Should You Buy Mutual Funds?

Their managers don’t

There are pros and cons to investing in mutual funds. When it comes to just wanting to own “stocks” then an index fund from a high quality low cost provider does make sense. The fact that you cannot control capital gains will make less of a difference in 2011, or maybe 2010 considering the idiots in Congress, when the favorable treatment of capital gains is removed.

Gary D. Halbert brought to my attention this week that Morningstar reported that not only do many mutual fund manager not invest in their own funds but that the percentage that did invest in their funds has DECREASED in the last year and a half.

There is no legal requirement that a fund manager invest in his own fund, but if they don’t, what does that tell you? Sort of like a Sprint executive carrying a Verizon phone, isn’t it?

I have reported long ago my experience doing tax returns for some stock brokers years ago and finding that none of them had significant money in any investment product they sold, despite high incomes. The few that had any stocks at all were usually in a “flyer” that someone gave them an “inside tip” on.

How much would it really pain a fund manager, with salary and bonus in the high 6 figures at worst, to invest $50,000 to $100,000 in his/her own fund just so he can have SOME idea how his customers feel?

Well, I think it’s shameful.

What do you think?

An Online Stock Broker to Buy Canadian Stocks

If you are going to really participate in the run up of junior resource stocks that will likely accompany the coming bull market in gold and silver, chances are you are going to want to buy some Canadian stocks.

That can be a problem if you are an American.

If your online stock broker is Charles Schwab or Ameritrade or something like that, you have probably found that the only way to buy a Canadian stock is to place a phone call during working hours to the international trading desk and then pay a hefty commission.

Perhaps you have been directed to a broker like Rick Rule, a giant in the junior resource sector. Unless you have millions to invest with him, though, you probably will never talk to Rick himself. And, you pay full retail commissions that will stop your heart and eat up a lot of potential profits – or add to the losses.

Choosing an online stock broker is not an easy task, and quite truthfully I hate to mention any names at all. But I doubt those serious about opening an online trading account would even bother to contact me to ask so I better just mention it here.

I have done a lot of due diligence myself, and I always recommend that you do your own also, but the online broker that I recommend where you can buy and sell Canadian stocks at low down online commission prices is Interactive Brokers.

Fortunately, not only do I have my own success to draw upon, but some of the writers at Casey Research have backed me up on this.

Interactive Brokers allows you to buy and sell right on the Toronto or Venture exchanges. You can also trade currencies (forex) for next to nothing. Some minimums apply.

One more bonus is that IB has the most secure login of any online stock broker I have come across. Some online brokers have a password that is not even case sensitive and allows no special characters. IB, on the other hand, allows complex passwords AND has the option (a requirement in some cases) of using a security card with it.

Check them out if you are in the market for an online stock broker with good service, great commission prices, and security that few others have. They pay me nothing (hint, hint IB!) for sending you their way.

We are all about profiting from investment newsletters at this blog, get your B.S. somewhere else!

Peter Grandich Portfolio – Hard to Match

I have followed Peter Grandich for quite some time.

His expertise traditionally has been in the junior resource sector, although recently has been venturing out into traditional markets with his model portfolio. Neither a perma-bull or perma-bear, Peter calls ’em as he sees ’em; and lately, he’s been calling them pretty good.

Check out the results of his current model portfolio here.

Paul van Eeden Still Bearish, Sees No Green Shoots

Paul van Eeden currently has no newsletter to sell, no axe to grind that I know of. Here’s his current thoughts on the financial crisis, de-leveraging and how long it will take to unwind:

Paul van Eeden on BNN

Paul doesn’t see de-leveraging getting over with any time soon. It took us 27 years to get here and we won’t undo the excesses in 6 to 18 months.

Paul looks for value, and he doesn’t see it right now. Asked about the real estate market and “Punch Bowl” Alan Greenspan’s recent comment that real estate may have bottomed Paul replied:

“Alan Greenspan is the same guy who couldn’t see the real estate bubble coming when he was Fed chairman”, followed by a lifting eyebrow look at the interviewer. Enough said.

