CSMS Magazine Staff Writer
After months of cruising America’s heartland, Andrew Robbins is back with the same refreshing analyses on the economy. CSMS Magazine is overly excited to be able to offer to the readers something they have been asking for in a long time. The article is below.
This article is written monthly and intended for the novice investor. It is my belief the reader will achieve success when she/he is making decisions that are best for their family. If you are a frequent reader you realize that I beat the same drum over and over until you incorporate one or two of my ideas and in the long run I bet that you will be a successful investor, trader, or speculator.
Through these articles I share a methodology that may increase the reader’s speculative or investor gain. And yes, I both invest and trade real money/stocks. Readers are encouraged to seek out and employ their own professional investment advisor or search out other plans that when combined may enhance their financial goals.
This summer I attended my 45th high school reunion. A recent retiree provided the following written comment to her classmates, “I hope I do not out live my retirement savings.” Interesting comment, for not only do we plan to save for the first car, first home, children and their education, but also end of life issues. From the moment one learns the value and need to manage capital the bells and whistles should sound, ‘Oh, how do I grow it?’ Yet for the majority of our society they share little desire to learn economics and its impact on their lives.
We read the economies of China and South American are growing at a fast pace. If one listens to conference calls or reads filings, we learn corporations that embrace global growth are exiting China while expanding in Viet Nam and India. It should be obvious that stable African governments/countries are on the global employers’ radar.
As I write this article the press is reporting, “Slower US job growth and income gains; the faltering economy may get another blow from spending cuts negotiated in Congress; monthly unemployment claims are over two million. The US lost its’ triple ‘A’ rating and commentators suggest US debt is junk status.” Sixty-million retirees did not receive a cost of living allowance. Yet, eighty percent of the workforce never felt the impact of the current recession/slowdown. Factor in the $32 per hour retiring factory worker and the $16 per hour replacement and one cannot visualize how workers will sustain governments, utilities, medical, and all other forms of monopolies.
The above paragraph is a simplistic brief description of the minefield investor/speculator venture into.
One of my basic rules for investing, ‘keep some money back’. The August stock sell off was a wonderful opportunity for the speculator to ‘ladder in’ and make multiple stock purchases. Ladder in, suggest the speculator purchases/buy as the stock price moved lower. We never know where or if the market bottoms/tops, we purchase/sell additional shares as price erodes or rises.
Markets struggle between greed and fear. Either extreme often result in significant price change. Factor in algorithmic trading (you against the machines) and you abound in what I call guerilla warfare. An investment rule derived from the readings of Ho Chi Minh or Che Guevara and embraced and practiced by me, as one engages the market, it demands you wait for the indexes to move toward your entry/exit point. Don’t chase, let the market come to you.
Throughout August you enjoyed ‘Stocks on Sale’. The next challenge, when to dump or take profits, for we always need to keep a few dollars ready for the next sale. If you followed previous suggestions and as I write the indexes have moved higher you now are confronted by the most difficult decision. When do you take profits? The answer is quite simple if you laddered in, ladder out.
Please remember, making a career of bottom picking or top prediction is a short lived profession.
Review the Trading Plan: My trading plan is quite simple. Readers should keep as much as 50% of your investment cash at the ready. As the market indexes dropped over 10%, stocks were on sale. One never buys all at once, rather as the market drifts lower your reserve dollars stand by to purchase new lows.
At some point the market will edge higher and you are faced with the decision, “Is it a trade or an investment?”
Investment rules include:
1.) Invest in companies that report profits and declare dividends.
2.) Look at the charts. Find points of support (floor) and resistance (ceiling).
3.) Listen/read conference calls.
4.) Never invest all your capital in a single trade.
5.) Do your own research. Never blindly follow the media’s headline.
And please remember, we make more money when our US neighbors are employed. The next election is all about JOBS, JOBS, where in the hell are the JOBS? If you reelect the same people one should not be surprised if things get worse.
Note: This magazine and the author are not in the business of providing financial services or advice. Prior to investing, readers must seek and pay for their own professional assistance.
Andrew Robbins is author and also a contributor to The Morning Eyes www.themorningeyes.com .