Creating Wealth in Stock Market

The 12 Rules of How to Avoid Losing and Start Making Money from the Stock Market

RULE 1: WHY DO YOU INVEST?

Make more money, this is the answer to most people.
If your reason is to make more money, then ask yourself these three questions:

1.Is your strategy making money?

2.Is your strategy safe?

3.How to increase the profit and minimize the risk?

RULE 2: HOW TO CREATE WEALTH IN STOCK MARKET WITH JUST $1,000

Let say we invest some lower price stocks with just $1,000 in the stock market, invest twice a year for short-to-medium term. If each time the return is double, you will make one million dollar cash within 5 years. If your starting capital is $20,000, after 3 years you will make one million dollar cash.

If you are using the same $1,000 capital, invest twice a year, but the return is only 50%, you will make one million dollar cash after 9 years.

So we can always start small. However, it is very important that we know how to select high profit and low risk stocks.

RULE 3: DON'T GET OBSESSED WITH STOCKS

Sitting and monitoring the market whole day long will not bring you profit. Instead, it increases pressure and misleads your judgment.

RULE 4: NEVER GAMBLE

95% of the people always buy at the highest price. They don’t really know when to buy, just relying on news, rumors and tips. Only 5% of the people knows how to trade at the lowest price. That’s why 95% are losing money, only the 5% are making money.
Investment Builds Wealth, Gambling Definitely Lose !

RULE 5: SAY GOODBYE TO NEWS

News used to be able to predict the market trend. But not anymore, it is difficult to judge which news could actually influence the market nowadays.

RULE 6: DO YOUR OWN ANALYSIS, FORGET ABOUT TIPS

Before investing, ask yourself these four questions:

1.How many people have already heard about the tips before you?
If many have heard about it before you, this news is already obsolete. The price is already high.

2.How long have the tips been spreading before it reaches you?
The next day?

3.Who told you?
Listed company director? Or friends?

4.Assuming that the tip is true, would you possibly know about it?
Normally insider news is not disclosed.

RULE 7: SELL YOUR STOCKS EVEN LOSING MONEY

It is easier to be said than done.

Sell at a loss is a difficult decision. Your heart will object, and your feeling will say "It is going to rebound, don't sell." Eventually price dropped further, causing a much tragic lost.

RULE 8: DON'T JUST FOCUS ON MAKING MONEY

How to protect your capital is much more important. Don’t try to make 100% profit. It is already good enough to have a 60% profit margin.

RULE 9: HISTORY WILL NOT ALWAYS REPEAT

Everyone expects to make some money from the stock market before Christmas, New Year, annual budget announcement or election, but the stock market is not always bullish during these events. We can say history is not always repeated.
The best way is “Let the Market Lead us”.

RULE 10: QUOTES FROM WARREN BUFFET

There are only two rules to make money in stock market:

The first rule: Never lose your money.
The second rule: Never forget the first rule.

RULE 11: TURN BAD STOCKS INTO GOOD STOCKS, DON’T JUST HOLD YOUR STOCKS

Don’t hold your stock too long, there is a value when stocks are sold.

How long have you been holding your stocks until now?
Since Year 1993? 1997? Or Year 2000?

Why didn't you exercise your stocks? Long term investment strategy is not practical anymore. Even the blue chips also crash when the market collapses.

The best strategy is to sell the stocks that are not earning money, and reselect some good counters. Buy low, sell high for several times will earn you more than enough to compensate the lost.

RULE 12: WAKE UP FROM MISTAKES

Stop investing if you are not sure of when to buy or sell.

Without the knowledge of investment, you are bound to lose again. This is an age of information. Investors are using knowledge, techniques and strategies to make money. Without investment knowledge, how do you protect your money?

Building wealth through investing starts with securing your capital.

10 Golden Rules for Stock Market Trading Success

Your stock trading rules are your money. When you follow your rules you make money. However if you break your own stock trading rules the most likely outcome is that you will lose money.

Once you have a reliable set of stock trading rules it is important to keep them in mind. Here is one discipline that can reap rewards. Read these rules before your day starts and also read the rules when your day ends.

Rule 1: I must follow my rules.

Naturally if you develop a set of rules they are to be followed. It is human nature to want to vary or break rules and it takes discipline to continue to act in accordance with the established rules.

Rule 2: I will never risk more than 3% of my total portfolio on any one stock trade.

There are many old traders. There are many bold traders. But there are never any old bold traders. Protecting your capital base is fundamental to successful stock market trading over time.

Rule 3: I will cut my losses at 5% to 15% when I am wrong without question.

Some traders have an even lower tolerance for loss. The key point here is to have set points (stop loss) within the limits of your tolerance for loss. Stay informed about the performance of you stock and stick to your stop loss point.

Rule 4: Never set price targets.

This is a style that will allow me to get the most out of rising stocks. Simply let the profits run. Realistically, I can never pick tops. Never feel a stock has risen too high too quickly. Be willing to give back a good percentage of profits in the hope of much bigger profits.

The big money is made from trading the really BIG moves that I can occasionally catch.

Rule 5: Master one style.

Keep learning and getting better at this one method of trading. Never jump from one trading style to another. Master one style rather than become average at implementing several styles.

Rule 6: Let price and volume be my guides.

Never listen to any opinion about the stock market or individual stocks you are considering trading or are already trading. Everything is reflected in the price and volume.

Rule 7: Take all valid signals that show up.

Don't make excuses. If an entry signal shows up you have no excuse not to take it.

Rule 8: Never trade from intra-day data. There is always stock price variation within the course of any trading day. Relying on this data for momentum trading can lead to some wrong decisions.

Rule 9: Take time out.

Successful stock trading is not solely about trading. It's also about emotional strength and physical fitness. Reduce the stress every day by taking time off the computer and working on other areas. A stressful trader will not make it in the long term.

Rule 10: Be an above average trader.

In order to succeed in the stock market you don't need to do anything exceptional. You simply need to not do what the average trader does. The average trader is inconsistent and undisciplined. Ask yourself every day, "Did I follow my method today?" If your answer is no then you are in trouble and it's time to recommit yourself to your stock trading rules.

Of Stocks, Stockholders And Stock Market

A copper mining enterprise Stora Kopparberg first introduced the system of stock in the 13th century. The financial backers and owners felt the need to raise money for investment in the new projects of the same company so they started the method of stock and shares. It was also required in order to ward off the threat to the ownership rights if the company was sold, which would mean complete loss of control.

The investors got the monetary support they were looking for and at the same time solved ownership issues in case the company was sold by granting stocks to the people. Plus, they sold a part to people and still retained control over the company. Thus, the owner had some portion of the assets, some power to make decision conditionally. In return, they shared a part of the profit with the stockowner as dividend.

Financially, stock implies the ownership or share in a corporation. It gives the stockowner the right to claim a share in the assets and income of the corporation. The two types of stocks, preferred and common differ in many respects. The common stock owners can vote at the shareholders' meetings whereas the preferred stockowners cannot vote. Common stockowners get dividends declared by the company, whereas preferred stock owners have higher claim in assets and income of the company. Preferred stock entitles the owner to have his dividends earlier than the common stock owner. Preferred stock owner gets the priority when the company goes bankrupt. Besides these two, the other types of stock are dual class shares and treasury stock.

