Here is a Quick Way to Select Successful Mutual Funds

Many investors look only at the track record when choosing a fund. This is a big mistake. The warning that all investment companies give - "past results are not guarantee for further profits" - is there for a reason. Past performance is only one factor that you should consider when selecting an investment fund.

If you want to pick a really successful fund, you should evaluate a combination of several criteria.

Here is a quick suggestion:

1. Past results. Of course! It's not the only factor, but remains one of the most important factors. The higher the average yearly results are, the better - if you are ready to accept the higher risks.

2. Long life. Since how long is this mutual fund in the market? You may think the longer is the better. Generally yes, because it means lower risk. But if you are looking for more aggressive opportunities, consider investing in younger mutual funds.

3. Size. The companies who manage large investment amounts are less liquid. Such funds are usually safer, but can't offer too high returns. In case of market crash, such funds are unable to cash out fast enough because of the size of their positions. Generally I prefer smaller funds, because they give more opportunities.

4. Company reputation. What do websites, magazines, newsletters and independent advisers say about the company offering the fund? If most people are happy or unhappy, they probably have good reasons for that.

5. Market segment. Is the fund investing in regions with emerging economy? If it is specialized in certain industry, what's the future of that industry? Mutual funds are long term investment - so thing long term when evaluating them.

There are hundreds of factors one should consider when picking a mutual fund. That's why there are so many companies who provide mutual funds evaluation and even charge for that. But in most cases, considering the five factors listed above can help you enough to achieve good results.

Avoid Bad Mutual Funds

Since the mid 1980's, the market of the Mutual Fund industry has grown continuously. Billions of dollars has been invested into the Mutual Fund Industry. Unfortunately, not all of investors make money. Therefore, it is important for you to study a mutual fund carefully before investing. Here are some tips that can help.

Stay Away From Poor Performance Funds: It is important to look at the history of the mutual funds. If it has been bad for awhile, it is probably not for you. The average investor will sell a poor performance fund to find best performing fund.

Over-Diversified Funds Are BAD: Mutual funds are regulated by law to diversify seventy five percents of their assets. They should not have more than five percents of the portfolio in a single security. As the result of the laws, some fund managers are forced to invest in many different stocks due to the size of their funds. Some fund managers are forced to buy poor quality stocks.

Be Careful Of Fund Overlap: Many investors try to diversify their investments by placing their money in different type of funds. Unfortunately, they will be surprised to know that many stocks held by one fund are also held by the other funds. Some investors end up investing in the same stocks over and over without knowing.

Investors who have over $100,000 of investable assets should separate their investment accounts. Separate accounts allow investors to have greater control over taxes and security. Furthermore, these accounts are usually managed by highly professional fund managers.

What's Wrong With Mutual Funds?

Why are Most Mutual Funds Bad Investments?

Most actively traded mutual funds are poor products from the investor's point of view. This may come as a surprise to many people since mutual funds are the primary investment product for most individual investors and they are very heavily advertised. Professional institutional investors rarely use active mutual funds. There are a number of problems with most active mutual funds such as:

1. They have high costs. The average active equity mutual fund has an expense ratio of over 1%. In addition to this, there are trading costs that may subtract as much as .5% from performance each year. I'm not even counting "sales loads" on some funds of 5% or more which I hope you aren't paying. How high are the expenses on your mutual funds? I hope not 1% or more. These expenses can eat up 25%-40% of your total returns and can end up costing you a fortune over 10-20 years (due to compounding).

2. Most mutual funds underperform the market. This is primarily due to their high expenses mentioned in point #1 above. According to Lipper, Inc. over the past 20 years the average US stock fund lagged the market by about 2% per year. The true track record is actually noticeably worse than this due to "survivorship bias". Survivorship bias occurs when poorly performing funds are closed or merged (with better performing funds) and are not counted in this data. The actual data including all funds (including the closed/merged funds) is probably another percentage point worse than the number mentioned above. Over 10 years or longer it is typical that 75% (or more) of all active mutual funds lag the market. The mutual fund firms promote their recent "winner" funds so much that you would think all funds beat the market (which of course is impossible).

3. They are tax-inefficient. Most active mutual funds have fairly high turnover (around 40%-100% per year on average), causing short-term and long-term gains which are taxable each year. This causes some of the return (the short-term gains) to be taxed at very high ordinary income tax rates. It also prevents the power of compound returns from providing maximum power by constantly taking gains and paying taxes each year. When you own mutual funds, you do not control the timing of taking capital gains (or not taking them).

