd there was something
wrong with you. When there is a stampede it is
best to run with the herd or be trampled to
death. However, there were a few who were not
mesmerized.

Today we are participating in one of
those manias only now it is called a bubble and
still is not being taken too seriously. Yes, it
is the stock market mania. Many are still
trapped in the madness of the crowd of the
1990’s who believe the “market always comes
back”. They are clutching their tulip bulbs,
sorry, stock certificates, and refuse to let go
of them because they know their value will grow
back to what it was 3 years ago. Stock owners
have become mad with what - greed? fear? denial?

When something, almost anything,
drops 50% in price it will take a 100% increase
in value to get back to “even”. With today’s
economic and world conditions that could be a
long time and maybe not in our lifetime.

Years ago I heard a story about how
they used to catch monkeys. A small hole just
big enough for the monkey to slip his empty hand
inside would be drilled in a coconut and candy
and fruit would be put in it. The coconut was
tied to a stake in the ground. When the monkey
grabbed a fistful of goodies he would not let go
even when the hunter came for him. Greed holds
him in an invisible grip.

Many investors today are like those
monkeys. They refuse to sell what is remaining
of the stocks and mutual funds they own even
though they can clearly see the major trend
continues down. They became mad with greed and
now fear of loss entraps them.

Until this madness is recognized
investors will continue to see their portfolios
become smaller and smaller. They must learn to
let go.

Written 3/10/03 but still applies today.

INVESTMENT LETTER 3 month free trial.
http://www.mutualfundmagic.com

Copyright Albert W. Thomas All right reserved.
Author of “If It Doesn’t Go Up, Don’t Buy It!”
Former 17-year exchange member, floor trader
and brokerage company owner.

In a business enterprise, finance is the connecting link of all the functional areas such as production, personnel and marketing, so the management of finance is vital to the smooth performance of the organization. The basic financial operations are investment, which deals with acquisition of fixed assets; financing, which deals with raising required funds from various sources; and profit appropriation, which deals with appropriating the profit earned by the enterprise among the suppliers of funds.

Regarding investment, assets/ projects are to be selected only by considering their net returns. Regarding financing, it is to be ensured that the firm gets the required financing at the lowest possible cost. Similarly, regarding profit appropriation it is to be seen that sufficient funds are provided for the developmental activities of the enterprise, without impairing the interest of the suppliers. In a firm where these operations are planned and controlled properly it can be said that there exists efficient investment management. Thus, investment management may be defined as that part of managerial activity which is concerned with the planning and controlling of the financial resources of a firm.

As every business activity requires investments, investment management is closely related with other areas of management. When investment is managed properly, other areas will also show good performance. Investment management helps in monitoring the effective deployment of funds in fixed and working capital. This will, in turn, ensure better working of the enterprise.

All the operations and resources in a business organization are managed with the same broad objective, i.e., to attain the objective of the enterprise. So each resource or area should be managed in such a way as to contribute to the fulfillment of the objective of enterprise. However, there are specific objectives for each functional area. In the case of investment, the objective is to ensure that the firm obtains the required finance at the lowest possible cost, and uses it in the maximum beneficial way.

Investment Management provides detailed information on Investment Management, Investment Management Firms, Investment Portfolio Management, Investment Management Training and more. Investment Management is affiliated with Investment Management Advice.

STEP 2: Achieve Financial Freedom - Choosing Your Escape Vehicle

Do you want to achieve financial freedom? For most people, this is constantly on their mind. If you are reading CashFlow Avenue’s 7 Simple Steps to Financial Freedom and Wealth Building, chances you are looking for ways to get out of the rat race and to achieve financial freedom. Unfortunately, it isn’t always as easy as it sounds.

With your Financial Goals firmly defined in Step 1, you would now have to choose your “escape” investment vehicle.There are plenty of investment vehicles in the world.Let’s name a few most common form of investment - fixed deposits, gold, bonds, real estate, stocks, stock options, mutual funds, starting a business on your own, etc.

