Every trader needs stock trading advice. This is especially true for investors who are just starting out in their careers. Of all the different kinds of expert tips available though, the most important ones revolve around trading systems.
Go For a Plan
Systems are essentially plans for you to follow when you need to make trading decisions. The logic of having a plan in place is obvious when you consider that trading is a highly risky undertaking. The sad news is that there are many traders who dive straight into trading, wanting to make loads of cash without even considering what their objectives are and how high they can tolerate loss.
The most ideal trading advice is to put your money on creating a system. With a plan, you can easily pinpoint entries and exits. Furthermore, a good plan can help you plot money management rules so you can limit your chances of losing all of your capital on bad trades. In short, a system can be your key to surviving the unpredictable nature of the stock market and to making profits.
Skip Black Box Plans
Systems that are labeled black box function automatically. They give out recommendations that are meant to be followed without questions. This may seem like a convenient set up but in reality, it may actually be dangerous. It’s never a good idea to follow suggestions if you aren’t fully aware of what they are based on.
In addition to not using black box systems, one other great trade advice is to evaluate your decisions carefully. You should consciously make decisions that match your personality and identity as a trader. Using an automated system could mean getting slapped with risk levels that are too high for you. This means there is a high chance that you will lose more than you are willing to let go of.
Test Your Plan
Whenever possible, you should create a trading plan. If you feel thought that devising a system is a bit too much for you, you can adjust a previously made system to fit you. Whatever you decide on though, it is crucial to follow the stock trading advice to back test a system before using it.
Back testing is the process of using a plan to make trades based on historical data. This means you don’t actually have to use real money and present market data. This implies that testing will not be able to provide extremely accurate results. Despite using past data however, there is still a good chance that systems that churn out good results will work well in current market conditions and situations. Aside from determining the effectiveness of a system, testing can also help you spot weaknesses that you can correct before you start to trade with your plan.
You’ll never run out of great pieces of trading advice. Take note though that the most excellent tip you can ever follow is to use a custom trading plan that has been back tested. Systems are the real secrets to profits that can make even non-technical experts rich in the stock market.
Everything Investments explains the benefits of saving early and saving often, and the impact that saving can have on your retirement. The idea of savings is good, but it is much better when it is coupled with investing. There is a difference between just saving money and saving money to invest. That difference is “purpose.” Purpose is often the reason why people do not save, or do not save enough. Without a purpose, or a reason, or a goal, your money is just sitting there waiting to be spent.
Learning to Cut Expenses
If you look around your home, you will likely find stuff that you bought, but either don’t need or don’t use. Could the money you used to buy those items have been put to better use? The answer is absolutely. When we forego buying things that we do not need, or that we do not use, we save money that can be used for investing. Learning to save is sometimes a difficult lesson. Learning not to spend money is one of the fastest ways to increase your savings potential. Most of us can find areas in our life where we can make cuts to expenditures and not damage the lifestyle to which we have become accustomed.
Social Benefits of being Frugal
The art of frugality is a social trend. When you decide to become frugal you will instantly discover that there are a lot of other people out there who are frugal too. There is power in numbers. This is not just a great way to realize that you are not alone in this endeavor but also that you can actually network and find better ways to save. It also helps on the social scene as frugal people tend to enjoy life without spending money, and that is an awesome way to meet new friends, and enjoy social activities with like minded people.
Money drives everything, and it takes money to make money. Having money to invest opens a lot of doors that can lead to better opportunities. Savings allows us to live while we make changes to our lives. Repositioning ourselves into a new career is a good example of how we can create a better opportunity for ourselves. Savings allows us that option because rarely do we just ascend to the next level without first having to go through the lower level jobs which often pay less money. Having more investment capital is also a way to find better investing opportunities.
Investing in Confidence
Learning to save is also a great way of learning to avoid temptation. You learn to look more closely at your own decisions and become strong at making better decisions. Having money saved is also a boost to your confidence. You do not have to wait for a crisis to become motivated to action. Money is a tool that allows you to fix problems before they escalate. When you are not dependent upon every paycheck you can search for better jobs. Learning to save money gives you better confidence to handle life.
The Power of Money
Look around you. How many people are totally stressed out right now over money issues? When you have a savings account, or investment account that is padded, you have room to breath when other people do not. The power of stress is deadly. It has amazing qualities to create destruction. Whether you are talking about personal relationships, or health, stress is involved. Learning to save takes the power away from stress and gives it back to you.
I’ve been reading more about Chowder’s Rule recently as I wanted to learn more about one of the columns in the US Dividend Champion list (it’s tucked away on the right hand side of the sheet in column BZ).
One of Chowder’s first rules in his stock screener is to find companies of “good quality”. But what does that mean?
What is Quality?
Back when I was at University studying Electronic Engineering, a friend of mine was studying Manufacturing. He used to talk about going to “Quality lectures” and I thought he simply meant any lecture where the professor did a good job presenting the course material. It took me some time until I finally realized that “Quality” was actually a subject all on its own! Yes, I can be pretty slow sometimes.
As it relates to Companies, the trouble with “Quality” is that it means many different things to many different people. In many ways Quality is in the eye of the beholder, and while its effects can be seen, it’s hard to measure.
Does the fact that a company increases dividends for 25 years mean that it’s a high quality company, and if so, what’s the magic number when the quality threshold is reached – 5, 10, 25 years? Is it cash flow, earnings growth, financial strength, profit margins, all of the above? Quality isn’t a simple value you can just plug into a stock screener in the search for quality.
Measuring dividend stock quality
For a quick initial yes/no litmus test on whether to investigate a stock further; Chowder’s approach and definition is simple:
“High Quality is defined as having superior financial strength. A company must have a 1 or 2 rating for Safety with Value Line, or a BBB+ rating or better with S&P. Both of these Financial Strength ratings indicate investment grade quality. … Anything that doesn’t meet the High Quality definition is considered speculation and managed differently within the portfolio.”
Companies have credit / investment ratings assigned to them, much as we have our own personal Credit Scores. Companies with low investment grades must pay higher expenses when borrowing money because they’re considered to have a higher risk of not paying their debt (aka defaulting) than highly graded companies. And you can imagine that there’s an army of people involved in researching and determining each company’s grade because of how much money is involved in that industry.
The S&P rating mentioned by Chowder is one agency; here’s a quick comparison of some credit ratings available on the web as well as the things I learned along the way.
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Model Release: No
Property Release: No
lot of numbers in a spreadsheet and charts over it (3d render)
S&P Investor Rating
You can obtain credit ratings for individual companies over at standardandpoors.com. You’ll be asked to create an account and supply email, password and name but it’s otherwise free and there are no charges. Their website is quite a pain to use because you have to pull each symbol individually however, and none of the screeners in my brokerage accounts allow this rating as a search criteria.