4. You may inherit capital gains and owe taxes on gains you never actually experienced. Does that seem fair? If you buy most active funds after a big upward move in the market, you will inherit the gains in the stocks in the fund. Over the next couple years you will have to pay the capital gains taxes on these gains, even if the fund is flat and you never make a dime. Those embedded gains were actually experienced by the prior owners of the fund (not you). Most people do not realize this fact about mutual funds.

5. You can't predict which funds will be the best performers and "beat the market" ahead of time. According to numerous statistical studies, past performance is not an indicator of future performance. Funds which have the hottest recent records are not likely to continue to provide the best returns, contrary to popular opinion. Funds which have good performance gather assets at a rapid rate, making it much more difficult for the portfolio manager to continue to perform well. In addition, funds with strong recent records are often just lucky to have been in the hottest part of the market or the "in" style. Buying last year's winners is usually a poor strategy which often results in buying future laggard funds. You may recall how most of the risky technology/internet funds had the best recent track records and the highest Morningstar ratings at the peak of the stock market bubble. They subsequently provided horrible losses to investors.

6. The Portfolio Managers keep changing, and they are too short-term oriented. Portfolio manager turnover (on each mutual fund) averages about every 5 years now. So even if you fund a fund and a manager you like with a good track record, chances are the same portfolio manager will not be there for long.

7. Portfolio Managers often drift from the strategy they are supposed to be following. They tend to drift towards whatever has been working lately (by adding more mid-size companies or international stocks to a large-company portfolio) to try to add to performance. The problem with this is you don't really know what you are getting when you invest in the fund. You think you have a large company domestic growth fund when in reality a significant percentage of the fund may be invested in other sectors or countries.

8. Mutual fund companies are at least as concerned about marketing and making money for themselves as they are about investment performance for shareholders.

Compare Mutual Funds With These Key Statistics

Comparing mutual funds is fairly simple when you have a good understanding of the key statistics and know how to employ them effectively. The key statistics listed below should serve you well in comparing mutual funds.

rious periods of time will give you a good feel for a fund's ability to consistently deliver good returns. MMutual Fund Returns

• Arithmetic Mean
• Risk-Adjusted Return

Mutual Fund Risk

• Standard Deviation
• Beta

Risk-to-Return

• Sharpe Ratio
• Coefficient of Variation
• Treynor Ratio

You'll find these statistics readily available on the Internet at sites like Yahoo! Finance. These key statistics should be used in the order in which they are listed.

Risk and return should not be used independently to compare mutual funds. Indeed, you need to use one of the measures of risk-to-return to compare mutual funds on a relative basis.

Published annual returns are usually computed by compounding monthly returns and multi-year averages are usually computed as the geometric mean of the annual returns, which yields a compound return and is the metric that will tell you how well you would have done if you had been invested in a fund over the period of interest. However, the arithmetic mean, i.e., a simple average of the annual means, is the appropriate metric for evaluating a mutual fund's ability to deliver good returns. The returns delivered over various periods of time will give you a good feel for a fund's ability to consistently deliver good returns. More weight should be given to the longer periods.

The returns published by independent sources should be total returns (they include dividend and capital gains distributions) net of fees and expenses. Be sure to verify this.

In investing, risk is measured in terms of volatility. Total risk is measured by the standard deviation of returns and it is the standard deviation that should be used to compare mutual funds. Beta is a measure of residual risk, i.e., the risk inherent in the overall market. Beta is an indicator of the volatility of a security relative to a broad market index such as the S&P 500.

Although we have a natural aversion to risk, risk is what justifies earning a return in excess of that of riskless securities like T-bills, but expected returns must be commensurate with the level of risk. If two mutual funds have equivalent returns but one has a significantly higher standard deviation, the one with the higher standard deviation should be rejected in favor of the other. If, on the other hand, two mutual funds have equivalent risk-adjusted returns, you may prefer the riskier of the two if you have a high risk tolerance, as it has the potential to deliver higher returns.

The risk-adjusted return is calculated by dividing a fund's return by its standard deviation then multiplying by the standard deviation of a relevant index. For example, if you are comparing emerging markets stock mutual funds, an appropriate index would be an emerging markets stock index. Using a relevant index rather than the S&P 500 isn't absolutely necessary but it has the advantage of providing you with the opportunity of comparing the individual funds with the index. If none of the funds you are comparing can beat the index on a risk-adjusted basis, then you should look at some other funds or buy the index.

