This Investment Newsletter handily beat the
S&P 500 for 2012
My goal as an investment newsletter writer is to outperform the stock market. My Investment Newsletter published at RulingTheMarkets.com handily beat the total return generated by the S&P 500 in 2012 (results can be seen on our website).
My goal as an investment newsletter writer is to outperform the stock market. My Investment Newsletter published at RulingTheMarkets.com handily beat the total return generated by the S&P 500 in 2012 (results can be seen on our website).
I belive my
philosophy about modern day investing can benefit many. I would like to discuss the difference
between "investing" and "trading", what my Investment Newsletter sets out to
accomplish and why I believe I am successful.
Investing
traditionally refers to people who are willing to allocate investment capital
with the expectation of earning a rate of return on that investment over a long
period of time. Many investors make the initial investment and then just put
their head in the sand and hope for the best.
Trading is usually
characterized by buying and selling stocks within the same day where the
holding period is often seconds or minutes. Trading is at the other end of the
spectrum from investing. Most traders have no long-term bias and they usually
change direction many times throughout the trading day.
I strongly believe
investors in the twenty-first century must be some place between putting their
head in the sand and directionless day trading.
Here
is my case for "why I trade my way into and out of investments" at
RulingTheMarkets.com as I
believe every investor involved with the stock market in the twenty-first
century should do.
30+
years ago computers came with very small amounts of computing power (Remember
the Commodore 64?) measured in kilobytes - megabytes of memory were
outrageously expensive, a gigabyte was only a dream and terabytes were an
impossibility. Today, we walk around with smart phones in our pocket utilizing
gigabytes of memory and we can buy terabyte hard drives for a $100. The pace at
which computing power has grown is parabolic.
In
addition, world wide business news organizations didn't exits 30 years ago.
CNBC did not exist until 1989, Bloomberg was started in 1986 and Google started
in 1998.
The
advancement in computing technologies and the development of worldwide business
news organizations have transformed the way economic information is
disseminated throughout the world. Think about it - in the 60's and 70's people
had to call each other on the phone or wait months to get new information
published in a nationally syndicated professional journal. No email, no text,
no business television and no Google.
Today
when new economic news is released - within SECONDS - it's known throughout the
world. New information is almost instantaneously factored into every economic
model on the planet. This in turn causes rapid swings in the stock market
outlook and exceptionally quick repricing of investments.
Charts
of the stock market indexes 30+ years ago looked like rolling waves in the
ocean, reflecting the slow absorption of new information into economic models.
Now if you compare older stock market charts to a chart from the last 10-15
years what do you see? You see massive swings up / down 20%-40% (sometimes
more) in months not years. Charts today look more like sharp pointed mountain
tops than a rolling peaceful sea. A startling change from decades ago.
So
if economic models are updated instantaneously why shouldn't your investment
strategy?
Technical
analysis provides the individual investor the ability to adjust their
investment strategy before the fundamental analysis is known. As an individual
investor you may not instantaneously know how a new natural gas discovery in Australia
effects your investment in a natural
gas infrastructure company based in North Dakota but you can watch the
stock chart.
In effect because of the new technology and speed of information the stock chart reflects consensus (right or wrong) instantaneously. This information can then be interpreted using technical analysis. Technical analysis tends to precipitate fundamental information.
In effect because of the new technology and speed of information the stock chart reflects consensus (right or wrong) instantaneously. This information can then be interpreted using technical analysis. Technical analysis tends to precipitate fundamental information.
This
is exactly what my Investment
Newsletter achieves by using fundamental and technical analysis to
produce higher investment returns. My
newsletter outperformed the S&P 500 last year by a factor of 4:1.
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