A stockowner is not liable to losses in case the company closes and has loans to pay back. The loss of the stockholders is limited to the money that would have been made by converting the assets into cash since all the money would be used to repay the loans to the creditors.

A stock exchange is the place where trading of shares is carried out. Individuals and companies sell and purchase shares on a large scale. Generally, a particular company trades only in one specific market and is said to be on the list of that particular stock exchange. However, big multinational companies can be listed on many stock exchanges. This is called inter-listed shares.

There are various methods to buy or sell finance stocks, but the commonest among them is through the mediator called stockbroker, who actually transfers the shares from one owner to another. Stocks can be bought directly from the company also.

The stock market of a country is an indicator of its economy, which just goes to show the growth and power of the stock market.

Stock Market Analysis

The return that a stock can provide is often predicted with the help of technical analysis. Stock market trading tips are based on technical analysis of various parameters.

Stock market analysis is science of examining stock data and predicting their future moves on the stock market. Investors who use this style of analysis are often unconcerned about the nature or value of the companies they trade stocks in. Their holdings are usually short-term – once their projected profit is reached they drop the stock.

The basis for stock market analysis is the belief that stock prices move in predictable patterns. All the factors that influence price movement – company performance, the general state of the economy, natural disasters – are supposedly reflected in the stock market with great efficiency. This efficiency, coupled with historical trends produces movements that can be analyzed and applied to future stock market movements.

Stock market analysis is not intended for long-term investments because fundamental information concerning a company's potential for growth is not taken into account. Trades must be entered and exited at precise times, so technical analysts need to spend a great deal of time watching market movements. Most stock tips and recommendations are based on stock analysis methods.

Investors can take advantage of these stock analysis methods to track both upswings and downswings in price by deciding whether to go long or short on their portfolios. Stop-loss orders limit losses in the event that the market does not move as expected.

There are many tools available for stock market technical analysis. Hundreds of stock patterns have been developed over time. Most of them, however, rely on the basic stock analysis methods of 'support' and 'resistance'. Support is the level that downward prices are expected to rise from, and Resistance is the level that upward prices are expected to reach before falling again. In other words, prices tend to bounce once they have hit support or resistance levels.

Stock Analysis Charts & Patterns

Stock market analysisrelies heavily on charts for tracking market movements. Bar charts are the most commonly used. They consist of vertical bars representing a particular time period – weekly, daily, hourly, or even by the minute. The top of each bar shows the highest price for the period, the bottom is the lowest price, and the small bar to the right is the opening price and the small bar to the left is the closing price. A great deal of information can be seen in glancing at bar charts. Long bars indicate a large price spread and the position of the side bars shows whether the price rose or dropped and also the spread between opening and closing prices.

A variation on the bar chart is the candlestick chart. These charts use solid bodies to indicate the variation between opening and closing prices and the lines (shadows) that extend above and below the body indicate the highest and lowest prices respectively. Candlestick bodies are coloured black or red if the closing price was lower than the previous period or white or green if the price closed higher. Candlesticks form various shapes that can indicate market movement. A green body with short shadows is bullish – the stock opened near its low and closed near its high. Conversely, a red body with short shadows is bearish – the stock opened near the high and closed near the low. These are only two of the more than 20 patterns that can be formed by candlesticks.

When glancing at charts the untrained eye may simply see random movements from one day to the next. Trained analysts, however, see patterns that are used to predict future movements of stock prices. There are hundreds of different indicators and patterns that can be applied. There is no one single reliable indicator, but these stock analysis methods when taken into consideration with others, investors can be quite successful in predicting price movements.

One of the most popular patterns is Cup and Handle. Prices start out relatively high then dip and come back up (the cup). They finally level out for a period (handle) before making a breakout – a sudden rise in price. Investors who buy on the handle can make good profits.

Another popular pattern is Head and Shoulders. This is formed by a peak (first shoulder) followed by a dip and then a higher peak (the head) followed again by a dip and a rise (the second shoulder). This is taken to be a bearish pattern with prices to fall substantially after the second shoulder.

Other Stock Market Analysis Methods

Moving Average - The most popular indicator is the moving average. This shows the average price over a period of time. For a 30 day moving average you add the closing prices for each of the 30 days and divide by 30. The most common averages are 20, 30, 50, 100, and 200 days. Longer time spans are less affected by daily price fluctuations. A moving average is plotted as a line on a graph of price changes. When prices fall below the moving average they have a tendency to keep on falling. Conversely, when prices rise above the moving average they tend to keep on rising.

Relative Strength Index (RSI) - This indicator compares the number of days a stock finishes up with the number of days it finishes down. It is calculated for a certain time span – usually between 9 and 15 days. The average number of up days is divided by the average number of down days. This number is added to one and the result is used to divide 100. This number is subtracted from 100. The RSI has a range between 0 and 100. A RSI of 70 or above can indicate a stock which is overbought and due for a fall in price. When the RSI falls below 30 the stock may be oversold and is a good time to buy. These numbers are not absolute – they can vary depending on whether the market is bullish or bearish. RSI charted over longer periods tend to show less extremes of movement. Looking at historical charts over a period of a year or so can give a good indicator of how a stock price moves in relation to its RSI.

Money Flow Index (MFI) - The RSI is calculated by following stock prices, but the Money Flow Index (MFI) takes into account the number of shares traded as well as the price. The range is from 0 to 100 and just like the RSI, an MFI of 70 is an indicator to sell and an MFI of 30 is an indicator to buy. Also like the RSI, when charted over longer periods of time the MFI can be more accurate as an indicator.

Bollinger Bands - This indicator is plotted as a grouping of 3 lines. The upper and lower lines are plotted according to market volatility. When the market is volatile the space between these lines widens and during times of less volatility the lines come closer together. The middle line is the simple moving average between the two outer lines (bands). As prices move closer to the lower band the stronger the indication is that the stock is oversold – the price should soon rise. As prices rise to the higher band the stock becomes more overbought meaning prices should fall. Bollinger bands are often used by investors to confirm other indicators. The wise technical analyst will always use a number of indicators before making a decision to trade a particular stock.

Stock Market Investment Advice That The Gurus Teach

There are many well known investment gurus out there – Joel Greenbalt, Warren Buffett, and Dr. Mark Faber are just a few and here is some of that stock market investment advice that the Gurus teach.

The number one stock market investment advice that the Gurus teach is to find the hidden jewel. In other words don’t just buy that well known business name instead do your research and check out those tiny out of the way rather mundane companies that are the hidden jewels.

Just take a look at Buffett’s investment in American Express when when it was near bankrupt. It looked like they’d never make it back to the surface and yet Buffett purchased these stocks and made a fortune following the stock market investment advice that the Gurus teach.

The second piece of stock market investment advice that the Gurus teach is about spin offs. A company will spin off a subsidiary into it’s own stand alone company. It may do this for a host of reasons including a hidden jewel that they want to expose. Spin offs do well in the first three years throwing 10% or higher returns and yet they are too often overlooked by investors. Check out all the options that the spin off provides you and the see what stock market investment advice that the Gurus teach.

