| Home | My photos | Forex | My trading | Contacts |
|
|
You Can't Become Rich In Your Pocket Until You Become Rich In Your Mind | ||||
|
Many investors may be satisfied with a 10 percent return on their money compared to 4 percent interest for a certificate of depositCREATING A TRADING FILTER After years of investing and trading, I came to the realization that to become good at this business I had to keep my eyes and ears open. I then set myself up to be able to accept both visual and audio information and to filter out useless information. Peter Lynch, former manager of the Fidelity Magellan mutual fund, is one of the best money managers of our time. In his books, he clearly states this principle of accepting all available information. Although the Magellan Fund, like many other funds, focuses on longer-term investments, the principles stated in Peter Lynchs booksas well as books by other great investorscan also be applied on a shortterm trading basis. I focus my attention on these principles of intelligent investing to get both the long-term and short-term perspectives. Many investors may be satisfied with a 10 percent return on their money compared to 4 percent interest for a certificate of deposit. I prefer to work a little harder in order to get a much higher percentage return. After all, this is the business I choose to be in. I want my trades and investments to make me a very good living no matter how much money I started with. Remember, the only way to build your account up quickly is to spot the consistently profitable opportunities and to use your money efficiently. Most investors and traders have very little idea how to find explosive opportunities. Its not that theyre not smart enough. Its just that they havent been made aware of the effectiveness of these techniques. During each trading day, I can work as little as five minutes and still make more money (with a much higher return) than investors who work all day. This is not to say that I spend only five minutes a day trading. I enjoy this business way too much. In fact, I dont even see what I do as work. I am sometimes even a little disappointed when the trading day is over. Believe it or not, weekends can be my most difficult periods. However, explosive opportunities can be found every day. To gain true opportunity insight, open yourself up to receive information from the perspective of a trader. Dont let important information slip through your fingers as many people do. Filtering information correctly can be the key to making money. Years of experience have shown me that the mega-successful investors are unique individuals who have developed approaches to finding opportunities others may be missing. Lets take a closer look at where these chances to make a very high return on your money in the short termminutes, hours, or dayscan be found. Remember That Stocks Follow Bonds If you keep your eyes on how interest rates are moving, you can determine where shares are likely to go. When interest rates are going up, bond prices are going down and shares will likely go down also. Conversely, if interest rates are decreasing, then bond prices are rising and shares should also be rising. If interest rates are stable, shares will have a tendency to go up. You can use these insights to create consistent profits in your account. However, there are points in time when this relationship does not hold. When this occurs, take the time to discern what has affected this relationship. For example, in 1998 turmoil broke out in the Asian markets which changed this relationship. Foreign investors bought bonds, which increased the price of bonds and lowered yields while the stock market moved downward. Stay Informed on Seasonal and Event-Driven Markets Event-driven markets are exactly that: markets that are driven by eventsseasonal, political, or otherwise. For instance, the energy markets are seriously affected not only by war in the Middle East, but by scheduled meetings of the Organization of Petroleum Exporting Countries (OPEC). The agriculturals are directly impacted by seasonal weather changes. Bonds are tied to changes in interest rates and the monthly release of the governments unemployment report. In essence, look for markets that have an event that triggers a specific trade strategy once or twice a month, or maybe once every three months. To keep up with these important market factors, you must keep abreast of daily news by watching television and reading mainstream and alternative newspapers and magazines in hard copy and on the Internet. It can also be important to listen to what key people in specific markets have to say. Typically, you need to come home from work and study what the markets are doing from many angles. In the beginning, it can be empowering to keep a journal of daily events and their effect on various markets you are actively watching. If a markets going to move, then its more likely that you can make money from it. By studying the daily reactions of specific markets to events, you can begin to forecast which strategy can be used to make the largest potential profit. Always keep an eye on markets that are dependent on the weather (oil, soybeans, wheat, etc.). See how they are reacting to seasonal factors. The tougher the winter, the higher the price of heating oil. The longer the drought, the higher the price of soybeans. All of this information can be used to find highly profitable trades. Walk around Retail Stores You can even make money while you are spending it. Just open your eyes and ears when you are shopping and see if you can spot an interesting investment. Find out what products are hot. Notice which products have the most store shelf exposure. Ask a clerk which products are literally flying off the shelf. On a shopping trip to a local toy store at Christmastime, I noticed that not only was the store filled to capacity, but people were fighting over the last items of one obviously hot product. Instead of jumping into the battle to fight for a toy, I picked up a box to find out the manufacturer. In addition, I asked a clerk at the store about the frenzy over this one product. She stated that this was almost a daily occurrence and then told me about a number of other items that were also flying off the