The final quantitative step in comparing mutual funds is the use of some measure of risk-to-return. Here the Sharpe ratio is the hands-down winner for use in comparing mutual funds, as it is computed using total risk. The coefficient of variation is a quick and dirty substitute for the Sharpe ratio. The Treynor ratio considers the degree of diversification in its computation and is best used for evaluating the competence of funds' managers.

The Sharpe ratio is the excess return (the actual return less the risk-free rate) divided by the standard deviation. The result is the real return per unit of risk. When comparing similar mutual funds, preference should always be given the one with the highest Sharpe ratio. Choosing one with a slightly lower Sharpe ratio might be appropriate if it displayed a lower degree of correlation with the other securities in your portfolio.

By themselves, the yield and expense ratio won't tell you a lot, but they should be factored into returns and you should verify that they have been. Yield is a consideration if one of your objectives is to produce a stream of income. Also, in taxable accounts, yield creates a tax liability.

Turnover will affect return to the extent that trading costs eat into returns, but it will always be reflected in the returns. In tax-deferred accounts, turnover that pays its way is not an issue. Turnover is an issue in taxable accounts, as it generates capital gains tax liabilities.

Finally, manager tenure should always be a consideration when evaluating and comparing mutual funds other than index funds. A mutual fund with a good long-term record under the same manager is highly desirable, and there should be a co-manager or fully indoctrinated protégé to carry on in the manager's absence.

Always compare apples to apples. Your comparisons will be most valid if you compare mutual funds that are in the same asset category, similar in size and managed by the same style. For instance, don't compare a huge large-cap growth fund with a tiny small-cap value fund.

If you use these key statistics effectively to compare mutual funds, you should be very satisfied with most of your selections. But nothing is certain in investing, so be prepared for an occasional disappointment.

Loaded Mutual Funds

'Loaded mutual funds' can be described as those that require the investor to pay fees for buying a mutual fund. These charges are known as sales load and are primarily commissions paid to the person who sells the fund to the investor. Loaded mutual funds are preferred mainly by sales brokers and insurance salesmen because they earn revenues for them.

There are three different types of sales loads on these funds. They are as follows:

1. Front-end loads: Also known as entry fees, these charges must be paid up-front when the investor buys the fund.

2. Back-end load: Also known as exit fees, these charges have to be paid by the investor when he walks away from the fund taking his investment along with the returns.

3. Constant load: These charges have to be paid throughout the entire term of the fund.

In all these three options, front-end loads are better for investors. A hidden fact in a loaded fund is that the charges or the sales load is deducted from the actual investment amount. As a result, the net investment value at the start of the fund is lower. For example, when an investor wants to invest $10,000 in a mutual fund and agrees for a 5 percent entry load, he is actually investing $9,500. The remaining amount of $500 is deducted from the total investment and deposited in the form of front-end load. This commission neither goes towards management of fund nor gets the investor any special privileges. It is simply deposited into the bank accounts of the broker or the salesperson. In this regard, loaded funds are disadvantageous when compared to no-load funds.

Making Money Beyond Mutual Funds

You've been good. You live on less than you make and you're not drowning in debt. Maybe you have a good 401k, some mutual funds and a bank account. Maybe you have a financial planner managing your money for you.

In spite of doing this you may still be wondering if you have enough to send the kids to college or how you can support your aging parents. Can you afford to retire before you're 70? Perhaps your dreams are such that you don't want to live on 80% of your current salary after you retire. So what else is there?

There are many options besides spending less and saving more. If you aren't living on less than you make, or you're drowning in debt, you will need to get that under control first. Once you do that you can learn how to make your money work harder so you can work less.

What are your options? They range from investments to real estate; starting a business to selling an idea. What interests you? Once you determine that you can learn more about that area.

Do you love to watch the stock market? Maybe investing is for you. You can research: investing; stocks; commodities; options; precious metals; etc.

Do houses and property fascinate you? Real estate may be right for you. You can research: traditional real estate purchases; no money down strategies; tax lien certificates; foreclosures; wholesaling; rentals; rehabbing; etc.

Can you envision the perfect product? Maybe you are an inventor. You need to protect your idea through an intellectual property attorney (patent attorney). Then you can research: selling a patent; manufacturing; marketing your product; etc.

Do you dream about being your own boss and calling the shots? Owning and running a business may be for you. You can research: business start-ups; franchises; home based business; network marketing; etc.

Does creating a system excite you? You may want to create a business. You can research: starting a business; franchising;

Each area is different and some may interest you while others may not. Take some time, think about what interests you, do some research, get some training and go create an income stream!