Another popular stock market investment advice that the Gurus teach is all about the merge although the opportunities aren’t are not seen as much as in the past because Graham and Buffett made the strategy famous and now it’s no longer a secret in the world of investments.

Bankruptcy is another stock market investment advice that the Gurus teach regularly. When a company sits bankrupt there are all kinds of stock holders just dying to sell off their stocks so there is the potential for huge profits but the stock market investment advice that the Gurus teach also notes that you need to make sure you choose a bankrupt company that can make it back from the bowels of extinction or you’ll loose your money.

There is plenty of stock market investment advice that the gurus teach. This is just the tip of the iceberg and with so much knowledge to share don’t miss out on their teachings. Shop around for a variety of stock market investment advice that the Gurus teach online. Many sites post it to help you.

Goal-Setting Advice For Investing in the Stock Market

You've heard all the popular cliches. Remember the statement "money doesn't grow on trees"? How about the famous line that it "takes money to make money"? Even if they didn't make sense to you before, they will now that you're interested in successful stock trading because investing money involves a great deal of risk.

Although there is plenty of risk associating with trading, that doesn't necessarily mean you'll achieve lofty profits. Also you don't have to invest heavily or take great risks to achieve profits. Every situation is different and a savvy investor makes solid decisions to earn considerable profits while suffering minimal loss.

Every successful businessman will tell you that the first lesson about making money in any endeavor has a risk for both loss and gain. The real trick is to decide whether the profit is worth the risk. If you think so, you need to figure out if you are personally willing to take that risk.

Before you begin trading, there are three basic questions to consider:

1. What goals to you hope to achieve by investing?
2. Do you believe your investments will lose money?
3. Do you want to take larger risks for bigger profits?

By setting goals for your achievement, you will know how long you want to wait for a stock to realize a profit. It also helps you define a limit on the amount you are willing to lose. Determining your goals is one of the basic ways to start investing in stocks and tracking your achievements.

If you begin by choosing a low return investment, you may want to increase the amount you invest or increase the length of time you invest in the stock. Once you decide whether you want to invest more money or more time on an investment, consider these trading philosophies to get to the next level of success including:

- Know when to invest. Beginners get excited and want to trade all the time. Adrenaline flows when shares go up or when they fall down. You make your decisions based on a whim and other factors that really don't impact a stock when it comes to long term investing. The most effective traders spend half their time waiting and studying how the stock performs and they are not trading all the time, everyday.

- Be disciplined. Once again, don't get so excited that you start trading on any stock that looks somewhat acceptable rather than waiting long enough for the best stock to come along.

- Make small moves with large payoffs. Instead of dabbling in a large number of small stocks with tiny profits, keep your eyes open for the big stocks and concentrate your efforts on just a few.

- Emotions don't belong in trading. It feels exciting to make money and depressing to lose money. As a trader, you must not be emotional or you become unable to view your investments objectively.

Trading stocks is a high risk venture with the potential for substantial profits. Don't dabble in the stock market without knowledge and goals. Take your time as a beginning trader. Study the market, do your research and be patient when making investments. Remember, it is your money so the losses are yours as well as the profits.

Stock Options - How to Insure You Shares Against a Market Crash

You wouldn't buy a car or a house and risk losing all the money you had invested should you be the victim of theft or experience a natural disaster such as fire or would you?

It makes perfect sense to the average person to make sure they have an insurance policy in place to protect them from any potential losses. Even though we have to pay a premium for this protection, it gives us peace of mind doesn't it?

Something that scares the average person away from Investing in the Stock Market is the fact that they may lose all their money in the event of a Stock Market Crash.

But did you know you can actually pay a premium for an insurance policy on Shares you own?

It is called a Stock Option, or more specifically, a Put Option.

A Put Option is a contract relating to a particular stock, that gives you the right to sell that stock at a fixed, pre-determined price within a fixed period of time.

So just like a car insurance policy that expires at the end of a six or twelve month term, a put option would allow you to have insurance on your shares for a certain period of time. This is called a Protective Put and is commonly called Hedging.

Let's say you own XYZ shares that you paid $ 20 for and you would like to insure them for the full value of what you paid, and you wish to have this insurance in place for 6 months.

You would purchase an XYZ $ 20 Put Option with an expiry date 6 months from now. For this you would pay a premium. That premium may be around $ 1.20 but you would then have peace of mind knowing that if the stock market crashed and your shares were suddenly only worth a few dollars then you could exercise your Put Option and sell those shares for the $ 20 you originally paid.

The only loss you would incur then would be the cost of the Put Option, but in many cases the dividends you would receive on your shares throughout this period of time may just be enough to cover the cost of your options, taking nothing out of your own pocket.

Stock Options started out as more of a hedging instrument than a speculative instrument, and these days there are so many different strategies that incorporate the use of Put Options.

Whether it be for insurance purposes or to make money as income in the short term, stock options strategies can be structured for any purpose...yes, you can structure a position to profit even if the stock you are holding falls!

Stock Market Money Management Skills

Let's start by saying: You can't be afraid to take a loss. The investors that are the most successful in the stock market are the people who are willing to lose money.

Having a strategy and/or a specific philosophy is an excellent starting point to investing but it won't mean a thing if you can't manage your money. As I have said a million times: without cash, you can't invest.

Most investors spend far too much time trying to figure out the exact pivot point or perfect entry strategy and too little time on money management. The most important aspect to investing is cutting your losses, 90% of the battle is won by protecting your capital, regardless of the strategy.

Most successful money managers only make money 50-55% of time. This means that successful individual investors are going to be wrong about half the time. Since this is the case, you better be ready to accept your losses and cut them while they are small. By cutting losses quickly and allowing your winners to ride the up-trend, you will consistently finish the year with black ink.

Here are some methods that can help you with money management:

Set a predetermined stop loss (you must know where to cut the loss before it happens “this will help control emotions when the time comes)." A 7-10% stop loss insurance policy is best. Tighten the stop loss range in down markets and loosen the range in strong bull markets.

Establish smaller positions if your account has had a recent losing streak (the losses may be telling you important information such as a critical turning point, it may be time to sell and get out).

If you think you are wrong or if the market is moving against you, cut your position in half “this is the best insurance policy on Wall Street."

If you cut your position in half two times, you will be left with only 25% of the original position “the remaining stock is no longer a big deal as your risk is very low."

If you sell out of a trade prematurely based on a minor correction, you can always reestablish the position again.

Initial position sizing plays a big part in money management “don't take on too big of a position relative to your portfolio size. Novice investors should never use their entire account on one trade no matter how small the account

Know when you would like to get out of a position after a considerable profit has been made. Signs of topping could be a climax run, a spinning top or higher highs on lower volume.

Finally, cut any trade that doesn't act the way you originally analyzed it to act.

With these guidelines, you will be well on your way to solid money management skills that will help you profit in Wall Street year in and year out. Always remember, you are going to take-on losing trades at least half of the time. This is a tough concept to accept for most novice investors but it a fact. If you don't cut losses, you won't be investing for very long as you will run out of cash and the desire to continue to invest.