shelf. This is not to say that everyone will be this helpful, but I was able to spot some particular potential investment opportunities by just asking questions of a store clerk. I then called my broker and investigated whether these particular companies were doing well. The next time you are shopping, take a look around and see if you can spot hot products or hot companies. Look for Opportunities When Driving Even when youre driving your car, you can spot opportunities. Once again, all you have to do is keep your eyes and ears open. For example, a few years ago I found a new restaurantat least it was new when I found itby the name of Boston Chicken. I first visited the place because I was hungry. However, when I saw the food and tasted the meals, I realized that this was a different kind of fast-food restaurant. I was given large portions of delicious food at a good price. I was not only satisfied with the food quality, but I felt that I got a good deal as to price and quantity as well. I returned on several occasions with others and everyone had the same impression. In addition, the counters displayed information on franchise opportunities. Although I was not interested in becoming a franchisee, it was clear this concept had to take off. Sure enough, these restaurants started popping up all over Boston, and the list of franchises exploded nationwide. When the company went public, I knew I had to get in on this. The companys public offering was a smash success. Now the company is known as Boston Market with stores all over the country and entres in supermarkets as well. When driving, always look for trends. Years ago I spotted a number of cars and trucks that had some interesting designs. It surprised me that they were Dodge productsI had never been a big fan of Dodge or any U.S. manufacturers automobiles. However, I kept seeing television commercials about the new Dodge. Well, I knew the old Dodge was not very exciting; but as a car fanI love sports carsI kept reading about their newest super car, the Dodge Viper. Luckily for me, a friend ended up buying one and I had the privilege of driving the Viper in the Nevada deserts. If youve ever driven in the desert, you know you can drive really fast out there. After all, theres nothing there but hard-packed sand. I wont tell you how fast I was going; but I was beyond merely being impressed with this car. At that time, I owned some other sports cars (Porsche and Ferrari) but I found the Dodge Viper to be much more exciting and fun to drive. Thereafter, I sold the Ferrari and bought the Viper, remaining to this day one of the Vipers biggest fans. Years later, I still get a thrill out of driving this car and so does anyone I know who drives one. It is by far the best sports car I have ever owned. This very positive impression of the cara Chrysler productled me to change my opinion of Chrysler products and American automobiles in general. Since then, I have bought two other Chrysler products (Jeep Cherokees), and I love them just as much. Such a positive experience on my part and the number of Dodge Ram pickups I saw on the road led me to believe that Chrysler had nowhere to go but up. The company has since reported record earnings. Indications are that this trend will continue and the stock will be a good long-term investment. Critique That Which You Already Own If you like a certain product, others probably do also. You can then look at this product as a potential investment. In addition, if you have a problem with a product and you feel dissatisfied, then others will likely have the same opinion. This may be a good selling opportunity for the stock (using a strategy that makes money when the price drops). Most of us have had a lot of both good and bad experiences. It is up to you to figure out how to translate these experiences into profit opportunities. If you buy an item and then are dissatisfied, cant get anyone to help you, or cant exchange the product, youre probably not the only one. This happened to me recently. I kept hearing about a certain computer product and how great it was. I subsequently purchased it and found installing it to be extremely difficult. The product was supposed to be easily installed, especially for a computer-literate person like myself. I contacted the customer support line and was put on hold for 20 minutes. I hung up out of frustration and called a second time determined to get through. After being kept on hold for 45 minutes (a very expensive long-distance call), I finally got a representative who knew less about the hardware and computers than I did. I asked for someone else, who ended up giving me information that crashed my computer. I quickly returned the product and went back to a reliable company that I have never had any problems withHewlett-Packard. I figured that everyone was having the same problems I was and that the product would flop as the hype about the product fizzled. The stock of this overhyped company was trading at around $50it had made a very fast move up from around $5 in less than a year. I immediately put on a bearish position to make money when the shares went down. The shares fell in less than four months to around $15, and I smugly changed my dissatisfaction and frustration with the company into cash. I didnt have to be a genius to figure this one out. All I had to do was translate a personal experience into what other peoples experience was likely to be and pinpoint a way to make money from this information. You can do this on a daily basis with items you own or have purchased and returned. Ask Your Children Yes, even children can be a good source of spotting new trends. What new movie do they want to see? What new toys do they want to purchase? What clothes styles are all the rage? What sports are popular? Children offer a wealth of information especially because they are greatly influenced by what other kids are doing as well as by what they see on television, in the movies, or anywhere. They can alert you to new trends that can affect the bottom line of a company. These pieces of information are valuable to the establishment of a winning investment perspective. |
|
|||||||||||||||
Previous Issues
|
| ©2007 Olesia | Home • My photos • Forex • News • My trading • Contacts |