Investment Advise is very common nowadays – it seems like everyone from your friends, co-workers, and family wants to be your financial advisor!
The question is with so much investment advice available how do you find the best stocks to buy and invest profitably on a fairly consistent basis?
One thing is absolutely true about stock prices in general – they fluctuate! Oh sure, sometimes they start and end at the same price, but unless they have few trades during the day they almost always to either up or down.
The key to profitable investing is to choose the best stocks to buy from a pool of stocks that are in an uptrend.
So the key to wealth management and successful financial planning is always where you get investment advice.
I am always amazed by the lack of unique financial planning that is delivered by the professional community. Their strategy always seems to me to expect to do “average” and no better.
Based on their recommendations I have purchased overseas mutual funds, US based mutual funds, and individual stocks – right before they rolled over and started going down in value.
Has that EVER happened to you? I believe that financial advisers really do have your interest at heart. But if you examine how the financial planning industry really works, you’ll find that they just can’t prioritize your investment performance over everyone else’s. There are exceptions of course, but many are directed by the company they work for to maximize the company’s income.
Their company’s investment advice just may not jive with yours!
Let’s review just a couple of examples.
Investment advice compared to Enron share price
Do you remember Enron? Here is a chart of investment advice vs the stock price of Enron.
One really might think that this chart is a joke – but it isn’t.
As Enrons stock price fell from the mid 70s – all the way to ZERO, financial analysts NEVER had a sell recommendation on this stock.
Are you kidding me??? What kind of an investment advice is that???
All the way from 75 to ZERO and no stock analyst had a sell recommendation? What do these people really do for a living? If they can’t recommend that you sell a stock long before the stock goes to zero should you really be taking investment advice from them?
If you are anything like me you’d would think there is something wrong with this. I mean common sense would require you to ask why there are no sell recommendations from the professional investing community while a stock goes to zero value.
Investment Advice – 3.5 years to Worldcom going bankrupt
How about WorldCom? Remember WorldCom? Here is another chart of a stock that went to zero – carrying many investors’ life-time savings with it I’m sure. I couldn’t find a chart of analysis recommendations vs the stock price – but I’d bet it looked similar to Enron’s!
After becoming totally frustrated with the professional investment advice AND the media, I decided to create my own profitable investing strategy – and it continues to work exceptionally well.
How to invest money
Stock market analysis is an essential first step to assess whether you should be buying stocks, holding what you own, or selling.
For a comparison if you were going to take a one-way canoe trip would you paddle upstream or downstream?
Unless you wanted to significantly increase the effort required for some reason, a logical person would elect to paddle downstream. You would want the current – the natural force of nature – on your side right?
We want the natural force of nature to help our investment strategy. We want to own and buy stocks while the market is going up!
We want all the help we can get from nature and the natural development of market forces.
Investment Strategy – Market Analysis
Take a look at the chart on the right, click on it and a larger image will open on your computer.
This chart clearly can make your investment strategy so much easier. It’s so simple it even amazes me to this day that it can be so easy.
It doesn’t take a lot of intelligence to see that if you focus on your stock buying in the green periods, and take profits in the red periods, your return on investment has got to improve.
That’s what stock market analysis does for us. It helps us own stocks while the natural forces in the stock market in place to help us.
Sector Analysis
Consistently across both the green and red areas of the stock market analysis chart, some sectors of the stock market do better than others.
Even when stock prices tend to be decreasing in value, it is almost always to your advantage to stay invested in the strongest sectors.
There are really two reasons for seeking to stay invested in the strongest sectors:
1 – If stock market analysis shows the environment to be red or yellow, no-one ever really knows when the overall stock market will change to green again. If you continue to hold stocks in strong sectors, when the turnaround does happen you’ll be able to take advantage of the explosive moves up that frequently occur at market bottoms.
2 – Strong sectors frequently move down less in bearish markets than weak sectors. By monitoring which sectors are strong and which sectors are week, you’ll be able to maximize your investment profits.
Stock Analysis
No matter what the stock market analysis and sector analysis tells us, we will continue to perform stock analysis for potential buy candidates.
Green Zone Investing Strategy – If the overall stock market is in the green zone we’ll be activity looking for buy candidates that fit our stock buying criteria. In addition we’ll be looking for optimal entry points so we can swim with the tide of overall increasing stock value.
Yellow Zone Investing Strategy – Between the green and red zones shown on the chart, there are obvious yellow zones that indicate a possible change in trend – and a corresponding change in investment strategy. While the stock market is in the yellow zone – which indicates caution – we’ll continue to perform sector and stock analysis. This helps us be well prepared if the market again turns green. We’ll already have a well thought out list of stocks to select from when the buying season returns.
Green Zone Investing Strategy – This is the time we want to swim with the current. We want all the natural power that we can find help our investments create profits. During this time we’ll continuously monitor the market for the performance of our current positions. And we’ll use the ongoing Stock Analysis activities to identify new investment opportunities as they break-out from well-defined bases.
Best stocks to buy
Most of our stock buying activities occur when the market is either in the green zone or is transitioning from red to green.
We will select stocks from our alert list and watch lists and take on new positions upon a solid break-out from a base or lower end of an upward trend line or channel.
Part of deciding when to buy a stock is deciding how much risk to assume. Profitable investing has a unique “risk normalization” approach that mathematically calculates how much risk our portfolios are allowed to assume for EVERY position we take on.
No longer do you have to wonder about how much of your total portfolio to invest in any one position. Just use our proven mathematical formula that takes into account the size of your portfolio and the amount of risk allowed in each position. Simple when you understand the strategy.
When to Sell a Stock
Remember Enron and WorldCom from the beginning of this article? What if your retirement planning depended on those two companies?
Part of our stock analysis includes when to sell a stock. What would be the point of identifying when to buy a stock if we don’t have a selling strategy?
There are 3 basic steps to deciding when to sell a stock:
1 – Our investing strategy again uses charts to identify the appropriate sell price either to capture profits or ensure against a loss. This is a mathematical calculation and not subject to interpretation or emotions.
2 – While we own a stock the strategy continuously monitors positions for strength compared to the overall market. Our strategy is to only own strong stocks and if a position weakens when compared to the market we’ll mark it as a sales opportunity. No Enron’s or WorldCom’s for us thank you!
3 – We’ll try to never let a gain turn into a loss. Not taking profits when appropriate is bad enough. But to let a stock that once had a gain turn into a losing position has a major negative effect on your entire investment strategy. Our strategy avoids this situation no matter how popular the stock is in the media and financial community.
Portfolio Management
You are probably a busy person. The last thing you want is to have to spend hours every day monitoring or updating your stock positions.
Even though creating this website takes more than 15 minutes a day, I really only spend about 15 to 20 minutes each day for all the steps of this investment strategy.
I have managed to streamline the market analysis, sector analysis, and stock analysis down to about 15 minutes a day. I’ll then put all this information onto real-time watch lists that you can actually access during the day yourself.
The major reason for putting this information on-line was because I wanted access to this information myself during the day from any computer I was near. I don’t want to have to type account passwords into public computers for instance.
This investment strategy makes portfolio analysis much easier. I just check my open positions list for alerts that I have triggered and take action appropriately.
If the current environment supports taking on new positions I can access my watchlist and alert list just a easily.
Stay tuned to this website and in now time at all you’ll be able to create and use your own investment advice!