Here is a simple way to improve your investment odds, based on my experience on studies of now about 1,600 strategies, along with their pros and cons, and most importantly, the discipline of usage.
To sum up a simple lesson that takes little effort: Once you learn the basics, turn off the constant noise and chatter that you get from the financial media.
All that mostly repetitive nonsense, does more harm than any possible good. ( See the Earl J. Weinreb NewsHole® comments.)
Big market traders earn big money in up and down markets. Can their method be copied by Main Street as well as others on Wall Street?
Giant investment bank/trading groups have been specializing in high-frequency trading, and now account for a large segment of all computer-generated trading on the NYSE. Their mathematical model/code has worked for them. These math models generally do well, until you hear of an eventual foul-up.
Mathematical formulas are not for Main Street. They are not even for many on Wall Street.
Always remember those who failed with collateralized debt in 2008, and at times, years earlier. ( See the Earl J. Weinreb NewsHole® comments.)
Many smaller would-be landlords are considering buying rental properties as a means of making better returns from investments.
Diversified corporate bond funds of lower credit ratings, but without outlandish credit risks, still offer decent yields, as do REIT mutual funds, which invest in real estate equity trusts.
Still, individuals who are familiar with small properties may find bargain real estate that will offer a decent return and possible capital enhancement.
But there is a danger in holding real estate on a small scale. It may derive from local regulations which you should know intimately. And you must be prepared to do most of your own small repairs, which can be costly when assigned to outside mechanics.
FINRA, or the independent Financial Industry Regulatory Authority, operates from Washington, DC, and New York City, with fifteen District Offices.
It’s involved with registering and educating the industry. It examines securities firms; along with writing and enforcing securities rules. FINRA also informs and educates the investing public, and provides trade reporting and other industry utilities. The Authority administers the dispute resolution forum for investors and registered firms.
The organization performs market regulation under contract for the NASDAQ Stock Market, the American Stock Exchange, the International Securities Exchange and Chicago Climate Exchange.
However, they are of help only to those who constantly are aware of investment principles on their own.
The Congressional Budget Office has indicated from its studies that U.S. economic growth will average a little more than 2% a year over the next 70 years. It had been about 3,5%, from the 1950s on.
There are many reasons why estimates for future economic growth are dismal, including our enormous debt which must be serviced. Moreover, it’s highly likely future interest costs will be much higher than they are today.
The specter of inflation all this imposes makes stock market growth difficult. (See the Earl J. Weinreb NewsHole® comments.)
In a previous report I mentioned the usefulness of short selling; selling borrowed securities, in the hope of buying back the borrowed security at a lower price in the future.
Without short selling, markets would become overvalued and would not be priced as rationally as they generally are.
However, during financial meltdowns or other emergencies which may affect markets from properly functioning, it may be necessary to temporarily stop such trading.
The SEC has placed restrictions on the use of short selling after a security is off 10% on the day. Unwise, because policing is difficult with the rise of lightning-fast computers. ( See the Earl J. Weinreb NewsHole® comments.)
Want a quick test of someone who considers himself a financial guru? Ask them about buying bonds with the threat of inflation.
When he starts talking TIPS, (for inflation-protected Treasury bonds) without asking how long you intend to hold the bonds, he has flunked the first step.
Then ask him to explain the duration principle behind the purchase of bonds. And how the usage of duration can overcome the effects of inflation. Chances are he will flub that too.
Want my answers to that question? ( See the Earl J. Weinreb NewsHole® comments.)