Creating Wealth With Mutual Funds

For ten years or more, U.S. investors in increasing numbers have depended on mutual funds to save for their retirement plans, creating wealth and other financial objectives. Mutual funds offer the benefit of diversification along with professional management. Diversification is obtained within the Mutual Fund. The fund manager buys and sells individual stocks from a variety of different market sectors thus diversifying the holdings within the fund. When you invest in mutual funds, as with other investments you are also taking a risk. For mutual funds, however, these risks are reduced by the diversification within the fund. As individual stocks may have large fluctuations in their value, the mutual fund helps smooth out these fluctuations by holding several different stocks from different market sectors.

Wise investors understand that there are up's and down's when investing in mutual funds. It is important to choose a mutual fund product that will match your financial goals against your tolerance for risk. Before investing in a mutual fund, obtain a copy of the fund's prospectus and review the investment strategy and market sectors it invests in. If you are comfortable with where and how they invest, this fund may be a good match for you. On the other hand, if you are not comfortable, save yourself the anxiety and find a different fund. There are hundreds of funds to choose from and choosing one that fits you can give you that piece of mind down the road.

Fees along with taxes will reduce the return on a mutual fund investment. Most mutual funds carry some kind of fee sometimes call a load. This is the fee to cover the fund management expenses. Many mutual funds are "no load". They do not charge a percentage to invest like the loaded funds do, but there are still fees involved. The fees are calculated and taken from the returns before distribution to the shareholders/investors. However the fees are collected, they are necessary for the fund to operate. The fund managers are under tremendous pressure to ensure the fund has a good rate of return and they are paid very well to take on this responsibility.

A mutual fund is a company that collects and pools money from various investors and invests the revenue or money into short-term money-market instruments, stocks, bonds, and other assets or securities. The collective holding's a mutual fund owns is referred to as a portfolio. When you invest in a mutual fund, you are investing in a portion of the fund's portfolio. Each share identifies an investor's proportionate ownership in the fund's holdings and the revenue those holdings have generated. Go to this site to increase your knowledge on investing.

Listed below are some traditional and distinguishing character traits of mutual funds:

* When investors buy mutual fund shares, they buy from the fund or from a stockbroker not from other investors on a secondary market, like the Nasdaq Stock Market or New York Stock Exchange.

* The amount the investor pays for mutual fund shares is the fund per share net asset value or NAV combined with any shareholder fees that the fund may charge at the time of acquisition (like sales loads).

* Mutual fund shares can be redeemed which means that investors can sell their shares back to the fund, who produce and sell new shares to sell to new investors. Mutual funds sell their shares continuously. Some mutual funds do stop selling shares when the fund gets to be too large.

* The investment portfolios of mutual funds are generally managed by investment advisors, which are separate entities.

Mutual funds seem to be a favorite investment instrument in both 401k's and IRA's. 401k's usually offer a variety of funds to choose from and are selected based on the level of implied risk associated with the investment strategy. You simply choose your level of risk comfort and invest in the fund that is offered at that level. Many allow you choose more than one fund and to reallocate your investments at various times throughout the year. Check with you particular 401k to see what the rules are.

Investors like mutual funds for IRA's because there is little to keep track of once the fund is selected. Changes are rarely made to this type of long-term investment and investors may only check the fund's performance once or twice a year. Whatever your investment goals, a good portfolio usually involves diversified investments such as stocks, bonds and mutual funds.

Creating wealth for you and your family means providing your family with an in-depth financial education that includes learning about stocks, bonds mutual funds and more. Children should be taught about financial products as soon as possible. Hopefully your plan for creating wealth includes family meetings where finances are discussed and decisions are made.

Life Lessons of Forex

Foreign exchange is the buying and selling of currencies of different countries online i.e through the internet. Yes, the forex is a means of making money through buying and selling of currencies but it's much more than that. It's also a process of leaving life lessons that be virtues or positive depending how one makes use of it. It's not just learn and trade but it also impacts into the life of the trader if one is observant.

In trading forex, one is told to study, study and keep on studying for that is the only way to bring out the best in trading forex. Now, in life we're better off if we allow ourselves to keep on learning new ways of life and the constant face of change so as to continue to grow in all ramifications such as learning news ways and mastering old ways in forex trade.