The S&P rating methodology grades companies from AAA (the highest), through AA, A, BBB, BB, B, CCC, CC and to R (in default). The symbols ‘+’ and ‘-‘ are used to denote positions with a rating e.g. AAA+ > AAA > AAA- > AA+.
Using Chowder’s definition, grades AAA+ through to BBB+ are investment grade companies and grades BBB through to CC- are speculative. Note that officially per the S&P rating, all BBB grades are investment quality not just BBB+.
Value Line
I didn’t try to get the Value Line ratings. The sign up process looked more complicated than at S&P and they seem very interested in promoting their newsletters and stock selection methodology so I stayed away…
Moodys
And went to Moodys instead which is a competitor to S&P. Their signup process is very similar to S&P’s (email, password and name) but I found their website better organized and it contained more information. It’s free to sign up and get basic ratings but there are charges for premium reports that detail the ratings and research on each individual company. I was still not able to find a list of stocks with a given credit rating, although their search tools are better than the S&P site.
Moodys’ rating methodology is more complicated than S&P’s with 25 different classifications. There’s the basic classification of Aaa (highest), then Aa, A, Baa, Ba, B, Caa, Ca and finally C (the lowest). Then within each rating (except for Aaa), there is an additional rating of 1, 2 or 3 showing the relative position within the rank. So Aaa > Aa1 > Aa2 > Aa3 > A1 > A2 > A3 > Baa1.
The grades of Aaa through to Baa3 are considered investment grade. Grades from Ba1 to Ca3 are speculative and C is in imminent danger of default.
Morningstar Credit Rating
Morningstar has their own credit rating score too. You can find it hidden on the “Bonds” tab of any individual stock quote page. Or you can view the entire list. This is a much easier system to work with than either S&P or Moodys, and is likewise freely available. One disadvantage here is that the coverage is not as high as with the previous two systems; I could not find scores for 6 companies that S&P and Moodys rated.
Morningstar’s scale is simpler though: AAA, AA, A, BBB, BB, B, CCC, CC and C. Any rating of BBB or higher is “Investment Grade” and ratings of BB through CC are considered more speculative grades. C is the rating that denotes imminent default on loan payments.
S&P Capital IQ Quality Rating
Finally I looked at S&P Capital IQ’s Quality Ranking score. S&P Capital IQ is related to the S&P Ratings service as they’re both owned by the same parent company – McGraw Hill. However Capital IQ is a more general investment data and analytics company competing with Bloomberg and Reuters.
The Capital IQ Quality Rating isn’t a standalone credit score; it rates growth and stability of earnings and dividends. This rating is not the same as the Capital IQ ‘star’ rating which is an aggregate of additional criteria. The Quality Ranking score is defined in a range from A+ (highest), A, A-, B+, B, B-, C+, C (lowest). Since it’s not a credit score, there’s not really a concept of Investment-Grade but the B+ score is considered “average”. So you could take either B+ or A- as a minimum threshold.
You can find the Quality Rating (and definition) on any S&P Capital IQ analysis report which are freely available via the Sharebuilder brokerage research tools and other brokerages. The Sharebuilder stock screener also includes this rating as a search criteria.
How do my stocks score?
I’ve normalized all the scores from the stocks in my portfolio to a common standard; using the Capital IQ scale as a baseline.
For Moodys, the conversion ignores the 1,2,3 classifier so I mapped Aaa=>A+, Aa*=>A, A*=>A-, Baa*=>B+, Ba*=>B, B*=>B-, etc.
For S&P, the conversion ignores the +/- classifier, e.g. AAA*=>A+, AA*=>A, A*=>A-, BBB*=>B+, BB*=>B and B*=>B- etc.
Finally for Morningstar, I used a similar scheme as the S&P conversion: AAA=>A+, AA=>A, A=>A-, BBB=>B+, BB=>B and B=>B- etc.
This yielded the following results for the stocks in my portfolio
Symbol
Moodys
S&P
MorningStar
Capital IQ
MSFT
A+
A+
A+
A-
PFE
A-
A
–
B+
T
A-
A-
A-
B+
ROC
B
B+
–
B
XOM
A+
A+
A+
A
HD
A-
A-
A-
A
JNJ
A+
A+
A+
A+
AXP
A-
B+
A-
B+
PG
A
A
A
A+
UPS
A
A-
A-
B
CVX
A
A
A
A
MCD
A-
A-
A
A
JPM
A-
A-
–
B+
KO
A
A
A
A+
INTC
A-
A-
A
B+
DOW
B+
B+
B+
B-
AWR
A-
A-
–
B
ADP
A
A
–
A
UNP
A-
A-
A-
A+
KMB
A-
A-
A-
A
GXP
B+
B+
B+
B
APD
A-
A-
A-
A
LNT
A-
A-
–
B+
GIS
A-
B+
A-
A
MAR
B+
B+
B+
B+
RTN
A-
A-
A-
A+
TROW
–
–
–
A-
LB
B
B+
–
B+
CB
A
A
A-
A
BMS
B+
B+
–
B+
EMR
A-
A-
A-
A+
LMT
B+
A-
A-
A+
Missing results
The Moodys and S&P Ratings are not always available for a given stock symbol. Here’s a quick run through the stocks in the list above where I couldn’t initially find a rating. Another place to find the rating can be the company’s Annual Report.
Rockwood Holdings (ROC)
ROC’s debt is issued by one of its fully owned Subsidiaries, Rockwood Specialties Group. Using the conversions above, this rates a normalized B for Moodys, or B+ from S&P.
American States Water (AWR)
AWR’s debt is mostly dependent on its subsidiary, Golden State Water Company (GSWC). This rates a normalized A- for Moodys and an A- from S&P.
T. Rowe Price (TROW)
TROW aren’t rated by S&P or Moodys simply because they have no debt!
Summary
While the Capital IQ ratings are by far the easiest to query and are readily available for every stock I’ve searched for; I think I’ll pay more attention to Moodys credit rating going forward. I think it’s more focused than the Capital IQ rating and since it can directly affect the cost of borrowing of a company, it’s a meaningful rating. I’m pleased to see that most of the stocks in my portfolio have a good credit rating though!
Based on Moodys scores, my two lowest quality stocks are ROC and LB although the news is not all bad. ROC is currently under watch for a possible upgrade after the announcement of the pending sale to Abermarle. LB was upgraded one step in 2011 due to strong performance and debt repayment, putting it in the top tier of its grade and the company currently has a stable outlook.
I’ve been reading more about Chowder’s Rule recently as I wanted to learn more about one of the columns in the US Dividend Champion list (it’s tucked away on the right hand side of the sheet in column BZ).
One of Chowder’s first rules in his stock screener is to find companies of “good quality”. But what does that mean?
What is Quality?
Back when I was at University studying Electronic Engineering, a friend of mine was studying Manufacturing. He used to talk about going to “Quality lectures” and I thought he simply meant any lecture where the professor did a good job presenting the course material. It took me some time until I finally realized that “Quality” was actually a subject all on its own! Yes, I can be pretty slow sometimes.
