qngkoniydsz

Swim With the Current

Youve probably heard me say over and over that 80% of your return on your portfolio comes from the market and the sector. But what the heck does that really mean?

In June 1998, Investors Business Daily summarized two studies on the causes of stock- price movement in two books: The New Science of Investing, by Dr. Robert Hagen and The Latent Statistical Structure of Securities Price Changes, by Benjamin King.

Those studies found that 31% of a company's stock-price action was tied to the market as a whole. Industry group action explained 37%, while broad sector action accounted for 12% of the price movement.

Both studies concluded that only 20% of the price action in a stock was determined by company fundamentals!

Unfortunately, most people were taught backwards. Most think gains and losses are only determined by picking the stock with the right fundamentals! Fundamentals are things like P/E ratio, good management, growth rates, new products, market share, etc. I'd venture a guess and say that most people spend 80% of their time (and sometimes 100% of their time!) trying to find the stock with the best set of fundamentals.

Yikes!

So what happens when a company "with great fundamentals" happens to be in a sector thats on defense? Or what if the whole market is on defense? The company could see their stock price get slammed (yes, even with great fundamentals!).

Say you bought at a stock a few months ago at $40. Today it is $20. The company may still be growing like crazy, but the market or the sector dragged it down. If the story didnt change, then didn't the fundamentals just get even better? It has to be a better value at this price, right? If you invest by using only the fundamentals, you lose.

Again, most of the returns you're going to get will depend on whether the market (and the sector the stock belongs to) is on offense or defense.

Look, everyone knows that if you're swimming with the current, it's an easier ride. There are times when the market is on offense (and you're moving with the current). Hey, it IS possible to make money when the current is against you. But the odds are stacked against you! So, try to swim with the current...swimming against the current is NOT recommended!

Offense? Defense? Huh?
When were on offense, we run offensive plays from our playbook. Meaning, well look to put money into the market to build our wealth. Were not going to buy everything in sight; we want to focus ONLY on the sectors that are also on offense.

When were on defense, well run plays designed to protect our assets. Defense doesnt mean run out and sell everything! Whats the goal when the defense comes on the field in a football game?

To prevent the other team (the market) from scoring against you!

When the market is on defense, well only call plays from our defensive playbook. Running a defensive strategy helps prevent us from making really stupid mistakes in our account and taking big losses. Defense can mean taking steps like buying protective puts against your holdings. Or possibly shave back a large investment in a stock or mutual fund.

Avoiding big losses alone will improve the performance for most people in the market.

How do we know whether to be on offense or defense? We use a tool that is an excellent indicator of the level of risk in the market. Fifty years ago, a technical analyst named A.W. Cohen came up with this tool he dubbed the bullish percent index. Cohen was looking for a way to tell when to be cautious near market tops and also aggressively optimistic near market bottoms.

If you think about it, isnt that what we all want? Something thatll tell us when the risk in the market is high...and when the risk in the market (or a sector) is low! And its been around for fifty years, ignored by many in the market!

The bullish percent index is the percentage of all the stocks in a universe that are currently on buy signals. Now, that universe may be all the stocks in the semiconductor or the financial sector. Or even all the stocks listed on the New York Stock Exchange.

Knowing when the risk is high in a particular area will go a long way toward improving your investment results!

When to take action
Weve discussed the bullish percent is all the stocks in your group that are currently on buy signals. We feel its the single best risk level indicator we have found. But how do you know when to take action?

If 90 out of 100 stocks in a given sector are currently on buy signals, the bullish percent index is said to be at 90% for that group. If only 30 of 100 are on buy signals, the bullish percent is 30%.

Now, if 90% of all stocks in a sector are already on buy signals, that means only 10% of the names in that group are NOT on buy signals.

Wed want to be cautious with that kind of high reading!

Hey, no one likes being the last guy to show up at a party, but thats what happens to a lot of individual investors. They get in near the top and get creamed when the sector or market takes a dive.

Now, what were measuring here is supply and demand. When there is demand, prices rise. When a sector reaches 90%, theres not much more that can move a group higher.

But thats NOT the time to sell.

See, stocks can hang around lofty levels for a LONG time. Its only when we see more and more companies in a sector (or market) start to give sell signals, we know that supply is overtaking demand. When that happens, lower prices are on the way.

