| |
| |
|
Investing |
|
|
|
Articles and Information about InvestingNetFinancial | Institutions | LoansColleges and Universities | Search Engines A Gadfly On A Dinosaurs Butt, Or The Hood-winking Of The American Investor
Have you ever noticed how some words in the English language are so perfectly named for what they describe? And how some words seem to be, I guess you could say, backwards? For instance, the word sunflower! How wonderfully aptly named is the sunflower, that beautiful yellow flower that follows the sun from sunrise to sunset. And then there are those words in the English language where there meaning appears to be backward, so to speak - like parkway and driveway. When my car is parked at home, I would think it would be parked on, well, a parkway - and when I'm on the road driving somewhere, I would think I'd be driving on a - a driveway. In the stock market world, I think the word analyst is a perfect word in the English language and stockbroker sounds right to me, too. And this leads me to what I call the 'brainwashing mantras' of Wall Street. The brainwashing mantras of Wall Street may take the form of a number, such as a stock rating of 1, 2, 3 etc. Or the mantras may be a star, 1 star, 2 stars etc. The mantras may be a word or a group of words- attractive, unattractive, neutral, market perform, market out-perform, market under-perform, market under-weight, market equal weight, market over-weight, sector perform, strong buy, buy, sell, strong sell. These mantras are so ingrained in Wall Street and investor's minds that they have created multi-billion dollar industries. There are other types of mantras, such as RSI (relative strength index-a trading volume indicator), Bollinger Bands (named after its creator John Bollinger (he use to be a regular on CNBC) and the bands deal with the channels a stock trades in, in relation to its 'moving average'- another mantra), Stochastics (used to tell if a stock is 75 % overbought - too many people have been buying) or 25% oversold (too many people have been selling), Momentum, MACD Convergence/Divergence- price of stock, up or down, in relation to its moving average), 50 day, 200 day moving averages, triple bottoms and tops, pendants, flags, bear and bull markets, head and shoulders formations, double bottoms, P/E ratios etc, etc, etc, etc. All these mantras serve a purpose (and if you're inclined to trade in the market they are, I admit, useful tools) - they create commissions. And in my opinion, have no meaning what-so-ever for the long-term, dollar-cost averaging, buying investor of company's shares, free of commission charges, whose companies raise their dividend every year, with the investor's idea or purpose being to provide an 85% tax-free income, through ever-increasing dividends for the rest of their lives, no matter what the price of the stock at any given time in the market place may be. (Whew! What a sentence!) Here's another mantra that comes to mind - 'consensus estimates'. The analysts that follow a company on Wall Street created this mantra. There may be three analysts or thirty analysts following a company and a consensus estimate of the company's next quarterly earnings will be projected from these analysts. For example, last quarter the company XYZ had record earnings of 90 cents a share. The company's consensus estimate predicted by the analyst for the next quarter is for one dollar a share. XYZ on the day the earnings are to be announced is selling at $40.00 a share. The earnings for the company are reported during the day and XYZ reported making 95 cents a share, missing the analyst consensus estimates of one dollar and the stock immediately drops to $38.00 a share. Never mind that XYZ had just made another quarter of record earnings, never mind that XYZ is paying a 4% dividend and has raised their dividend for the past twenty-five to thirty consecutive years (and three months from now the normally scheduled dividend increase will occur; after all, they'll have the money to raise it again, with record earnings and all). The only words that I can come up with to explain this type of stock price behavior after seeing something similar happen time and again through the years are 'brainwashing mantra at work.' I think I would be remiss if I didn't at least mention the mother of all mantras - the mutual fund, though I hesitate to mess with this mantra. (They being soooo big in investor's minds, and me just being a lowly gadfly on a dinosaurs butt; it really shouldn't matter what I say, one way or the other.) As I write this, some are in such a mess - caused by illegal trading practices costing investors tens of millions of dollars. One mutual fund has been fined $100 million, another $125 million. I wonder where they'll get the money to pay the fine. I believe all investors in a fund pay the fund's operating expenses, as well as the fund's marketing and management fees. They are called 'hidden fees' (I don't believe there is a hidden 'fee-fees'- this would be a fee that enables you to pay the fees - naw! Don't laugh- one mutual fund recently had been fined 450 million for 'hidden fee' practices). It is really, at the time of this writing to early to determine if the mutual fund industry has been 'riding a good horse to death. There is an enormous amount of investor dollars supporting some whopper salaries on Wall Street. Just recently (the summer of 2003), Richard Grasso, the once former head (CEO) of the New York stock exchange was forced to resign, after his salary for the past 2 years were made public. His salary - 12 million a year for the past two years, a check for $48 million, which his advisor suggested he return (which he did) and a pay-package of $139.5 million (which he hasn't returned, as of this writing-mid-2004 and a lawsuit to recover some of the monies is pending). Now, that is just one man's salary on Wall Street and it is certainly good work if you can get it! Where did all this money for his salary come from? If the money didn't come from investor's dollars, why were Pension fund managers so outraged by Grasso's salary that they threatened to pull billions of Pension fund dollars from the New York exchange? I really don't know where the money came from to pay his salary. What I do know is the one place where the money for his salary didn't come from, and that is from the Stockopoly investor. Not one cent! For more excerpts from the book 'The Stockopoly Plan' visit http://www.thestockopolyplan.com About The Author Charles M. O'Melia is an individual investor with almost 40 years of experience and passion for the stock market. Author of the book 'The Stockopoly Plan', soon to be released by American Book Publishing. You have permission to this article either electronically or in print as long as the author bylines are included, with a live link, and the article is not changed in any way (typos excluded) Please provide a courtesy e-mail to charles@thestockopolyplan.com telling where the article was published.