Stock Market Timeline

The history of stock market is very rich and the efficient system that you use now for trading and investing in companies has evolved over centuries. All the policies and regulations have evolved through time as and when the policy makers felt the need for them. Wall Street was laid out as early as in 1685. The investment market was born after a century in 1792 when five securities were traded. These included three government bonds and two bank stocks.

The Buttonwood Agreement was the historic pact that around twenty four brokers and merchants signed agreeing to trade securities for commission. It is said that the New York Stock Exchange began as a result of this pact. Slowly the market started gaining prominence and securities such as bank stocks, insurance stocks and government bonds had begun to trade. As the market gained prominence, the requirement of rules and regulations for the proper conduct of trading and investing was felt. The New York Stock & Exchange Board was formed at wall street. In 1853, the board required the companies which were listed on the exchange to produce complete statements of shares outstanding and capital resources.

The first stock market crash happened in 1853 when the market lost up to 45% of value. The reason was the collapse of the Ohio Life Insurance & Trust Company. In 1866, the first transatlantic cable was laid which enabled instant communication between New York and London. In 1867, the first stock ticker was invented and this brought the current prices of the companies to all the investors. In 1872, the specialist was created. The specialist is a trader who trades only in one stock because of which he sits in one location on the trading floor. In 1895, it was suggested that companies start providing annual reports of their performance to their shareholders. Then in the subsequent year, there was another development in the form of the wall street journal publishing the Dow Jones Industrial average for the first time.

The Federal Reserve System was created in 1913 to bring structure to the control credit and to structure the banking system. The market price was quoted as a percentage of the par value. This was changed to prices quoted in dollars. In 1929 the largest crash in terms of the volume of shares takes place. This marked the beginning of the great depression. The Dow Jones reached the lowest value from its 1929 peak in 1932. It was quoting 89% down at that point of time. The Securities and Exchange Commission is established to provide full disclosure to investors and to prevent fraudulent activities in connection with the sale of securities. Women enter the trading floor in 1943 ending the reign of men. In 1966, several important developments took place. The Securities Investment Protection Corporation was set up to provide protection to the clients of brokerage firms that collapse. The New York futures exchange was formed in 1979. In 1996, real time tickers were launched in CNBC and CNN thus bringing the stock prices to investors and traders instantly.

As you can see, the rich history is incomparable to the history of any other stock market in the world. NYSE is the biggest stock exchange in the world and it will continue to remain so for some time to come.

Who Wants To Be A Stock Market Millionaire?

I know many people who want to be stock market millionaires. They ask how all the time on “The Wallet Doctor” Ezine. It is actually not that complex if you know what you are doing. Becoming a millionaire does require discipline and the more the better.

There are a couple of main concepts that you have to master to become a stock market millionaire. First, you have to control, reduce and eliminate your family expenses. If you can get past this step you are well on you way. Most people feel restricted when they lower their expenses but there are creative ways to do this. Don’t take your children into stores and don’t buy them junk.

My wife and I like to eat at fine restaurants. We reduce the bill substantially by sharing a plate. If a restaurant charges a “plate” fee we never go back. We also began accelerating our mortgage years ago and are now amazed at how little we have left to pay off.

Second, you have to optimize your income. You can do this by getting a second job or selling things or services in your off hours. I know this is a lot more work then your peers are putting out but financial freedom doesn’t not come free. The first two steps amount to optimizing your cash flow which is the difference between your total income and total expenses.

Third, you need to insure against all insurable calamities. These calamities include illness, death of a breadwinner, vehicular accidents, and property losses. A good insurance agent is literally worth their weight in gold (or more) in helping you create an umbrella insurance plan that covers all insurance contingencies that are economically viable to cover.

Fourth, you need to dedicate yourself to a consistent, persistent plan of study in the area of stock investing that includes investing scams and understanding risk. Fundamentally you must learn how to buy stocks low and sell them later at high price. To become a stock market millionaire this will be come your guiding principal. The more you study techniques as well as people who have been fantastically successful in the stock market the more you are going to understand what it takes to make your personal finances work toward making you a millionaire stock investor.

Fifth, you have to absolutely believe you can do it. Only you can believe in you and when you do people fall in behind you to help. The more time you spend daydreaming that you can do it the more likely you will make it a reality. Everybody’s financial path is highly personal. For me I felt I needed a Ph.D. in finance to get down my financial path but you probably won’t. You may recognize that you need to do different things to put all of these five steps to becoming a millionaire into place. Believe you can become a stock market millionaire, wake up each and every day and do what you know you need to do to make it happen and it will!

How To Make Profit With Market Segmentation

MARKET SEGMENTATION

Market Segmentation is a simple concept, that can help your business to gain an advantage, even in very competitive online categories.

You know that 20 percent of buyers consume 80 percent of your product, so the idea of market segmentation is that you could sell much more products with much less effort if you can identify that 20 percent and find others like them.

People that's interested in it, and consume your product, can be thought as a market segment. So the idea behind market segmentation is to target, communicate, sell and obtain feedback of your best customers.

In order to survive and prosper as a company, you need to chose the right segment fo the market, then you will achieve large sales volume and profitability

In a market segmentation campaign, to choose the right segment of market, the segments should be:

* measurable
* big enough to generate good sales volume
* reachable by your company's distribution methods

You must also know wich are the similar products that can be offered to your buyers, and your competitor's sales strategy.

You need to satisfy and keep those consumers that love your products or services, being aware that new products are going to be offered to them and with different strategies.

And of course, once you have segmented your market, you must offer different products and may be use different sales strategies for the different segments.

In example if you offer sport shoes, the market segmentation can be done by sport or by gender, and then further segment your market with specialized models for each sport, gender and age.

As you know, we are a home business site. Many people is interested in having their own home business, but, do they all want the same?

You can be shure that not everybody wants the same, and that's why we have

- The Monthly Residual Income Program for those that want to build a big business with hundreds of affiliates working for them
- Make Money With Your Own Web Site for those that want to start their home business owning a web site
- How to Sell on The Web for those that want to become marketing experts
- The Viral Marketing Secrets for those that believe that viral marketing is the best marketing too that you can use
- etc.

Every time that a new product's idea comes to your mind, you must first estimate the size of your target market, to know if there are going to be enough buyers to provide you enough sales and profits.

Another important issue, is that you must try to sell more than once to the same prospects. 30% of people that already bought from you, will want to buy again.

So if you offer a product that is bought once in a lifetime, unless you have such a big market that you don't care, you should try to find something else to offer to your segment of the market.

A Review of the Stock Market Code

All we have to say is don't judge a sales page, by well, the sales page. At the beginning you will come across a subscription box that is placed so far to the right that you have to scroll over in order to see it. However, once the page loads everything comes back center stage and you'll find yourself in front of The Stock Market Code. Best of all you get 60 days to try out the system and they tell you right in the very beginning.

Then of course you get a full refund if you aren't satisfied with everything The Stock Market Code has to offer. During the start of your reading you will notice that this covers various short-cuts they want to share with you in the stock market industry. According to them, it could change your life forever, and while we've heard that statement time and time again, we never overlook anything. You never know when the hidden secret will show itself.

