Thanks for stopping by the only investing website on the 'net designed by working folks for working folks. As more and more companies dump their old guaranteed pension plans and move their employees into 401(k) retirement plans, it's more important now than ever to learn how to manage your own investments. Come on in and get started!
We'll show you how to get a better understanding of the markets and become a confident, competent investor. And we lay it all out for you in plain English (well, a Southern variety of English, anyway). Hey, you work hard for your money - learn how to make your money work hard for you!
Are We Investors or Psychologists?
As trend followers, we constantly keep an eye on major market trends. Recognizing major trends enables us to adjust our portfolio so we are always ‘on the right side of the market.’ That makes a huge difference to our bottom line over years and years of investing.
To identify major market trends, we look at long term price charts. By ‘long term’ we mean weekly and monthly price charts. Using long term charts give us a big picture of the market and makes it simple and easy to spot major trends.
But what are we looking at when we look at the charts? Well, we can see how prices are moving, how long they’ve been moving and how many buyers/sellers are moving them. But what are we really seeing? We are reading people’s emotions.
Price movement, price direction and the numbers of buyers/sellers that are printed out on our charts are direct reflections of basic human emotions:
> When markets are ripping higher and volume is huge, we are seeing greed displayed by investors.
> When prices are plummeting and volume is soaring, fear has gripped investors.
> When prices are moving sideways with normal or lesser volume, we are witnessing investor complacency or indifference or a ‘wait and see’ attitude.
There are many other types of price action we see on our charts: pullbacks, corrections, consolidation, break-outs and gaps to name a few. But they too are reflections of investors’ emotions: caution, calm, elation and surprise…to name a few. These emotional responses change as new market information becomes available.
In essence, our charts let us peer into the souls of other investors like a psychologist uses Rorschach inkblots to understand his patients. When a majority of patients (investors) are greedy, bull markets are created and perpetuated; when the majority are fearful, bear markets are created and perpetuated. Bull and bear markets are the major trends we look for when making portfolio decisions that keep us in line with the markets.
What about all of the new mechanical investment systems and computerized trading algorithms that are involved in the markets nowadays? Could you make the case that not all price movement on our charts is the result of human emotion? Maybe…until you consider that humans created these systems and algos for a reason: greed!
Human emotions are funny things, but they make the markets that make up our 401(k)s and IRAs. Don’t ignore them – keep an eye on them with your charts!!
NEWS YOU CAN USE
"Vanguard's McNabb Said Cost
of Investing Will Keep Falling"
"300 Global ETFs to Get Morningstar Ratings"
"iShares Family of ETFs to See Lower Fees"
"Fidelity Freedom Funds: Convenience Comes at a Cost" from The Motley Fool
"What Boomers Have Learned About Retirement Saving" from Money
VIEWS YOU CAN USE
"The Case Against Traditional Indexes"
"7 Retirement Planning Steps Late Starters Must Take"
"Bogle Says Index Investing No Threat to Market Efficiency" from Bloomberg
"Aspect's Anthony Todd Says the Trend is Your Friend" from Financial Review
"Dividend ETFs: The 5 Best Ways to Collect Income"
Fall Reading List
The days are getting shorter - why not take advantage of the longer evenings by boning up on your investment know-how!
These 4 books are sure to help!!
>>>>> And just so you know:
Clicking on these book images takes you to Amazon.com via our affiliate link. You won't pay a penny more for what you buy, but we do get a few coins for sending you there - and that helps us cover the costs of keeping our website running free!
Here are a couple of very simple retirement calculators courtesy of our friends over at Calculator Pro.
Here are the figures we used:
> Required Annual Income: we put in what we're making now (we don't buy into that "plan to spend 70% of your working income in retirement" idea!)
> Years until Retirement: we shot for age 65, but who really knows, right?
> Years after Retirement: we sure hope to have 20 good years of doing what we want to do!
> Annual Inflation: we used 3.5% (maybe go a tad higher to be safe?)
> Annual Return on Balance: we used 7% (maybe go a tad lower to be safe?)