Paul van Eeden is a smart guy and is worth listening to. And by the way, he sees NO “green shoots currently”; zero, nada. (And Paul is NOT a perma-bear.)

Best Strategy For Building Stock Portfolio

Gold Stocks – the Best Strategy for Portfolio Building

by Jeff Clark, Editor of BIG GOLD

October 27, 2008 was the gold mining sector’s Black Monday, the day nearly every stock hit rock bottom. Hindsight makes it plain they got caught in the violent deleveraging that sucked down every equities market in the world.

The broader markets were of course making year-to-date lows at the same time, and unlike gold stocks, they continued falling after a short intermission. In fact, the Dow fell 2,000 points after Obama was elected. In sharp contrast, the mining stocks went on a tear. Between November ’08 and January ’09, many of our BIG GOLD picks made substantial gains, rising anywhere from 45% to 149%.

This good news isn’t the whole story, of course; many mining stocks saw percentage losses greater than the broader market averages during the Big Selloff. But given the fact that gold stocks started rebounding while the broader markets continued lower, the BIG GOLD portfolio ended the year down 24% while the S&P lost 38%. We were also glad to see our portfolio responded better than the HUI; the broad-based mining index lost 32% on the year. Meanwhile, the demand for physical gold and silver was surging, likely attributed to investors who’d been spooked by the broad meltdown.

We held on to our shares throughout the selloff and advised our readers to do the same – and subsequently watched our stocks rebound mightily. And we fully expect these kinds of surges to repeat as gold pushes higher. Keep in mind that the real mania is yet to come. Once inflation responds to the Federal Reserve’s ongoing monetary foolishness, gold will need a space suit and our miners oxygen masks.

A key point to remember going forward is that gold mining shares constitute a minute fraction of the global equities market, and a small shift in investor interest toward our sector can move gold stocks sharply higher in a big hurry. The market cap of the fifteen largest gold producers in the world — combined — is a paltry $125 billion. That’s barely more than a single company such as General Electric, at $116B; much less than Microsoft ($175B); and waaay less than Exxon Mobil at $400B.

Miners have also had a temporary respite from high energy costs due to the collapse in the price of crude oil. Energy is one of the biggest expenses a miner has to carry. As energy prices came down, the cost of producing gold also declined, fattening the bottom line. Oil is likely to get back to and then beyond $143 per barrel at some point, but not for a while. We doubt it will top $75 this year, which is enormously helpful for our companies.
Recently, gold stocks have outperformed bullion, a trend we’re keeping an eye on and one we’re confident will continue in the future, especially when we see the certain emergence of serious inflation and the dollar resumes its downtrend.

So… what to do now?

What we hope you’ve been doing all along. Our general rules: If you’re already fully committed to this sector, stay the course; you will be well rewarded.

For those with money still to invest, accumulate well-run, sound companies on weakness. Volatility will continue; we expect days and weeks marked by retracement in the prices of even the best companies. The dips will be your buying opportunities. Place below-market bids and let the price come to you. Take positions with half or so of the funds you’ve allotted for this sector, then fill out your portfolio with whatever bargains come your way.

Whether you’re already full-up with gold stocks or are just getting started, you should be well positioned before the all-out mania for gold stocks hits.

The Quandary of Timing

It may surprise some to hear that we are not “all-in” yet with our portfolio. Why? Because our attitude is one of caution, and because we know that our big gains since October could get clawed back, partly or wholly, by another reversal – which would lead to another buying opportunity we wouldn’t want to miss.

But caution can be expensive when the market runs away from you. What if the train has already left the station? In that case, those waiting on a pullback will be disappointed. Just as all below-market bids placed on October 28 of last year went unfilled, so could today’s, or tomorrow’s.

Looking as little as a year out, our money is confidently on our stocks going higher – much higher. We expect the government’s assorted “stimulus” packages to fail to deliver as advertised, and usher in high inflation. This will push gold and gold stocks much higher.