Also, forex will tell you not to be greedy in as much as it can tempt you to be. And if one can master this very well in trading forex his/her other issues of life will be less troublesome be it personal or public, emotional or financial. For in forex greed leads to disaster. Thus, a trader in forex who had been greedy at one point or the other will understand it means and takes to be greedy and its consequences. For in forex greed leads to loss.

Furthermore, in life we're told to be patient for it's a virtue. And I think there is no better way to learn this than through trading of forex. In forex, one just has to be patient else face the challenges of not being. This is because in forex you're made to set up trading plans that'll be successful and sticking to the plan no matter what, whether you're making a loss or profit. It also teaches how to manage risk taken and this if well-developed can help one to be able to make decisions on other aspects of their lives. Also, the art of money management cannot be forgotten as a good life lesson from forex trading.

Thus, one can say trading of forex is not just about making profits but accepting losses whenever they occur. And that forex trade will not only teach one such lesson as a trader but helps that person to imbibe such good virtues as a human being.

Conclusively, though you may loss some cash in forex you definitely must've gained some wisdom on the affair of life. Thank you.

Forex-foreign exchange is the buying and selling of currencies of different countries online i.e through the internet. Yes, the forex is means of making money through buying and selling of currencies but it's much more than that. It's also a process of leaving life lessons that be virtues or positive depending how one makes use of it. It's not just learn and trade but it also impacts into the life of the trader if one is observant.

In trading forex, one is told to study, study and keep on studying for that is the only way to bring out the best in trading forex. Now, in life we're better off if we allow ourselves to keep on learning new ways of life and the constant face of change so as to continue to grow in all ramifications such as learning news ways and mastering old ways in forex trade.

Also, forex will tell you not to be greedy in as much as it can tempt you to be. And if one can master this very well in trading forex his/her other issues of life will be less troublesome be it personal or public, emotional or financial. For in forex greed leads to disaster. Thus, a trader in forex who had been greedy at one point or the other will understand it means and takes to be greedy and its consequences. For in forex greed leads to loss.

Furthermore, in life we're told to be patient for it's a virtue. And I think there is no better way to learn this than through trading of forex. In forex, one just has to be patient else face the challenges of not being. This is because in forex you're made to set up trading plans that'll be successful and sticking to the plan no matter what, whether you're making a loss or profit. It also teaches how to manage risk taken and this if well-developed can help one to be able to make decisions on other aspects of their lives. Also, the art of money management cannot be forgotten as a good life lesson from forex trading.

Thus, one can say trading of forex is not just about making profits but accepting losses whenever they occur. And that forex trade will not only teach one such lesson as a trader but helps that person to imbibe such good virtues as a human being.

Conclusively, though you may loss some cash in forex you definitely must've gained some wisdom on the affair of life. Thank you.

Forex-foreign exchange is the buying and selling of currencies of different countries online i.e through the internet. Yes, the forex is means of making money through buying and selling of currencies but it's much more than that. It's also a process of leaving life lessons that be virtues or positive depending how one makes use of it. It's not just learn and trade but it also impacts into the life of the trader if one is observant.

In trading forex, one is told to study, study and keep on studying for that is the only way to bring out the best in trading forex. Now, in life we're better off if we allow ourselves to keep on learning new ways of life and the constant face of change so as to continue to grow in all ramifications such as learning news ways and mastering old ways in forex trade.

Also, forex will tell you not to be greedy in as much as it can tempt you to be. And if one can master this very well in trading forex his/her other issues of life will be less troublesome be it personal or public, emotional or financial. For in forex greed leads to disaster. Thus, a trader in forex who had been greedy at one point or the other will understand it means and takes to be greedy and its consequences. For in forex greed leads to loss.

Furthermore, in life we're told to be patient for it's a virtue. And I think there is no better way to learn this than through trading of forex. In forex, one just has to be patient else face the challenges of not being. This is because in forex you're made to set up trading plans that'll be successful and sticking to the plan no matter what, whether you're making a loss or profit. It also teaches how to manage risk taken and this if well-developed can help one to be able to make decisions on other aspects of their lives. Also, the art of money management cannot be forgotten as a good life lesson from forex trading.

Forex Overview

Each day, millions of trades are made in a currency exchange market called Forex. The word "Forex" directly stems off of the beginning of two words - "foreign" and "exchange". Unlike other trading systems such as the stock market, Forex does not involve the trading of any goods, physical or representative. Instead, Forex operates through buying, selling, and trading between the currencies of various economies from around the world. Because the Forex market is truly a global trading system, trades are made 24 hours a day, five days a week. In addition, Forex is not bound by any one control agency, which means that Forex is the only true free market economic trading system available today. By leaving the exchange rates out of any one group's hands, it is much more difficult to even attempt to manipulate or corner the currency market. With all of the advantages associated with the Forex system, and the global range of participation, the Forex market is the largest market in the entire world. Anywhere between 1 trillion and 1.5 trillion equivalent United States dollars are traded on the Forex market each and every day.

