The stock market in India has turned highly volatile of late. A tremendous rise in points in one day is bringing a heavy downfall the very next day. This high degree of volatility has made the life of investors miserable as they are incurring massive speculative losses. In this crucial juncture, effective share tips have become the need of the hour.
Before venturing into share trading, novices should have a complete understanding of the specific terminology of this business. It is imperative to understand the intricacies of stock trading, so that you can judge the market and its functioning to perfection. Similar to any form of investment, more and more knowledge about share trading can boost your chances of tasting success. One way to expand your knowledge base is to acquire good trading tips from seasoned investors, traders, trade magazines and numerous online stock research and advisory companies.
Online research and advisory companies having a formidable relationship with countless stock market brokers and traders offer you vast amounts of information in the form of option tips, nifty tips and intraday tips. They generally carry out extensive research on share market by revolving around company news, economy news, fundamental analysis and technical analysis.
Option trading is a derivative instrument that involves the trading of options over an exchange. In place of trading stocks, traders trade the options presented with these stocks. Options are available in two categories like call options (options to buy) and put options (options to sell). Option trading is frequently confused with futures trading. But, both are completely different having their own distinct characteristics. The use of limitless option tips can open the door to richness for you can derive substantial profits from both upward and downward movement of the market or even when the inherent stock remains stagnant. Option trading with effective strategies can provide you exemplary protection against loss, exemplary potential for profits and exemplary flexibility even in an adverse situation.
Intraday trading, on the other hand, refers to a position in a security that is opened and closed in the same trading day. Though it appears to be quite straightforward and remunerative, traders need to be highly alert and agile to the latest developments. Therefore, there are certain intraday tips that must be kept in mind always. For example, it is not obligatory that a stock running weak today at the time of intraday trading might bear the same fate tomorrow as well; similarly, a stock is going strong now might not be the same tomorrow. Another important trading tip is trade in stocks with high liquidity all the time i.e. that feature huge volume since entry and exit can turn out to be very quick in such stock shares.
Share tips can lend a helping hand to all those investors and traders who fail to make money in the stock market due to short of knowledge, experience and strategy. Using these tips, they can become smarter and churn out money in both ascending and descending market.
Sunday, August 1, 2010
Nifty Tips for You
The stock market is one of the best places to invest your money in. People have both earned and lost a lot of money online. The stock market is a place where knowledge is power and knowing when and where to spend your money can be the difference between earning money and losing it. Here are some Trading Tips if you're a new investor, or even if you're a seasoned buyer looking for a new trick or two.
To start off with, finding Intraday Tips can be quite hard. In case you're not ready to spend a lot of time researching the share market, then it's better off if you apply for a good online site that can provide you with buy and sell tips that are delivered promptly to you. These sites will probably provide Option Tips as well.
With that said, it's imperative to understand the stock market before you can really begin trading. The NSE [National Stock Exchange] is certainly not a place you can enter without knowing what's happening. Very simply put, you earn money by selling stocks at a price higher than the one which you bought them at. This is tricky because the prices are constantly fluctuating, and predicting them takes extensive research, which is why most people prefer to just go with an online database that provides Share Tips.
Basically, buying takes place at four price points or times in the day. These are the price at opening, the intraday high price, price at closing and the intraday low price. The very first step is to decide the company whose shares you want to purchase. You then need to research and understand the environment in which they function. Placing some consideration on the segment also helps, as the prices in different segments fluctuate differently.
Try and invest in a company that has a diverse portfolio. Liquidity loss is greatly reduced in such a situation and this can really be a deal breaker. Be very cautious if you wish to invest in a company that has had a reputation of being relatively inactive for extended periods of time. These may result in you losing a lot of money, and in general, it's just best to not invest in them altogether. Look for a company that is constantly listed and active.
When you are studying the company's portfolio, pay more attention to the long term plans. Short term plans rarely stay constant, and should not be a deciding factor. Long term plans on the other hand can completely alter how a company's stocks are affected. The management is also something to look at. A bad public image, chances of any setbacks, impending disaster, all these are things to be avoided like the plague. Apple recently faced a large dip in share prices due to the fiasco of one of their smartphones' reception problems.
Overall, the share market can be a great place to trade if you are careful how you do it. Trade smart, and you can easily make a living out of it.
