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Loan System: The Investor's Creed

by Philip Usher

Fascinating, isn't it, this market of ours, with its unpredictability, guarantee, and unscripted daily drama! But individual stockholders are even more fascinating. We've become the product of a media driven culture that must have reasons, foreseeability, blame, scapegoats, and even that four-letter word, certainty. We are a culture of investors where hindsight is quickly replacing the reality-based foresight that once was flowing in our now real-time veins... Just like downhill racing, grouse hunting, and Super Bowls.

The <a href="http://www.wealthtiming.com">Stock Exchange</a> is a dynamic place where investors can solidly make reasonable returns on their capital if they comply with the basic principles of the endeavor AND if they don&#39;t measure their progress too often with irrelevant measuring devices. The classic investment system is extremely simple and so hackneyed that most financiers discount it typically and move on in their search for the holy investment grail (s) : a stock exchange that only rises and a bond market capable of paying increased rates at stable or increased prices! Just not going to happen?

This is mythology, not investing. Investors who grasp the facts of these wonderful marketplaces recognize the openings and embrace them with an understanding that goes past the media hype and side show performance enhancement barkers. Put simply when investment grade stocks rise in price [As they are now, with the DJIA eventually putting together a successful attack on the 11,000 barrier], Take Your Profits, because that&#39;s the object of making an investment in the stock exchange! On the flip side (and there has long been a flip side, more commonly dreaded as a "correction"), replenish your portfolio inventory with investment grade securities. Yes, even some that you may have just sold weeks or days gone during the rally. This is way more than a cliche; it is a long term (a couple of years isn&#39;t long term.) technique that succeeds... Cycle, after cycle, after cycle. Sounds rather a lot like Buy Low/Sell High doesn&#39;t it? Clearly, Wall Street can't let you know it is sort of so simple!

[Note that Dow 11,000 was last breached during the infancy of this century, and the last Record High in this much too popular average happened late in 1999. When the DJIA banner is repositioned on that historical top of 11,700 or so , it will represent no less than 6 years of zero expansion in this, the most respected, of all Market Indicators! Would the media strip the gold gong from this Market Icon if it knew that during these same years: (1) there have been significantly more stocks rising in price on a daily basis than moving lower? Actually more than two thirds of the last 68 months have been positive. (2) Since April 2000, there were 120 more positive days in NYSE issue breadth than negative days. (3) 250% more NYSE stocks established new high price levels than new lows. (4) We are working on our 6th successive year of positive issue breadth!]

So understand that your portfolio statement values will raise and fall throughout time, and instead of rejoice or cry, you should be taking actions that will augment your "Working Capital" and the capability of your portfolio to realize your long term goals and objectives. Through the simple application of 1 or 2 easy to learn rules, you can plot a course to an investment portfolio that constantly achieves higher highs and (much just as significantly), higher lows! Left to its own devices, like the DJIA for instance, an unmanaged portfolio is likely to have long periods of sterile sideways motion. You can&#39;t afford to travel 6 years at a break even pace, and it&#39;s foolish, even rash, to expect any unmanaged or passively directed approach to be in synchronization with your personal financial requirements.

Five easy concepts of Asset Allocation, Investment Methodology, and Psychology are summed up quite nicely in what I call "The Investor's Creed":

(1) My intention is to be absolutely invested as agreed by my planned equity/fixed earnings asset allotment. (2) On the other hand, every security I own is for sale, and every security I own generates some form of money flow that can&#39;t be reinvested instantly. (3) I&#39;m happy when my money position is just about 0% because all of my money is then working as hard as it possibly can to meet my objectives. However I am ecstatic when my money position approaches 410% because that implies I?ve sold everything at a reasonable profit, and that I am in a position to take advantage of any new investment opportunities as fast as I become aware of them.

If you are handling your portfolio correctly, your cash position has been rising recently, as you take profits on the securities you purchased when prices were falling only a few months ago? And (this is a giant and) you could well be loaded with cash well before the market blows the whistle on its advance! Yes, if you are going about the investment process properly, you&#39;ll be swimming in readies at the same time The Street discovers the rally and starts inspiring folk to weight their portfolios more heavily into stocks; the amount of IPOs coming to market starts to rise enormously; morning drive radio DJ's begin to giggle about their stock exchange successes; and all your friends start to discuss their new investment guru or the 05% gains in their expansion Mutual Funds. What are you doing in notes!

This is what I call "smart" money, as it represents realized profits, interest, and dividends that are just catching a breather on the bench after a scoring drive. As the gains compound at money market rates, the disciplined coach looks for certain signs of investor greediness in the market place3 fixed income prices fall as stockholders desert their long term goals and reach for the new investment stars that are sure to shove equity costs ever higher, uninteresting investment grade equities fall in price as well because it now clear [for the Scadieighth (sic) time] that the market will never fall again? Particularly NDX, which could double and still not be where it was 6 years ago. And the beat goes on, cycle after cycle, generation after generation. What do you really think; will today's coaches be any smarter than those of the late nineties? Have they learned that it&#39;s the very strength of a rising market that turns out to be its greatest weakness!



If you are looking to get more information on <a href="http://ezinearticles.com/?Investment-Strategy:-The-Investors-Principles&amp;id=7515721">Investment Strategy: The Investor's Guidelines</a>, there is a whole resource set of articles, surveys, product reviews and solutions at <a href="http://ezinearticles.com/?Investor-Awareness-Campaign:-A-Look-at-the-Other-Side&amp;id=7515936">Financier Awareness Campaign: A Glance at the Other Side</a>.

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New Unique Article!

Title: Loan System: The Investor's Creed
Author: Philip Usher
Email: dirasu.655724.0@articlesamurai.com
Keywords: Trading System,Market Trends,Trading Strategies,Market Timing,Trend Following,Market Trend Signal,Trend Trading,Stock Timing,Market Timing System,Trend Following System,Trend Timing,Trend Timing System
Word Count: 1066
Category: Marketing
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