A Hedge Fund Choice?

                  

Hedge funds try to make up for their enormous fees by using either esoteric investments or excessive leverage. They use huge amounts of investor capital to achieve an advantage that average investors believe they cannot muster on their own.

                       

Hedge funds get into situations such as short selling and derivatives and unusual techniques. They get involved with leveraged buyouts and exotic business ventures.

                       

Uncertainties are much higher. Too high, in relation to the potential gains. The hedge funds really do not compensate their investors for exorbitant risk.(See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Securities Gains Ahead?

          

The average analyst will correctly tell you that stocks have risen, on average, about 10% over the long-term. But that has been in the past. Unless interest rates in the future remain extremely low, chances are that the future stock market will not earn this past figure. Some researchers have projected an average return of only 6%, and even much less for the future.

                                           

True, some financial academics claim that price earnings ratios for stocks are relatively low and this bodes well for the future of the stock market. My investigations over the years have told me that price/earnings are a poor measuring tool. What is a high or low P/E is simply too relative and too dependent on other important factors, including interest rates.

                       

Let’s not forget the specter of future inflation because of our extraordinary budget deficits.(See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

401 (k) Retirement Plans

                  

Employers under 401(k) programs just contribute retirement funds each year;  the employee takes responsibility for his or her investing.

                       

Employer contributions are usually in the form of such 401 (k) s. (In the past, the employer would be responsible for the management of the funds.) The employee can add personal investments to what the employer contributes.The bottom line:

The employee today has to bear the investment responsibility.

                       

So, it’s important that you pay attention to a viable mix of possible low-cost, diversified investment tools. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Disciplined Strategy

                  

Repeat: I have fully investigated the discipline of strategy use. Discipline is much more essential than strategy usage; it helps performance far better than the foolish market timing plans of the overwhelming majority of investors, professionals as well as amateurs.

                       

Iron-clad discipline must be part of each strategy. Important: The reason to buy a security has to be an integral part of the eventual reason to sell. That’s discipline. But it isn’t easy to maintain when you’re an investor having to contend with media noise. That consists of the usual panoply of opinions, most of which are broker, “adviser,” or salesmen-oriented. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

                   

               

Various Gold Investments

                     

This is for those who insist on gold purchases at all times:

                       

Purveyors of gold investments often sell one type without discussing various other forms that you can buy. Or whether everyone ought to be buying, even with inflation looming. The public never gets full information, nor the pros and cons of gold ownership.

                       

Gold can come in bullion or bars, or coins. And if the latter, they can be rare, or bought just for content. In either instance, they must be stored for safety, and preferably insured. Furthermore, gold values can be had in mining shares or in the form of mutual funds or ETFs.

                       

There’s lots of confusion, and the fear of not getting it exactly right. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Stock Winners?

                 

It is harder to pick stock winners than you may think from reading some of the financial media. Everyone believes they can, when you read what the advisers, analysts and other stock and bond touts have to say.

                       

But after all their effort, how many real winners do the media really find? You hear about big stock winning predictors. But with every investigative effort, we discover there are far, far more losers. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Investing in TIPS?

                

TIPS are bonds issued by the federal government through a bank, broker, or the Treasury, for five, ten and twenty year maturities. Their value grows to the extent of inflation. TIPS also are bought in mutual funds and ETFs.

                       

Investors seek inflation protection more than interest, which is  low right now. With little current, reported inflation, returns are insignificant.

                       

Potential inflation makes for their investor attraction. State and local taxes do not apply on U.S. Treasury obligations. However, additional interest paid because of inflation are subject to federal taxes.

                       

But why buy them? I have never considered TIPS a valid bond inflation advantage, despite the mass of what I feel is publish-by-rote-publicity that TIPS received in the financial media.

                       

Moreover, you can get inflation protection elsewhere. Even with other bond funds, yielding much higher returns. The public has to learn how to use principles of “duration” which the media never fully explains. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Independent Financial Authors

              

Many authors of how-to financial books and lectures are tied into Wall Street in some way. If they are not procuring their own advisory accounts, they are selling contacts for others. From only one point of view.

