A Radical New Approach to Personal Investing - Part 1
In the book the book "The Perfect Portfolio" author Leland Hevner states that the investing environment that we, as individual investors, face today is not a friendly place. Equity prices are buffeted by factors that were inconceivable just a few years ago. Yet while markets have changed dramatically, the investing theories, methods and resources we have available to cope with them have not.
The time has come to pause, take a deep breath and rethink in totality how we view and interact with the equities/stock markets. It is time to recognize that much of what you have been taught about how to invest has changed. To survive and thrive in today’s new investing environment, a completely new approach to personal investing is needed. This new approach is the subject of this article.
In the good old days (not many years ago), investors had a reasonable chance of predicting stock prices by analyzing company financial statements. Investors had a legitimate chance of being successful by doing their homework using basic equity analysis methods and tools. Unfortunately those days are gone. Today a host of factors influence stock prices that have nothing to do with corporate fundamentals, and these factors are almost impossible to analyze using the resources available to us.
What are these new factors?
Let just look at a few:
The internet. The vehicle of mass communication has changed everything. Information (good and bad) travels so fast that anyone with an internet connection can cause millions of people to make uninformed trading decisions and in this manner manipulate stock prices easily and cheaply.
Short selling attacks. Short selling is a major factor that can dramatically influence the price of any stock. A short attack can destroy the value of a stock, and there is no way that individual investors can predict which companies are going to be affected.
Government activism. Government intervention in the free market system can dramatically affect stock prices in either direction.
Speculation. Speculative price swings in assets such as oil, gold, food etc have significant effect on the health of the overall economy. These price movements are not attributable to factors that can be analyzed with any degree of confidence.
In the face of these new market dynamics and the inability of existing investing tools to deal with them, what can the individual investor do? You have three choices.
1. Do nothing and hope for the best. Hopefully you are smart enough not to take this option.
2. Develop revised theories, methods and tools to analyze these new market influences. This is extremely difficult if not near impossible.
3. The most logical choice is to develop an updated and improved approach to personal investing.
The current state of personal investing
Today, investors are confused and often intimidated by the world of personal investing as it currently exists. When seeking to learn how to cope with this new world, they are confronted with hundreds of investing books, countless newsletters, non stop seminars, sales pitches from financial advisors and a constant barrage of information from the talking heads on TV and the financial media.
The world of personal investing today is simply overwhelming for the average person trying to protect and grow their savings. When confronted with this chaos, most people simply give up in despair and either cash out of the stock market and put their money in the bank in low interest deposits, or do nothing and just watch and hope that the market will eventually rise and they will recoup their losses.
What is needed is a simplified approach to investing. One that frees you from the tedious process of analyzing individual stocks and mutual fund styles. One that is logical and easy to understand. One that meets your unique needs and is responsive to changing market conditions. In short, it fixes what is broken in today’s personal investing market.
This new approach will empower you to become more personally involved in the investing process and easily make investing decisions with confidence. My 20 plus years of experience working in the financial services industry and working with investors has shown me that in order for this new approach to work it must:
1. Be easy to understand
2. Be simple to implement
3. Be easy to monitor and change
4. Be responsive to changing market conditions
5. Be customizable
6. Enable superior returns without excessive risk
In Part 2 of this article I will reveal a recently completed study on a strategy that I have been working on for the last eighteen (yes 18) years. This research and strategy has been made possible because of a very powerful software program that I have just completed developing. This software has allowed me to back-test this investment method, over any time frame, using real historical data from any North American Stock, ETF or US based mutual fund. The results have been amazing.
You are about to learn an approach to personal investing from a totally different angle, one that defies tradition. You will need an open mind to appreciate and absorb this paradigm shift. Stay tuned.
Bruce
The time has come to pause, take a deep breath and rethink in totality how we view and interact with the equities/stock markets. It is time to recognize that much of what you have been taught about how to invest has changed. To survive and thrive in today’s new investing environment, a completely new approach to personal investing is needed. This new approach is the subject of this article.
In the good old days (not many years ago), investors had a reasonable chance of predicting stock prices by analyzing company financial statements. Investors had a legitimate chance of being successful by doing their homework using basic equity analysis methods and tools. Unfortunately those days are gone. Today a host of factors influence stock prices that have nothing to do with corporate fundamentals, and these factors are almost impossible to analyze using the resources available to us.
What are these new factors?
Let just look at a few:
The internet. The vehicle of mass communication has changed everything. Information (good and bad) travels so fast that anyone with an internet connection can cause millions of people to make uninformed trading decisions and in this manner manipulate stock prices easily and cheaply.
Short selling attacks. Short selling is a major factor that can dramatically influence the price of any stock. A short attack can destroy the value of a stock, and there is no way that individual investors can predict which companies are going to be affected.
Government activism. Government intervention in the free market system can dramatically affect stock prices in either direction.
Speculation. Speculative price swings in assets such as oil, gold, food etc have significant effect on the health of the overall economy. These price movements are not attributable to factors that can be analyzed with any degree of confidence.
In the face of these new market dynamics and the inability of existing investing tools to deal with them, what can the individual investor do? You have three choices.
1. Do nothing and hope for the best. Hopefully you are smart enough not to take this option.
2. Develop revised theories, methods and tools to analyze these new market influences. This is extremely difficult if not near impossible.
3. The most logical choice is to develop an updated and improved approach to personal investing.
The current state of personal investing
Today, investors are confused and often intimidated by the world of personal investing as it currently exists. When seeking to learn how to cope with this new world, they are confronted with hundreds of investing books, countless newsletters, non stop seminars, sales pitches from financial advisors and a constant barrage of information from the talking heads on TV and the financial media.
The world of personal investing today is simply overwhelming for the average person trying to protect and grow their savings. When confronted with this chaos, most people simply give up in despair and either cash out of the stock market and put their money in the bank in low interest deposits, or do nothing and just watch and hope that the market will eventually rise and they will recoup their losses.
What is needed is a simplified approach to investing. One that frees you from the tedious process of analyzing individual stocks and mutual fund styles. One that is logical and easy to understand. One that meets your unique needs and is responsive to changing market conditions. In short, it fixes what is broken in today’s personal investing market.
This new approach will empower you to become more personally involved in the investing process and easily make investing decisions with confidence. My 20 plus years of experience working in the financial services industry and working with investors has shown me that in order for this new approach to work it must:
1. Be easy to understand
2. Be simple to implement
3. Be easy to monitor and change
4. Be responsive to changing market conditions
5. Be customizable
6. Enable superior returns without excessive risk
In Part 2 of this article I will reveal a recently completed study on a strategy that I have been working on for the last eighteen (yes 18) years. This research and strategy has been made possible because of a very powerful software program that I have just completed developing. This software has allowed me to back-test this investment method, over any time frame, using real historical data from any North American Stock, ETF or US based mutual fund. The results have been amazing.
You are about to learn an approach to personal investing from a totally different angle, one that defies tradition. You will need an open mind to appreciate and absorb this paradigm shift. Stay tuned.
Bruce
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