From experience, you might probably be able to tell that every one of the above contains risk, except for fixed deposits.Profit, simply defined, is your reward for placing taking risk on your assets.

On surface, fixed deposits, look the safest form of investment but are probably the most risky because inflation rates are consistently higher that what the bank would pay you - slowly eating away your purchasing power in years to come. So, in truth, while your bank account is growing in numbers, you are actually becoming poorer. If there is no inflation (which will never happen in the long run), fixed deposits are still not the best escape vehicle because it takes just too long to appreciate.Who would want to wait 30 years before they can be rich?

Without getting involved into too much detail, let’s jump straight into action. When choosing an escape vehicle, you probably would want to set a few criterions to screen out what will and will not work for you.The ideal escape vehicle or business should provide:

Liquidity - allows you to cash out within a few days.

Leverage on Your Capital - using only your capital can be slow. Select a vehicle that provides leverage that magnifies only returns but not losses.

Fast Results - should see return on investment within the 1 st month.

Easy to Set Up - should take no longer than 1 month to start.

Predictable Monthly Return on Investment (ROI) - be able to forecast accurately your monthly

Low Risk - consistent and provides a high percentage for success

Profit with Time - with each tick of the clock, you should be making money.

Utilizes The Power of Compound Interest - snowball your returns to accelerate your wealth building process.

After running these criterions over the choices of investment available, most vehicles don’t make the cut.Of all, only 2 investment vehicles would make the cut.

Stay tuned for Step 3 for the Best Escape Vehicle.

CASHFLOW AVENUE is established to provide Low-Risk Options Trading Recommendations to the common traders in their pursuit of financial freedom and a better lifestyle. http://www.cashflowavenue.com

As the year comes to an end, you will see plenty of websites
offering stock guidance for 2006 and what you should expect for
years to come. This guide can be had for free if you buy this or
subscribe on that or sign up for newsletters. This is just
marketing gimmick. Sure, they have their use. But they want to
get you back by offering you a set of stock guide every year.
You only need one stock guide for your entire lifetime and I
will give it to you for free. Well, your time is not free so
that is what you need to read this guide.

2006 will be similar to any other years. In fact, it doesn’t
matter what year you are in. You can be in 1921, or 2105 and it
will bring the same thing to investor. Therefore, stop reading
‘Stock Guide from 2007′ one year from now. You just have to read
this once.

2006 will bring out the best to undervalued investment and
companies having stellar balance sheet. It doesn’t matter what
economic condition we are in, these stocks will give you
outstanding return. Now, these stocks will not give you the best
return ala Taser ( up 2040 % in 2003) or Travelzoo ( up 1070% in
2004), but it also will not give you Taser-like loss ( down 80.6
% in 2005) or Travelzoo ( down 75.3 % in 2005)

After all, Warren Buffet becomes rich by getting a return in
excess of 20 % annually for a long time. His stock holding does
not move up 1000% in one year and move down 80 % in another.
Yet, he is doing fine, more than fine. Slow and steady wins the
race and apparently it has been time-tested by some of the best
investors in the world.

Yep, so your 2006 guide is to find undervalued investments and
invest in them. You think oil price will go up in 2006? Then,
whip out your calculator, determine the fair value of any
Chevrons or Exxons of the world and compare it with the current
stock price. Be sure to look at the balance sheet too. Having a
positive net cash will ensure that the company you picked will
survive one year from now at the very least.

How do you determine the fair value of a stock? Quite simply,
you compare it with the prevailing interest rate and add a risk
premium to arrive at fair value. For example, if current
interest rate is yielding 4.5 %, the fair value of a common
stock is when it yields around 7.5 %. This implies a Price
Earning Ratio of 13.3

Anything else you need to know? Nope. Your only guide for year
2006 and beyond is to find undervalued investment. It has stood
the test of time.