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Sunday, February 26, 2012

130-30 Strategy. What is it?

There are many ways to implement complicated strategies into how you invest, and how you can make money off of the stock market.

Today, I am going to teach you what and how the 130-30 Strategy is used.

What it is is basically how investors rank stocks in indexes, and then use that information to their advantage.

They do this by ranking all of the companies in an index fund such as the S&P 500 and see which companies are expected to have the greatest profit margin, from beginning to end. They see which stocks will and are performing the best, and then they

What they then do is liquidate or sell the stocks that are projected to underperform and buy various stocks at the top of the list.

This then allows the investors to further more diversificate their portfolio and end up winning.

I hope you learned something valuable today. I sure did.


Saturday, February 25, 2012

Some Resources to use to Learn.

Sadly my dear friends, you might not be able to actually fully understand investing with the  rate of learning I am going at. I seem to have to do other things, which isn't too good for the health of this blog and the overall success of my project.

Luckily, in this article I will teach all of you guys how to learn about the beautiful world of investing and managing money from all of these websites. These are some great websites to learn how to make money just by putting money into a fund or investment.

http://www.investopedia.com

This is pretty much the premier website of choice for learning about investing and is a valuable tool for those who are students or such in the world of investing. There are various quizzes, practice exams, worksheets, guides, and even a handy stock simulator in which you get money to invest in your own stocks of your own choice.

http://finance.yahoo.com/

Yahoo Finance is a great tool to use to check stock quotes for a building block for conducting your won research.

If you are actually a professional investor who hasn't signed up for an online stock broker, you should remember this bottom-line rule that will help no matter what in your decision in which stock broker you would want to choose.

If an online stock broker ever says that they have "extensive" tools for performing complicated research, but charge more for that very reason, skip them as a choice. They are basically ripping you off and treating you for nothing. There are many other free choices and websites out there to check your quotes and to get data for your stocks.

http://www.stockpickr.com/

I honestly don't know much or basically anything about this particular website, but I just recently signed up for an account.

This is actually a really cool business idea in which people can share what they have invested in. It's basically like Facebook for Stocks.

People can also view what the big-shot investors are looking into, so you can definitely inspect what they invested in, why they chose it, and learn quite a bit.

These are all I have for you. On to the review for my portfolio.


Oh yeah. I guess you could say that I definitely predicted well. If only I had real money to reap in the benefits.

I also haven't really looked at the stocks in-depth for a while, so here I go.

Apple Inc.

This was taken over a six month period. I don't really know if I should sell or not, but it is definitely growing rapidly and fast.

The company is doing well, but I guess I'll keep an eye on it but stay with it. There always has to be an end to everything, including success.

Real Estate Index:

I looked at it and I don't think I need to show you a picture of my situation. It's a high-cap stock, it's not doing too well at the moment, but I believe that it can go up in a longer term. I'll hold.

IDCC (Interdigital, Inc.)


I have gotten really lucky. I pretty much hit it Johnny on the spot. The dot represents the time of which I bought the shares. It has gone up since then. Oh yeah. It is on a positive upturn, but it is still fluctuating. I'll still hold and keep an eye on it.

Overall, my portfolio has earned even more money, my account is fine, I will continue to blog more and more for you guys.

Thanks for reading.


Wednesday, February 22, 2012

Sorry for the Wait.

Sorry for making you guys wait so much for me to post. I didn't really have a whole lot of time. Right now I don't have an abundance either.

Here's my update on my portfolio.

It seems I actually did a pretty good job, except for the fact that the average for real estate hasn't been too well. The stock really bounced in IDCC so in the long term that was a good idea, and APPL has served me well.

Who cares for the IYR quote though? It's a high-cap stock so it is bound to rebound back. I don't have to worry about it or sell it right now.

My account is in good standing.


Sunday, February 12, 2012

Some More Basics.

There's no other way for me to actually say it. If you want to consider yourself in any way a professional investor, you're going to have to answer these questions or know what they are without any problem. You should also remember this stuff and remember what it is, because trust me, you will have to know what they are.

the Dow Jones Industrial Average and other Index funds, the S&P 500; you will have to remember what these are. These are called index funds. They are considered the benchmarks for the overall economy; what they do is take the average of the stocks of companies which are considered to lead today's industries, and they show that.

Warren Buffett
Investing in them are a decent decision which not much people will argue against, because they don't often flop and completely get destroyed or go bankrupt, because they are high-cap stocks.
You will also kind of somewhat know some of the best investment mentors, such as Warren Buffett. You can even see some of their interviews to hear about what they say and you can learn quite a bit. Trust me, they know the market and they know investing. They've made quite a fortune with investments.