Asking the Questions

You'll find a bullet point area that asks a series of questions about things you will most likely want to answer. Some of them include wondering if your frustrated with whipsaws. Do great entry points elude you? Then of course, wondering if you'll ever find a simple trading strategy that will work wonders and you'll just be able to reap the rewards. Basically, answer yes to any of them and then Barry Willis says he can help you.

The Story

See, many of us believe that someone who owns a product like The Stock Market Code has always had it good. Sure, they've made great money, but you have to remember greatness only starts after many successful failures. This is the feeling you get from Barry as he talks about the good times, the not so good times, and then the ugliest of times. Each of them rendered life lessons that he'll never forget.

However, throughout the process of this story we couldn't help but think about the main message he was stringing along. The point is he went through all the trials and tribulations as well as enjoyed the other side of life full of money, power, and celebrity appeal. Even though 2001 brought a major crash in the economy, he feels you shouldn't have to endure the same problems he did years ago.

Our Overall Analysis

You're going to need about fifteen to twenty minutes if you want to get an in depth look at The Stock Market Code. While it sounds like a lot of time, you'll enjoy the 24 things he has to offer that could virtually change the landscape of the way you live, your overall lifestyle, and that of your family as well. Just read some of the testimonials that have been left on his sales page.

Whatever you decide to do, we know Barry will have you thinking. It's hard to believe that financial bliss can become a reality for many individuals who have struggled all their lives, but it can happen. The only way it does though is by taking the time and energy to help yourself. It could start here, and if by chance it doesn't, you'll learn something in the process for next time.

Investment Strategies for the Stock Market

When it comes to Investment Strategies for the Stock Market most people believe that there is only one safe strategy.

‘Buy and Hold’

The reason why most people believe that this is the safest investment strategy for the stock market is because that is exactly what their financial advisers have told them. Have you ever heard the phrase

“The key to successful investing is Time In the Market NOT Timing the Market”

I believe that this is a lazy approach to investing and is really just an excuse to hide the fact that some financial advisers have no idea what the market is doing. Wouldn’t successful investors use multiple investment strategies for the stock market? If the market is at a record high and there is a chance of a correction then surely there is something that you can do (other than selling your stocks) to protect some of your profits?

The reason why financial advisers don’t want you to know about any other investment strategies for the stock market (other than buy and hold) is because it isn’t in their interest for you to know about them. They want you to remain reliant on their advice and have you feel as if the stock market is a very scary and dangerous tool – only to be tamed by the so called experts.

What is your opinion? I certainly believe that at times the stock market can be very scary and dangerous but like any thing; the more you educate yourself the more comfortable you will feel with it.

So what are some Investment Strategies for the Stock Market other than buy and hold?

Let’s have a quick look one very simply investment strategies that can be used to great effect on any stock market.

Covered Calls

This is one of the most effective, low risk investment strategies that can be used on the stock market. The basic idea to sell call options on a stock that you own. What? I hear you saying. In simple terms it means that you are renting out your shares for a monthly premium and in return you are giving somebody the option to buy your shares at a predetermined price that is higher than what you paid for them.

Let’s say you own 1000 XYZ shares that are worth $15.00 each. People will pay you a monthly premium to have the option to buy these XYZ shares at a predetermined price within a predetermined time frame.

For instance someone might offer you $500 for the right to buy your shares at $16.00 within the next month. Why would they do this? Because if the shares happen rise up to $18.00 they will be able to buy 1000 XYZ shares at a $2.00 discount per share ($18-$16).

The great thing about this strategy is that both parties can win e.g. If this was to happen you would be happy too because you would get to keep the $500 premium and you would also make $1.00 from every share that you sold because you bought them at $15.00 and sold them at $16.00.

What happens if the share price was to go down?

If the share price was to go down from $15.00 to $13.00 then you would still get to keep the $500 premium which would reduce your paper loss from $2.00 per share to $1.50 per share.

Writing covered calls (or renting out your shares) is one of the most commonly used investment strategies by the rich. It is a great low risk low risk investment strategy for the stock market that everybody deserves to know about.

When it comes to Investment Strategies for the Stock Market most people believe that there is only one safe strategy.

‘Buy and Hold’

The reason why most people believe that this is the safest investment strategy for the stock market is because that is exactly what their financial advisers have told them. Have you ever heard the phrase

“The key to successful investing is Time In the Market NOT Timing the Market”

I believe that this is a lazy approach to investing and is really just an excuse to hide the fact that some financial advisers have no idea what the market is doing. Wouldn’t successful investors use multiple investment strategies for the stock market? If the market is at a record high and there is a chance of a correction then surely there is something that you can do (other than selling your stocks) to protect some of your profits?

The reason why financial advisers don’t want you to know about any other investment strategies for the stock market (other than buy and hold) is because it isn’t in their interest for you to know about them. They want you to remain reliant on their advice and have you feel as if the stock market is a very scary and dangerous tool – only to be tamed by the so called experts.

What is your opinion? I certainly believe that at times the stock market can be very scary and dangerous but like any thing; the more you educate yourself the more comfortable you will feel with it.

So what are some Investment Strategies for the Stock Market other than buy and hold?

Let’s have a quick look one very simply investment strategies that can be used to great effect on any stock market.

Covered Calls

This is one of the most effective, low risk investment strategies that can be used on the stock market. The basic idea to sell call options on a stock that you own. What? I hear you saying. In simple terms it means that you are renting out your shares for a monthly premium and in return you are giving somebody the option to buy your shares at a predetermined price that is higher than what you paid for them.

Let’s say you own 1000 XYZ shares that are worth $15.00 each. People will pay you a monthly premium to have the option to buy these XYZ shares at a predetermined price within a predetermined time frame.

For instance someone might offer you $500 for the right to buy your shares at $16.00 within the next month. Why would they do this? Because if the shares happen rise up to $18.00 they will be able to buy 1000 XYZ shares at a $2.00 discount per share ($18-$16).

The great thing about this strategy is that both parties can win e.g. If this was to happen you would be happy too because you would get to keep the $500 premium and you would also make $1.00 from every share that you sold because you bought them at $15.00 and sold them at $16.00.

What happens if the share price was to go down?

If the share price was to go down from $15.00 to $13.00 then you would still get to keep the $500 premium which would reduce your paper loss from $2.00 per share to $1.50 per share.

Writing covered calls (or renting out your shares) is one of the most commonly used investment strategies by the rich. It is a great low risk low risk investment strategy for the stock market that everybody deserves to know about.

So there you have it a simple investment strategy for the stock market that can help increase your cash flow and also gives you downside protection. What more could you ask for in a stock market investment strategy? So next time you see your financial adviser ask them about covered calls and see what response you get. My bet is they probably won’t even know what you’re talking about because their university course didn’t teach that subject.

So there you have it a simple investment strategy for the stock market that can help increase your cash flow and also gives you downside protection. What more could you ask for in a stock market investment strategy? So next time you see your financial adviser ask them about covered calls and see what response you get. My bet is they probably won’t even know what you’re talking about because their university course didn’t teach that subject.

