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Retirement Plan: "Strength of the Effort is the Measure of the Results."

"Strength of the Effort is the Measure of the Results." As the Business Service Manager and Veteran's Advocate for Inter-City Services a non-profit workforce service that teach Veterans and minorities in the usage of Microsoft Suite of Products and provided job placement, my job was to find ways to get them trained and placed. Many of the students had active or inactive retirement planes and they did not understand higher risk mutual funds and stocks which gave superior growth. So, there retirement income was based on investing in lower risk money markets and Certificate of Deposits, which earn little and would not grow at a rate that would allow them to retire. Ten students accepted my offer to attend my class in "Making Money in Stocks.".

The results of there grasp of market psychology empowered them to understand there are good reasons why natural human reactions often leads to trouble in trading stocks. Instincts developed over thousands of years, such as seeking security in a crowd and the fight or flight response has help to secure our survival as humans. The biological survival of yesterday has little to do with the material survival of today. We are competitors for jobs and profits in financial markets. Trading securities can exploit rather than reward biological survival responses.

Crowd followers hold their stock positions until they are panicked into selling en-masse, which creates accelerate losses in those stocks. Where a disciplined growth investor who act on price-based stop-loss rules will exit their position before disaster strike, and disciplined value investors will move in to purchase shares in great companies at fire-sale prices. These contrarians are the investors that deserve and receive the market beating returns.

Thought-control is the key to avoiding the two most dangerous emotional extremes in the financial markets: greed and fear. Develop your thoughts, so that you never enter the market without a preset plan of how you will handle your portfolio: the general buy and sell rules, stock selection criteria, market-watching procedure and other principles that make up your investing strategy. Review your holdings as well as your target stocks daily. Think through your reaction according to your strategy, if the market moves against your positions or in their favor. What point will you cut losses? What point will you sell to lock in a profit. What conditions will you recognize that a stock is looking weak or extended? Keep in mind that your primary market indicator should be the market itself: the major indexes, trading volume and leading stocks. They will help you interpret sentiment indicators. For example, a correction often will bottom in a final convulsion of extreme fear ( or there is blood in the streets ). The market will go to a new intra-day low, then may recover on heavy volume. At the same time trading volume in put options on stocks will surge relative to call options or to a ratio of 1.0. Research has shown that options buyers are usually wrong on the direction of the stock market. They are the wrong-way crowd.

Greed also can appear in individual stocks, often in the form of a climax run. After a long advance, a stock's rise may accelerate and score an additional 50% gain or more in a few days, which is a sign that the greed has taken over, and greedy shareholders will hold on, convinced their genius is about to make them rich in one easy stroke.

"A Bull Market climbs a Wall of Worry," and the wall is created by investors with a healthy dose of skepticism on concerns about interest rates, stock valuations, economies. Many investors set their money on the sidelines or will short-stocks because of these fears. When the fears subsides, a lot of capital could propel the market even higher.

Top market analysts have drawn from years of experience a rule: When everyone is invested and everything looks great, the market and individual issues could be near their peaks. The reason could be: All the good news is out . Everyone who was going to buy has already done so. So the next move often is down as sellers in the market start to outnumber buyers and send prices lower.

Empower yourself, learn the skill of investing

Comments

Montell--I'm not trying to be snarky or condescending, but there is an accumulation of grammatical and spelling errors in your post such that it is difficult at times to fully understand what you are trying to communicate. Someone who commands a rate of $90 per hour should be able to hire someone to proofread his posts. I know that you are an expert in financial matters, not an English scholar; however, potential clients are going to be skeptical of shelling out 90 bucks an hour to someone who does not know the difference between "there", "their", and "they're".

$35p/h

Montell C.

Learn to invest in Stocks and Mutual Funds for Profit.

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