As it relates to Companies, the trouble with “Quality” is that it means many different things to many different people. In many ways Quality is in the eye of the beholder, and while its effects can be seen, it’s hard to measure.
Does the fact that a company increases dividends for 25 years mean that it’s a high quality company, and if so, what’s the magic number when the quality threshold is reached – 5, 10, 25 years? Is it cash flow, earnings growth, financial strength, profit margins, all of the above? Quality isn’t a simple value you can just plug into a stock screener in the search for quality.
Measuring dividend stock quality
For a quick initial yes/no litmus test on whether to investigate a stock further; Chowder’s approach and definition is simple:
“High Quality is defined as having superior financial strength. A company must have a 1 or 2 rating for Safety with Value Line, or a BBB+ rating or better with S&P. Both of these Financial Strength ratings indicate investment grade quality. … Anything that doesn’t meet the High Quality definition is considered speculation and managed differently within the portfolio.”
Companies have credit / investment ratings assigned to them, much as we have our own personal Credit Scores. Companies with low investment grades must pay higher expenses when borrowing money because they’re considered to have a higher risk of not paying their debt (aka defaulting) than highly graded companies. And you can imagine that there’s an army of people involved in researching and determining each company’s grade because of how much money is involved in that industry.
The S&P rating mentioned by Chowder is one agency; here’s a quick comparison of some credit ratings available on the web as well as the things I learned along the way.
S&P Investor Rating
You can obtain credit ratings for individual companies over at standardandpoors.com. You’ll be asked to create an account and supply email, password and name but it’s otherwise free and there are no charges. Their website is quite a pain to use because you have to pull each symbol individually however, and none of the screeners in my brokerage accounts allow this rating as a search criteria.
The S&P rating methodology grades companies from AAA (the highest), through AA, A, BBB, BB, B, CCC, CC and to R (in default). The symbols ‘+’ and ‘-‘ are used to denote positions with a rating e.g. AAA+ > AAA > AAA- > AA+.
Using Chowder’s definition, grades AAA+ through to BBB+ are investment grade companies and grades BBB through to CC- are speculative. Note that officially per the S&P rating, all BBB grades are investment quality not just BBB+.
Value Line
I didn’t try to get the Value Line ratings. The sign up process looked more complicated than at S&P and they seem very interested in promoting their newsletters and stock selection methodology so I stayed away…
Moodys
And went to Moodys instead which is a competitor to S&P. Their signup process is very similar to S&P’s (email, password and name) but I found their website better organized and it contained more information. It’s free to sign up and get basic ratings but there are charges for premium reports that detail the ratings and research on each individual company. I was still not able to find a list of stocks with a given credit rating, although their search tools are better than the S&P site.
Moodys’ rating methodology is more complicated than S&P’s with 25 different classifications. There’s the basic classification of Aaa (highest), then Aa, A, Baa, Ba, B, Caa, Ca and finally C (the lowest). Then within each rating (except for Aaa), there is an additional rating of 1, 2 or 3 showing the relative position within the rank. So Aaa > Aa1 > Aa2 > Aa3 > A1 > A2 > A3 > Baa1.
The grades of Aaa through to Baa3 are considered investment grade. Grades from Ba1 to Ca3 are speculative and C is in imminent danger of default.
Morningstar Credit Rating
Morningstar has their own credit rating score too. You can find it hidden on the “Bonds” tab of any individual stock quote page. Or you can view the entire list. This is a much easier system to work with than either S&P or Moodys, and is likewise freely available. One disadvantage here is that the coverage is not as high as with the previous two systems; I could not find scores for 6 companies that S&P and Moodys rated.
Morningstar’s scale is simpler though: AAA, AA, A, BBB, BB, B, CCC, CC and C. Any rating of BBB or higher is “Investment Grade” and ratings of BB through CC are considered more speculative grades. C is the rating that denotes imminent default on loan payments.
S&P Capital IQ Quality Rating
Finally I looked at S&P Capital IQ’s Quality Ranking score. S&P Capital IQ is related to the S&P Ratings service as they’re both owned by the same parent company – McGraw Hill. However Capital IQ is a more general investment data and analytics company competing with Bloomberg and Reuters.
The Capital IQ Quality Rating isn’t a standalone credit score; it rates growth and stability of earnings and dividends. This rating is not the same as the Capital IQ ‘star’ rating which is an aggregate of additional criteria. The Quality Ranking score is defined in a range from A+ (highest), A, A-, B+, B, B-, C+, C (lowest). Since it’s not a credit score, there’s not really a concept of Investment-Grade but the B+ score is considered “average”. So you could take either B+ or A- as a minimum threshold.
You can find the Quality Rating (and definition) on any S&P Capital IQ analysis report which are freely available via the Sharebuilder brokerage research tools and other brokerages. The Sharebuilder stock screener also includes this rating as a search criteria.
How do my stocks score?
I’ve normalized all the scores from the stocks in my portfolio to a common standard; using the Capital IQ scale as a baseline.
For Moodys, the conversion ignores the 1,2,3 classifier so I mapped Aaa=>A+, Aa*=>A, A*=>A-, Baa*=>B+, Ba*=>B, B*=>B-, etc.
For S&P, the conversion ignores the +/- classifier, e.g. AAA*=>A+, AA*=>A, A*=>A-, BBB*=>B+, BB*=>B and B*=>B- etc.
Finally for Morningstar, I used a similar scheme as the S&P conversion: AAA=>A+, AA=>A, A=>A-, BBB=>B+, BB=>B and B=>B- etc.
This yielded the following results for the stocks in my portfolio
Symbol
Moodys
S&P
MorningStar
Capital IQ
MSFT
A+
A+
A+
A-
PFE
A-
A
–
B+
T
A-
A-
A-
B+
ROC
B
B+
–
B
XOM
A+
A+
A+
A
HD
A-
A-
A-
A
JNJ
A+
A+
A+
A+
AXP
A-
B+
A-
B+
PG
A
A
A
A+
UPS
A
A-
A-
B
CVX
A
A
A
A
MCD
A-
A-
A
A
JPM
A-
A-
–
B+
KO
A
A
A
A+
INTC
A-
A-
A
B+
DOW
B+
B+
B+
B-
AWR
A-
A-
–
B
ADP
A
A
–
A
UNP
A-
A-
A-
A+
KMB
A-
A-
A-
A
GXP
B+
B+
B+
B
APD
A-
A-
A-
A
LNT
A-
A-
–
B+
GIS
A-
B+
A-
A
MAR
B+
B+
B+
B+
RTN
A-
A-
A-
A+
TROW
–
–
–
A-
LB
B
B+
–
B+
CB
A
A
A-
A
BMS
B+
B+
–
B+
EMR
A-
A-
A-
A+
LMT
B+
A-
A-
A+
Missing results
The Moodys and S&P Ratings are not always available for a given stock symbol. Here’s a quick run through the stocks in the list above where I couldn’t initially find a rating. Another place to find the rating can be the company’s Annual Report.