In The Stock Market Greater Risk Could Mean Greater Profit

One of the many ways to make a larger profit on the stock market is to take grater risks. There are several advanced strategies and techniques and/or strategies that you can use. Each has its own level of risk and as we say, "In the stock market, greater risk could mean greater profit".

Before we get into the different techniques, it needs to be clear that when using any trading strategy or technique, you should play with money that is liquid. In other words, money you can live without, should things go badly. Never play the market with money you need to survive. Trade responsibly and knowledgably.

One strategy is investing in an IPO (Initial Public Offer). An IPO is way that a company is moved from being privately owned to being publicly held, or stockholder owned. Simply put, they offer common stock to a few hand picked investors. If the need for capital is greater, then they might offer stock on the open market.

One way to use IPOs is to jump in right at the beginning, buy stock at the initial IPO price and hope for a big price jump initially. Then you would sell those shares on the stock floor and pocket the profits. The risk here is that the company may not be accepted well by investors at first. If that happens, the stock price will fall and you will lose money.

Another IPO technique is to simply sit back and watch the IPO stock after it has opened. If the stock is fairly priced, and goes up in value you can buy and make a profit but not as much as the trader who jumps in as soon as the stock is issued. The basic rule is "buy low, sell high and get out". This method carries the same risk but in the stock market, greater profit means greater risk.

Short selling is an advanced technique that is not used to its full potential. This is due to the high-risk level involved. Short selling is a serious speculation technique and carries maximum risk. A trader will sell stocks he doesn't actually have at a higher price in the hope of a downturn. If the stock goes down, he buys at the lower price, pockets the profit and returns the shares to the owners. The risk here is very high for obvious reasons. If the shares price increases rather than decreases, the trader loses money. Plus there is still the matter of the broker's commission, which is still owed regardless.

Then there is margin trading where a trader borrows money to buy a stock. The money can be borrowed from a broker, normally up to 50% of the investment. Obviously, if the stock goes up, you make the profit on your 50% of the purchase price and pay the broker back. Without the benefit of margin trading, the trader shoulders the responsibility of the entire purchase plus the broker's commissions.

Of course, if the stock goes down, you have lost part of your original cash investment and you still need to pay the broker for the loan and his commissions. This is another technique that is heavily laden with speculation and carries maximum risk.

Trading stocks in this way is not for the faint of heart. The promise of big profits is an aphrodisiac, but in the stock market, greater risk could mean greater profit. Remember to trade intelligently and responsibly at all times.

Mastering Your Mind For Stock Market Profit

The stock market is made up solely of buyers and sellers. These buyers and sellers may be super-huge, billion dollar institutions trading enormous amounts of money everyday or private individuals trading just one or two parcels of shares each year. Regardless, at its core, the market is made up 100% of people. People with emotions just like you and me.

You’ve no doubt heard the phrase, “History repeats itself”. Well, despite all of our technological achievements, we have still not mastered our emotions. History in the stock market always repeats itself because the markets are driven by two of the strongest human emotions, FEAR and GREED.

Markets boom and bust with cyclical regularity because of human nature. We are creatures of habit. For those who can accept this and learn to control their emotions, the rewards are outstanding. By recognising emotion in the markets, we can time our entry and exit strategies and profit from history repeating itself time and time again.

Investors like Warren Buffet recognise that investing is 80% psychological and only 20% mechanical. It doesn’t matter how good your system or strategy is. Unless you are mentally focused and as emotionless as possible, you will fail. This is much easier said than done, of course. Why? Because we spend our entire lives developing our psychological feelings towards money. These feelings are often referred to as Comfort Zones.

Comfort Zones

One of the most basic human needs is the feeling of Certainty. When we are certain of our surroundings we can rest easy and enjoy our lives. Uncertainty brings risk and makes us feel anxious and very uncomfortable. Since we were little children we have developed our comfort zones and we all have different comfort zones when it comes to money. Some of us feel that we must work very hard to make money. Others feel that they will never have money, or they don’t deserve to have money.

If you look at the wealthiest people in the world, very few live within these comfort zones. Their money comfort zones see them having an abundance of money. They believe that there is an enormous amount of money, more than enough for everyone to enjoy. They know that there are trillions of dollars circulating the world everyday looking for a home. They know how to make money and that making it is ridiculously simple.

Our emotion of certainty dictates our comfort zones. If we are certain that money is hard to make, then it will be, and we will be certain in our comfort zone. We would probably not be rich, but in our minds, we would be right. Alternatively, if we are certain that money is easy to make, and we just have to know how, than it will be easy to make, and we will be certain in our comfort zone.

Obviously, if your comfort zone has you believing that money is difficult to make, or some other negative feeling, then you will have to break out your comfort zone and climb into another one. When you do this, you will feel very uncertain. This can be very scary and is the reason why, despite all of the opportunities available, 95% of people end up broke or financially dependent when they reach 65 years of age.

Stock Trading Profit, Earnings Can Still Be Had Today

Day trading most commonly refers to the practice of buying and selling stocks during the day so that at the end of the day you don't hold any shares overnight; you sell as many shares as you buy. You make money on the difference between the purchase and sales prices.

The main motivation for this style of trading is to make money every day so you don't sit on the shares , plus of course you eliminate the risk that the shares go down in value overnight. the motivation of this style of trading is to reduce the risk of holding a position overnight where the open price may have significantly changed from the previous day's closing price.

NASDAQ defined day trading by saying somebody is a Daytrader if he makes more than four buy and sell orders over a five-day period.

Prior to the year 2000 it was not uncommon for some of the most successful Daytraders to make more than a million dollars in a single day.

There were dozens of Daytrading Chatrooms where people were "told" what to buy and when to buy it.
Some Chatrooms had more than 500 members.

And most Daytraders, it is estimated as high as 99%, lost their shirt.
One of the reasons they lost their shirt is because they could trade on Margin.

Trading on Margin means that the brokerage firm which executes your trades will lend you up to 5 times your investment.
So if you had $10,000 in your trading account you could in some cases trade with $50,000.

However, if you lost on your trades, repayment was due immediately.

Since the heady dot com days of the year 2000 DayTrading has gone out of style and out of range.

Most brokerage firms have gone under or have consolidated, and staff has been reduced in the remaining firms by about 80%.

Trades that used to cost $35 to execute can now be had for as low as $4.-

Initially it happened because President Bush talked the economy down and Mr Greenspan kept on raising the interest rate to such a level that all optimism disappeared from the Market.

Up until this time like clockwork 2 or 3 days a week there were Stocks, mainly Internet Stocks, that would rise more than 30% early in the morning and then fall the same amount five minutes before closing so people could take profit.

If you were on the ball you could make a lot of money as a DayTrader.

You could also lose a lot of money.

Those days no longer exist.

It is very rare to see stocks vary more than 30% in one day so the profit potential first of all is not as great, and the ability to catch a percentage of the increase in the price of a stock has also lessened.

One of the reasons also is that Internet Stocks which were totally overvalued are no longer overvalued and as a matter of fact have risen much less than any other type of Stock.