Forex operates mainly on the concept of "free-floating" currencies; this can be explained best as currencies that are not backed by specific materials such as gold or silver. Prior to 1971, a market such as Forex would not work because of the international "Bretton Woods" agreement. This agreement stipulated that all involved economies would strive to hold the value of their currencies close to the value of the US dollar, which in turn was held to the value of gold. In 1971, the Bretton Woods agreement was abandoned. The United States had run a huge deficit during the Vietnam Conflict, and began printing out more paper currency than they could back with gold, resulting in a relatively high level of inflation. By 1976, every major currency worldwide had left the system established under the Bretton Woods agreement, and had changed into a free-floating system of currency. This free-floating system meant that each country's currency could have vastly different values that fluctuated based on how the country's economy was faring at that time.

Because each currency fluctuates independently, it is possible to make a profit from the changes in currency value. For example, 1 Euro used to be worth about 0.86 US dollars. Shortly thereafter, 1 Euro was worth about 1.08 US dollars. Those who bought Euros at 86 cents and sold them at 1.08 US dollars were able to make 22 cents profit off of each Euro - this could equate to hundreds of millions in profits for those who were deeply rooted in the Euro. Everything in the Forex market is hanging on the exchange rate of various currencies. Sadly, very few people realize that the exchange rates they see on the news and read about in the newspapers each day could possibly be able to work towards profits on their behalf, even if they were just to make a small investment.
The Euro and the US dollar are probably the two most well-known currencies that are used in the Forex market, and therefore they are two of the most widely traded in the Forex market. In addition to the two "kings of currency", there are a few other currencies that have fairly strong reputation for Forex trading. The Australian Dollar, the Japanese Yen, the Canadian Dollar, and the New Zealand Dollar are all staple currencies used by established Forex traders. However, it is important to note that on most Forex services, you won't see the full name of a currency written out. Each currency has it's own symbol, just as companies involved in the stock market have their own symbol based off of the name of their company. Some of the important currency symbols to know are:

USD - United States Dollar

EUR - The Euro

CAD - The Canadian Dollar

AUD - The Australian Dollar

JPY - The Japanese Yen

NZD - The New Zealand Dollar

Although the symbols may be confusing at first, you'll get used to them after a while. Remember that each currency's symbol is logically formed from the name of the currency, usually in some form of acronym. With a little practice, you'll be able to determine most currency codes without even having to look them up.

Some of the richest people in the world have Forex as a large part of their investment portfolio. Warren Buffet, the world's richest man, has over $20 Billion invested in various currencies on the Forex market. His revenue portfolio usually includes well over one-hundred million dollars in profit from Forex trades each quartile. George Soros is another big name in the field of currency trading - it is believed that he made over $1 billion in profit from a single day of trading in 1992! Although those types of trades are very rare, he was still able to amass over $7 Billion from three decades of trading on the Forex market. The strategy of George Soros also goes to show that you don't have to be too risky to make profits on Forex - his conservative strategy involves withdrawing large portions of his profits from the market, even when the trend of his various investments seems to still be correlating upward.

Thankfully, you don't have to invest millions of dollars to make a profit on Forex. Many people have recorded their success with initial investments of anywhere from $10,000 to as little as $100 for an initial investment. This wide range of economic requirements makes Forex an attractive venue for trading among all classes, from those well entrenched in the lower rungs of the middle class, all the way up to the richest people alive on the planet. For those on the lower end of the spectrum, access to the Forex market is a fairly recent innovation. Within the past decades, various companies began offering a system that is friendlier to the average person, allowing the smaller initial investments and greater flexibility that is seen in the market today. Now, no matter what economic position you are in, you can get started. Although it's possible to jump right in and start investing, it's best that you make sure you have a better understanding of the ins and outs of Forex trading before you get started.

The world of Forex is one that can be both profitable and exciting, but in order to make Forex work for you it is important that you know how the system works. Like most lucrative activities, to become a Forex pro you need a lot of practice. There are many websites that offer exactly this, the simulated practice of Foreign Exchange.