To start off with, finding Intraday Tips can be quite hard. In case you're not ready to spend a lot of time researching the share market, then it's better off if you apply for a good online site that can provide you with buy and sell tips that are delivered promptly to you. These sites will probably provide Option Tips as well.
With that said, it's imperative to understand the stock market before you can really begin trading. The NSE [National Stock Exchange] is certainly not a place you can enter without knowing what's happening. Very simply put, you earn money by selling stocks at a price higher than the one which you bought them at. This is tricky because the prices are constantly fluctuating, and predicting them takes extensive research, which is why most people prefer to just go with an online database that provides Share Tips.
Basically, buying takes place at four price points or times in the day. These are the price at opening, the intraday high price, price at closing and the intraday low price. The very first step is to decide the company whose shares you want to purchase. You then need to research and understand the environment in which they function. Placing some consideration on the segment also helps, as the prices in different segments fluctuate differently.
Try and invest in a company that has a diverse portfolio. Liquidity loss is greatly reduced in such a situation and this can really be a deal breaker. Be very cautious if you wish to invest in a company that has had a reputation of being relatively inactive for extended periods of time. These may result in you losing a lot of money, and in general, it's just best to not invest in them altogether. Look for a company that is constantly listed and active.
When you are studying the company's portfolio, pay more attention to the long term plans. Short term plans rarely stay constant, and should not be a deciding factor. Long term plans on the other hand can completely alter how a company's stocks are affected. The management is also something to look at. A bad public image, chances of any setbacks, impending disaster, all these are things to be avoided like the plague. Apple recently faced a large dip in share prices due to the fiasco of one of their smartphones' reception problems.
Overall, the share market can be a great place to trade if you are careful how you do it. Trade smart, and you can easily make a living out of it.
Annuity Payment
There are many financial institutions that offer cash for annuity payment. They will give you lump sum cash in exchange for your annuity. Annuity is a financial investment that many people make either in single lump sum or through installments, which can be completed in 20 to 25 years.
After the completion of payment, the company from which you paid annuity premiums will pay you for your entire life or for a fixed number of years, either monthly, quarterly, semi-annually and annually a fixed sum.
Annuity is a good investment to secure your future after retirement. But there are times in your life where you face emergency situations that require the use of immediate cash. Maybe you have set aside sufficient funds for emergency uses.
Depending on the nature and gravity of the situation, you may run out of cash. If you have no other savings to use, or if your non-emergency savings are not enough, you may have the option of selling your annuity payments.
Having an emergency situation is not the only reason why you may consider converting annuity payments into cash. Many people sell their annuity investment in order to purchase a real estate property, a dream car, venture into business, or to finance an education.
There are institutions which offer the services of purchasing the payments you have made for your annuity, and this can solve your immediate financial worries. Annuities, though may serve a significant role in meeting your plans, they are not flexible and capable of solving immediate financial problems.
In the United States of America, more than thirty state governments decided that their residents should have access to this important resource and allow for the smooth transfer of the annuitant's rights to receive payments when it is deemed to be in his best interest.
In all fifty United States, you are able to convert your payments into cash. If you are interested in this undertaking, you may get a free annuity analysis provided by the institutions.
Some financial institutions buy other annuities such as non-structured insurance annuities, single premium immediate annuities, and investment annuities.
Cash for annuity is flexible. You have the option of choosing the number of payments you would like to sell, the funding company that will provide for your lump sum payment, and several options for payment.
Normally, after you have submitted your information, it will take 6 to 8 weeks for you to cash in your annuities. Many financial institutions will bid for your payments, and they will offer you more flexible terms and payment options.
You have to bear in mind though that the lump sum you will receive from financial institutions for annuity payment will be lower than what you would have received once your premium payment matures. This is one way that financial institutions earn their profit.
After the completion of payment, the company from which you paid annuity premiums will pay you for your entire life or for a fixed number of years, either monthly, quarterly, semi-annually and annually a fixed sum.
Annuity is a good investment to secure your future after retirement. But there are times in your life where you face emergency situations that require the use of immediate cash. Maybe you have set aside sufficient funds for emergency uses.
Depending on the nature and gravity of the situation, you may run out of cash. If you have no other savings to use, or if your non-emergency savings are not enough, you may have the option of selling your annuity payments.
Having an emergency situation is not the only reason why you may consider converting annuity payments into cash. Many people sell their annuity investment in order to purchase a real estate property, a dream car, venture into business, or to finance an education.