Another reason is that there are very few IPO's and even Google's IPO did not take off for quite some time.

If it was not for the spectacular performance of Google , Internet Stocks lost more than 8% in 2005.

Even Ebay lost more than a quarter of its value.

However, if you are shrewd, you can still make money as a DayTrader but it ain't easy.

What do you think happens when a company invents a car that runs on water?

If you could get news about this company very early you could make a lot of money.

Not many people know that you can trade the NASDAQ Stock Market as early as 6 AM.

So if you are a Stock Market News Hound and like to get up really early in the morning and have nerves of steel you could buy the stock at 6 AM and sell it at 9.29 AM to everybody else starting a regular trading day.

This will not happen very often, the fact that there is spectacular news.

But if you are patient it may happen once a month.

One of the many ways to make a larger profit on the stock market is to take grater risks. There are several advanced strategies and techniques and/or

One of the many ways to make a larger profit on the stock market is to take grater risks. There are several advanced strategies and techniques and/or strategies that you can use. Each has its own level of risk and as we say, "In the stock market, greater risk could mean greater profit".

Before we get into the different techniques, it needs to be clear that when using any trading strategy or technique, you should play with money that is liquid. In other words, money you can live without, should things go badly. Never play the market with money you need to survive. Trade responsibly and knowledgably.

One strategy is investing in an IPO (Initial Public Offer). An IPO is way that a company is moved from being privately owned to being publicly held, or stockholder owned. Simply put, they offer common stock to a few hand picked investors. If the need for capital is greater, then they might offer stock on the open market.

One way to use IPOs is to jump in right at the beginning, buy stock at the initial IPO price and hope for a big price jump initially. Then you would sell those shares on the stock floor and pocket the profits. The risk here is that the company may not be accepted well by investors at first. If that happens, the stock price will fall and you will lose money.

Another IPO technique is to simply sit back and watch the IPO stock after it has opened. If the stock is fairly priced, and goes up in value you can buy and make a profit but not as much as the trader who jumps in as soon as the stock is issued. The basic rule is "buy low, sell high and get out". This method carries the same risk but in the stock market, greater profit means greater risk.

Short selling is an advanced technique that is not used to its full potential. This is due to the high-risk level involved. Short selling is a serious speculation technique and carries maximum risk. A trader will sell stocks he doesn't actually have at a higher price in the hope of a downturn. If the stock goes down, he buys at the lower price, pockets the profit and returns the shares to the owners. The risk here is very high for obvious reasons. If the shares price increases rather than decreases, the trader loses money. Plus there is still the matter of the broker's commission, which is still owed regardless.

Then there is margin trading where a trader borrows money to buy a stock. The money can be borrowed from a broker, normally up to 50% of the investment. Obviously, if the stock goes up, you make the profit on your 50% of the purchase price and pay the broker back. Without the benefit of margin trading, the trader shoulders the responsibility of the entire purchase plus the broker's commissions.

Of course, if the stock goes down, you have lost part of your original cash investment and you still need to pay the broker for the loan and his commissions. This is another technique that is heavily laden with speculation and carries maximum risk.

Trading stocks in this way is not for the faint of heart. The promise of big profits is an aphrodisiac, but in the stock market, greater risk could mean greater profit. Remember to trade intelligently and responsibly at all times.

In The Stock Market Greater Risk Could Mean Greater Profit

One of the many ways to make a larger profit on the stock market is to take grater risks. There are several advanced strategies and techniques and/or strategies that you can use. Each has its own level of risk and as we say, "In the stock market, greater risk could mean greater profit".

Before we get into the different techniques, it needs to be clear that when using any trading strategy or technique, you should play with money that is liquid. In other words, money you can live without, should things go badly. Never play the market with money you need to survive. Trade responsibly and knowledgably.

One strategy is investing in an IPO (Initial Public Offer). An IPO is way that a company is moved from being privately owned to being publicly held, or stockholder owned. Simply put, they offer common stock to a few hand picked investors. If the need for capital is greater, then they might offer stock on the open market.

One way to use IPOs is to jump in right at the beginning, buy stock at the initial IPO price and hope for a big price jump initially. Then you would sell those shares on the stock floor and pocket the profits. The risk here is that the company may not be accepted well by investors at first. If that happens, the stock price will fall and you will lose money.

Another IPO technique is to simply sit back and watch the IPO stock after it has opened. If the stock is fairly priced, and goes up in value you can buy and make a profit but not as much as the trader who jumps in as soon as the stock is issued. The basic rule is "buy low, sell high and get out". This method carries the same risk but in the stock market, greater profit means greater risk.

Short selling is an advanced technique that is not used to its full potential. This is due to the high-risk level involved. Short selling is a serious speculation technique and carries maximum risk. A trader will sell stocks he doesn't actually have at a higher price in the hope of a downturn. If the stock goes down, he buys at the lower price, pockets the profit and returns the shares to the owners. The risk here is very high for obvious reasons. If the shares price increases rather than decreases, the trader loses money. Plus there is still the matter of the broker's commission, which is still owed regardless.

Then there is margin trading where a trader borrows money to buy a stock. The money can be borrowed from a broker, normally up to 50% of the investment. Obviously, if the stock goes up, you make the profit on your 50% of the purchase price and pay the broker back. Without the benefit of margin trading, the trader shoulders the responsibility of the entire purchase plus the broker's commissions.

Of course, if the stock goes down, you have lost part of your original cash investment and you still need to pay the broker for the loan and his commissions. This is another technique that is heavily laden with speculation and carries maximum risk.

Trading stocks in this way is not for the faint of heart. The promise of big profits is an aphrodisiac, but in the stock market, greater risk could mean greater profit. Remember to trade intelligently and responsibly at all times.

Mastering Your Mind For Stock Market Profit

The stock market is made up solely of buyers and sellers. These buyers and sellers may be super-huge, billion dollar institutions trading enormous amounts of money everyday or private individuals trading just one or two parcels of shares each year. Regardless, at its core, the market is made up 100% of people. People with emotions just like you and me.

You’ve no doubt heard the phrase, “History repeats itself”. Well, despite all of our technological achievements, we have still not mastered our emotions. History in the stock market always repeats itself because the markets are driven by two of the strongest human emotions, FEAR and GREED.

Markets boom and bust with cyclical regularity because of human nature. We are creatures of habit. For those who can accept this and learn to control their emotions, the rewards are outstanding. By recognising emotion in the markets, we can time our entry and exit strategies and profit from history repeating itself time and time again.

Investors like Warren Buffet recognise that investing is 80% psychological and only 20% mechanical. It doesn’t matter how good your system or strategy is. Unless you are mentally focused and as emotionless as possible, you will fail. This is much easier said than done, of course. Why? Because we spend our entire lives developing our psychological feelings towards money. These feelings are often referred to as Comfort Zones.

Comfort Zones

One of the most basic human needs is the feeling of Certainty. When we are certain of our surroundings we can rest easy and enjoy our lives. Uncertainty brings risk and makes us feel anxious and very uncomfortable. Since we were little children we have developed our comfort zones and we all have different comfort zones when it comes to money. Some of us feel that we must work very hard to make money. Others feel that they will never have money, or they don’t deserve to have money.

