Tag Archives: Warren Buffett

Best Investment Advise of 2011

There’s plenty of advice floating around these days when it comes to investing in the financial markets. The problem is to find the ones who really is worth something, like the famous “Bob Farrell’s 10 Rules of Investing.” But once in a while I stumble over something that sounds quite wise to me, and I happy to pass it on. Here is the top 20 investing rules for 2011 from the independent advisers at Cabot.net, (And, of course, a copy of Farrell’s classic ” Top 10″.

“Markets are never wrong; opinions are.”

Jesse L Livermore

There is of course different advise for different types of investors. So,the first thing you should determine is what kind of investor you are; a speculator investing to make as much money as possible in the shortest amount of time? Are you investing to save money and preserve the wealth you already have? or maybe you’re an ethical investor trying to make some kind of statement by the way you invest?

There is – however – some advice that are valid regardless of what kind of investor you are.

The following 20 tips from Cabot.net is the kind of sound, good common sence advise. and can be applied to almost every type of strategy.

Enough jaba-jaba from me – here they are:

Cabot’s 20 Best Investment Advise For 2011

1. Cut losses short (definitely rule #1 for growth stock investing).

2. Search for strong sales and earnings growth (especially triple-digit sales growth).

3. Search for revolutionary products with major benefits. First Solar and Crocs filled the bill in 2007 and were our two biggest winners.  This year we’ve benefited from Green Mountain Coffee Roasters’ revolutionary Keurig single-cup brewer.

4. Heed the message of the overall market–never fight the main trend!

5.  Never average down in growth stocks.

6. Be prepared for all contingencies (always have an exit plan ahead of time).

7. Never try to buy at the bottom or sell at the top (if you try, you’ll just lose more money).

8. To avoid gut-wrenching volatility, stick with stocks that are liquid (at least 500,000 shares traded per day or more).

9. Only put more money to work after your past purchases are showing you a profit.

10. Be humble—making money in stocks is tough, so don’t kill yourself over one or two bad trades. Be thankful when you hit a big winner.

11. Find an investing system that works for you, then follow it. The best way to deal with stress from the market is to have a game plan ahead of time. If you wait until things are blowing up in your face, it’s too late—by then, your emotions are out of control and you’re likely to do the exact opposite of what’s constructive.

12. “Markets are never wrong; opinions are,” is a quote from Jesse L. Livermore, one of the most colorful, flamboyant, and respected market speculators of all time. At Cabot, we agree wholeheartedly with his comment and truly embrace this thinking. And you should, too, if you want to become a successful growth investor.

13. When looking for potential purchase candidates, examine both the company’s fundamentals and its stock’s technical performance. When analyzing the technicals, focus on the stock’s momentum and price chart, along with its volume pattern and 50-day moving average.

14. Find a company that has a big idea … one that leaves few if any limits on its future growth potential. It’s these big ideas that create an atmosphere that can push a growth stock to dizzying heights!

15. Warren Buffett once said there were only two rules to follow with your investments: Rule #1: Don’t lose money. Rule #2: Don’t forget rule #1.

16. Our goal is to get you heavily invested while the market is trending higher. During those times, when investor perceptions are improving, investors are willing to pay more and more for stocks. This is when you can make big money! But, of course, no market moves in one direction forever. So, when the intermediate-term trend of stocks is down, your best move is to play defense. Easing up on new purchases, while building up cash by selling your weakest stocks, is a good idea.

17. Be an optimist. In our more than three decades of publishing investment advisories, we’ve seen many ups and downs for both the market and our country. But after every tough event our dynamic country and economy have eventually rebounded. So no matter how bleak the situation, always stay optimistic because our country and stock market will give you some dazzling opportunities!

18. Diversify your portfolio. For our Model Portfolio in Cabot Market Letter, 12 stocks provide plenty of diversification for your growth portfolio. Smaller investors can do well with as few as five stocks, but you should never have all your eggs in one basket.

19. Once you’ve invested in a stock, be patient. Recognize that time is your friend. Frequently stocks don’t go up as fast as you might want them to. But if you can develop a persistent and tolerant attitude coupled with plenty of patience, you’ll have a great advantage.

20. Buy growth stocks with strong Relative Performance (RP) lines. RP studies are a superb way to identify successful companies and to avoid problem companies. You should buy stocks that are consistently outperforming the market. This is a good indication that they are under accumulation, week after week, month after month, and that the companies are succeeding. The best investing tips come from the performance of the stocks themselves. So ignore hot tips!

Bob Farrell’s Classic Rules

When it comes too investment advise, it’s impossible to get around Bob Farrell’s 10 classic rules of investing.

Every trader, saver or investor should have a copy pasted on their wall, or somewhere where they’re sure to be remembered when turbulence are rocking the boat and the so-called experts are more confused than ever.

(You can download a copy at the link below.)