There are institutions which offer the services of purchasing the payments you have made for your annuity, and this can solve your immediate financial worries. Annuities, though may serve a significant role in meeting your plans, they are not flexible and capable of solving immediate financial problems.
In the United States of America, more than thirty state governments decided that their residents should have access to this important resource and allow for the smooth transfer of the annuitant's rights to receive payments when it is deemed to be in his best interest.
In all fifty United States, you are able to convert your payments into cash. If you are interested in this undertaking, you may get a free annuity analysis provided by the institutions.
Some financial institutions buy other annuities such as non-structured insurance annuities, single premium immediate annuities, and investment annuities.
Cash for annuity is flexible. You have the option of choosing the number of payments you would like to sell, the funding company that will provide for your lump sum payment, and several options for payment.
Normally, after you have submitted your information, it will take 6 to 8 weeks for you to cash in your annuities. Many financial institutions will bid for your payments, and they will offer you more flexible terms and payment options.
You have to bear in mind though that the lump sum you will receive from financial institutions for annuity payment will be lower than what you would have received once your premium payment matures. This is one way that financial institutions earn their profit.
Thursday, July 1, 2010
Investing Mistakes
When it comes to investing-it's a risky business. Just like gambling you never really know what you're going to wind up with or how successful you'll be. However, with great risk comes great reward and many investors realize this early on. In order to minimize your risk as much as possible it's a good idea to avoid any potential mistakes that you could fall into. Here are the 3 mistakes you can't afford to make.
Mistake #1 - Getting started without first knowing the basics. If you're brand to investments then you'll want to brush up on some basic knowledge first. Simply handing your money over to a brokerage firm or finding your way in the dark is a great way to go broke fast. That being said, taking the time and effort to actually learn about how to be a good investor is extremely important for being successful. Jumping in as soon as possible without any background knowledge can only leave you discouraged and broke.
Mistake #2 - Ignoring the urgency of diversifying. Many people blindly begin to invest in whatever they think will have a decent return and maybe in the short term this is a good idea, depending on your goals. However, long term speaking it's a better idea to diversify your assets and get your fingers in a lot of different things. This is a great way to protect against losses and increase performance over a longer period of time.
Mistake #3 - Making investments without a clear goal. This is a major mistake that many beginners make. Not having a clear goal or objective for your portfolio is a sure fire way to be perpetually distracted and passive about your investments. Make sure you have a clear and set goal along with a deadline to have your goal completed by. This will help keep you on track and working towards your objective.
Investing is a terrific way to grow your money and get a good return but always try to think outside the box and see where else you can increase your financial growth. It's also important to remember not to make other mistakes that can be easily avoided. Always make sure you do your research on new investments and minimize your risks at all times to make sure you reduce the potential losses from a poor decision. Through being smart with your investments and avoiding these mistakes you can have great long term success.
Mistake #1 - Getting started without first knowing the basics. If you're brand to investments then you'll want to brush up on some basic knowledge first. Simply handing your money over to a brokerage firm or finding your way in the dark is a great way to go broke fast. That being said, taking the time and effort to actually learn about how to be a good investor is extremely important for being successful. Jumping in as soon as possible without any background knowledge can only leave you discouraged and broke.
Mistake #2 - Ignoring the urgency of diversifying. Many people blindly begin to invest in whatever they think will have a decent return and maybe in the short term this is a good idea, depending on your goals. However, long term speaking it's a better idea to diversify your assets and get your fingers in a lot of different things. This is a great way to protect against losses and increase performance over a longer period of time.
Mistake #3 - Making investments without a clear goal. This is a major mistake that many beginners make. Not having a clear goal or objective for your portfolio is a sure fire way to be perpetually distracted and passive about your investments. Make sure you have a clear and set goal along with a deadline to have your goal completed by. This will help keep you on track and working towards your objective.
Investing is a terrific way to grow your money and get a good return but always try to think outside the box and see where else you can increase your financial growth. It's also important to remember not to make other mistakes that can be easily avoided. Always make sure you do your research on new investments and minimize your risks at all times to make sure you reduce the potential losses from a poor decision. Through being smart with your investments and avoiding these mistakes you can have great long term success.
Bullion Investments
Official figures out show gold bullion prices have risen for yet another day as people continue to get jittery over exactly how much their paper money will continue to be worth. Fears over mounting debt in the western world have fuelled a demand for gold and precious metals that mean prices have climbed 13 percent this quarter - the most since 2007. If you are looking at gold bullion investments, will buying gold bullion alone protect your wealth?