Rockwood Holdings (ROC)
ROC’s debt is issued by one of its fully owned Subsidiaries, Rockwood Specialties Group. Using the conversions above, this rates a normalized B for Moodys, or B+ from S&P.
American States Water (AWR)
AWR’s debt is mostly dependent on its subsidiary, Golden State Water Company (GSWC). This rates a normalized A- for Moodys and an A- from S&P.
T. Rowe Price (TROW)
TROW aren’t rated by S&P or Moodys simply because they have no debt!
Summary
While the Capital IQ ratings are by far the easiest to query and are readily available for every stock I’ve searched for; I think I’ll pay more attention to Moodys credit rating going forward. I think it’s more focused than the Capital IQ rating and since it can directly affect the cost of borrowing of a company, it’s a meaningful rating. I’m pleased to see that most of the stocks in my portfolio have a good credit rating though!
Based on Moodys scores, my two lowest quality stocks are ROC and LB although the news is not all bad. ROC is currently under watch for a possible upgrade after the announcement of the pending sale to Abermarle. LB was upgraded one step in 2011 due to strong performance and debt repayment, putting it in the top tier of its grade and the company currently has a stable outlook.
Some investors see the value of investing in gold, but simply don’t want to bother with the handling and storage requirements of investing in physical gold. In the past, many would move on to other investments or be pushed towards paper gold as a solution. Today, however, investors can have many of the features of both physical and paper with a bullion vault. What is a bullion vault? Bullion vaults are companies that specialize in providing their clients with remote, allocated gold storage coupled with access to professional markets. In the past this sort of turnkey service was only available to major institutions such as banks, mutual fund and ETF management firms, and metals dealers. Starting around the turn of the century, however, firms began to appear that brought this part of the market to individual investors. Individuals always had options for storage itself, usually through the banks that would in turn deal with institutional bullion vaults, however that service was simply storage for the gold you brought to the bank or purchased through them in certificate form at a markup. Not only were they a middle-man but they didn’t provide the easy online trading and access to professional gold markets that you get with modern services.
How does a bullion vault work? The major markets in gold are the professional exchanges in major financial centers, such as the London Bullion Market (not to be confused with the London Metal Exchange, which deals in metals futures). The size and market concentration in these exchanges provides buyers and sellers with high liquidity and low spreads in exactly the same way that large stock exchanges provide the same advantages to stock investors. The trouble individuals have in utilizing these exchanges is one of purchasing power. Gold is traded in 400oz “Good Delivery” bars on these exchanges. These bars are produced according to strict specifications detailed by the London Bullion Market Association (LBMA) or a similar organization for other good delivery networks. All of the bars are cast in approved refineries that are monitored and regularly audited to ensure that the bars contain the precise amount of gold claimed. To maintain its good delivery status, a bar must then be stored in an LBMA-approved warehouse and never leave the LBMA system. Once a bar leaves the system it will need to be re-assayed before it can enter the system again. The advantage of this system is that the bars can change ownership many times without having to be go through a very expensive full-melt assay (a complete recasting of the bar) to verify authenticity each time. With the assay costs minimized, the exchange can operate with very low transaction costs – basically only the cost of storage. Individuals are largely unable to access these markets directly due to the extremely high values of the bars stored in the LBMA system. Unless you have hundreds of thousands of dollars dedicated to investing in gold you won’t be able to purchase a good delivery bar. A bullion vault fills this gap by acting as a middleman between the professional exchanges and individuals. In exchange for a small commission, the bullion vaults pool your investment with that of their other clients so that, on the back end, they can trade only in large, good delivery bars. Advantages of bullion vaults Bullion vaults have compelling advantages when compared to holding and storing your own physical gold. First and foremost is that you don’t hold and store your own physical gold. For some investors, especially those that already have a large enough emergency cache or have no good way to do so, this is a big draw. While we don’t recommend that you keep all of your gold in other locations, we likewise don’t recommend that you keep all of your gold in your home for security reasons. Bullion vaults make an excellent second or third storage location. An additional draw, and definitely our favorite at Wise Gold Investing, is that the premiums are very low. The specifics vary depending on the bullion vault, but in most cases you are looking at a purchase premium of less than 1.5% over spot including the vault’s commission and a sale premium of less than 1% under spot including the vault’s commission. One thing to look out for is additional transaction costs. If a bank wire is required to deposit money into the vault system you may be paying $30-$50 per deposit, which is as much as 3% of the purchase price of a single ounce. If you think you will be depositing in smaller amounts you should look for a vault that has a no-fee way to get money into the system. The last advantage of note is that it is real, physical allocated gold. It isn’t prone to the issues of paper gold. As a bailment contract with the bullion vault, the gold belongs to you and your investment will be protected even in the event of the dissolution of the vault company. As an added protection, most bullion vaults have your investment insured. Disadvantages of bullion vaults Our biggest complaint with bullion vaults is the difficulty or, in some cases, outright inability to take physical delivery of your gold. As these companies deal exclusively in large bars it is difficult for them to provide conversion services for. Fortunately, some vaults are taking note of this issue and allowing clients to convert to good delivery silver for physical delivery. This will incur an additional fee, so before using bullion vaults with the plan of eventually taking physical delivery you should add up the fees to see if you wouldn’t be better off just purchasing physical in the first place. Another issue for some looking at investing in gold is the lack of immediate access to your bullion. If security in the event of disaster is an issue then you will want to make sure you are happy with the amount of physical gold you hold locally before taking advantage of the benefits bullion vaults provide. After all, in an emergency a pile of gold sitting in Zurich isn’t of much value. Bullion Vault: Wise Gold Investing or Not? Wise Gold Investing is all about maximizing your returns while still investing in gold through means that meet your ultimate goals. Properly used, bullion vaults provide excellent value to the gold investor. As long as you don’t plan on taking personal delivery of the product they can provide the lowest transaction fees of all forms of physical gold while maintaining a phenomenal level of security. Utilizing a bullion vault is definitely something that should be seriously considered by anyone investing in gold.
When people hear the phrase day trading, the first thing that the phrase conjures is the problems associated with it. Also, most people think that most traders fail miserably. If you want to become an online investment guru, there are many books to read on the topic and you must become extremely aware about all the strategies used by abundantly successful traders. You may believe that the main reason why many traders end up in financial ruin is due to improper training This article is meant to be a simple guide to break down the steps needed to become a day trading guru.
The main problem of day traders is that they don’t have the tenacity needed to fully study the subject. There are thousands of people out there willing to help new traders but there’s no such thing as the concept of “easy money” in day trading, but there’s diligence and tenacity. Money probably won’t grow on trees and you will need to focus on studying the basic concepts. Remember, most traders who destroy their financial lives don’t have the right financial foundation. If you want to become a financially secure individual you need to start learning the basics.