The services provided by online practice sites differ from site to site, so it is always a good idea to make sure you know all of the details of the site you are about to use. For example, there are several online brokers who will offer a practice account for a period of several weeks, then terminate it and start you on a live account, which means you may end up using your own money before you are ready to. It's always a good idea to find a site that offers an unlimited practice account. Having a practice account allows you to learn the ways of the trade with no risk at all.
Continuing to use the practice account while you use a live account is also a beneficial tool for even the most seasoned Forex traders. The use of a no risk practice account enables you to try out new trading strategies and tread into unknown waters. If the strategy works, you know that you can now implement that strategy into your real account. If the strategy fails, you know to refrain from the use of that strategy without the loss of any actual money.

Of course, simply using a no risk account won't get you anywhere. In order to make money with Forex, you need to put your own money in. Obviously, it would be ridiculous to travel to other countries to purchase and sell different currencies, so there are many websites that you can use to digitally trade your money. Almost all online brokerage systems have different features to offer you so you have to do the research to find out which site you wish to create an account with.
All brokers will require specific information of you to create your account. The information they will need from you includes information required to communicate with you, including your name, mailing address, telephone number, e-mail address. They also require information needed to identify who you are, including your Social Security number, Passport number or Tax Identification number. It is required by law that they have this information, so they can prevent fraudulent trading. They may also collect various personal information when you open an account, including gender, birth date, occupation, and employment status.

Now that you have practiced trading currency and set up your live account, it is time to truly enter this profitable yet risky world. To make money with Forex, you do need to have money to begin with. It is possible to trade with very small amounts of money, but this will also lead to very small profits. As is with many other exchange systems, high payouts will only come with high risks. You can't expect to start getting millions as soon as you put money in to the market, but you can't expect to make any money at all if you don't put in at least a 3-digit value.

As most Forex brokers will warn you, you can loose money in the foreign exchange market, so don't put your life savings into any one trade. Always trade with money that you'd be able to survive without. This will ensure that if you get a bad trade and loose a lot of money, you wont end up on the streets, and you'll be able to make a comeback in the future.

So how does trading currency work? Logically, trades always come in pairs. For example, a common trade would be the United States Dollar to the Japanese Yen. This is expressed as USD/JPY. The way to quote a trade is kind of tricky, but with practice it becomes as natural as reading your native language. In a Forex quote, the first currency in the list (IE: USD in USD/JPY) is the base currency, and in the quote the base is always one. This means if (hypothetically of course) One USD was worth Two JPY, that the quote would be expressed as 1/2.

When trading in Forex, we use pips. Pip is an acronym for "percentage in point". A pip a certain decimal place in a number compared to the same decimal place in another number. Using pips, we track the gains and losses of a currencies value compared to another's. Let's take a look at an example. Say a value is written as 1.0001/1.0004. This would indicate a 3-pip spread, because of the 3 number difference in the fourth decimal place. Almost all currency pairs go to the fourth decimal place. The only currency pair that doesn't is that of the USD/JPY, and it goes to the second decimal place. For example, a USD/JPY quote with a 3-point spread would look like this: 1.01/1.04.

A very common aspect to the foreign exchange is leverage. Leverage trading, also known as trading on margin, is a way to amplify the amount of money you are making. When you use leverage trading, you borrow a certain amount of money from your broker and use that to make your transaction. This allows you to trade with more money then you are actually spending, meaning you can make higher profits than you would normally be able to make.

There are risks associated with leverage trading. If you increase the amount of money you are using, if a trade goes bad, then you'll loose more money than you'd usually loose. The risks are worth it though, because a big win on margin means a huge payout. As mentioned before, it is definitely a wise idea to try out leverage trading on your practice account before you use it excessively on your live account, so you can get a feel for the way it works.

Now that you're an expert on the way Forex trading works there are some things about foreign exchange that you should know. Forex is just like the stock market in that there are many benefits and risks, but if you are going to invest your time and personal money into this system, you should be fully aware of all of the factors that may change your decision to invest in the currency market.

Generally speaking, Forex is a difficult subject to opinionate on, because of the different factors that may alter the currency over the years. "Supply and demand" is a major issue affecting the Forex organization, because the world is in constant variable to change, one significant product being oil. Usually the currency of all the nations around the globe is described as a huge "melting pot", because of the fact that all of the interchanging controversy, political affairs, national disputes, and possibly war conflicts, all mixed together as a whole, altering the nature of Forex every second! Although problems such as supply and demand, and the whole "melting pot" issue, there are a numerous amount of pros to Forex; one being benefited profit from long term stock. Because of the positive aspects of Forex, the percentage of the use of electronic trading in the FX market (shortened from Foreign Exchange) increased by 7% from 2005 to 2008. Despite the controversial realm of Forex, it is still recognized today by many, and is still popular amongst many of the nations in the world.