The facts are difficult to ignore: amid the fanfare that the worst of the recession is over, American companies did not increase their workforce as much as predicted and some reports show that business expansion actually slowed compared to last month. Seen as a sign that the US workforce is struggling, this provoked a desire to protect wealth in the face of an uncertain economy, and many turned to gold bullion.
Historically, it has been proven that gold bullion has the ability to ignore global recessions and does well when other forms of investments fail. It has soared in value when currencies fall and grows from strength to strength in times of high inflation.
We are living in uncertain and unprecedented times. The riots in Greece over currency devaluation has provoked fear and it is only natural that people turn towards the one thing that has stood the test of time in not only increasing their wealth but also protecting it.
In the light of the above, one could argue a very strong case that gold alone is the best wealth protector and you should go all out to increase gold bullion investments. However, I would like to point you towards wealth creation alongside wealth protection - one that can even produce in these uncertain times.
The internet explosion has opened up multi-million dollar industries. Having had this technology unleashed into the world, there is no going back - there will never be a time in the future where the internet will pass away as 'a phase'. Increasing technological inventions will continue to bring new visions and ideas to a computer near you - whatever that may look like. This in itself will continue to open up many more million dollar opportunities.
Protecting your wealth also means finding new ways of increasing your wealth. If you knew there was a key that would open the door into a prosperous future, would you take it? Would you be prepared to invest your time and money in learning new knowledge that would equip you to survive a volatile work market for many years to come?
The facts are difficult to ignore: amid the fanfare that the worst of the recession is over, American companies did not increase their workforce as much as predicted and some reports show that business expansion actually slowed compared to last month. Seen as a sign that the US workforce is struggling, this provoked a desire to protect wealth in the face of an uncertain economy, and many turned to gold bullion.
Historically, it has been proven that gold bullion has the ability to ignore global recessions and does well when other forms of investments fail. It has soared in value when currencies fall and grows from strength to strength in times of high inflation.
We are living in uncertain and unprecedented times. The riots in Greece over currency devaluation has provoked fear and it is only natural that people turn towards the one thing that has stood the test of time in not only increasing their wealth but also protecting it.
In the light of the above, one could argue a very strong case that gold alone is the best wealth protector and you should go all out to increase gold bullion investments. However, I would like to point you towards wealth creation alongside wealth protection - one that can even produce in these uncertain times.
The internet explosion has opened up multi-million dollar industries. Having had this technology unleashed into the world, there is no going back - there will never be a time in the future where the internet will pass away as 'a phase'. Increasing technological inventions will continue to bring new visions and ideas to a computer near you - whatever that may look like. This in itself will continue to open up many more million dollar opportunities.
Protecting your wealth also means finding new ways of increasing your wealth. If you knew there was a key that would open the door into a prosperous future, would you take it? Would you be prepared to invest your time and money in learning new knowledge that would equip you to survive a volatile work market for many years to come?
Double Digit Return
In any real estate market imagine earning 10% to 18% and often much more on your investment. Most investments will fluctuate in value, have a low rate of return or are affected by market trends. But there are investments that do keep their value and generate a high interest rate of return for the investors. These investments are known as Tax Lien Certificates and until recently were dominated by institutional investors, savvy investors, wealthy investors and occasionally novices. Many of these investors eventually got the houses or properties associated with the tax lien certificates for "Pennies on the Dollar" through a tax deed (a byproduct of tax certificate ownership).
Tax lien certificates are nothing more than unpaid property taxes that generate a very high interest rate of return to the investors buying them. But they have made many investors extremely wealthy and provided a very comfortable lifestyle. The biggest problem though is very few people know how to capitalize on the existence of a tax certificate. Everyone has heard the saying "Knowledge is Power" and it is very true, especially when you are investing your "nest egg" or money needed in the future. The previously described investors do not want this knowledge brought to everyone's attention because this would cut into their bottom line.
The internet has opened up the ability for anyone interested in learning more about investing in tax liens and tax deeds to do their own searches. Also, there are many tax certificate investors that have opened niche markets to help the novices buy tax certificates for themselves.