But the question is, if the broader markets head lower, will gold stocks follow them down or ride on gold’s coattails?

That question leaves you in a quandary only if you’re looking at the short term. Or if you get emotional about this stuff. Those with no stomach left after the gut-wrenching selloff into last October probably shouldn’t deviate from the cautious strategy outlined above. If you’re one of those who see the big picture and ignore the gyrations along the way – which is what Doug Casey does – then you’re drawn to the idea of placing a bet when you judge that the odds are in your favor. It’s when you see the price of something is far less than its value that you can have the confidence to load up, whether that’s today or perhaps later this summer.

Whether you buy today or wait in hopes of a pullback, we believe you’ll be looking at profits a year from now. In the big picture, our stocks are still deeply undervalued, even after so many of them have doubled off their lows. But could they retreat again? In a general market pullback, definitely. Could they tread water for a while? Certainly. And could they leave present levels in the dust and double again from here? Absolutely.

There are times when one must put away the crystal ball and simply prepare for more than one scenario. This is one of them. Whether you respond more conservatively or more aggressively, keep your eye on the endgame. We think you’ll be glad you did.

Prudent precious metals strategies for conservative investors – that’s what BIG GOLD is all about. And now that the gold price is going up again, you shouldn’t wait to jump on the bandwagon. Read in our latest report why super-low interest rates mean we could see $1,500/oz gold this year – click here to learn more.

Are Banks Going Bankrupt?

Are Banks Going Bankrupt?  “NO!”, say banks

By Olivier Garret, CEO, Casey Research

On April 21, Treasury Secretary Timothy Geithner said the “vast majority” of U.S. banks have more capital than needed.

“Currently, the vast majority of banks have more capital than they need to be considered well capitalized by their regulators,” Geithner said in testimony to a congressional oversight panel on the government’s financial rescue program.

Geithner’s remarks come on the heels of a surge in reported quarterly profits by the big banks.

One of these banks, Bank of America (BAC), the world’s second largest in terms of market capitalization, booked a first-quarter net income of $4.247 billion – 6% more than it made in all of 2008.

So is this the turnaround Geithner et al. have been willing to beggar our nation’s future for?

Before calling your broker and placing a big order for bank stocks based on all this “good” news, it might be prudent to answer a couple questions first.

For starters, just where did all this income come from? And has credit quality really improved?

The answers to both can be found buried in a company press release bearing the encouraging title “Bank of America Earns $4.2 Billion in First Quarter.”

I’d like to draw your attention to the four most telling excerpts from this release.

  1. “Equity investment income includes a $1.9 billion pretax gain on the sale of China Construction Bank (CCB) shares.”
  2. “Noninterest income included $2.2 billion in gains related to mark-to-market adjustments on certain Merrill Lynch structured notes as a result of credit spreads widening.”
  3. “Credit quality deteriorated further across all lines of business as housing prices continued to fall and the economic environment weakened.”
  4. Nonperforming assets were $25.7 billion compared with $18.2 billion at December 31, 2008 and $7.8 billion at March 31, 2008, reflecting the continued deterioration in portfolios tied to housing.”

Now we see that out of its $4.2 billion in profits, a total of $4.1 billion came from a one-time sale of CCB stock and marking up Merrill’s book of mortgages. If you subtract these one-time gains from net income and include preferred dividends, Bank of America actually lost $1.286 billion.

As far as credit quality goes, I think number 3 above makes the situation as clear as can be.

Importantly, Bank of America is not the only big bank engaged in accounting sleight of hand.

As The New York Times article “Bank Profits Appear Out of Thin Air” by Andrew Ross Sorkin points out:

With Goldman Sachs, the disappearing month of December didn’t quite disappear (it changed its reporting calendar, effectively erasing the impact of a $1.5 billion loss that month); JP Morgan Chase reported a dazzling profit partly because the price of its bonds dropped (theoretically, they could retire them and buy them back at a cheaper price; that’s sort of like saying you’re richer because the value of your home has dropped); Citigroup pulled the same trick.

