Who: You! and other investors who are learning to make money trading stocks

What: The main topic will be: How to Diversify without Diluting your Portfolio… but there will be lots of time for interaction

When: Tuesday, February 21st, 8 pm EST

Where: http://www.bigmarker.com/AllThingsFinancial/DoctorStock

Why: To help you be a successful investor.

How: Simply join in that evening or you can sign up in advance through Big Marker.

So, if you’re looking to be a more confident and successful trader, join us for this free webinar on How to Diversify without Diluting your Portfolio.

Take the S&P 500 for example… in October 2007, it was around 1500. By March 2009, it was below 700. That’s approximately 50% of a loss… extreme! In fact, I think it’s absolutely idiotic to suggest there are not better times to buy and sell than other times. But, how do you learn to time the stock market to make the most of the upside without getting caught by the downside risks? Let’s take a look together!

Perfectionists Need Not Apply

You’re going to be wrong. It’s a basic, yet often ignored, principle of successful investors. I’ve yet to meet the perfect investor, the perfect system, or the perfect stock that always leads to faultless profits. But there is a difference between being perfect and knowing the right moment to buy or sell. Successful investors follow a few simply principles:

• Protect Capital – Making money is our aim… so losing money is the enemy. Therefore, successful investors know the right time to sell a position is before they lose money, or more money than they’ve already loss.
• Minimize Risk – The most risky time to hold a stock is in the first few days of owning it. However, if you buy the rise, as the stock price is climbing, the risk is minimized by the sheer momentum of the stock. Once it is up a couple of percent, it is easy to protect your capital by placing your stop loss at or slightly above your purchase price, minimizing the risk of the trade.
• Maximize Returns – Early on in my investment journey, I’d sell stocks when they rose 5% or more… unfortunately, in some cases, I’d watch it climb 20% or higher… frustrated I had sold it. Premature selling is emotionally driven trading and it will limit your returns rather than maximize them.
• Put Profits in your Pockets – There are times when you need to put the profits in your pockets. One such example is when the fundamentals of a company change. If revenue is dropping and they are forecasting some troubles in the coming quarter, wise investor will take their profits rather than give them back.

Following these simple principles will help any investor successfully time the market. Do you apply principles to discipline your timing for purchasing and selling stocks? Join me in a couple of days when we’ll look at some specific examples of how timing the market can make a tremendous difference between being one of the 70% of investor who lose money or one of the leaders who making money trading stocks.

No doubt several companies already come to mind… like Apple, Nike, Lululemon, McDonalds, Exxon, Coca-Cola and others. I typical use the markets leaders to help me evaluate the market’s momentum before it’s too late. In fact, any investor can look to several of these leaders and tell which way the markets are moving… and be able to react accordingly.

Today we’re going to look at a couple of these market leaders, specifically Disney and Nike, to see what they are telling us about the overall markets.

Disney

Disney is poised to breakout in 2012. With the extremely bullish tell in November 2011 of the 50% boos to their dividend, Disney was raising the flag of victory over the markets. Since no one ever wants to cut a dividend, by raising it they were sending not simply a short term signal, but a longer term forecast of strength in the US economy. Compared to previous years, when 6 out of the last 8 years the raised the dividend less than 15%, anyone can see how important this signal is for investors.

And they could do so because of some strong fundamental developments. Here’s a sampling:

• Disney’s channel lineup is expanding and strengthening, especially ESPN.
• Their media network business accounts for 67% of their operating income from affiliate fees, retransmission fees for ABC, etc.
• Disney’s parks and recreation is only 17% of their operating income, so attendance isn’t the most critical component to their revenues (although, as confidence picks up, so will attendance).
• Shanghi Disney is scheduled to open in 2016 and will be 2 times larger than the size of Disneyland in LA.

Nike

Disney is a market leader that can help regular investors gauge the overall strength of the US economy. Another market leader with great earnings is Nike. Take a look at just some of their developments:

• A 16% dividend boost
• Continue to dominate their sector with a recognizable brand
• The cash alone on Nike’s balance sheet is almost as large as Under Armor’s Market Cap
• Good management of their inventory has enabled them to hold onto what they have produced which means they don’t have to discount it to get rid of it
• Culture, culture, culture… it’s like a sub-culture in and of itself

If you listen to the stories that markets leaders like Disney and Nike are telling us, then we are pulling out of this dismal correction that we’ve been experiencing since Spring 2011. To simply be sitting on the sidelines with your cash parked is a waste of an asset. But it may not always be this way… which is why I look to the market leaders to tell me about what is happening with market direction.

For over a year, I’ve been sharing with subscribers of the Weekend Investor Newsletter the importance of job creation. Not government payroll expansion, but grass roots private sector job creation. This is what I refer to as “real employment.” Here’s some of the interrelated affects of employment on our economy:

• Employment Leads to Spending – While some people spend even without much income, eventually they will run out of buying power. This leads to a spiralling of personal finances, leading to deflation as we’ve seen in recent years in the housing market. Even now, new housing starts remain depressed despite some “green shoots” of strength in other areas of the economy.
• Consumers buy Houses – If you have a job, you’re able to refinance for ultra low rates today. Yet, we still have nearly 13 million households in the US that are behind on their mortgage payments.
• People with Jobs Create Jobs – People with jobs buy houses, cars, and other major ticket items. They travel, take holidays, eat out, etc. All of this might be considered above and beyond the normal spending… and these large items employ others, thus creating jobs.

The so-called recovery depends on private sector jobs. If you want to know if we are experiencing a recovery, ignore the public sector job creation and focus on private sector job creation. And consider the impact of employment on the banking sector. As people secure employment and have stable incomes, those “bad loans” that are haunting the banking sector decrease, bringing stability to these so-called “to big to fail” institutions. Employment is critical to understanding how, and if, our economy will recover in the near future and the impact will be felt either way on stock prices.

Domestic Oil Production

With the US moving more toward domestic dependence upon oil production, this area will continue to expand at record levels. Perhaps you remember when I was discussing the importance of employment for investment decisions back in October 2011, I mentioned how North Dakota had record low employment due to the Bakken development. This is the leading example in the nation of why American oil production is the highest its been in 8 years. But how does CLR benefit from these meta-trends? Here’s a sampling:

• CLR produces approximately 75,000 Barrels of oil per day of the 500,000 for the whole region.
• The government has estimated there are 5 Billion barrels in the Bakken region… which may actually be a gross underestimate.
• The quality of oil in this region is superior to 95% of oil production in the US.
• US net imports of liquid file continue to decrease, down 36% since 2006, meaning they are buying it from drillers and explorers such as CLR.
• The push is for energy independence (continental) by 2020… so business is almost mandated by the government to grow independent of world demand, higher prices, etc.