Tax lien certificates are nothing more than unpaid property taxes that generate a very high interest rate of return to the investors buying them. But they have made many investors extremely wealthy and provided a very comfortable lifestyle. The biggest problem though is very few people know how to capitalize on the existence of a tax certificate. Everyone has heard the saying "Knowledge is Power" and it is very true, especially when you are investing your "nest egg" or money needed in the future. The previously described investors do not want this knowledge brought to everyone's attention because this would cut into their bottom line.
The internet has opened up the ability for anyone interested in learning more about investing in tax liens and tax deeds to do their own searches. Also, there are many tax certificate investors that have opened niche markets to help the novices buy tax certificates for themselves.
Tuesday, June 1, 2010
Investment Strategy
Fascinating, isn't it, this stock market of ours, with its unpredictability, promise, and unscripted daily drama! But individual investors are even more interesting. We've become the product of a media driven culture that must have reasons, predictability, blame, scapegoats, and even that four-letter word, certainty. We are a culture of investors where hindsight is rapidly 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 Stock Market is a dynamic place where investors can consistently make reasonable returns on their capital if they comply with the basic principles of the endeavor AND if they don't measure their progress too frequently with irrelevant measuring devices. The classic investment strategy is so simple and so trite that most investors dismiss it routinely and move on in their search for the holy investment grail(s): a stock market that only rises and a bond market capable of paying higher interest rates at stable or higher prices! Just not going to happen…
This is mythology, not investing. Investors who grasp the realities of these wonderful marketplaces recognize the opportunities and embrace them with an understanding that goes beyond the media hype and side show performance enhancement barkers. Simply put, when investment grade securities rise in price [As they are now, with the DJIA finally putting together a successful attack on the 11,000 barrier], Take Your Profits, because that's the purpose of investing in the stock market! On the flip side (and there has always 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 days or weeks ago during the rally. This is much more than an oversimplification; it is a long-term (a year or two is not long term.) strategy that succeeds... cycle, after cycle, after cycle. Sounds an awful lot like Buy Low/Sell High doesn't it? Obviously, Wall Street can't let you know that it is quite so simple!
[Note that Dow Jones 11,000 was last breached during the infancy of this century, and that the last All Time High in this much too widely followed average occurred late in 1999. When the DJIA banner is repositioned on that historical peak of 11,700 or so, it will represent no less than six years of zero growth in this, the most respected, of all Market Indicators! Would the media strip the gold medal from this Stock 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. In fact, more than two-thirds of the last 68 months have been positive. (2) Since April 2000, there have been 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 sixth consecutive year of positive issue breadth!]
So understand that your portfolio statement values will rise and fall throughout time, and rather than rejoice or cry, you should be taking actions that will enhance your "Working Capital" and the ability of your portfolio to accomplish your long term goals and objectives. Through the simple application of a few easy to memorize rules, you can plot a course to an investment portfolio that regularly achieves higher highs and (much more importantly), higher lows! Left to its own devices, like the DJIA for example, an unmanaged portfolio is likely to have long periods of unproductive sideways motion. You can ill afford to travel six years at a break even pace, and it is foolish, even irresponsible, to expect any unmanaged or passively directed approach to be in sync with your personal financial needs.
Five simple concepts of Asset Allocation, Investment Strategy, and Psychology are summed up quite nicely in what I call "The Investor's Creed":
(1) My intention is to be fully invested in accordance with my planned equity/fixed income asset allocation. (2) On the other hand, every security I own is for sale, and every security I own generates some form of cash flow that cannot be reinvested immediately. (3) I am happy when my cash position is nearly 0% because all of my money is then working as hard as it possibly can to meet my objectives. (4) But, I am ecstatic when my cash position approaches 100% because that means I’ve sold everything at a profit, and that I am in a position to (5) take advantage of any new investment opportunities (that fit my guidelines) as soon as I become aware of them.
If you are managing your portfolio properly, your cash position has been rising lately, as you take profits on the securities you purchased when prices were falling just a few months ago… and (this is a big and) you could well be chock full of cash well before the market blows the whistle on its advance! Yes, if you are going about the investment process properly, you will be swimming in cash at about the same time Wall Street discovers the rally and starts encouraging people to weight their portfolios more heavily into stocks; the number of IPOs coming to market starts to rise exponentially; morning drive radio DJ's start to laugh about their stock market successes; and all of your friends start to talk about their new investment guru or the 30% gains in their growth Mutual Funds. What are you doing in cash!
