Home of Grace Groner, secret millionaire
It’s hard to be a buy and hold investor in this economic condition. We’ve seen major companies get bailed out, or evaporate like a pool of water on a hot summer day.
But think what it was like to be a buy-and-holder in 1935, the depths of the Great Depression. That’s when Grace Groner spent $180 on three shares of her employer’s stock. Over the next seven decades, those shares in Abbot Laboratories split many times and she reinvested the dividends, too.
And guess how much she ended up with when she passed away in January?
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Investing, Money, Online Investing AI, Success, US Economy
buy-and-hold, invest, Investing, lessons, millionaire, millionaire next door, rich, Success, wealth
pic by dizznbonn via Flickr Creative Commons
The trader’s Catch 22 is that high risk can lead to high returns. Oh, and high risk can also lead to devastating losses.
But the great trading dilemma is to figure out how much return you’ll receive for the risks you take. One way to estimate this risk-reward ratio is by using the Sharpe ratio.
The Sharpe ratio is named after Nobel-prize winning economist William Sharpe.
The ratio is calculated by subtracting the risk-free rate – such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the returns.
This may sound a little complicated, but compared to other ways of determining risk, the Sharpe Ratio is a snap.
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Automated Trading, Investing, Money, Online Investing AI
Automated Trading, invest, money management, risk, sharpe ratio, smart investing, strategy, trading, wealth
It’s a new world.
Trust in financial companies… down.
Interest in saving money and frugal living… up.
Desire to break free of the shackles and chains of indebtedness? That’s at an all time high!
When it comes to personal finance, brothers and sisters are doing it for themselves. Here are some posts and articles that will help you do it for yourself.
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Accelerating Technology, Business Strategy, Internet, Investing, Money, Online Investing AI, US Economy
diy, do it yourself, invest, Money, saving, spending, wealth, weekly wisdom, wrapup
Investing always involves some risk. But, this was ridiculous.
The investors were betting on a company that didn’t even have a product. They had a few ideas. Maybe they would trade commodities, like grain or tobacco. Maybe they would trade precious metals–that move paid off for some Spanish entrepreneurs.
Some of the investors weren’t impressed with the entrepreneurs or their management, either. Oh, they were visionaries alright. They had a glorious elevator pitch: they weren’t just going to create a new industry; they were going to create a new world. But they had a habit of pissing people off. They were a bunch of separatists, actually.
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Dreams Come True, Investing
company, indians, invest, Investing, pilgrims, thanksgiving
Brent and Marilynn @ Flickr
We know that George Washington was the father of our country. But was he also the father of Trend Following investing?
OK. That may be pushing things a little bit, but if you examine the career–especially the military career–Washington did use some essential techniques of great trend followers, like Rich Dennis.
Trend following is an investment strategy that couples risk minimization with return maximization. It does so through a couple key market insights:
- Identify opportunities
- Preserve capital
- Limit risk
- Let your profits run.
Let’s see how some of Washington’s campaigns match up with the trend following philosophy.
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Accelerating Technology, Business Strategy, Dreams Come True, Investing, Money, Online Investing AI, Success, US Economy
history, invest, Investing, profits, trend following, washington
Joe Schlabotnik @ Flickr
If you make, invest, and spend wisely, we suspect you’ll make a lot of money. And, if you continue to reinvest this money.
It’s going to continue to grow.
And that amount can be pretty dramatic. That’s what we revealed in yesterday’s post on yesterday’s post on the Eighth Wonder of the World: Compound Interest. If you use this power of compounding, the possibility of your investment doubling (and more) increases.
But, you may want to know exactly how much it is going to grow. To estimate that figure easily, all you need to do is master the secret of 72.
If you have invested a certain amount of money at a certain interest rate and would like to know how long it will take to double, you just use the secret number and plug it into the following equation:
Take 72 divided by your interest or return rate and that equalls the number of years (or months or days!) it will take to double.
Let’s take a look at it in action.
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Business Strategy, Investing, Money, Online Investing AI
72, compound interest, invest, Investing, return
No, the headline of this post is not the answer to the question: “What three investment strategies don’t go together?”
Critics out there are likely saying that they can see the connection between Automated Trading and Trend Following, but how does Buy and Hold fit in. After all, Buy and Hold is for rigid, risk-averse investors. Buy and Holders would never get involved with Automated Trading and Trend Following is too much bother.
If you’ll give me a little time, I can show you how Automated Trading, Trend Following, and Buy and Hold strategies are actually complementary.
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Business Strategy, Online Investing AI
Automated Trading, buy-and-hold, invest, Investing, Money, trend following
Rennett Stowe's pick @ Flickr
Patience is a virtue.
It’s not a virtue when it comes to finances. Since Americans are among the least financially educated people in the world, they often refer to financial procrastination in far more positive terms–like caution. They offer “safety” as one excuse of why they aren’t investing. These excuses go a little like this:
“I’m waiting for the market to settle.”
“It’s too volatile at this point.”
It makes it sound like they have a plan, right?
Other people believe that they have an unlimited amount of time for investing. Why do today what you can put off to tomorrow?
Both of these assumptions are wrong. Financial procrastination can keep you away from personal financial freedom.
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Business Strategy, Investing, Money, Online Investing AI, US Economy
caution, financial procrastination, income, invest, Investing, procrastinate, safety, trading
Mozzecork photo@Flickr
It was one of those perfect English autumnal days which occur more frequently in memory than in life.
~P.D. James
Last September was a doozy. The feds swept in and seized Fannie Mae and Freddie Mac, while the market didn’t so much swoon as do a full-blown pancake on a hot cement sidewalk.
But, according to Wall Street historians, September and October are always pretty bad for making money in the market. Of course, the Great Depression kicked off in October. But that’s just the start of autumn’s financial malaise.
- Black Monday hit on Oct. 19, 1987
- The panics that made up the Great Depression–Black Thursday, Friday, Monday and Tuesday–all occurred in on October of 1929.
- There were panics in September 1869 and September 1873, Then there was the sell-off following the Sept. 11 attacks.
It’s a pretty impressive line up of evidence, right? But does that make it a curse?
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Automated Trading, Investing, Online Investing AI
autumn curse, bias, invest, Investing, Louis Navellier
Media bias is a well known theory in the political realm. The writers and reporters who bring you information and news can’t help not sliding some of their political or philosophical bias into their articles and news reports.
If a reporter has a liberal bent, so will his or her article. Conservative news outlets offer that point-of-view.
Where investors run into trouble is when they believe the bias only relates to political news. As they consume the information, or absorb it, they let it alter their perceptions of reality and how they react to that reality.
However, media bias can cause–and is causing–an effect on your portfolio and your returns.
Here are a few ways how media bias can cause financial bias.
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Investing, Money, Online Investing AI, US Economy
bias, invest, Investing, investing bias, media
is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