Now, say last week we noticed that a sector had a bullish percent reading of 30% and this week its now at 38%. This is a group wed want to pay attention to! Not only are the readings going up, they are going up from low levels!

This is precisely the stuff we zoom in on when telling you where to put money to work!

Predictions

If we need to get out of something, wed sure like to know it NOW, not later!

Hindsight IS 20/20. But it wont help you avoid losses in your account. Weve given up predicting what the market will do because we use tools that tell us accurately what IS happening right now in the marketplace. The point and figure charts we use and the bullish percent index are tools that tell us whats happening today. These charts tell us what is in demand and what is in supply.

There are too many folks trying to complicate the investing process. Keep it simple. Just remember that anything with too much supply will see their prices fall. Anything in demand will see their prices rise. And we have a method of measuring exactly which stocks and mutual funds are in demand and which are in supply.

posted by xtrx @ 9:56 PM 0 comments

Domestic Cleaning Advice: Computer Cleaning

The computer you use can get pretty dirty sometimes and that might reduce it's performance and reduce it's life time so here is some advice on how you can clean it up.

The computer won't be well cleaned if you'll use alcohol cleaners, you'll need to use a hard surface cleaner, in concentrated solution in warm water.

Cleaning the case

You'll need a cloth that you'll wrung in the solution you chose. Use this cloth to wipe the casing and all the external parts (cabling, keyboard). Make sure you wash the cloth since the soil will be considerable. Excess water shouldn't be used and try not to let water go into the vents of the case. You will be able to clean between the keyboard keys by using damp cloth pushed between the keys with toothpicks.

The following actions need to be taken every six months.Cleaning actions that should be taken periodically, every six months

You'll need to open the case and remove all the dust from it and from the vents. You'll need to be very care full while cleaning inside the case. You can use the vacuum cleaner but be sure the motor is far from the computer and it's components. Also, you should earth yourself by touching any metal object that you know it's earthed, like a radiator.

You should vacuum the vents of the casing and the keyboard. The keyboard is a place where a lot of dust and rubbish collects, the amount might surprise you. Keeping the dust away from the vents of the case and the coolers inside it you'll prevent overheating the computer that leads to damaging the components. Also, it's not a good thing to push the dust out of the computer, it's just going to stay in your room and will eventually get back in the computer

Mouse cleaning

The mouse can be cleaned by removing the ball and dusting inside, remove stray food and human or dog hairs from around the rollers. You'll have to keep the mouse dry, everything has to be scraped out.

That's just a small bit of advice meant to help you keep your computer clean, it's a good thing to get your computer to a professional cleaning service for better cleaning.

posted by xtrx @ 2:39 PM 0 comments

Gifts, All That Is Left Of Yesterday

Whenever dealing with such an overwhelming issue as the exquisite feeling of achievement and joy of our children we always use the commercial use of gifts usually comprising their utmost yearnings such as the latest toy embodying their hero or favorite personality. It was psychologically shown that these moments are sheer important for forming their personality and preserving their serene state of mind which usually means full development.

First and foremost, it should be taken into account the fact that, in this case, we should discuss the safety projected by these certain toys or gadgets on your children: firstly, we can bring about the issue of their imaginative world, the one they have created accordingly to their ideas or fantasies. Secondly, by safety we can also refer to the fact that these toys are precisely chosen by means of their age and possibilities.

Furthermore, many people should be protected by the ensnaring of matters regarding the easiness of pursuing these toys. There are plenty of possibilities for doing it; yet, the most convenient way is the exact one which could combine the price, quality and purchase of the gadget. There should be added that there should exist the range of products which could satisfy any taste, as exigent as it could be. Needless to say, the degree of accomplishing all these should give an aid for all parents who are willing to fulfill their childrens yearnings.

All in all, our intent was to highline the fact that there are patterns to comply with all these aspects diminishing the useless efforts of formal demands. By all means, joy is almost priceless. And this almost can be solved by quality services which give the proper answer to all preferences; pragmatism is the one thing which could combine all the needed elements, pragmatism and the right services.

posted by xtrx @ 7:21 AM 0 comments