Announcement

Collapse
No announcement yet.

The Seven Core Principles of Investing

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • The Seven Core Principles of Investing

    1. Always follow a system, despite your emotions.

    2. Use an objective financial advisor or coach to keep you on that system.

    3. Learn to think contrarily; don't buy more high and sell more low.

    4. Don't chase the hottest investments based on performance alone.
    Understand the past risks associated with the returns of each
    investment and how they differ in varying economic cycles.

    5. Always diversity among at least four different investment sectors that
    have relatively low correlation in both up and down markets.

    6. Understand your risk tolerance and income needs, and don't commit
    to a portfoliio strategy that is likely to violate your personal limits in
    risk.

    7. Focus on diversified sectors that are favored by projectable mid- to
    long- term trends within your time horizon.


    by Harry S. Dent, Jr. The Next Great Bubble Boom copyright 2004
    Last edited by sharon sanders; February 12, 2006, 09:00 AM.

  • #2
    What are the Core Principles of Not Investing?

    Florida1, we have followed those good rules of investing through the years. Thanks for laying them out again. My question now with the growing probability of pandemic is...

    What's the alternative to investing? After you have your food preps and cash and a bit of gold/silver coins...

    What about sitting out the pandemic financially... cashing out of stocks? Where do you put your money? Every choice has financial implications... If you have more than $100,000, what about putting your $$ from cashing out in a number of bank accounts so as not to exceed the FDIC insured limit on any one? (Joe Kennedy pulled out of the Stock Market prior to the 1929 crash and the Kennedy family fortune survived.) Of course, cashing out generates a potential tax burden, if your stocks have increased in value.

    This is a different kind of question than asked by those who know how to invest in the stock market in ways other than buying good stocks when they're low (or buying on a fixed schedule over time, catching the lows and highs) and holding them and selling when they're worth more. For the inexperienced, we have lots of questions...

    (DISCLAIMER: I know you can't and won't "give advice". But what are some of the parameters of the playing field, er, investing field? (GR, FL1, Brinkerbear, can you pretend you're in "Econ and the Pandemic 100" or "Investing in the Face of Pandemic for Dummies" or "Hedging your Investments 101" or "Alternatives for Retirement Investing for those with Oldtimers Disorder" and tell us what must be considered?) I had to really work at understanding what questions to even ask our TSA rep to get at what options might be available and the pros and cons. Problem with most of these people is they are not dis-interested advisors. They may not want to offer you some options if it impacts their bottom line.)

    Retirement funds?

    Seems like there are relatively few options there, but you can sometimes choose to move your retirement funds into a more conservative "value" fund option from "growth". Most financial advisors who are not tuned in to the bird flu are suggesting that "growth" is now the way to go, that the market looks good for "growth"... They pull out their charts to convince you, showing patterns that have existed in the past... So you have to do a little explaining first... This is not about patterns that we have any experience with, in my opinion. I'd rather be financially conservative... if I can figure out what financially conservative is. (I lack experience with any investment other than my bit of knowledge of investing in stocks. People tell me I know more than I think, but from my perspective I don't...)

    So what is most conservative for, say, a Tax Sheltered Annuity? we asked the Valic rep... with very little work (phone call or web) we can move those investments into another category that may be far less risky than stocks, ie, to the Short-Term Fixed Account (3% interest rate), but it must stay there for a 90 day minimum. Longer is an option too. The rep we talked with said he's had some people move their investment there, at the drop of a hat; and they've left it there for some time until they feel safe investing in stocks again. No financial penalty or charge for making such a move. It's all done within the TSA.

    We also have retirement funds managed by a state retirement system. Apparently there is very little control over how those funds are managed or invested. I still need to do more research on that one.

    If money is taken out of retirement funds "before their time" (based on your age, I think), you pay taxes and penalty. One question is... if a person is old enough to escape a penalty on cashing out of some of those accounts, should they bite the bullet on taxes? Is there any other consideration besides taxes and penalty?

    I heard that one person (not American) "borrowed against their retirement fund". Anyone know if that is possible in the US and what would be the pros and cons? Does it have to be paid back?

    These are just some of the many questions I have.