Really, it's definitely quite good to be acquainted with their techniques and advice. It'll help you out in the long run.

asset: this is a vocabulary word. What does it mean? It means something which you own that has value.  Still don't get it? I am wearing a north face jacket right now. That has value, so therefore it is your asset. Investors use this to calculate how much your net worth is by looking at all of your assets and adding them up to find the final answer.

net worth: What that means is how much you are basically worth with all of your assets. So all of your investments and things you own added up to find the net worth.

high-cap and low-cap: These are basically describing the types of stocks that are out there. High-cap means that the company is in the billions in assets, like google, microsoft, the DOW Jones industrial average etc. Low-cap means that a company is just getting started, and the prices of the stocks can fluctuate often, meaning that if you invest in the company, your stock prices can rapidly go up and down, which is higher risk, but if that company becomes the next corporation giant, then you'll get a huge return. Your call.

IPO: This is an abbreviation for "initial public offering." What? This is the definition for how much a company is asking for each share when it goes from private to public. Such as, Facebook is going public soon. It's all over investment news. This only happens when private companies ask for prices per share when it enters the market.

eTrade, one well-known stock broker.
broker: This basically the company who buys the shares of stock for you. There are many different options for stock brokers, and you really just have to choose carefully when you choose because there are many different types of brokers which are good and bad for the situation you are in and the decisions you will have to make.

Brokers are very important for the success of your investment career, so do your research and choose wisely.






That's pretty much all I can think of from the top of my head. Learn these because it will be basics you will remember for hopefully, a long time.

Friday, February 10, 2012

Diversification; Why it can save you.

If you put all of your money towards a certain industry or stock, then you are going to win big if the stocks skyrocket, but then you are going to really flop if the stocks go bad. Some investors like the idea of taking these risks because they can actually analyze the company's "books" and really decide if the investment will be good for them, but in real life most investors diversify their investments, by spreading out their funds with different types of stocks and different types of investing.

Examples would be how investors invest in stocks, stash some money in bank accounts, invest in stocks, bonds, mutual funds, etc. Don't know what they are? Check out my last post here.
The reason why diversification is such a proven-method is because if, say, your stocks aren't doing well and you are losing some value, you will always have some other form of investment to counteract your loss making your net worth not so much blown over.

Some investors invest in many different stocks, or they go even further by investing in different methods altogether. Your pick on which way to diversificate your portfolio, but make sure you do, because it will help you out immensely.

If you still don't understand what the idea of diversification still is, let me help you.

Say you were an avid sports dan and you have gotten into the habit of betting on the winner of the sports games, your starting fund is $100.

You have 2 choices:

1. Bet all your $100 on one team in one game. You can win, but if you lose, you'll lose it all.

2. Divide your $100 into 1/5ths which would equal $20 for each game that you would bet on. You still have the same amount of research and a good sense of estimation. You are more likely to get better returns because there are so much different games that would be going on, and if you get unlucky once, there would be a good chance of you offsetting your loss with the next game.

Yes, you would probably pick 2, otherwise you are very smart or very stupid. Why? With 2, your odds of gaining your starting fund are seriously better, and you can lower your risk of losing it all are drastically reduced. You may not earn as much, but you won't lose as much, either. That's the difference between a high-risk investment and a low-risk investment.

You can even diversify your investments by moving into other sports that you are very familiar with, to help your chances out even more. And so on.

As you can really see, diversification is a valuable skill to use when investing, and so you can end up more secure and feeling less likely to lose it all.

Portfolio update:


I guess my predictions weren't the best... So apple really increased like heck which is very good, but I didn't choose right with real estate and IDCC for now...

But it's only been 2 days. What can you expect? Stocks fluctuate, meaning they go up and down rapidly in short term, so you can't really base your decision on 2 days. This is still in the speculating area.

I really hit will with APPL so far though, but I think this won't last too long. I'll keep it a bit more, I'll check on it to see when everyone starts to buy it, so I'll sell then.

I'm not going to invest in any new stocks for the time being, so that will be it.

Thursday, February 9, 2012

Investing Meaning and Examples

In order to fully understand your investing environment that you encounter nowadays, you actually have to understand it first. This goes for you, this goes for me, this goes for everyone. Even experienced investors have to go back to basics to fully understand investing.

Let's look at the dictionary definition. Taken from dictionary.com



















Well, I hope you read it clearly. What you are doing is putting money to use, as in the first definition. You are making your money work for you to make even more money.

There are also many different ways to invest.

Let's start with Bank Accounts.