Here’s a quick summary of Farrell’s “10 Rules of Investing”:

1. Markets tend to return to the mean over time.
2. Excesses in one direction will lead to an opposite excess in the other direction.
3. There are no new eras — excesses are never permanent.
4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.
5. The public buys the most at the top and the least at the bottom.
6. Fear and greed are stronger than long-term resolve.
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.
8. Bear markets have three stages — sharp down, reflexive rebound and a drawn-outfundamental downtrend.
9. When all the experts and forecasts agree — something else is going to happen.
10. Bull markets are more fun than bear markets.

Download: Bob Farrell’s 10 Rules of Investing

See also: David Rosenberg: How To Play 2011

On a personal account, I’d like to remind you of John Maynard Keyes well-known quote: “The markets can stay irrational longer than you can stay solvent.”

Worth keeping in mind in this age of quantitative easing.

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Filed under International Econnomic Politics

Meredith Whitney: States May Need Federal Bailout in Next 12 Months

The U.S. government will face pressure to bail out struggling states in the next 12 months, says Meredith Whitney, the banking analyst who correctly predicted Citigroup Inc.’s dividend cut in 2008, Bloomberg writes.

“It’s going to be an incredibly divisive issue.”

Meredith Whitney


While saying a bailout might not be politically viable, Whitney joined investor Warren Buffett in raising alarm bells about the potential for widespread defaults in the $2.8 trillion municipal bond market. She said state and local issuers have taken on too much debt and that the gap between public spending and revenue is unsustainable, according to Bloomberg.

“People will think the federal government will bail these states out,” Whitney,  the founder of Meredith Whitney Advisory Group Inc., says in an interview on Bloomberg Television.

“It’s going to be an incredibly divisive issue.”

Whitney’s comments coincide with her release of a report rating the financial health of the 15 largest U.S. states measured by gross domestic product, according to Fortune magazine.

The report, which Whitney said took two years to complete and hasn’t been released publicly, ranks California’s finances the worst, with New Jersey, Illinois and Ohio tied for second-worst.

Read the story here.

Watch the video.

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2010 Analysis: "11 Black Swans"

The independent research and financial advisory firm Wealth Daily presents a list of 11 possible “Black Swans” for 2010. Among the highly unlikely (but possible) events is; total collapse in China, England will be forced to seek help from IMF and Dow Jones hits 20 000.

“No one is talking about an extended bull market, and I’ll grant you that with the amount of debt the U.S. has taken on – on both personal and national levels – it seems the market’s geared for a long up-move.”

Brian Hicks

(Article in Norwegian, links to reports in English)

Wealth Daily er liten skjelden blomst i det enorme universet av internasjonale analyse- og investeringsrådgivere.

Selskapets grunnlegger, Brian Hicks, beskriver sin investeringsfilosofi på denne måten:

“The greatest investment advice I ever received didn’t come from Warren Buffett, Peter Lynch, or my grandfather. It came from a car salesman I never knew or met. And I’ll bet you never heard of him either. He lives in California and his name is Carlos Gray. Carlos grew up as the son of a migrant worker from Mexico and a WWII veteran from Rockford, Tennessee. He never went to college, but that didn’t stop him from becoming the richest person in his family. To date, Carlos’ net worth is in excess of $9 million. He didn’t become wealthy by trading stocks or flipping real estate. He did it in a most unique way. He did it by selling cars.Mind you, Carlos doesn’t own any car dealerships and never has. And he didn’t sell expensive cars like Mercedes, Ferraris, Rolls Royces or Jaguars. He built his wealth selling cars that sold for less than $20,000.”

Siden oppstarten i 1994 har Brian Hicks spesialisert seg på å identifisere billige, undervuderte og nærmest ukjente aksjer, og kan vise til en imponerende vekst i sine kunders porteføljer.

I 2002 anbefalte Wealth Daily kjøp av selskapet Polymet. Siden da har aksjen steget 7780 prosent.

Wealth Daily utgir daglige investeringstips, i tillegg til jevnlige makroøkonomiske spesialrapporter.

Her er Brian Hicks liste over mulige overraskelser i 2010:

1.Full kollaps i Kina.

2. England går konk, og må be IMF om krisehjelp.

3. Alle kullkraftverk blir nedlagt.

4. Prisen på uranium spretter opp til 90 dollar per pund.

5. Demokratene klarer å beholde flertallet i den amerikanske Kongressen.

6. Kina dropper dollaren som referansevaluta.

7. Iran utvikler sin første atombombe.

8. Nytt krakk i boligmarkedet.

9. Dow Jones-indeksen når 20 000 poeng.

10. Solenergi blir en hovedkilde for energi.

11. USA legaliserer mariuana.

Here’s a short version of the report “11 Black Swans”.

Here’s  Wealth Daily’s “2010 Stock Market Outlook”.

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Filed under International Econnomic Politics, National Economic Politics