A Brief Explanation And Mini-Perspective Of My Methodology - For Consistent Annual Profits
This article was initially written on 11/1972 and Updated on 08/2011.
This is my Introductory Article in a series: "Why Most Investors and Nearly All Traders Lose Money." It is expanded in one of the chapters I have in my - yet to be published book. The title of my book is: "Decoding Wall Street."
"A branch of logic concerned with the application of the principles of reasoning to artistic, scientific and philosophical inquiry."
It is the foundation of the Three Pillars of "My Methodology" for "Investing Wisely."
(For another over-view of "My Methodology," and my Three Pillars, please see my Private Blog - (Currently Not Active)): http://investingwisely-rotation.blogspot.com/?spref=tw
The following URL is also a very important missive supporting "My Methodology:" http://www.safehaven.com/article/27218/being-selective-is-critical-for-consistent-profitability
In my initial years as a financial analyst and asset manager, it became abundantly clear that I needed my own Methodology; if I was to sustain consistent profits. Text-books, newsletters, symposiums and more University Courses in finance and economics did not do the trick of - Making Consistent Annual Profits. Over these 40-years or so, I developed an Investment Methodology that does "make consistent annual profits" in both Bull and Bear market environments. I call it - "my stuff" - and "my stuff" only makes sense to those of you who have lost money with stock-brokers, and assorted asset managers, i.e. mutual funds. If you are one of those Investors, I encourage you to read-on and consider beginning an Email Dialog with me, e.g. - one-on-one.
One of the most important "tricks" to "Investing Wisely" is to have the Patience and Discipline to wait for the opportunities to come to you. The Investor, in particularly, the American Investor is lacking these attributes, big time! Listening and being submissive to teaching, rather than talking, seems to be long-lost art form. That is a sad observation to share, but I am convinced it is a fact. While you are "waiting" for an Investment Opportunity to come to you, I always recommend Cash.
Cash is often overlooked as an Investment Strategy. The media and Wall Street never suggest this (Cash) as an investment alternative. That too, also is a sad observation to share, but I am convinced it is both fact and "Why Most Investors and Nearly all Traders Lose Money."
If you take the time to read and perhaps re-read my "Three Pillars" - three articles (hyper-linked below) you will have a much better perspective on how I - "Invest Wisely" for both myself and my Clientele. I promise and even guarantee you will begin to be on a path of consistent annual profits and financial peace of mind. May I say with a smile -- that you may need my professional services for a year or two, perhaps more - for guidance and mentoring.
Here is My --- Mini-Perspective of "Investing Wisely"
I would like to share a mini-perspective on how I go about identifying future on going profitable investments by using these three (well honed) Investment Tools. Profiting consistently in the stock market is a common goal for all Investors. My work is an analytic process that has been profitable for both, me and my Clients for over 50 years.
My mission is to identify the next set of profitable / low risk Companies, within each Sector / Industry Group. The focus is on those Companies that have the highest prospect of being the Profitable, with the Lowest Possible Risk / Reward threshold / matrix in the coming few months and beyond. The Risk / Reward Ratio for all securities can be calculated as either positive or negative at any given time! I am sure that Investors, unknowingly bear Risk - and that is absolutely unnecessary.
Remember, this stock market is continuously Cycling and presenting an ever-changing venue for Investors to Profit or Lose from. The same-old Companies are no longer, repeatedly the leaders, year after year. For me, that means I have to work harder to identify those Companies and secure the consistent profits we all are seeking. I love this work. I always have and I always will be sharing my "stuff." My "Three Pillars" (articles) above - they should be very compelling support for you to buy-into "My Methodology."
For you folks that are seeking Monthly Income, you may be interested in the following remarks: An Example: XOM is a company that pays a dividend of only 2.5+%. Two-plus percent may seem like a low dividend to you if you are seeking income. You - Might Remember That - You can instruct your broker to send you any amount you wish each and every month not just the Dividends received to data. If you study my 20-Year chart of XOM, clearly you will note that you also have enjoyed - Long-Term conservative Growth. (Click here for my 20-Year Exxon Mobil Chart). Why not combine the 2.5+% dividend with say 3.5% from the growth and get 6.0% or even more per year? This is safe and very logical advice. Exxon Mobil suddenly becomes a better Monthly Income provider than you may have thought. You might ponder these remarks about how to receive additional and safe income each and every month.
Apple, Inc. intends to begin paying a dividend. That dividend man also not be all that high of a percent. However, the above comments about XOM are also applicable for AAPL. (Click here for my 20-Year Apple, Inc. Chart).
Identifying the future profitable component stocks of a given Sector or Industry Group is not a simple or easy process. It requires a great deal of hard work, discipline and experience. Most likely, you have heard these words used many times in my financial articles. I have practiced those "characteristics" for a very long time.
