successful investing

Marketing timing strategies like “buy low, sell high” make sense of past market movements, but are pretty much useless at predicting the future.

This will be our last Inner Circle Q&A for 2015. Our next issue will go out on Tuesday, January 5, 2016.

Now is a good time for me to say “Thanks!” to all our Inner Circle members. It’s a pleasure to read and answer your questions. I take great pleasure and pride from the many compliments and expressions of gratitude you send every week.

That’s especially true when I hear from a member who I recognize from decades ago—from the early days after the 1994 launch of The Successful Investor, or from the two prior decades that I spent at The Investment Reporter and MPL Communications.

It’s also great to see that our Successful Investor philosophy and practice have begun attracting more and more younger investors.

I wish you all a great year-end holiday and a healthy, happy and prosperous New Year!

...

Peak Oil theory believers thought we were in danger of running out of oil

One of the least useful investment sayings you’ll ever hear is the oft-repeated “the secret of profitable investing is to buy low and sell high.” It can lead you to waste years in a costly search for a magic way to figure out where “low” is, and how to tell when a price has gone up to “high”. One obvious but erroneous answer to the first question is that a low price per share, particularly less than $1, is a good place to buy. This lures many beginning investors into penny stocks. After all, a winning penny stock can go from under $1 to several dollars. However, zeroing in on that rare event, much less making money at it, is a lot harder than many investors realize. Although the price may seem right, the average penny offers a poor long-term return. After all, it’s hard to create a successful business. It’s much easier and cheaper to set up a company and sell stock to the public. That’s why bad penny stocks always outnumber good ones. ...

Every time you buy or sell a stock and increase your portfolio turnover rate, you face three costs

If you plan on making money with penny stocks, first realize that many are little more than very well executed marketing campaigns

The price-sales ratio is one of many tools to help you with investing

To know how to trade stocks successfully, you need to know the right time to sell stocks. Here’s our advice.

One of the cardinal rules of successful investing is to invest mainly in simple, plain-vanilla investments. This rule limits your choices to two main categories: stocks and bonds. By confining yourself to these two investment categories, you still have all the investment choice you need. You also avoid the hidden risks and conflicts of interest that you’ll find in more complex products. The funny thing is that the promoters of complex investments describe the features of these investments as if they were benefits, disregarding the associated negatives. This marketing approach attracts investors who want to make a quick decision. These investors tend to accept the sales pitch at face value. Target-date funds provide an example. These mutual funds take advantage of the widely held view that bonds are inherently safer than stocks, so you should gradually shift your investments out of stocks and into bonds as you near retirement. Target date funds do this for you automatically....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on successful investing, and on successful retirement planning. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away.

Tip of the week: “When you work out a plan for your retirement, make sure that you aren’t basing your future income on over-optimistic calculations that will end up leaving you short.”

As the deadline for RRSP contributions approaches, many investors are confident they are taking concrete steps toward a secure retirement. But are those steps based on realistic calculations?

...