The main rule of thumb is not to get greedy. Just when you think you have it pinned, the market will swiftly change for no apparent reason. Why? Because dilettante traders are taking small positions on the market. Now, they do not really affect the longterm market, however, they DO affect Forex somewhat. Many people are enthralled with day trading because of the excitement that comes along with it and its potential for big money, but patience is key to being successful with this risky endeavor.
As a novice, you should first start out by reading forum posts. This can help you have an idea of what it really takes to succeed in this business. Feel free to question professional day traders and ask for advice, but be discriminating, because some people are just out to harm your success. So, use your head and common sense when dealing with strangers. Don’t just rush into day trading, prepare beforehand or you may regret it.
Although you can consider certain factors – like your health, relationships with family and friends, hobbies and social activities – as better than wealth, obviously money and personal financial status are extra important factors to your future lifestyle.
Getting really caught up in preparing your financial future is very easy. After all, your money is measurable and many things revolve around the money component when you plan for your future. So what should you do to successfully prepare for retirement? You could simply work really hard and spend lots of time making as much money as possible. But is it worthwhile if you have too little time to enjoy with your family? Fortunately you can carry out these strategies when preparing for retirement.
Saving encourages wealth
You may guess that a high income is an important factor for having a prosperous future, but research proves that the best strategy to retirement bliss is to consistently save. Research shows that wealth accumulation is determined by the ability to save (instead of spend) than it is by your current level of income.
A study tried to challenge the notion that most households with low incomes don’t get enough money to both save and pay their bills or debts at the same time. It was found that that the majority of the differences among these households are attributed to variations in the amount that households allocates for save. The variations in saving choices among these households with equal lifetime earnings lead to significantly different levels of assets accumulation when retirement period comes near.
It isn’t what you make today but in reality what you save (keep) that’s important when you want to amass wealth. Certainly, earning more money should make it very easy to save, but many people allow their spending to grow with their revenues.
Keeping your balance
Many people you know have multiple goals when it comes to planning their money management and personal situations. For instance, say, you are at age 50 right now, and want to scale back on work to a part-time basis while spending more on your hobbies. The reasons, you don’t want to wait until you are 60 or 70, when you are less healthy. But, you also want to help your adult children with their graduate school costs and maybe even buying their first homes. Your situation – of having a few competing goals and also limited dollars, is sadly often the norm nowadays. Thus, a recurring theme is how we can trade off competing goals, which takes balance and personal considerations in your life.
Except if you really have deep pockets and decent goals, you should prioritize and measure each of your financial goals.
Knowing that planning is an ongoing process
A good musician is always learning something new, likewise, to have a comfortable financial future you should adjust your plan continuously. Financial planning is an ongoing process. Too many people conclude their financial plans and then think they are finished. Taking this path is a sure way of running into unpleasant surprises years to come.
A plan is built upon forecasts and assumptions. However, no plan -regardless how carefully it is developed – gets every forecasts and assumptions correct. Even the best, most careful estimates may completely miss the mark.
Therefore, every few years, you should review your financial plan. As you are reviewing, assess how much facts differed from your forecasts. Often, you will be pleasantly surprised, a portfolio may earn a lot more than you previously expected, or you may spend far less than you thought.
Other times the plan review won’t be as enjoyable. The markets probably have dragged down most of your portfolio returns and your spending may have surpassed your estimates. In both cases, you aren’t accomplishing your goals.
Even if you can meet the mark in many cases, you still never complete your planning and revising. You are bound to experience fluctuations in your life, the markets, the economic situation, tax law, and other sectors. You may come across fresh opportunities that were not available a couple of years ago or were not right for your situation then but somehow make sense now. You should continually adapt the plan to these developments. You should change your investment portfolio or spending accordingly.
You don’t need to be obsessive. Monthly or even weekly changes in the portfolio that are moving away from your original plan aren’t a good reason to return to the drawing board. However every year (or if you have a critical change in your financial situation) you need to take a fresh look. Reexamine the plan and your current progress. Find out what works and what don’t. Decide whether your situation or goals have changed and if any modifications are necessary. Finally, implement your updated plan and enjoy your life. After all, that is what your money is for.
Finding great businesses isn’t easy. With over a thousand businesses alone listed on the Australian Stock Exchange (and multiples more internationally), finding the diamonds in the rough can be difficult, time-consuming and overwhelming. Today, I’ll show you two quick methods to find companies that in my opinion provide a great starting point to finding dividend stocks that will deliver you attractive long term returns.
Stock Screening – the diamonds in the rough
Stock screening is the process of sorting a list of companies by some financial criteria. By using any number of online tools, we can take a universe of stocks and rank them on this criteria from best to worst. Two of the most commonly used company screens are Price to book value and Price to earnings; these are the two gold standards for screening for “value” stocks. Other common stock screening methods include sorting by market capitalisation (in order to separate smaller companies from larger companies) and growth-focused screens such as screening for return on equity and earnings per share growth rates. An excellent book that describes various stock screens and the subsequent investment results of these screens is “What Works on Wall Street” by James O’Shaughnessy – a true classic in using screening methods to build market beating portfolios.
My favourite Stock Screens.
I have two stock screens that I use to find excellent businesses. The first is filtering by volatility and looking for low volatility stocks. Low volatility stocks have a long history of outperforming market averages – this is known as the low volatility anomaly and has been discussed in a number of academic journals. Low volatility stocks have performed exceptionally well over the last three or so years, and as a result, the amount of investment dollars (particularly in the USA) that has flowed into low volatility products has been extremely high. The demand has been so strong in fact that investment firms have rolled out over 20 different “low-vol” stock funds and exchanged traded funds since the end of 2015! The largest such ETF is the iShares MSCI USA Minimum Volatility ETF (USMV), which has a whopping US$14.1b invested in it! Unfortunately, there is some evidence that enthusiasm for these products has driven prices for low volatility assets to historical highs, which anecdotally is certainly the case in Australia as well. Nonetheless, this screen can be great for finding business to place on your watchlist, so you are ready to pounce should the price of the company fall to more reasonable levels!
Currently, the lowest volatility quintile of the ASX300 are as follows:
CMW
Cromwell Prop
NVT
Navitas Limited
TCL
Transurban Group
SYD
SYD Airport
DUE
Duet Group
TAH
TABCORP Holdings Ltd
CQR
Charter Hall Retail
DXS
Dexus Property Group
BKW
Brickworks Limited
BXB
Brambles Limited
SCG
Scentre Grp
CBA
Commonwealth Bank.
GOZ
Growthpoint Property
SGR
The Star Ent Grp
AGL
AGL Energy Limited.
FPH
Fisher & Paykel H.
TLS
Telstra Corporation.
RHC
Ramsay Health Care
SGP
Stockland
ARB
ARB Corporation.
