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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Box-By-The-Riviera™ who wrote (12980)	1/8/2002 8:40:52 AM
From: AC Flyer	Read Replies (2) \| Respond to of 74559

>>when it comes to his prouncements on where the economy is going, folks should reserve the right to ignore those comments<< I agree with that, but it can be done without disrespect. The man's just doing his job after all. To paraphrase Harrison Ford in Six Days Seven Nights, would you prefer if he stood up and said "Oh my God, the economy sucks, we're all gonna die!"

To: Box-By-The-Riviera™ who wrote (12980)	1/8/2002 9:30:58 AM
From: AC Flyer	Read Replies (1) \| Respond to of 74559

>>explain to me truely, how to patriotically invest and make money. i'm all ears. hope you are not all mouth<< You may be yanking my chain, but I'll bite anyway. All below imho only. The secret is that there is no secret. Also, I'm no guru. I had my ass handed to me trading in Nasdaq issues in the last couple of years, same as everybody else. But it turns out that there have been a few people smart enough to make money consistently in the stock market (e.g. Ben Graham & Warren Buffett), and I have copied their approach in my retirement accounts with good success. I'll boil it down to a few key points. 1. Don't trade. Traders all lose in the long run. A few lucky monkeys make money for a while. Some even make a bundle and tell everyone about it, but it's mostly a random walk. And if someone has figured out how to trade profitably consistently they are not posting on SI. 2. Don't try to get rich quick, try to get rich slow. Trying to get rich quick makes you too vulnerable, like the dog with a bone in Aesop's fable who sees a dog with a better bone in the pond (his reflection) and drops the one bone he has while trying to grab the second bone. 3. Shoot for returns that are "enough" rather than "as much as possible." A consistent 15% annual return will eventually make you rich. A consistent 25% return will make you rich quite quickly. Both of these numbers represent excellent success as the long run return in the market is 7% to 8%. Shooting for 50% or 100% annual returns will make you do things that are not consistent with getting rich (see 1 and 2). 4. The ONLY way to achieve consistent positive returns is to buy stocks of companies with strong franchises, solid balance sheets (little or no debt) and good cash flow that are trading at a discount to their intrinsic value. (This is where Ben Graham and Warren Buffett come in). The idea is that stock prices always return to the intrinsic value of the underlying companies sooner or later. Buy stocks that are trading above the intrinsic value of the company (i.e. Amazon at 100) and the long run result is predictable. Buy stocks that are trading below the intrinsic value of the company (i.e. AT&T at 18) and the long run result is also predictable. 5. I'm too lazy to do the fundamental analysis that is required to make (4) work for individual stocks, but there are numerous mutual funds that do this. Look for funds with tenured managers and consistent 3 year and 5 year results. Buy a few of the good ones. Some have value biases (OAKLX, LLPFX, WMCVX, others) some have growth biases (ARTMX, WGROX, others). 6. Spend more time at Morningstar than at SI. Morningstar is an unbelievable free resource, the best site on the internet, imho. 7. Recognize that money is only a tool. Life is short. Invest time in your kids and in doing the things you like. Some will sneer at all the above and will have the trading results to prove it. Some of those people will be justified and some will just be lucky monkeys.