So what’s the takeaway?

When the Treasury secretary tells you banks are well capitalized and you read in the press that financial institutions have turned a corner, don’t buy it. And don’t buy the stocks of these companies either.

These days, smart investors are well advised to carefully watch the investment as well as the political landscape… because Washington’s movers and shakers’ influence on the markets has never been greater. The Casey Report investigates and analyzes those influences and trends – to find the best investing opportunities with maximum gains. You can try it completely risk-free – check out our 3-month trial with 100% money-back guarantee. Click here to learn more.

Jim Cramer Investment Advice

Jim Cramer is defininitely a character made for television. The question is: can you profit from his investment advice?

Certainly after seeing his run-in with Jon Stewart you might think you can profit from Jim Cramer’s investment advice by doing the OPPOSITE of what he suggests (like, SELLING Bear Stearns?). But let’s not forget that Cramer did get where he is by making money on Wall Street.

Perhaps he’s learned his lesson?

I would certainly hope that Jim Cramer will shape up and fly right, as my dad used to say, and use his extensive Wall Street knowledge and experience to put profit in the pockets of those who subscribe to his investment service.

Time will tell. I know that among his infamously bad calls of the last year he has had some profitable calls too, like buying gold and some gold stocks.

Come on Jim, we know you can do it; now show us!

Daily Reckoning Kills Forum

I headed over to the Daily Reckoning today to see what was new on the forum and was taken to a page with this message on it:

Thank you for visiting The Daily Reckoning forum. You’ve probably noticed that we have been updating and improving the website. As part of this evolutionary process we have replaced the former 2Cents forum with new commenting areas underneath each of the articles.

Your thoughts and opinions are extremely important in shaping how we develop The Daily Reckoning as a publication and as a community. Please continue posting your ideas and opinions in the new comment areas. This is the best place to make sure your musings remain highly visible and are broadcasted to the widest possible audience.

Thank you for again for sticking with us through our growth. We are confident that the new website comment feature is a great improvement for The Daily Reckoning community.

Bollucks!

This particular message had “0 Responses” printed under it with, no surprise, no way to add a comment.

I disagree as strongly as I can that adding comments below articles is “best place to make sure your musings remain highly visible and are broadcasted to the widest possible audience” or “a great improvement for The Daily Reckoning community”.

While I know that running a forum can be a challenge, an open forum is a community. Responses under an article are not. Witness agoracom.com. I often read Peter Grandich’s musings there, but when he makes 3 or 4 posts within an hour (and no link to previous/next post) a comment on the first of the posts of the day can be ignored once the more recent posts are discovered.

I think the Daily Reckoning is shooting themselves in the foot by closing down their forum. I’m sure they have reasons but let me tell you that all of that traffic can certainly be valuable to a website owner.

Casey Research used to have a forum also and chose to close theirs down.

Sure, there is some moderation needed; some people (especially hiding behind their computer) just aren’t civil. But there is just no substitute I have seen for an open user forum

I have often considered a forum here, but it is a bit of work. I would love to have a forum where people can share their thoughts on paid and free sources of investment advice (investment newsletters, obviously) – what they profit from and what’s a scam (or just junk).

Please feel free to post your comments here.

Is It Time To Look At Emerging Markets Again?

“After passing much of 2008 standing thankfully on the sidelines, we believe that with current valuations, opportunities have returned for putting capital back into long-term positions in emerging markets. In fact, we believe that emerging markets will recover faster and outperform developed markets over the long term….”

Another Look at Emerging Markets

By the editors of Without Borders, Casey Research

After passing much of 2008 standing thankfully on the sidelines, we believe that with current valuations, opportunities have returned for putting capital back into long-term positions in emerging markets. In fact, we believe that emerging markets will recover faster and outperform developed markets over the long term.