These are the safest type of investment you can make. You will definitely not lose any money, at all. Unless someone robs the bank or if the bank seriously goes out of business.

They have the lowest interest rates, so the return won't be very high. (I have a savings account, and I get .01% Interest. That's very low.)

Money Market Accounts.

Almost just as safe, but what you are doing is investing in the money markets, which is basically a system in the financial sector which involves loans. So, what you do is loan someone(s) some money, and you get more return. Sadly, you can't get all your money back instantaneously just like that, like in Savings Accounts. You have to have pre-determined periods of investment. So, this wouldn't exactly be the best bet for the rainy day fund.

Bonds. 

Basically you loan some money to any company, or the government.
They are given in sums of quite a bit of money and are traded in the Stock Market.
Very low risk investments, and it takes a long time (years) to get money because the money that will be given back is already promised when you first apply for one. The company that asks for it will pay it all back on a set date with added interest included.

It is really good for those who don't really want to open a professional portfolio but aren't sure about what they want to invest in. Also great if they don't have all the cash in the world to invest and are not sure about investing in general. 

Certificates of Deposit:

This is like the ones above, with a preset date of getting your funds back. Relatively low interest rates.

STOCKS!

This is pretty much one of the standards of investing. People like it in the long run because you get the highest rates of return, which was proven by other financial experts, so people really focus on it and, it is quite predictable sometimes.

If the economy of the country the company is based in is decent, then the stocks will be decent. If the economy is struggling or sucks, well, better not invest in it until you know what you are doing.

Mutual Funds.

This is basically hiring a financial expert to do the work for you. You get to choose between low rates of return (less money) and less risk, or high rates of return and more risk.

They trade the stocks with yours and others money all mixed up together, and the magic happens. This method lets investors without that much money to get higher rates of return, because your money is benefited from methods that can only be achieved by higher starting funds, like diversification, and a higher stake in the company. (I'll get into that later.)

Trading. 

Not recommended for beginners. I repeat, not recommended for beginners.

Why? This is basically using methods such as forex, or investing in futures and options (I even don't know much about this) for short-term investments. 

Not recommended. I can't say this enough. You have to be a professional and have a lot of experience to do this, so I would say wait if you're a beginner like me. 

If you are a pro, you better look like this if you want to consider this path. That's all I can say.

Futures.

This is investing in precious metals such as gold, silver, etc.
This is a decent way to invest, because the risk isn't too high and quite a bit of factors are involved which can be learned about not that hard, such as the environment, supply and demand. You can learn about this from even asking your friends if they like gold. 

It's not as likely to flop as currency, because gold actually matters, not some piece of paper or a nickel coin.

Remember this golden rule. 

The more money you ask for, the more likely you are to go down under.

The less money you ask for, the less likely you are to go down under.

Simple as that. You can't expect to invest in super-high risk stocks for stupid reasons, like if you had some misplaced sense of self-superiority, because the risk is real.

People have lost entire fortunes making the wrong investment decisions. Your money, believe it or not, can betray you sometimes. So don't go around thinking that investing is a sure way to earn money, because it's not. Sorry to break it to you.

So, I hope you understand more about the different types of investing, and maybe you'll get even more knowledge from this stuff. I know I surely did.

And again, I hope you realize that I don't know everything, so please comment if you want to give me a suggestion or some advice. Thanks for reading!

-Kevin


Tuesday, February 7, 2012

Why I Created this Blog

Hello, there folks.

This is a blog to make trading and investing easier than it people tend to make it seem to be. You may be wondering why I created this blog, so I'll dedicate this first post to introduce you guys to me. It will be quite hard, since I'm probably talking to nobody right now and this is kind of awkward, but I'll get on with it.

My name is Kevin. I am a teen who really likes, business. This isn't just something I find cool or something I have to study on in school for some project, I really want this to be my career.

The problem is, I don't have inspiration or motivation to do so. Therefore, I created this blog. I tweaked it to my own style with some nice templates and got it all going.

In this blog what I'll basically do is research some little part of investing like terminology or a technique and then share it with you guys and we'll basically learn a whole lot in the years to come. Notice how I said years. I probably will stay with this blog for a long time, because investing... Whew. There is a whole lot to learn about investing.

What I'll really be posting in here are just random terminology and ideas, or things that have been going on or changed in my "desk". Because every investor knows that style matters. *hint, hint*

Heck, maybe I'll end up talking about some of my favorite pencils. You never know.

But really, I just wanted to create this blog so I would have an incentive to start learning about investing. I have always been interested with this subtle art and really would like to challenge myself to learn about one of the best and worst ways to make yourself a fortune.