GPT
GPT Group
SKI
Spark Infrastructure
DLX
Duluxgroup Limited
IVC
InvoCare Limited
IOF
Investa Office Fund
AOG
Aveo Group
ASX
ASX Limited
ABC
Adelaide Brighton
CSL
CSL Limited
AMP
AMP Limited
AST
AusNet Services Ltd
CCL
Coca-Cola Amatil
APA
APA Group
SUN
Suncorp Group Ltd
WFD
Westfield Corp
REA
REA Group
WES
Wesfarmers Limited
IAG
Insurance Australia
RMD
ResMed Inc.
SKC
Skycity Ent Grp Ltd
BWP
BWP Trust
BLD
Boral Limited
CHC
Charter Hall Group
GNC
GrainCorp Limited
SCP
SCA Property Group
NAB
National Aust. Bank
GMG
Goodman Group
AMC
Amcor Limited
MGR
Mirvac Group
AHG
Automotive Holdings.
VCX
Vicinity Centres
WBC
Westpac Banking Corp
TTS
Tatts Group Ltd
TPM
TPG Telecom Limited
ABP
Abacus Property Grp.
SAI
SAI Global Limited
FBU
Fletcher Building
PPT
Perpetual Limited
CAR
Carsales.Com Ltd.
HSO
Healthscope Limited
Obviously there are a number property trusts in the list, and these require special analysis which I will discuss in the future. Of particular interest in my opinion are industrial stocks; that is, everything other than resources and property trusts. The above list can be a great starting point for further research.
The other screen I love to use is very similar, and often there is a large percentage of overlap between the two. The next screen I use is a low-beta screen. Beta is a finance term which is reasonably technical, but a basic explanation is that a company with a beta less than 1 is less volatile than the broader market. Therefore, we again look for low betas as potential interesting opportunities. The top 60 of this screen are below as well.
RMD
ResMed Inc.
SGP
Stockland
SKC
Skycity Ent Grp Ltd
FBU
Fletcher Building
FPH
Fisher & Paykel H.
SCG
Scentre Grp
ACX
Aconex Limited
TPM
TPG Telecom Limited
DUE
Duet Group
WFD
Westfield Corp
IPH
IPH Limited
AZJ
Aurizon Holdings Ltd
SPK
Spark New Zealand
JBH
JB Hi-Fi Limited
TME
Trade Me Group
AST
AusNet Services Ltd
PRG
Programmed
AHY
Asaleo Care Limited
GOZ
Growthpoint Property
SYD
SYD Airport
GNC
GrainCorp Limited
TLS
Telstra Corporation.
TCL
Transurban Group
CCL
Coca-Cola Amatil
APO
Apn Outdoor Grp
SGR
The Star Ent Grp
SKI
Spark Infrastructure
PGH
Pact Group Hldgs Ltd
BKW
Brickworks Limited
GTY
Gateway Lifestyle
CMW
Cromwell Prop
DLX
Duluxgroup Limited
CCP
Credit Corp Group
MGR
Mirvac Group
ANN
Ansell Limited
VOC
Vocus Comms Ltd
API
Australian Pharm.
PRY
Primary Health Care
ECX
Eclipx Group Ltd
COH
Cochlear Limited
SAI
SAI Global Limited
CVO
Cover-More Grp Ltd
IOF
Investa Office Fund
BWP
BWP Trust
HSO
Healthscope Limited
CPU
Computershare Ltd
TAH
TABCORP Holdings Ltd
SCP
SCA Property Group
ALU
Altium Limited
GPT
GPT Group
AGL
AGL Energy Limited.
SHL
Sonic Healthcare
CAR
Carsales.Com Ltd.
MQA
Macq Atlas Roads Grp
QAN
Qantas Airways
SKT
Sky Network
CQR
Charter Hall Retail
EHE
Estia Health Ltd
CSL
CSL Limited
NSR
National Storage
As you can see, there is some overlap between the two. Again, these can be great places to find quality companies with the potential to pay strong and growing dividend streams.
Why not just use Dividend Screens?
The reason I start with other screens is that I am far more interested in owning businesses with strong financial characteristics and strong prospects than companies with the largest yields. As I have written about before, stocks with lower than average volatility and low betas have historically performed well. My concern with screening by yield is that it can result in a list of companies with extremely high yields but impaired business outlooks. While I am primarily looking for dividend growth companies, I would prefer companies with slightly lower yields but with the ability to grow those yields over time.
Stock Screening Warnings.
Stock screens are great for coming up with a list of companies deserving of further investigation. I implore you not to just use the top 10% or top 20% as a portfolio. Blind buying of companies rarely works out for individual investors. Again, I would suggest you use these screens as a starting point for further research.
In addition, stock screens only screen for quantitative factors. Other factors, such as the quality of the management team and the outlook for the broader industry cannot be screened for (at least, as far as I am aware). These qualitative factors are an important part of the investment research process.
Lastly, when using stock screeners you should make the effort to understand where the data is coming from and how relevant it is. Fortunately, I have access to some institutional level tools which enables me to be confident in both the quality and timeliness of my data. Make sure the tools you use are up to date and accurate!
Conclusion:
Stock screens can enable an investor to quickly and efficiently find quality companies deserving of further investigation. I would encourage everyone to explore stock screening as a valuable way to find new investment ideas. For those of you who are concerned about data issues, I update my screens quarterly, and you can find them here. As I said, these are the primary way that I find new and interesting companies for further research.
Do you use stock screening? What are you favourite stock screens? Let me know in the comments!
Few days ago, I got a request from one of the reader of this site. Here’s the screen shot of his request:
Before going into the details on How to Play the Dividends, here are the definitions that you need to know. More explanation can be read in my previous blog.
Declaration Date – Board of Directors announces the payment of Dividend
Ex-Dividend Date – The Stock starts to trade without the dividend
Record Date – Current shareholders on the record book will receive the dividend
Payment Date – Company issue the dividend payments
The dividend timeline below illustrates the four dates investors(traders) must understand and monitor in order to effectively implement their dividend play strategies.
Figure 1. Dividend Timeline
Maybe, you are already aware that dividends are one of the many factors that influence the stock price, though not really a big impact compared to other variables such as company earnings, arbitration’s issue like what happened recently with MWC and MPI.
In this article, I’m going to take a look on the common ways to trade around the dividends.
PHILIPPINE STOCK DIVIDEND HISTORY
As a Dividend Investor, Most of the time I am looking into stocks known as blue chips since these stocks are considered stable. I reviewed my database and filter the stocks that distributes dividends for the last five years, below is the top 5 blue chips dividend stocks ranked base on the dividend yield.
