Investing Tools for Investors Looking to Excel
10/21/02  

New Investing Frontier

What new realities do investors confront after a turbulent decade typified by a massive equity bubble and tremendous disappointment and disillusionment with investing and investing intermediaries, and basis morality in America?

First, stocks have historically earned 10% over a long time, and the outsized performance of the 90's of 15% to 20% is completely unsustainable. In fact, regressing to the mean suggests the next decade could see results in 6% to 8% range. 

Second, "buy and hold" does not work for the huge supermajority of stocks. Better to buy stocks with attractive technical and fundamental characteristics, establish targets and protective sell stops and hold for the time until you either sell at the target or get stopped out. 

Third, intermediaries who play both sides of the investing equation, are not to be trusted. They are, and will remain, deeply conflicted and lazy. Further, they are not nimble or quick to recognize their mistakes. If you are not prepared to educate yourself in technical and fundamental analysis, and other critical areas like economic timing and market timing, turn you money over to professionals who have established a record of consistent out-performance overtime in both up and down markets. 

Fourth, use technical analysis to time your entrance, establish targets and protective sell stops. Failure to do so, is raw sloth and will lead to bad results. 

Fifth, while markets trade up, down, or sideways, there are always stocks and sectors that will trade in a contrary fashion. Find out how by reading the articles on the margins, particularly wave investing, economic timing, and market timing.  Be prepared to move and do not sweat the additional churn. Trade only electronically through discount brokers (where commissions are no more than 19.95), and jettison human interface that will question, challenge and slow your motion. A 25 year old "sports management" major does not add much value.  

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