Why is it one of the worst? I'll get to that in another post.

By the way, advice is GREATLY APPRECIATED. I need help, guys. I can't do this whole thing without some of the more experienced investors, so please help me out if I get confused, comment below and tell me what I am confused on, what I am doing wrong, etc. Tell me the truth. I won't get mad. I want to learn, not to feel some misplaced sense of self-decency because no one doubts me.

I will also be starting an investment game on investopedia.com I started off with 100k capital, not sure if that's ever going to happen anytime soon, but sure. I'll take it. I'll give you guys updates on some of my decisions, maybe you guys can comment or help out.

I do actually know some about investing right now, so I'll also share a bit with you guys on that sooner or later. I'll probably end up explaining a lot of what I do in the future, so get ready for that. (My parents won't let me open an online brokerage account because I'm not experienced enough, and I'm ok with that.)

And don't worry, you also might think, investing is way too complicated for me! No way I'll understand that! Well, my dear sir, me too.

That's the purpose of this blog. Anyone showing an interest in investing can go on here and learn some easy tips and tricks, which will really elevate their portfolio and help them out in the long run with their finances. I'm not some witty expert with investing, and nor would you have to be either.

I'll also try to paraphrase the witty definitions and explanations that those websites and books give that leave you scratching your head and thinking, "what?" again, don't worry. I'm just as confused as you are. But as you know more and more, you will find that investing isn't too complicated, and with the right skills and attitude, you'll get your million.

This'll be much more different. This'll sound like a 6 year old is explaining it, (but without the drooling, crying and such.) That was actually a bad example, but I think you know what I mean. The explanations will be so simple anybody can get it.

How did I get to talking about six year olds? Odd.

Ok, now that the therapy session is over and we are all hopefully comfortable with ourselves as investors of ANY level, we can begin with introductions, and getting to know ourselves more, too. Not trying to sound like the Buddha, but it will be something important in the investing world, because you will have to know your strengths and weaknesses when you are standing in the face of the golden glory; the money. Something we all strive for, because it is a measure of how much we are worth, how much work we put in to our lives, and in today's capitalist society, it puts you into an entire new social class of people.

Let's start with me first.

My name is Kevin. I am a teen, still in middle school. The picture you just saw above was my "desk", and I guess I'll be staying there for a while.

I enjoy playing soccer, and I am quite the emotional guy. I enjoy relaxing, hanging out, and having a good time with my life and feeling like I am in control.

I also am quite the aficionado of office supplies, my favorite general writing pencil is the Paper Mate Sharpwriter; (right)

My favorite pencil for looking like a corporate boss is the Parker Jotter; (left)

And my favorite pen is the Pilot G-2. I won't have a picture with regards to having way too much space, so I guess that will be it.


I've always admired sitting in an office in the top floor of a skyscraper in the Financial District of a city, and just enjoying life and handling investments, I don't know. I might be daydreaming right now.

Wow, I really did end up talking about my favorite pencils.

I guess that's what you should know about me, I don't want to start a biography.

Let's get on the the good stuff.

My portfolio in the simulator will start like this.

So what I basically invested in was Interdigital Company, Apple Inc, and the index fund which is basically a compilation of all real estate in the US.

Let me explain why I chose these particular stocks.

Interdigital:

I saw that it was one of the biggest dropping companies so I took a look.


This is a yearly chart. You can't expect me to really have in-depth proof, but in selling stocks it is a buy low sell high game. I saw that not a very long while ago the prices jumped, and I predict that it is on its way soon. So I bought some shares.

You also might wonder why I chose it because it is one of the highest dropping. 

Buy low, sell high. I'll get into this later.

APPL: 

No need for a chart here, you all know well the company is doing, and I might as well hop on the bandwagon. This is a high-cap stock company, meaning that the total value is expensive, so I bought some shares of that.

Dow Jones Real Estate:

Chart!


This is a period of 5 years. I saw that there was sudden drop in the housing market as we all know, but I can also see that the market is coming back. I bought some shares for that reason and the real estate market isn't likely to suddenly drop again because I thought it was a necessity. I may be wrong.

That's it.

So there is my portfolio for the time being, and I'll just end this blog post for the sake of me not rambling on and on about some of the information I already know.

Let's just hope that I'm right.

Remember. This is a learning situation, I may not be right. This is in no way investing advice and you should not hold me accountable for lost funds due to my actions.

Also, please comment or tell me if you disagree. We're all in this together.

Well, I'm wrapping up! Thanks for being with me so far, and we'll start on our long ol' journey from here.

-Kevin
 

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