RANK
STOCK
LAST PRICE YR2009
TOTAL DIVIDEND YR2010 – 2014
DIVIDEND YIELD
LAST PRICE YR2014
PRICE %CH YR2009-2014
TOTAL RETURN
1
DMC
1.94
8.5000
438.14%
15.70
709.28%
1147.42%
2
SCC
18.33
52.0000
283.64%
142.00
674.55%
958.18%
3
AEV
9.00
7.4800
83.11%
52.70
485.56%
568.67%
4
AP
8.60
4.9400
57.44%
42.90
398.84%
456.28%
5
URC
16.25
8.2800
50.95%
196.00
1106.15%
1157.11%
The following screen shots shows the stock prices movement around the dividend dates:
AEV
AP
DMC
SCC
URC
ACCUMULATE BEFORE THE DECLARATION DATE
It seems the idea of accumulating before the declaration date is good. If you notice, almost all of the five stocks shown above, the stock price started increasing prior to the declaration date. For Dividend Investor this may not really matter. I will elaborate this further in my future post. For Short term trader taking advantage of the upcoming dividend, this strategy might be good to implement. However, two important things is a MUST to be known. First, The expected Dividend distribution month MUST be known so you can schedule the timing when you will start accumulating. I have a compilation of this anyway to help you shorten your time of your research, just check the DIVIDEND CALENDAR page of this site. Secondly, You MUST be aware of the previous quarter earnings of the stocks of your interest. You have to ensure that the company has a positive earnings otherwise the probability of distributing dividends is very less.
BUY ON DECLARATION DAY
Most of the time, the stock price rises from the declaration day up to the day prior to Ex-dividend date. For short term trader taking advantage of the upcoming dividend, this day may be the BEST time to enter. However, not all stocks rises as shown in the screen shots above.
SELL ON OR BEFORE THE EX-DATE
For short term trader, selling before the Ex-Date is always preferred as long as the profit is almost equal or more than the dividend yield since on the Ex-Date, stock price will most likely drops to almost same amount of the dividend. Let’s take a look on DMC. On May 16, 2014, DMC declares a dividend with a 4.11% yield. Let’s assume you bought a shares of DMC during closing on May 16, 2014. On May 20, 2014 (two trading days after dividend was declared), the stock price raises as high as 7.68% from May 16 closing. During this time, you may consider to SELL your position reaping a 7.68% return better than the 4.11% return from the dividend. However, If you really wanted to collect the dividend income but not planning to hold the stock for a long time, you may SELL on the Ex-Date (most likely with a loss but dividend income may compensate this loss anyway). If you could wait a little longer, I recommend to SELL your stocks few days (or weeks) after the Ex-date since the stock price will recover from a loss due to the dividends (you may check again the screen shots above and observe how the stock price recovers after the Ex-date).
CONCLUSION
Not all stocks have the same behavior/reaction to dividends. Nonetheless better to know how the particular stock perform on the dividends and respond accordingly. I recommend that you MUST have always a trading (or investing) plan before you execute in any of your future trading(or investing) decision and stick to the plan all the time. In this way, it is easy to modify and trace what went wrong or which one needs to be improved. Remember, it is your hard earned money. So, be responsible on all your actions.
Thank you for reading. May you have a consistent and profitable trades ahead!
Ever since the beginning of the article I want to say that this will not be a standard article. I will try to talk in this article about getting rich and money from a different perspective.
I am talking about getting rich from a psychological, motivational and educational perspective.
It is an article about the way we treat the desire to get rich an about how important money is for us. Many people say that money does not bring happiness, but in my opinion this is totally wrong and this is strictly my opinion.
I want to start by shutting down the myth according to which “We cannot be all rich, someone has to be poor and work hard.”
First of all, we can all be rich. Why w cannot be all rich? Why are you thinking that you do not want to become rich? You will become rich if you believe you will be rich.
Everything we think and everything we want can be real. If you want to be rich, first of all you have to believe that you want to be rich.
Second of all, why do you think only poor people are working? Rich people work even more, or better said, more efficiently. Rich people work in the right place and at the right time.
Hereafter, I will tell you some ideas about how you can become rich, ideas got from the book “The Science of Getting Rich” by Wallace D. Wattles, which, by the way, I recommend you to read it if you like this article.
It is cheap and the investment you make, if you buy it, can return tenfold.
To be rich does not mean to steal from someone or to be a good negotiator. It does not mean to compete with someone and to try to be better than that someone.
“Wealth is the moment you become a creator, not a competitor.”
Never look around you, saying afterwards that it is impossible to get rich.
Ideas like “There are too many rich people, it is impossible for me to be one of them” must disappear. It is not a positive or a constructive idea.
The road to becoming rich
Hereafter, I will show you some activities you should do on a day to day basis or on which you should meditate occasionally in order to get rich. They are not actual steps, yet ways we are thinking about things and ways in which we act each day.
Invisible things
In order to get rich, you must always look at invisible things, meaning things that have not appeared so far.
We are living in a world where technology is always changing. It always evolves.
There will always be people who will make something that does not exist, something invisible. They will make an invisible thing become visible, they will be successful and they will get rich.
Being rich is not a bad thing. There is a spirit among us that makes us look with evil eyes at rich people. I, for one, admire them.
This quote always inspires me when I hear about the success of a rich person:
“Rich people admire other rich, successful people. Poor people do not like rich, successful people.” T.Harv Eker
Being rich is an extra power to help the world. With the help of money, you can change the world and you can help it evolve.
Desire
Desire is the most important thing leading you to getting rich. The more you want, the more you thing in that direction, the more your forces, as well as nature’s forces, will act to implement your desire.
If you want and think small, small you are going to get. But if you want and think really big, you will act in that direction and you will get there.
A very good quote of T.Harv Eker about rich people and poor people is the following: “Rich people think big. Poor people think small.”
Always think of something big. Desire will help you fulfil your dream.
Acknowledgement
I am not referring here to prayers.
I am referring to the acknowledgement we have towards our peers, be grateful to those around us.
By acknowledgement I am also referring to divinity. Your acknowledgement towards divinity and towards yourself for doing what you are doing.
Acknowledgement is good for your vision, for your desire of getting rich. Is helps if you are stronger and if you believe harder in your purpose of being rich.
Thinking
Thinking leads to the impact of the will. If you think about poverty, about the days with no money from the past, about the way poor people live, you will end up thinking like poor people.
If you are thinking that you will have money in the future and you will buy x, y, z, you will end up thinking like a millionaire.
Wealth depends on will. Will depends on the way you are thinking about it.
Act now!
If you want to get rich, do not postpone it for the future. Act now, analyse the environment you work in and see if it is the right environment.
If it’s not, change it. Move in the right environment which will help you get rich.
Not yesterday, not tomorrow. Today is the right time.
Act efficiently
If you do things and if you work, at least work efficiently. Inefficiency holds you back.
Each inefficient thing holds you back.
There is a law that says “If you do not do things inefficiently and you do enough efficient things, you will get rich.”
Observe this law in everything you do from now on and never deflect from it. If you feel something is not right, change your style and your work environment.