In our December 2007 edition of Without Borders we wrote:

“So much money has been sloshing around the globe in search of an “above average” return that even risky assets have been bid up tremendously. At this stage, however, with new holes in the financial dike showing themselves almost weekly – more holes, we suspect, than officialdom has fingers – the money flows are building toward a reversal. This will hammer the emerging markets the hardest because, historically, in times of crisis, capital packs up its bags and goes home. When that happens, shares of good companies get sold at the falling bid simply because the seller must get liquid, whether to calm his fears or to cover his losses elsewhere. Asset prices become screaming passengers strapped into a luge ride.

“This creates opportunity, of course. Even though the economies of all the most prospective emerging-market countries are strong enough to weather any likely storm, their financial systems aren’t. This is emphatically true in India, China, Brazil, and other fast-track economies. Even so, when foreign financial capital has fled, the physical and human capital will remain, it will still be valuable, and good investments will be cheap in the extreme. But the opportunity won’t be available for everyone – just the investors who’ve been patient.”

Then in April 2008, we gave our presentation on “Bottom Fishing for Stocks in Emerging Markets,” during which we highlighted that the single most important factor in emerging-market stock markets is capital flows. In the emerging markets, the time to invest is when capital has fled the country.

We know we disappointed the crowd when we said that there was not one emerging market we found attractively priced and that shorting in emerging markets is almost impossible, so our strongest recommendation was to do nothing.

It’s quite a skill to do nothing and do nothing well. We sidelined ourselves and watched, staying away from emerging markets for most of 2008.

But now… finally, the catastrophic sell-off in global financial markets had the effect that we expected: there was a huge sucking sound coming from public equity and currency markets in Russia, Brazil, China, Taiwan, Malaysia, India, South Korea, Colombia, Chile, etc. Foreign institutional investors came face-to-face with the reality of lower risk tolerance and deleveraging and were forced to sell. Everything.

The ensuing flight to quality left emerging markets and their currencies decimated… but herein lies the opportunity. We just hope the IMF and World Bank will run out of money or leave them alone, thereby preventing the return to the boom/bust cycle of the 1990s.

Bullish long-term outlook

Remember, the sell-off in emerging-market equities, bonds, and currencies reflects a rush for the exit sparked by global deleveraging and a need to raise cash, rather than any change in the fundamentals. When the current turmoil subsides, we believe that emerging markets will fare better than developed markets and will outperform the latter over the long term. As such, we find that current valuations are solid entry points for putting our hard-earned capital into long-term positions. Consider:

* Emerging-market economies will prove resilient during this economic slowdown and may account for all of world economic growth in 2009 as developed markets slow to zero.

* Emerging economies are not nearly as dependent on consumer spending and almost not at all exposed to consumer credit.

* Emerging markets by and large suffer neither the demographic imbalance nor the entitlement imbalance that plague the developed nations.

* Corporate and personal balance sheets in emerging markets are stronger than those in the developed markets.

* In many emerging markets (Brazil, most of South East Asia, India) as well as several African nations, domestic or regional demand is now more important than exports for GDP growth.

* Among stronger economies, high foreign-exchange reserves and lower foreign debt levels act as insurance against the global slowdown; reserves have grown six-fold to over $4 trillion over the last ten years.

* Over the past ten years, emerging-market companies have produced higher profits with lower (but not necessarily low) leverage, while profits expanded annually by double digits during the past ten years.

Cash Rich, Resource Rich

Compared to the late 1990s Asia crisis, the present situation is much more stable for emerging markets. While we expect current account surpluses to deteriorate given the global slowdown and recessionary pressures, emerging markets will face this challenging period with cash in their bank accounts.

The importance of this change cannot be overstated.

Much like individual households that stash away something for a rainy day, many emerging-market countries now have a greater reserve of wealth with which to buffer financial market headwinds. This gives them the option of taking fiscal stimulus measures to offset the effects of a developed-markets slowdown without having to go into debt. While we decry these neo-Keynesian actions as throwing water on an electrical fire, historically they have boosted share prices.

