Thursday, June 26, 2008
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Sometimes They're With You Sometimes They're Against You
Welcome to the Investing Forum Where all are Equal in the Eyes of Mr. Market.
Some Things Never Change
Like Time and Price
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Do's and Do Nots of Successful Investing
- 1) Buy and Hold Doesn't Always Work.
- 2) Cut your losers, and let your winners ride.
- 3) Don't fall in love with your stock; it won't fall in love with you.
- 4) Don't fight "the tape" (the trend).
- 5) Don't have more than 5% at risk in any one position.
- 6) Don't miss a good one by being too concerned with the exact price you pay.
- 7) Have patience and stick with your discipline.
- 8) Neglected sectors often turn out to offer good values.
- 9) Not selling a stock for a gain, simply because the taxes, is a bad idea.
- 10) Real estate cycles are not the same as stock market cycles.
- 11) There's usually only one reason corporate insiders buy stock.
- 12) Try to buy a stock when it has few friends.
- 13) When a stock hits a new high, it's not time to sell. Something is going right.
- 14) When all you're left with is hope, get out.
- 15) You can learn more from your bad moves than your good.
Great Information Here
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One of My Favorite Fundamental Tools
- ***Lets talk a little about the value measurement of earnings yield.While this measurement is being more widely followed, it remains a very key tool in obtaining the true value of a security.
- ***The earnings yield is nothing more that the opposite or reciprocal of the P/E ratio.It helps to put value in a more easily understandable light as it can be measured againstthe prevailing 10 year note yield.The premise is that if the earnings yield on the market or whatever stock you wish to measure is greater than the 10 year note yield then the security is undervalued.
- ***Now this is a gross simplification of the theory, but it gives you a reference point.Don't forget also that the 10 year T- note yield is a before tax measurement and the earnings yield is an after tax measurement. Therefore even if the earnings yield is less that the 10 year note yield, there is still a possibility of a security being undervalued.
- ***This gives you a very strong starting point as to where to go from here with the tool. Especially the after tax aspect of the earnings yield.Here is an example of the calculation for the earnings yield on a stock.Let us suppose a stock has a P/E ratio of 12. In order to get the earnings yield we just invert the 12/1 fraction to 1/12 and the yield comes to 8.33%. Compare this to the 4.5% 10 year note yield and you have quite the undervalued security. Maybe even more so than the 8.33% dictates as this is the after tax yield. To convert it to the before tax yield simply multiply the 8.33% by 1.33 for the 33% corporate tax bracket. The before tax yield becomes 11.08% which makes this security very undervalued.
- ***You can also use the earnings yield of an entire index such as the S&P 500 to get a feel for the current state of value in the market. Above this post you will see a visual of the current earnings yield model that shows the S&P 500 to be quite undervalued. This does not take into account the after tax effect which would move the target for the S&P 500 even higher.
- ***The earnings yield is a great tool and should be in every good investors toolbox.
A Bit About Me
- Currents of Emotion
- Metro Detroit, Michigan, United States
- Currently an electrician by trade I have been involved in both the equity and futures markets for over 20 years. I have learned alot over the journey with the highlight being you never stop learning. I am always looking for new and innovative ways of analyzling the markets. I really want to get the investment message out to the young adults and encourage them to save, especially while they have little to no liabilities.
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9 comments:
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Do you want to become really rich in short time?
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I feel good, I started to get real money with the help of this company,
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It is based in Panama with offices around the world.
Do you want to become an affluent person?
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and I invite you to do the same. It`s all about how to select a proper companion who uses your savings in a right way - that`s AimTrust!.
I take now up to 2G every day, and my first investment was 500 dollars only!
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AimTrust incorporates an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.
Its head office is in Panama with offices around the world.
Do you want to become really rich in short time?
That`s your choice That`s what you wish in the long run!
I feel good, I started to take up real money with the help of this company,
and I invite you to do the same. If it gets down to choose a correct companion utilizes your funds in a right way - that`s it!.
I take now up to 2G every day, and what I started with was a funny sum of 500 bucks!
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Hello !.
You re, I guess , probably curious to know how one can collect a huge starting capital .
There is no initial capital needed You may start to get income with as small sum of money as 20-100 dollars.
AimTrust is what you haven`t ever dreamt of such a chance to become rich
The firm represents an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.
It is based in Panama with structures everywhere: In USA, Canada, Cyprus.
Do you want to become a happy investor?
That`s your choice That`s what you desire!
I feel good, I began to take up real money with the help of this company,
and I invite you to do the same. If it gets down to choose a correct companion utilizes your money in a right way - that`s it!.
I take now up to 2G every day, and what I started with was a funny sum of 500 bucks!
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Hello !.
You may , probably very interested to know how one can reach 2000 per day of income .
There is no need to invest much at first. You may start earning with as small sum of money as 20-100 dollars.
AimTrust is what you haven`t ever dreamt of such a chance to become rich
The company represents an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.
Its head office is in Panama with affiliates around the world.
Do you want to become a happy investor?
That`s your choice That`s what you desire!
I feel good, I began to get income with the help of this company,
and I invite you to do the same. If it gets down to select a proper partner who uses your funds in a right way - that`s the AimTrust!.
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