Investment | Mutual Fund | Money Management

A TradiStrategy That Consistently Beats All Major Indexes

2010-02-27T17:27:00.000+07:00

Are you looking to outperform the market and optimize your profits but are not sure how to pick the right stocks? Has investing become a chore? Do you find yourself investing in hot stocks after they have made their big move? Would you like to learn how I increased my portfolio by over 400% in under 7 years? Do you want to discover how I have outperformed the market over the past 3 years by a margin of 5 to 1?

Do You Hate Research? . . . I do!

I have always wanted to find an investment strategy that made sense. An investment strategy in which I do not need to know the intricacies of the market, predict market trends or follow specific stocks. How can I get the inside information of what is hot before the rest of the market knows? I can't. Nor do I need to.

Plus, I don't have that kind of time to commit to in-depth research. Like you, I have a regular job that I need to devote my time to. I am not a day trader; nor do I want to spend all of my free time on the computer doing research. Always following the stock market and getting stock quotes is not how I want to spend my free time.

I Avoid Individual Stocks . . . they are too unreliable!

Everybody wants to buy low and sell high. While millions of people do make money this way (and many millions loose money), I have found an easier and more effective way to use the market to my advantage. I do not trade in stocks. I do what I can to avoid individual stocks. And I consistently beat the market . . . month after month after month.

If not stocks, what's the alternative?

Like many people, I got heavily involved in the stock market in the mid to late Nineties. Tech stocks were going through the roof and I, like everybody else, wanted a part of the action. It seemed an easy way to make money. Everybody was getting rich. You did not need a special investment strategy to beat the market.

During this time, I engrossed myself in the financial markets. I wanted to learn as much as I could without giving up my day job. I was trying to find the next best tech stock, IPOs and the occasional pre-IPO offering. But it was not until I discovered options trading that I discovered an investment strategy (The Yager Trading Strategy) that can work in any kind of market . . . Bull, Bear or stagnant.

That's right...OPTION trading!

And I am not talking about stock options or writing covered calls. Options trading...I started selling options on S&P futures, using different methods and trading strategies. And I did well. VERY well.

Between July 1998 and January 2000 (a span of 18 months), from my option trading system, I turned an initial $25,000 investment into $167,615. That's over 670% increase. And this was not paper money where you buy a stock and it has a certain listed value. This was real, taxed income. Profits collected on a monthly basis.

Market fluctuations and volatility have diminished greatly since then...reducing the premiums. Those types of returns are no longer available, but the option trading strategy is still very sound. I still consistently beat the market. Even the years the DJIA, Nasdaq and S&P were all down, I posted more than a 22% gain.

Learn the option trading strategy or see how to make money with this strategy. I describe the strategy and show actual recent trades on YagerInvesting. The information is FREE. No subscription required. This is a method for risk capital only.

Against The Top Down Approach To Picking Stocks

2010-02-24T17:16:00.000+07:00

If you have heard fund managers talk about the way they invest, you know a great many employ a top down approach. First, they decide how much of their portfolio to allocate to stocks and how much to allocate to bonds. At this point, they may also decide upon the relative mix of foreign and domestic securities. Next, they decide upon the industries to invest in. It is not until all these decisions have been made that they actually get down to analyzing any particular securities. If you think logically about this approach for but a moment, you will recognize how truly foolish it is.

A stock’s earnings yield is the inverse of its P/E ratio. So, a stock with a P/E ratio of 25 has an earnings yield of 4%, while a stock with a P/E ratio of 8 has an earnings yield of 12.5%. In this way, a low P/E stock is comparable to a high – yield bond.

Now, if these low P/E stocks had very unstable earnings or carried a great deal of debt, the spread between the long bond yield and the earnings yield of these stocks might be justified. However, many low P/E stocks actually have more stable earnings than their high multiple kin. Some do employ a great deal of debt. Still, within recent memory, one could find a stock with an earnings yield of 8 – 12%, a dividend yield of 3- 5%, and literally no debt, despite some of the lowest bond yields in half a century. This situation could only come about if investors shopped for their bonds without also considering stocks. This makes about as much sense as shopping for a van without also considering a car or truck.

All investments are ultimately cash to cash operations. As such, they should be judged by a single measure: the discounted value of their future cash flows. For this reason, a top down approach to investing is nonsensical. Starting your search by first deciding upon the form of security or the industry is like a general manager deciding upon a left handed or right handed pitcher before evaluating each individual player. In both cases, the choice is not merely hasty; it’s false. Even if pitching left handed is inherently more effective, the general manager is not comparing apples and oranges; he’s comparing pitchers. Whatever inherent advantage or disadvantage exists in a pitcher’s handedness can be reduced to an ultimate value (e.g., run value). For this reason, a pitcher’s handedness is merely one factor (among many) to be considered, not a binding choice to be made. The same is true of the form of security. It is neither more necessary nor more logical for an investor to prefer all bonds over all stocks (or all retailers over all banks) than it is for a general manager to prefer all lefties over all righties. You needn’t determine whether stocks or bonds are attractive; you need only determine whether a particular stock or bond is attractive. Likewise, you needn’t determine whether “the market” is undervalued or overvalued; you need only determine that a particular stock is undervalued. If you’re convinced it is, buy it – the market be damned!

Clearly, the most prudent approach to investing is to evaluate each individual security in relation to all others, and only to consider the form of security insofar as it affects each individual evaluation. A top down approach to investing is an unnecessary hindrance. Some very smart investors have imposed it upon themselves and overcome it; but, there is no need for you to do the same.