If you look at the wealthiest people in the world, very few live within these comfort zones. Their money comfort zones see them having an abundance of money. They believe that there is an enormous amount of money, more than enough for everyone to enjoy. They know that there are trillions of dollars circulating the world everyday looking for a home. They know how to make money and that making it is ridiculously simple.

Our emotion of certainty dictates our comfort zones. If we are certain that money is hard to make, then it will be, and we will be certain in our comfort zone. We would probably not be rich, but in our minds, we would be right. Alternatively, if we are certain that money is easy to make, and we just have to know how, than it will be easy to make, and we will be certain in our comfort zone.

Obviously, if your comfort zone has you believing that money is difficult to make, or some other negative feeling, then you will have to break out your comfort zone and climb into another one. When you do this, you will feel very uncertain. This can be very scary and is the reason why, despite all of the opportunities available, 95% of people end up broke or financially dependent when they reach 65 years of age

The stock market doctor makes a short prognosis

THE STOCK MARKET DOCTOR MAKES A SHORT PROGNOSIS

Unfortunately, our doctor is not Doctor Feel Good…at least not in the short run.

The prognosis is not good for the stock markets in the U.S. and Europe. Sure, they can rally, but don't count on any long bull runs. Any stock market runs we get in coming months are more likely to be bear runs, and those are seldom fun.

In our memo for November 26, we predicted four types of events to look for which would take place to ultimately end the current world liquidity crisis.

Prediction 1: New capital investments by sovereign wealth funds and wealthy companies into banks and other financial institutions with problems. This has begun happening and more investments are announced everyday.

Prediction 2: World central banks are going to provide increasing liquidity...this is happening with a vengeance. It seems that every day interest rates are being lowered somewhere, and everyday more liquidity is being provided to the markets by central banks. The latest are large coordinated loans by central banks to keep liquidity in the system. Instead of lending only on conservative government bonds, as had long been the policy, central banks are willing to take other forms of collateral, even junk mortgage paper. In spite of this, the crisis is not curing itself and illiquidity still pervades the world mortgage markets.

Central bank lending against low quality assets like mortgage paper is just a step away from prediction number three.

Prediction 3: An organization will be funded in the U.S. and/or Europe to buy bad mortgages and to make a market in them to provide a market price for illiquid mortgages.

Prediction 4: The U.S. and foreign governments will actually buy low the quality debt. This may happen sooner rather than later. Trial balloons are being floated in Washington D.C. in the last couple of days to renew the Home Owners Loan Corp. This organization was started in 1933 at the depths of the great depression, to buy mortgages from banks at a discount and refinance them on easier terms. It was closed down in 1951 once the depression and the mortgage crisis of the 1930's was long over.

Already in just three weeks, predictions one and two have happened, and will likely continue. Predictions three and four will have to happen soon if the U.S. wants to avert long-term real estate problems like those experienced during the 1930's.

THE CRISIS IS LEADING TO A RECESSION IN THE U.S., AND MAYBE IN EUROPE

This is temporary bad news for all markets. Long term, it is good news.

Historically, when people begin to realize that a recession is probably going to develop a bear market decline sets in. This may happen in the next few weeks. The process of this market decline and recovery will have several steps.

Step 1 is a "slowing down" in world investing psychology. Most all markets see a decline in their P/E ratios and even if corporate earnings continue to grow the stock markets decline in value.
Step 2 will be when fear recedes enough for the realization to dawn that developing economies especially those of India, China, Brazil and Russia have still been growing. This realization leads to an earlier recovery in these markets.

Step 3 will be when investors begin to realize that the growing markets continue to consume commodities at a rapid rate. Thus, commodity prices can begin a new uptrend.

Step 4 is the realization occurs to investors that developed economies will once again grow, and corporate profits growth will pick up. Finally, their stock markets also rise.

SUMMARY

The temporary bad news is that we believe most global markets for stocks and commodities will fall for the next few months. The long-term good news for the nimble is that we can repurchase at lower prices in a few months, and be ready for the time when a new market uptrend will begin.

Guild Investment Management, Inc., a registered investment advisor. All material presented herein is believed to be reliable. Investment recommendations and opinions expressed in these reports may change without prior notice.

You can also read our past periodic market and economic commentary articles by going to the Commentary Archive on our web site www.guildinvestment.com.

These articles are for informational purposes only and are not intended to be a solicitation, offering or recommendation of any security. Guild Investment Management does not represent that the securities, products, or services discussed in this web site are suitable or appropriate for all investors. Any market analysis constitutes an opinion that may not be correct. Readers must make their own independent investment decisions.

The information in this article is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation, or which would subject Guild Investment Management to any registration requirement within such jurisdiction or country. Any opinions expressed herein, are subject to change without notice. In addition, there are many market, currency, economic, political, business, technological and other risks that are beyond our control. We make reasonable efforts to provide accurate content in these articles; however, some content and some of the assumptions, formulas, algorithms and other data that impact the content may be inaccurate, outdated, or otherwise inappropriate. In addition, we may have conflicts of interest with respect to any investments mentioned. Our principals and our clients may hold positions in investments mentioned on the site or we may take positions contrary to investments mentioned.

What's better? Shares or Managed Funds?

Many people are now dabbling in online share trading as a way to lower their commission fees and experiment with the stock market. While this can prove financially rewarding those with little experience in the stock market could find this a risky strategy. Some financial gurus are recommending a safer option of managed funds for those with little experience in the stock market. It is important to do background research into the difference between managed funds and direct share investing and work out what is the best investment for you.

The simplest way to access the stock market from home is usually through online brokerage websites, but this can have its disadvantages: if you're looking to make serious money, you're going to need a large amount of money for investments, market knowledge, and time to research stock market trends. While some people may thrive on the independence that online share trading offers, it's very easy to lose money, as you're competing with professionals who have worked in the stock market for several years. Many at home day traders may find that the amount of research needed into share trends and smart investments will offset any financial gain made. But like all things that are risky, the pay-off from making smart investments can be worth it.

Another option for novices in the stock market is investing in managed funds. This allows experts to join your money with other investors, and make decisions in your best interest. Managed funds often are a more popular choice for stock market beginners, as you can still choose what investments you'd like to make, but under the guidance of an experienced professional. Options such as managed funds can broaden your investment opportunities. Using these investment methods can open doors, such as investing in commercial property which most individual investors would not have the opportunity or funds to be able to do. However, with little risk comes little return; you're much less likely to reap as many financial rewards as you would have through direct investing. Additionally, management fees can be expensive, which is a turnoff for clients who only want to make a minor profit. But for those who are novices in the stock market, it's often a better choice to learn from an experienced day trader, as opposed to going it alone.

It is important to work out what is the right investment option for you, and this will come down to what expectations you have. If you're a knowledgeable day trader and have the know-how of stock market trends, you may be able to get away with paying the fees associated with managed funds by making savvy investment choices, compared to a beginner. For those with little experience of share trading and stock market investments it may be a better option to get guidance from a managed fund run by professional day traders, compared to doing it on your own.