This is what I call "smart" cash, because 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 sure signs of investor greed in the market place: fixed income prices fall as speculators abandon their long term goals and reach for the new investment stars that are sure to propel equity prices ever higher, boring 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 NASDAQ, which could double and still not be where it was six years ago. And the beat goes on, cycle after cycle, generation after generation. What do you think; will today's coaches be any smarter than those of the late nineties? Have they learned that it is the very strength of a rising market that proves to be its greatest weakness!
The Stock Market is a dynamic place where investors can consistently make reasonable returns on their capital if they comply with the basic principles of the endeavor AND if they don't measure their progress too frequently with irrelevant measuring devices. The classic investment strategy is so simple and so trite that most investors dismiss it routinely and move on in their search for the holy investment grail(s): a stock market that only rises and a bond market capable of paying higher interest rates at stable or higher prices! Just not going to happen…
This is mythology, not investing. Investors who grasp the realities of these wonderful marketplaces recognize the opportunities and embrace them with an understanding that goes beyond the media hype and side show performance enhancement barkers. Simply put, when investment grade securities rise in price [As they are now, with the DJIA finally putting together a successful attack on the 11,000 barrier], Take Your Profits, because that's the purpose of investing in the stock market! On the flip side (and there has always 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 days or weeks ago during the rally. This is much more than an oversimplification; it is a long-term (a year or two is not long term.) strategy that succeeds... cycle, after cycle, after cycle. Sounds an awful lot like Buy Low/Sell High doesn't it? Obviously, Wall Street can't let you know that it is quite so simple!
[Note that Dow Jones 11,000 was last breached during the infancy of this century, and that the last All Time High in this much too widely followed average occurred late in 1999. When the DJIA banner is repositioned on that historical peak of 11,700 or so, it will represent no less than six years of zero growth in this, the most respected, of all Market Indicators! Would the media strip the gold medal from this Stock 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. In fact, more than two-thirds of the last 68 months have been positive. (2) Since April 2000, there have been 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 sixth consecutive year of positive issue breadth!]
So understand that your portfolio statement values will rise and fall throughout time, and rather than rejoice or cry, you should be taking actions that will enhance your "Working Capital" and the ability of your portfolio to accomplish your long term goals and objectives. Through the simple application of a few easy to memorize rules, you can plot a course to an investment portfolio that regularly achieves higher highs and (much more importantly), higher lows! Left to its own devices, like the DJIA for example, an unmanaged portfolio is likely to have long periods of unproductive sideways motion. You can ill afford to travel six years at a break even pace, and it is foolish, even irresponsible, to expect any unmanaged or passively directed approach to be in sync with your personal financial needs.
Five simple concepts of Asset Allocation, Investment Strategy, and Psychology are summed up quite nicely in what I call "The Investor's Creed":
(1) My intention is to be fully invested in accordance with my planned equity/fixed income asset allocation. (2) On the other hand, every security I own is for sale, and every security I own generates some form of cash flow that cannot be reinvested immediately. (3) I am happy when my cash position is nearly 0% because all of my money is then working as hard as it possibly can to meet my objectives. (4) But, I am ecstatic when my cash position approaches 100% because that means I’ve sold everything at a profit, and that I am in a position to (5) take advantage of any new investment opportunities (that fit my guidelines) as soon as I become aware of them.
If you are managing your portfolio properly, your cash position has been rising lately, as you take profits on the securities you purchased when prices were falling just a few months ago… and (this is a big and) you could well be chock full of cash well before the market blows the whistle on its advance! Yes, if you are going about the investment process properly, you will be swimming in cash at about the same time Wall Street discovers the rally and starts encouraging people to weight their portfolios more heavily into stocks; the number of IPOs coming to market starts to rise exponentially; morning drive radio DJ's start to laugh about their stock market successes; and all of your friends start to talk about their new investment guru or the 30% gains in their growth Mutual Funds. What are you doing in cash!
This is what I call "smart" cash, because 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 sure signs of investor greed in the market place: fixed income prices fall as speculators abandon their long term goals and reach for the new investment stars that are sure to propel equity prices ever higher, boring 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 NASDAQ, which could double and still not be where it was six years ago. And the beat goes on, cycle after cycle, generation after generation. What do you think; will today's coaches be any smarter than those of the late nineties? Have they learned that it is the very strength of a rising market that proves to be its greatest weakness!
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