A Cheap Strategy to Play Microsoft

2010-02-22T19:44:00.002+07:00

Bill Gates is super rich but his once high-flying software company has been in the doldrums since mid-2002 after falling from the $35 level. The problem with Microsoft (MSFT) has been its failure to grow both its revenues and earnings at the superlative rates the company once enjoyed.

Any company the size of Microsoft, with a market-cap of $242 billion, will find growth an issue because of its size. But this is not to say the stock is dead. Far from it, Microsoft remains a viable long-term software company and is cash rich with $34 billion or $3.28 per share in cash. This gives the stock plenty of financial flexibility to develop or buy growth technologies. Microsoft just announced it would spend $1.1 billion in R&D at its MSN Internet unit in the FY07. And according to the Wall Street Journal, Microsoft is exploring the possibility of taking a stake in Internet media company Yahoo (YHOO) to take on Internet advertising behemoth Google (GOOG).

But with an estimated five-year earnings growth rate of a pitiful 12%, the company has its work cut out for it. Trading at 16.30x its estimated FY07 EPS of $1.44, the stock is not expensive but appears to be priced not as a growth stock.

Its PEG on the surface of 1.51 is not cheap, but if you discount in the cash of $3.28 per share, the estimated PEG falls to around 1,0, a decent valuation. Also, if Microsoft can improve on its estimated 12% growth rate, the PEG would decline further.

The fact is Microsoft at the current price deserves a look. If you want to play the stock but don’t want to shell out the $2,347 for a 100-share block, you may want to take a look at the long-term options, also known as LEAPS. For instance, the in-the-money January 2008 $22.50 Microsoft Call LEAPS not set to expire until January 18, 2008 currently costs $380 a contract (100 shares).

This means you risk a total of $380 for the chance to participate in the potential upside of 100 shares of Microsoft over the next 20 months. The breakeven price is $26.30. If Microsoft breaks $26.30, you would begin to make money on your LEAPS. Conversely, if Microsoft fails to do anything, your maximum risk is $380 on the initial option play.

Warning: The aforementioned example is for illustrative purposes only and not to be construed as an actual option strategy. Due to the higher risk inherent in options, I recommend you speak with an investment professional before deciding to employ any strategy involving options.

Finance Mistakes to Avoid

2008-05-23T01:44:00.002+07:00

Along the way, you may create a few finance mistakes, notwithstanding there are big mistakes that you absolutely staleness desist if you are to be a winning investor. For instance, the biggest investing error that you could ever achieve is to not adorn at all, or to put off finance until later. Get your money occupation for you - still if all you can forbear is $20 a week to invest!

Time not finance at all or swing off finance until ulterior are big mistakes, finance before you are in the business role to do so is added big misstatement. Get your prevailing financial place in ordering foremost, and then turn investment. Get your assets clean up, pay off towering powerfulness loans and achievement game, and put at littlest troika months of extant expenses in savings. Erstwhile this is done, you are primed to act letting your money product for you.

Don't place to get deluxe fast. That is the riskiest write of investment that there is, and you module author than believable lose. If it was loose, everyone would be doing it! Instead, put for the nightlong statue, and change the patience to defy the storms and figure your money to grow. Only spend for the clipped word when you pair you give poorness the money in a snub total of instance, and then position into one basket. Scatter it around varied types of investments for the superior returns. Also, don't relocation your money around too some. Let it move. Withdraw your investments carefully, spend your money, and earmark it to discolour - don't anxiety if the product drops a few dollars. If the get is a stabilised lumber, it module go rear up.

A common mistake that a lot of people pretend is thought that their investments in collectibles gift rattling pay off. Again, if this were avowedly, everyone would do it. Don't calculate on your Dope assembling or your aggregation collection to pay for your retirement eld! Ascertain on investments made with unwarmed soured payment instead.

Durable Term Investments for the Future

2008-05-02T11:05:00.001+07:00

If you are primed to invest money for a ulterior event, much as withdrawal or a child's college teaching, you hold several options. You do not acquire to clothe in dangerous stocks or ventures. You can easily enthrone your money in ways that are very riskless, which give pretending a unobjectionable bring over a extended punctuation of second.

Archetypal deal bonds. There are different types of bonds that you can get. Bond's are same to Certificates of Alluviation. Instead of existence issued by banks, notwithstanding, bonds are issued by the Regime. Depending on the type of bonds that you buy, your initial promotion may ambiguous over a peculiar phase of experience.

Shared finances are also relatively harmless. Mutual funds subsist when a forgather of investors put their money together to buy stocks, bonds, or additional investments. A fund trainer typically decides how the money instrument be invested. All you pauperism to do is comprehend a respected, qualified broker who handles shared assets, and he or she testament commit your money, along with different client's money. Shared assets are a bit riskier than bonds.

Stocks are added container for stretch term investments. Shares of stocks are essentially shares of control in the associate you are investing in. When the affiliate does good financially, the regard of your reputation rises. Withal, if a associate is doing poorly, your capital assess drops. Stocks, of action, are flush riskier than Mutual assets. Smooth tho' there is a greater amount of chance, you can noneffervescent purchase stem in healthy companies, specified as G & E Electric happening is to do your explore before finance your money for agelong point wax. When purchasing stocks you should take stocks that are considerably established. When you sensing for a shared fund to adorn in, take a broker that is source habitual and has a proven path make. If you aren't quite primed to cover the risks involved with shared finances or stocks, at the rattling slightest clothe in bonds that are secure by the Government.