    Comment


    • #3
      Not Investing.....Pandemic

      Mellie - Love your title...

      GR will say all cash or gold and keep it in your home in a vault!!!

      Actually, in theory, I could offer some suggestions -

      as long as we talk hypothetical situations.

      Let me ponder a couple of days. I have concrete ideas but I want to double check the data.

      BTW, Joe Kennedy probably had insider info. Something we all would like to have.

      Comment


      • #4
        Re: Core Principles of Not Investing

        Excellent, Florida1,

        I could dig a hypothetical course in "Econ and the Pandemic 100" or "Investing in the Face of Pandemic for Dummies" or "Hedging your Investments 101" or "Alternatives for Retirement Investing for those with Oldtimers Disorder". Thank you for any ideas.

        (Aside: GR is a valuable resource, worth his weight in gold in my opinion. But there's only so much burying, hiding, defending gold that can be done...)

        Comment


        • #5
          Re: Student Loans

          What do you think is the best way to deal with student loans?

          I an about to consolidate $85,000 worth of higher ed Plus loans to a fixed 6.1% 30 year.

          Now, I also have about the same $$ in the market to cover the next 2 years of new tuiton and more than that in IRA and 401k.

          Is it wise considering what can happen in the market soon to use the Market money and pay off the loans instead of consolidating, borrow against the 401k, hardship withdraw againt the IRA? or just let it all ride, and put theMarket money, IRA & 401k into a 2-3 year treasury and wait it out?

          Comment


          • #6
            Re: Student Loans

            Mellie: GR really is "worth his weight in gold". Good one ! I'm not a financial advisor but I really believe that, if you think that a crippling pandemic is on the way, then the conventional wisdom of investing will be thrown out the window. I think that even F1 would agree to have at least a 5-10 % position in gold along with the food and ammo preps. The remainder should probably be in the most conservative, recession-proof stocks and maybe a 10 % postion in zero-coupon bonds. Caveat on the bonds: The new Fed Chairman Bernanke has a reputation for fighting deflation, not inflation. Since I'm really negative, I would exit most stocks and divide all you've got between gold and cash ..and I now lean even more overweight to gold. Bernanke was nicknamed "Helicopter Ben" when he suggested that the Fed could print money and drop it from helicopters to solve deflationary problems.

            Comment


            • #7
              Re: The Seven Core Principles of Investing

              #8 Never listen to a stock broker or financial advisor unless they are making money from the profits you are making on their advice.

              Comment


              • #8
                Re: The Seven Core Principles of Investing

                Originally posted by Pfwag
                #8 Never listen to a stock broker or financial advisor unless they are making money from the profits you are making on their advice.
                ...unless they're only making money if you profit on their advice.

                Even then, it's not their money they can and will lose. I saw it and contributed to it in commodities (hello So Dakota).

                My own advice is "never listen to a stock broker or financial advisor unless their track record and thinking are considered rock solid by you.

                Then it's worth buying their talent. I remember I think it was Jerry Tsai who started a mutual fund, with a lot of hype based on his track record. He tanked and lots of dummies, my parents included, ate losses courtesy of the hype by the brokers that the Tsai fund stood great potential of fat profit.

                It's one thing for them to say they were successful in the internet boom or the housing boom. That's BS. What you want to see is their ability to swim upstream. Otherwise, forget having long term trust in them; hedge your bets. They ain't my kind'a investment guru.

                Comment


                • #9
                  Re: The Seven Core Principles of Investing

                  Most people (me included) don't have enough money in the market to warrant a really good advisor or broker.

                  Besides, if they were that good why haven't they made a fortune and retired to Tahiti?

                  There are very few Warren Buffets around. I could just buy Berkshire Hathaway and hope Warren lives for another 10-15 years and maintains his track record. Or I can listen to my P&F charts and make 300-500% or more this year on Bird Flu.

                  Comment


                  • #10
                    Re: The Seven Core Principles of Investing

                    Originally posted by Pfwag
                    ... Besides, if they were that good why haven't they made a fortune and retired to Tahiti?.....
                    Absolutely correct. It is hard to find a good one because those guys are at home trading for themselves or managing huge funds.

                    Comment

                    Working...
                    X