As part of their fiscal stimulus, we also expect to see higher infrastructure spending by countries with the financial muscle to do so. China, for example, which is projected to have more than 200 cities with populations exceeding one million people by 2025, up from just 23 in 2005, announced in early November 2008 a two-year infrastructure investment and stimulus package of up to 4 trillion yuan ($586 billion). While much of this stimulus will come in the form of strong-arming banks, there will be substantial cash injections in the Chinese economy, and they have the cash to do it: highways, railroads, and airports. The government hopes that this stimulus package will also encourage increased consumer consumption. All this is good news for raw-materials companies, one of which is an undervalued Chinese cement company that is a cornerstone of our portfolio. (Learn more about this company here.)

The turning point

Emerging markets will be the catalyst for global economic recovery, not the West. Like China, many emerging markets that have been saving for a rainy day have the cash and political will to spend on development projects that require raw materials. Others, like Chile and Angola, have the raw materials to sell. Even more so, a few countries like Brazil and Saudi Arabia have both. The economy will get jumpstarted with these countries initiating their own trade without the leadership or consumptive traditions of the Western world.

Perhaps even more pointedly, we foresee a highly inflationary environment over the next several years… all of the dollars with which President Obama will be flooding the world will have to find a home somewhere. This will more than likely spark another commodities boom, which is supported by the world’s ever-growing demographics, resource scarcity, and climate-change legislation.

As such, resource-rich emerging markets are going to find themselves being the future home to foreign investment capital again. Institutional capital will trickle, then gush into these markets as the world wakes up one day and finds oil and copper trading at twice their present levels.

Consequently, today’s emerging markets will be the net recipients of the future inflation that is being created by the West.

Capital Flow Conclusions

We have long said that capital flows are the most important indicator for emerging equity markets. Investor outflows in the second half of 2008 already equal one-third of the total inflows into emerging-market equity funds over the prior five years. This is a positive sign for contrarians looking for a bargain. There has been a bloodbath, and this is a buying signal.

We recognize that the ride will likely be bumpy. Fiscal stimulus, trillion-dollar deficits, and politicoramus bickering may cause a roller-coaster ride to the top… but the evidence strongly suggests that, once institutional funds finally realize that U.S. Treasuries are a fool’s bet, remaining capital will be on the hunt and flowing back into emerging markets.  The window is open, and we are dedicating our efforts to finding the most undervalued companies with rock-solid management and balance sheets.

******

In times of economic crisis, prudent investors are well advised to diversify their portfolio… ideally, some of it in global stocks and real estate. Without Borders brings you the inside scoop from two globetrotting ex-CIA agents with privileged connections around the world. They’ll suggest sound international investments, as well as the most beautiful, stable, safe, and cheap places to live and invest.

Kick the tires of Without Borders risk free for 3 months, for just $49. If you decide Without Borders isn’t for you, we’ll refund every penny – no questions asked! Learn more here.

Merry Christmas – If You Can!

Christmas Day, 2008

I wish each and every one of you a happy and safe Holiday season!

I do so with the sad realization that for some that is easier than
for others. It’s been quite a year.

Few people are rejoicing at the results of their year, especially
investment-wise.

For those of us who have some profits from shorting the market and
financial stocks in particular, it’s hard to rejoice in the face
of the losses in other areas or the hardship brought about to so
many by the circumstances bringing our gain.

But as always there is little point in bemoaning the past when we
should be planning for our future.

InvestLetters.com is a focus on services that provide us with
investment advice which will hopefully enrich our portfolios.

Few publications I am aware of succeeded to any great degree at
that this year.

———–
Disclaimer:

Let me note here that nothing in this missive is to be construed
as investment advice. I am NOT a registered investment advisor
of any kind. Please seek someone who is when making investment
decisions.
———–

(With the disclaimer out of the way, let me note that most, not
all, investment advisors are morons – in my HUMBLE opinion.)

Many experts are pulling out past issues of missives and waving
them in the air saying “I told you so”…

Some actually did. But of those, how many actually offered the
exact advice on how to profit from it? Of those, how many merely
reiterated their yearly advice and it FINALLY came true?