Yet, there are pros and cons to every investment strategy I’ve ever investigated.

                       

These authors could be offering investment suggestion or brokerage services, whatever sells, once they get known through the book or lecture they have authored. They rarely cite their actual independent research or the reputable work of those without an axe to grind.

                       

It’s fine to expound financial theories. Where’s the real research? (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Market Timing Hazards

               

I often discuss the foolishness of attempting to time buying and selling securities. Occasionally, investors can luck out in such efforts. But this success can only be accidental; most timers overwhelmingly fail to get out at the highs they claim, nor back into the market in time for low points.

                       

They get media play, but check independent research and you find the market timers are generally not the success they purport to be. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Odds-Enhancing Trading Strategies

              

The purpose of my investigations of thousands of independent studies of strategies and investing techniques has helped me delve into ways to simplify investment techniques and permit a more successful approach to trading and investing.

                       

Result? Not all the panaceas that you read and hear about are as they are reported.

                       

I have found from experience that the average investor, as opposed to pros, does well by avoiding trading extremes. That’s possible by sticking to a disciplined, favorite strategy and then forgetting daily market prices. You don’t need constant financial news, unless your investment strategy calls for it. Relatively few strategies do. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Securities Returns Can Be Misleading

                    

Stock potential:

They have been said to return about 7% above the rate of inflation for the past two hundred years. And in twenty year periods, they have supposedly outperformed bonds about 90% of the time.

But that figure is misleading. These statistics conceal important facts. Someone who had invested at the market peak in 1929 would have had to wait until 1998 to reach a return of 10% on their money. (That would include dividends.) This is an after-inflation yearly return of 7%. Actual returns will differ greatly, depending on the time you actually begin investing in the market.

                       

An S & P 500 investor from 1929 through 1949 received an after-inflation return of about 4.5%. An S & P 500 investor starting in 1932, and holding on until 1951, received an after-inflation annual return of about 10.8%. That works out to over 6% more per year. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Disciplined Strategy Usage

                

The Dow Industrial Average contains some of the largest, soundest companies, and cannot be considered speculative. Yet, the market is highly volatile. Thus, added pressures exist for tempting frequent buying and selling.

                       

This may be great for professionals who make up 80% and more of the market, but it can be disastrous for average investors subject to the influences that induce market timing.

                       

The solution? Disciplined strategy that I often describe.(See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Your Investment Odds

                  

My aim has always been to increase the odds of success for all investors. Investing need not be a toss-up game where an investor has to outsmart someone else in order to win more often than not.

All you need for investment success are better odds, not sure-fire future winners.

                       

What is therefore needed to accomplish all that is a special discipline. That means a strict avoidance of the media and Wall Street/financial industry distractions and noise. The latter constantly bombard the investor from all sides.

                       

Knowing why and how to avoid  distractions, along with how to cope in the jungle-like investment environment, are the key to investment success.(See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

               

Disciplined Investment Strategies

                  

Investment strategies should be tailored to individual preferences and needs. What tips the odds for each investor is the discipline employed in the use of strategy. Every investor has built into the purpose for the purchase of a security, the reason to sell it. Discipline from the original intent guides that sale.

                                           

Most importantly, strategies cannot be intermingled. You sell a stock when the purpose for which you bought it no longer holds. But there must have been only one purpose. If it was excellent earnings growth and that stopped, then sell.

                       

Low price earnings is too vague and variable, to be a disciplined strategy.(See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Reported Investment Gains

                

The financial media often report on big winnings made by some of the financial operators and hedge funds as if following them is instructive for the average investor

                       

However, the average investor does not have the funds, nor credit to emulate what big investors and hedge funds attempt in the markets.

                       

The ability to borrow the necessary capital would be impossible on the terms needed. Professionals have access to the multi-millions in credit.

                       

It makes for entertainment for most investors who read or tune in. But it does something else. It poorly educates the mass public about financial strategy. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)