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Learning to Invest – Lesson 5

On April 24, 2011   /   Education   /   Leave a comment

It may be one of the most popular casino games among amateur and seasoned gamblers…  It’s not too complicated.  You don’t need a PhD in mathematics to calculate your winnings.  And there are a few basic principles to help you limit your risks and maximize your potential returns.

Blackjack – whether played with two, six, or eight decks of cards… the game is quite simple.

To tell you the truth, I’m not sure, despite the many books written on blackjack or the numerous strategies players share around the table, that one can win consistently… unless that “one” is the casino.  Nevertheless, there is a little lesson I think we can learn from the blackjack table.

Perhaps you’ve heard of a hot or cold shoe?  It’s when a dealer keeps busting and the players win or the dealer just can’t seem to lose.  Either way… there’s a trend.  And when there’s a trend at the table, the seasoned players take notice and change their strategies… betting more or less dependent on the trend.

OK… so this is a weak parallel… which shows my gambling ignorance I’m sure (once again).  But, play along…

Lesson 5

Go with the Trend

Hot or cold… up or down… recognize there is a trend in the markets and that momentum is very difficult to fight.  Yes, there’s always a winner in the midst… but when the overall market momentum is going in a particular direction with conviction, it is difficult to swim against the tide and come out ahead.  The same can be true for individual stocks.  That’s why I review and highlight everyday the “Market Momentum” as I see it for that day (see the top right side of this website).

So, before you jump in or jump out of your next investment, take time to review the overall Market Momentum and then review the trend of the stock.  If it’s crashing… don’t chase it down… please.  If it’s already taken off and left you behind, please be cautious about diving in to chase it.  And if it is gaining strength and growing in revenue sales as well as trending upward, do it… go with the trend… and may you make money on the markets every morning.

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Learning to Invest – Lesson 4

On April 22, 2011   /   Education   /   Leave a comment

In yesterday’s article, I highlighted the importance of knowing a little about investing before throwing your money into the markets in the morning.  Today is a continuation, of sorts, on this theme.

Did you know some of the games at the Casino have what’s referred to as a “rake” (see this article)?  Win or lose, they take a little of your money every hand you play.  Did you also know brokerages also have a sort of “rake?”  Every transaction you make, buy or sell, comes at a cost.  It’s the fee you pay to the brokerage whether or not you “win” or “lose.”

But, what if I told you that although the game doesn’t change from casino to casino… and the trades don’t change from brokerage to brokerage, one will rake you over the coals by charging you a $29.95 fee versus the competitor brokerage fee of $4.95 for the same trade?  Umm… yep… exactly…  Now of course, one brokerage has slight differences from the others… and you’ll have to determine if it’s worth the $25 surcharge.  After all, I’ve had some inexcusable service from the cheaper brokerage.  Nevertheless, at the end of the day, learn this little lesson from the casino…

Lesson 4

Don’t get Raked over the Coals… Know your Broker(age)

The “Keep your Cash Series” from several months ago touched on this lesson… but in light of the importance of this topic, I wanted to highlight it in this article.  I hope this helps you in your investment plans.

Friends… week one (lessons 1-4) of this series is done, with the next 4 to come next week.  Please take a moment to share your thoughts with the community of investors that share this site.  We learn from one another… and many of you have lots to contribute!  So, join in!  Next week, we’re going to look at three specific casino games and the lessons we can learn about investing through them….

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Learning to Invest – Lesson 3

On April 20, 2011   /   Education   /   Leave a comment

There’s a game at the Casino I have no idea how to play… but I’ve always been intrigued.  It is definitely one of the most social casino games… and the loudest.  Interestingly, it has a rather strange name too… CRAPS.  Really, craps?

Let’s say I told you I’ve always been intrigued by craps… I’ve watched at a distance, heard all the noise and seen the successes of those around the table.  And I’ve wondered… I wonder how well I’d do at this game? So, I decide to dive in and play a few hands.  The first time, I hit a hard six (impressive, huh?  But honestly, I have no idea what that means… I just know I’ve heard it before) and I win along with nearly everyone else at the craps table.  So I make a slightly larger bet.  This time, it doesn’t go quite so well… they sweep my chips away.  But I knew not every roll of the dice would be a winner.  Then, the guy with the biggest stack at the craps table tells the group, based on the stats at the table and his years of experience playing craps, the dice will hit a soft 8… so I join in with the others and bet the 8.  And lose when the dice hit 7.