I have heard a few prognosticators predict something on the order
of what happened in 2008 for over a decade. If you had followed
their advice in 2008 you would have likely avoided some losses.

But if you had been following their advice for very long, you
probably would have either racked up serious losses in years before
or at minimum suffered what economists call “opportunity cost”;
ie, missing out on huge profits enjoyed by others.

Let’s look at some cases in point:

Currencies: This year was pretty good for being short the U.S.
dollar – up until July when the trade SHARPLY went against you.

Some of us have been short the dollar so long that even the
seemingly large gains, when taken over the time of the trade,
dwindle to mediocre returns. Chinese Renmimbi is probably a
poster child of this. And it didn’t suffer the effects of the
dollar rally July to December.

And while we are on the topic of the dollar, how about all of
those highly paid nincompoops (sp?) saying (once the dollar had
rallied significantly) that the dollar would now stay strong for
years? Following that advice would have cost you about 10% in the
last 6 weeks or so.

Those same nincompoops completely missed the profits of being
short the dollar in the first place, or the brief rally that
accompanied the financial meltdown.

Gold: If gold can close the year about $835 it will have a yearly
gain winning streak of 8 years. Pretty impressive. And for those
who got in at $280 in 2002 congratulations are in order.

But what if you got in back in the mid 1990’s at higher prices?
Sure, you have a double by now, but so would you have by investing
in CDs and money market funds – even though the last 10 years or
so have seen, at times, some pretty low returns.

And you would have lost no sleep.

When looking for financial advice, we have to understand that some
gurus finally got it right in 2008 only because they have had the
same message for 20 years and cicumstances finally matched their
predictions.

Others got it right in 2008, probaby surprising even themselves,
but they never gave any clear advice on how to profit from it.

Getting even a small part wrong this year could have easily
mounted enough losses to offset your gains.

Past is prologue, what do we do NOW?

  1. I hope you have sold enough losers to offset any gains
    you might have had so as to avoid paying capital gains tax.
  2. Throw away hope. Hope won’t make any stock return to the
    prices of its former glory. Facts, and cash in the bank, rule the
    day.
  3. Determine your risk tolerance. Did you have sleepless nights
    this past year because of your investment portfolio? If so, it’s
    time to re-evaluate what types of investments you are getting into.
  4. If you make New Year’s resolutions, resolve to identify the
    mistakes of 2008 and resolve further to endeavor NOT to make them
    again in 2009.
  5. If you have been managing your investment portfolio without
    a plan in the past, there is no better time than right now to start
    operating WITH a plan.

Lessons learned.

For those still holding onto the mantra of buy and hold with the
phrase “it will come back” spewing forth from your lips, 2008 should
be bury that nonsense for good.

There is always a time to sell.

Remember what I said above about time; it may come back, but what’s
your overall return when that finally occurs? That’s where
opportunity cost comes in. Something else might serve your
portfolio much better. Find it.

In my review of the investment newsletters I have paid homage to
over the last year, one comes out a clear winner.

 

is one investment newsletter that did no flip flops, made no excuses,
and allowed stop loss orders to do their job of preserving capital.

I will admit that I believed some of the stops they recommended were
so low that:
a) the stock would never go that low
b) if it did go that low, it wouldn’t go lower
c) it would be painful to be sold out at that level

Guess what?
a) they did go that low
b) they continued lower thereafter
c) it would have been much less painful than the tax loss sales I
ended up taking

The Trend Letter doesn’t hold your hand, though. They give you the
advice you need and then they say no more until that advice changes.

You receive a monthly newsletter and as many flash reports as they
deem necessary depending on what’s going on. It is NOT a trading
service.

As their name implies, they identify a trend, look for the best way
to invest in it, then invest and wait for the facts to change.

It’s been good advice and I predict it will continue to prove itself
time after time.

 

I think you will find it one of the best newsletters out there.

Happy Holidays!

Roger.