Evolution
Evolution, or, better said, the desire to always evolve, is very important when it comes to getting rich.
We all want more from life, due to our desire to evolve.
Always live with the desire to evolve. Always want more money, keep the feeling that you will get rich and do everything you can to stay on that path.
Never brag yourself with your success, because you will be eaten by fears and doubts. “Whenever you meet a show off, be sure that inside him he is eaten by fears and doubts.”
If you believe and inspire evolution to those around you, they will also want evolution.
Remember!
It is quite complicated and it needs a lot of work to get rich. Getting rich depends not only on your professional knowledge, it also depends on behaviour.
Here are 3 things you should remember from this article:
Getting rich is possible only if you want to know more, to do more and to be more. The more you give from your part, without entering into conflicts with others, the more you will get rich and you will end up changing society.
The moment you become a creator, you will start getting rich.
Evolution. Want more from yourself every day. Act now and efficiently. Inefficiency will hold you back.
I, for one, believe in these laws and I think about them every day. I am convinced that only I am responsible to fulfil my dreams and my desire is bigger than ever to get there.
I recommend you to read this article twice, buy the book and start implementing your dreams. Your desire will get you where you dream.
In the end, I want to invite you to comment based on this article. Tell me your opinion on the way we can get rich.
How do you see the difference between a poor person and a rich person? What does the rich person do compared to a poor person?
The Bull and The Bear are continuing to bang heads. Wall Street and even Main Street USA, and I am sure even your street is in shambles. The banking system is melting before our eyes and is in total chaos. The bankers, all the smart players are demanding a bailout. They have ripped us off, lined their pockets and are smoking a big cigar bought with their fat wallets and they want help! The only bailout plan should be the bankers getting bailed out of jail for this mess, the mess that has almost crippled our economy and the mess that they have put us into. So as we sit around wondering what’s next, now we need to ask ourselves… Are there any safe places to put your money in this time of the weak Dollar, while all of the financial lenders go belly up, with the oil market a ticking time bomb, with wild fluctuations in the stock market? There is hope for that safe haven. You need to follow this advise, you need to act now, this is not a doom and gloom scare tactic, it is simple real life mathematics. We say park your cash in: gold. Yes Gold! Whether it is coins, bullions, or Kruggerands, gold has historically been a safe haven for your hard earned cash. That is not about to change any time soon, if ever.
The California Gold rush is a well documented example of how far back gold has been popular. In fact, we can go back thousands of years to trace the investment lineage of gold. Gold has historically and will continue to be a solid investment! Think about this, gold is an item you can hold in your hand, that alone is a main reason why it is so valuable. It is an item you can hold, wear around your neck or store in a safe. It’s not an abstract number in a computer bank that rises or lowers by market movers who have no clue. It’s not spat out by a magic money tree in the basement the Federal Reserve. It is produced by mother earth and all her wonderful resources. Gold, to this day has to be mined by gold miners and separated from the earth. Gold is virtually impossible to become worthless, along with silver it is what all paper and minted money is supposed to be backed by in all countries around the globe. Everywhere you can think of, world economies depend on the price of gold, and more importantly the economies need the value of it to be maintained in a positive manner.
The history of our economy has always been whenever derivative money such as the Dollar have shown times of volatility, causing stocks and bonds to go on a wild ride, that is when most seasoned and wise investors have turned to gold and precious metals as a place to not only invest but to protect their hard earned precious wealth. Way back when gold was first discovered, gold has always been the rock upon which all currency and wealth is built upon. Stocks, bonds, oil, pork bellies, orange juice futures and other commodities, can collapse any day, gold will never collapse. The original money known to mankind is, that’s right gold. You can wake up one morning, or return from work one day and in an instant The Dollar can become worthless on the FOREX, but gold will never lose any of its value. If the Dollar were to become worthless, then investors would be pushing up the value of gold, driving the price to historic levels, and investing much more of their money in it! That will be an all time Gold Rush, and your pockets will be lined with golden dollar signs.
Now, I do not want to get your hopes up, in fact the Dollar going to zero is not a realistic scenario. But now that we have your attention we are just exaggerating to make a point–a very realistic point that gold as an investment really has some true merit. Gold coins and gold bullion have been magnificent investments for a long period of time. We do not see this changing and the more troubled times that occur in the speculative stocks and bond markets, thanks to a few greedy people, the better gold coins and bullion become as investment vessels. Gold will always remain a smart investment choice, perhaps one of the few, safe outstanding plays for a college fund. If college is still greater than 15 years out, then a play on gold, may in fact be a safe haven for a few of those “golden” eggs. In other words get into gold when your child is born and just tuck it away for the first college day.
Now, let’s look at what may not be fun to review, but is probably a good time to discuss the facts, and that is a few hard economic realities. First things first, the value of gold and the other precious metals, always reflects global inflation. Inflation is caused by the increased circulation of derivative or fiat monies. Inflation, even if it were to slow down now (very, very unlikely), is a hard reality of modern economics; thus, the value of gold will continue to rise. All the precious metals will continue to see an increase over the next decade and beyond.
For another thing, does it seem to you that geopolitical uncertainties are going do just vanish anytime soon? Yea, OK! There are way too many world leaders that have an agenda that is self centered and dangerous. Turmoil amongst world leaders is only going to worsen over the next few years. The world, especially some of its world leaders is crazy with greed. There are more than enough of crazy “leaders” in the world, plenty of people who will kill you for their fanatical cause, will keep the price of gold at all time highs. As the planet generally grows wealthier, while on the one hand that gives more opportunities for more people to do well, it also provides more opportunities for people to do wicked things. World financial markets, regardless of the country do not like the risk with this political chaos. These are threats to world economies and to the wealth of these world leaders. And yet, the smart and wise investors continue, year after year to profit from this kind of risk. And they know that perhaps the very best way to profit from risk is investing in gold and other precious metals. When markets grow more destabilized, which seems to be happening most of the time, the price of gold and precious metals goes up, because people around the world value it more.
There is always risk to the stocks and bond market anyway. No different than betting on some sports action in Vegas or a long shot at the races, the larger the risk or odds, the greater the return Smart investors and wise gamblers know that greater risk taking, if done right, leads to greater profits and earnings. But, those bigger profits are also less certain profits. Yet with gold, the riskiness has a very strong and historically proven tendency to drive up the value of the precious metal. So it can be said that with gold investments, greater risk basically GUARANTEES greater profits!
Remember, whenever the markets experience some turmoil, people start placing their money into more solid things. People want to be able to sleep comfortably at night; they need the comfort that their nest eggs are protected. They want less speculation, less derivation, and more concrete stuff. When stocks and mutual funds are reeling, gold coins and gold bullion are rising. For they are the stuff and the foundation that economies are made of and provide the true value that investors seek. Beginning today you should start building your core foundation of gold coins and gold bullion investments.