I would also like to focus your attention on these three words, I call them "my three Ws." These three words are: What, When and Why. The basic components of my analytics are the Companies within the Sectors and Industry Groups. In all Sectors, each company in each sector also belongs to an Industry Group. By Fundamentally - Valuating the component Companies within each Sector and Industry Group (300 or so!), I can easily affirm and / or discard a given Sector or Industry Group and focus on only the Best of the Best or the Worst of the Worst. I keep doing this analytic process (over and over) until I have identified the (Currently) very Best candidates for future Buying. The same valuation process works just as well if we are seeking to identify Companies for a short sale. (Please see my Bell Curve in "My Rotation Model" article). This work / analytics provides me with an excellent list of fundamentally sound candidates for investments well ahead of a Bullish or Bearish Inflection Point. (Please see my article on "My Inflection Points"). This is fundamentally is the key to the very important question of "What?"
Experienced "Technical Analysis" is the key to the important question of "When" The "When" always depends on the current (bullish or bearish or neutral / transitional) cycle of the stock market itself. Investing Long even in the best Company in a Bearish Cycle is just plain foolish and definitely expensive. And Investing Short in the worst Company in a Bullish Cycle is also just Not - "Investing Wisely."
Now, with a little guidance and few more analytic tools, we can begin on a path of enjoying consistent annual profits.
Over the coming months, I will continue to write many articles with the hope of offering you guidance and a path to my professional services. I will offer updates, i.e. Alerts (for Buying) and Warnings (for Shorting) for many companies. The Companies are always a representative group High Profile / Bellwether Companies that should be familiar to all. Often I will concentrate on a specific Sector or Industry Group or two. That's because that Sector / Industry Group may appear to have "Rotated" into favor and therefore the Best of its component Companies will do well. The opposite is true when I am anticipating a Bearish Cycle.
These, most often are "large cap" Companies that have competitors / peers, within their respective Industry Group. These "peers" are what I call second and third-tier Companies. These second and third-tier Companies often have much better Fundamental - Valuations and a Lower Risk / Reward threshold to work with. So these top-tier Companies always lead me to excellent alternative Companies that I most often recommend for Buying to my Clients. On the Other-Hand and Obviously, I am seeking very poor second and third-tier Companies when I am in a Bearish stock market environment.
So the "When" has to do with "My Inflection Points" and "My SHB Cycle". May I again suggest that these three articles are worth your time to read?
I mentioned my three "Ws" above and still have not shared my reason for the - Why? "Why" is a kind of "Conformation" for me that all this analytic effort is correct and accurate at the time and before making specific Company recommendations to my Clientele? If, I cannot answer the questions of "Why" this Company is a low-risk and potentially profitable investment, satisfactorily to myself, I will not recommend it as a buy or short sale to my Clients. It is that simple!
So, the first analytic obstacle I over come is whether or not the Company that Fundamentally Valuates well is currently Technically a Buy, Sell or Hold?
You can continue to roll the "dice" - or - take the time to get better acquainted with "My Methodology." It Works and it always has!
It's a clear analytic process that I have developed that very accurately tells me the "What", the "When" and the "Why" a Company is or is not in sync, both Fundamentally and Technically. When a Company is in sync it's a confident - Go!
Now we are back to the "When" in "Investing Wisely." In my work, that question is also rather easy to answer. Unfortunately, I have found that few Investors have the patience and discipline to hold any Cash in their portfolio until the "When" arrives. Waiting sometimes for weeks for a specific Company to be ripe for buying is not easy and often impossible for most Investors. Unfortunately, that is one of the reasons why "Most Investors and Nearly all Traders - Lose Money!"
As you likely know by now, I am a very pragmatic person and always share my most candid thoughts regarding "My Methodology" and "Investing Wisely."
This thyme does not change when I invite you to have an Email Dialog with me about my Professional Services.
For over 50 years I have provided consistent annual profits for my Clients. I am asking you to consider exchanging Emails so I can "candidly" answer your questions and perhaps further explain how I go about making money in the stock market for myself and my Clients.
You will find that you are working with a well seasoned and experienced person that is focused on consistent profits and excellent communications.
My mission is to provide my Clients with the very best possible results in both Bullish and Bearish time frames in the Marketplace. You will find whether we are in an introductory Email Dialog or you are a respected Client that my response to your query is timely, supportive and open to your constructive criticism.
I have indeed been profitable (often very profitable) for nearly every year and there have been over fifty of those years. Experience, Discipline and Patience are what I posses and would like share those characteristics and to gain your confidence and trust with the guidance and conservative management of your assets.
Questions or Thoughts - to Share?
Should you have questions or thoughts, please feel free to Email me. I will respond promptly. (Please - Serious Investors Only!) My Email address is: firstname.lastname@example.org
Keep Smiling, Have Fun - "Investing Wisely",