Well, before my total ignorance in craps shows through (if it hasn’t already), let me get to the question.  Is that the best way to play craps?  Likely not… before placing a dollar on the craps table, I probably should have learned a little about the game, perhaps even played a “pretend” game or two.  But, to put money on the table before educating myself a little, practicing with play chips, etc. would be nuts and a sure way to lose my money.

It’s really not that different when it comes to investing in the markets.  You may be intrigued… want to join in the fun, especially when you keep hearing how well others are doing and how much fun they are having investing.  But wait, please… take a little lesson from the craps table at the casino.

Lesson 3

Know the Rules of the Game before Playing

Before investing your first real dollar in the markets, educate yourself.  I hope this website is assisting with this objective… but don’t just take my word for it.  Grab ahold of an investment book or two… create a fantasy portfolio and test your ideas… track my public performance.  Then, when you are ready and you know the basic rules of the game, join in the fun and I’ll do what I can to help you make money in the markets every morning!

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Learning to Invest – Lesson 2

On April 19, 2011   /   Education   /   Leave a comment

How many of you have entered a casino with cash in your pocket… let’s say $200… and then it happens…  It starts to go downhill… a bad shoe, a poor roll of the dice, an “unlucky” dealer.  But you know, even if no one else believes you, that you’re just around the corner from that big win!  So, you dip in a little more…

Part of investing is knowing your own personality and temptations.  In an upcoming series, I’ll be discussing the importance of developing an investment plan… but for now, let me just suggest, you need to know yourself.

And you need to remember this little lesson from the casino…

Lesson 2

Walk out a Winner by Putting Cash in your Pocket!

Friends… It’s not about how much money you pull out and put on the table, it’s about how much you put in your pocket by the end.  Small wins, avoiding losses… be sure you walk out a winner.  Put the cash in your pocket along the way and be sure, when the dips come, not to pull the cash back out again.  Walk out a winner!

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Learning to Invest – Lesson 1

On April 17, 2011   /   Education   /   Leave a comment

Hey… I’ve got a great idea… give me some money and see what I can do for you.  You can take the risk, finance your home, lend me money to invest on your behalf for which you will pay me a fee and for which I take no risk.  Sound crazy?  Sounds like a real gamble to me!

I once went to a FREE investment seminar with a renowned Canadian investment advisor in which he suggested the following to mortgage free attendees:

  • Take out a mortgage on your home (approximately 9% for a 5 year fixed at that time)
  • Invest it with the “sponsoring” investment firm – how convenient for them (oh, and they only charge a small fee for investing your money for you on top of the money they are paid by the mutual fund companies, etc.)
  • Tell your friends and family to do the same… again, how nice for the sponsoring investment firm
  • For those of you with a mortgage, use the equity you have, not matter how small…  extend yourself to make profits!

Imagine… you decide in the Spring of 2008 to follow this wonderful advice.  And, let’s just say, your investment advisor somehow limited your losses to 25% that year… which is criminal in and of itself that they don’t use stop losses more regularly.

Doom… gloom… fear tactics…

That’s not my intention.  But, please, heed this simple lesson from this gambling mentality.  If an investment advisor tells you to go into debt to invest with him/her, run fast, run far, run friend, run….

Lesson 1

Avoid debt to create investment equity

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Equinox Minerals

On April 4, 2011   /   Education, Newsletter, Stock Analysis   /   Leave a comment

Every week I publish a Weekly Newsletter for the Weekend Investor.  For just over a year, I’ve been posting alerts online for free… with some significant accuracy.  While I include US names in the portfolio, I tend to focus on Canadian stocks the most… because it is nearly impossible to find reliable information on Canadian names.  Nevertheless, our markets often blend… leading to stocks being listed on both sides of the border.

Usually I don’t disclose the picks for the Weekly Newsletter online; however, today, I’m going to make an exception… and here’s why.

Equinox Minerals (EQN.TO) closed up 32% TODAY!

Now, let me show you a few of the reasons why I chose this stock for the Weekly Newsletter and what I’d do now to protect the gains and put the profit in my pocket! READ MORE →

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