MORE RESOURCES:
Investing - Google News |
|
|
|
RELATED ARTICLES
Sitcom Investing A fickle stock market encourages good-humored mockery.Recently, as I watched the premiere of a sitcom, an obvious omission breached television etiquette. 25 Ways to Find Companies to Buy When you start your program to purchase your "ideal" company, you quickly realize that your ultimate success will depend on two primary skill sets: 1) Your ability to FIND viable companies that are for sale, and 2) Your ability to effectively qualify the potential acquisition investment once found.This article is about only step one, how to creatively find viable companies and one's that are able to be purchased. An Investment Real Estate Strategy Unknown To Most Is A Negative Amortization Loan If you want to make the most of your personal or investment real estate, you should consider a negative amortization loan. Mortgage amortization is basically mortgage balance reduction. Options Education: Financing the Calendar! As a trader, one of the key things that I try to consciously do is to cultivate my instincts by talking with other traders and investors as often as possible. It still amazes me how large the divergence of opinion that exists regarding what people believe will unfold as we enter the new millennium. Super Rules, OK? Do you rule your superannuation or does it rule you?It's easy to fall for some myths about your super unless you do some clear thinking about who is in charge. Virtually all Australian employees now have a superannuation account, many have several, even more than they know about. Stocks: Reduce Risk Yet Maximize Profits It is important to note that every smart investor wants to minimize risk while maximizing profit potential. Yet conventional investment theory tells us that in order to increase returns, you have to increase risk. Credit Scores = ROI Profits for Real Estate Investors Strong credit saves real estate investors money on mortgage finance costs. A good credit score, along with the other credit and mortgage qualifications, means that investors can pay lower fees for financing, such as points and interest charges. Retirement - Its Sooner Than You Think!! (Honestly) Many people hear "retirement" and think- what? 401K? Roth vs. Traditional IRA? Stocks, bonds, mutual funds? Do they?Or do many people put money away according to the suggested amount and then simply hope that when retirement comes all will work out?One report I read estimated that 66 million Americans have put away a Whopping $0 towards retirement. The Differences Betweeen the Wealthy and Everyone Else I recently received an e-mail from a young lady who had doubts about the principles of wealth found in "Rich Dad, Poor Dad". She mentioned a couple of past failed investments, and wanted to know what I thought about investing and financial freedom - whether it was just a myth, or whether it could be acquired. The Economys Greatest Depression Downturn Ever Is Now Just A Few Years Away What really controls the economy? Forget interest rates, forget deficits, forget the Fed, forget IRAQ, forget which party is in office. In fact, forget just about everything that permeates the news. Use of a Franchise Business as a Family Tax Planning Strategy Suggesting the use of a franchise business as a vehicle for family estate and tax planning. Specifically using as an example, The Car Wash Guys, a portable car wash franchise, where you will be purchasing a completely designed and outfitted car wash truck and the right to develop a specific city or regional area with out of pocket start-up costs between $25-50,000. Index Trading Weekly Update Here is a sample of the last newsletter:SP500 Last Signal Comment We just had a new sell signal last friday on june 10th 2005. As expected we faced strong resistance at 1200 and it ended up with a double top as stated in previous issues. Five Sure Fire Way to Secure Your Financial Future "You can be poor when you're young, but you can't be poor when you're old." That was the tag line used some years ago in a financial services television commercial. Do You Need A Financial Planner? No matter how much money you make, it pays to keep on top of money coming in and going out. Even if you do a good job of that, there are important times in your life when talking with a professional adviser makes sense. Seven Investment Terms Everyone Should Know For those who have never given their financial future a second thought, the term "Financial Planning" could be a scary one. Investments can be a smart way to invest money for your future, but it can be confusing for those who have no experience in the financial business. Is a SEP Plan Right For Your Business A SEP is a special type of IRA. Under a SEP plan the employer creates an IRA account for each eligible employee, hence the name SEP-IRA. Investing in Car Dealerships: Doing Your Homework This article attempts to help give the investor a broader basis upon which to decide whether a dealership merits their time, money and attention.Interviewing Factories and Financial InstitutionsLenders have an affirmative duty not to promiscuously disclose the financial condition of their debtors. The Truth About Real Estate Investing - Is It Right For You? You have probably been hearing, seeing and reading that real estate investing is the best thing since sliced bread. There are many late night cable television infomercials spewing out sales pitches for courses that teach you how to buy residential real estate no money down or for next to nothing. Approaches to Investing Here is a small summary of the three major approaches to investing:1. Fundamental AnalysisTruly superior companies exist, are sometimes undervalued by markets, and can be identified by mostly financial research. Chile Leads the Latin Pack Everyone's talking about China. Don't miss the opportunities in the other CHI.
|
|
Currency Trading | Investing | Leadership | Negoatiation | Real Estate | Stocks and Mutual Funds | Taxes home | NetFinancial | Institutions | Loans | Colleges and Universities | site map Search Engines | EZmatic | 0pops | GetSonic | TrafficFish | Health |
| © 2006 |