Of all the organizations that recognize Forex, most of them practice fiscal policy, and monetary policy. Both policies are dependent on the nation's outlook on economics, and their standards set. The government's budget deficits, or surpluses against the country, is widely affected by the country's economic status of trade, and may critically inflict the nation's currency. Another factor for the nation's deficit spending is what the nation already has, in terms of necessities for the citizens, and the society. The more the country already has, prior to trade, the greater the budget for other demands from the people, such as technology, innovations in existing products, etc. Although a country may have an abundance in necessities, greed may hinder the nation's economic status, by changing government official's wants, to want "unnecessary" products, therefore ruining or "wasting" the country's money. This negative trend may lead to the country's doom, and hurt the Forex's reputation for positive change. There are some countries which hold more of a product (such as oil stated above), the Middle East dominating that sector in the circle of trade; Since the Middle East suffers much poverty, as a result of deficit spending, and lack of other resources, they demand for a higher price in oil, to maintain their economic status. This process is known as the "flights to quality", and is practiced by many countries, wanting to survive in the trading network that exists today. Interest rate, and leveraged financing, is due to the inflations that occur in many parts of the world from one point to another. Inflations wear down purchasing abilities, causing the currency to fall with it. In some cases, a country may observe the trends that it takes, and beforehand, take action to avoid any mishaps that had been experienced before. Sometimes, the country will buy more of a product, or sell more of a product, otherwise known as "overbought" or "oversold". This may aid in the country's future, or devastatingly hurt the country, because of lack of thought, as a result of fraud logic.

FX Tips for Beginners

Stepping on the stage of the currency for the first time may feel a little intimidating, but do not forget these forex trading tips and you will be soon a good trader.

Study/Self-Study - The very first step before entering currency trading.

Practice means perfect - Most of new traders lose their account at first in two or three months, so do yourself a favor and keep your trading education of the costs as low as possible. Practice with one or more different demo accounts. Be good at analyzing the actual trading before throwing your money. Then when you feel ready, begin to negotiate a very small amount of real money.

Patience - Not all Forex traders trade because they want to make money. Most of the traders trade because they want the action. Do not expect to make money in all trades. Forex markets do the unexpected and sometimes you lose more than you expected, but if you resolutely avoid these mistakes, you must make money.

Self-Discipline - It has been an experience to all traders in Forex trading that the greatest cause of losses in trading is the absence of self-discipline. You need self-discipline to follow your plan to trade, be patient, take the loss and benefits.

Forex Trading Overview

Forex is a country to country exchange of currency. It is a program that examines the currency around the world. Through the news and other forex signals, such as the expansion of government, the change of administration or other things that will affect the dollar value of the country.

Money is a particular value for the currency exchange in the world. This value may increase or decrease depending on the circumstances. In forex trading, many investors are speculating that the value at time of purchase will increase and may sell their investments at the end of the season and make a profit. Their are trading platforms online for individuals who wish to speculate on the exchange rate between two currencies. Traders buy or sell their currency to another, hoping to make profit when the value of the currencies changes in favor of traders in the wake of events aroung the world. Forex market is the largest financial market in the world and it is available 24 hours a day and five days a week. Internet makes it easy for people to participate in foreign exchange markets and online marketing through intermediaries.

Money Management

Always remember to place a protective stop loss order immediately after entering the Forex market. Having a real protective stop loss order, the market should not allow a significant loss in trading.

In general, you should never risk more than 5% of your trading capital in any trade.

The best way to do this type of day trading is by setting a weekly goal. If you set a goal such as at least 100 pips per week, which is well below the average weekly earnings, it becomes easy to achieve this very reasonable on a consistent basis.

As you start to experience in achieving its profit goals of the week, you will inevitably increase your earnings targets every week. Trading more to earn more points in order to increase the profit is not the right way.

The best thing to manage your trading capital and risk is to based upon you studies. When you start trading a one mini contract, withdraw some percentage of your profit to reward yourself and leave the rest of your trading account. The percentages vary depending on your needs in trading. Since you're awarding yourself, you can also build your own capital to the point where you have enough margin to add one of your contract to your trades. Remember, just because you have the margin to trade more, you should not allow yourself to break the 5% capital risk rule.

Forex- Things to know on how to trade

Things we should consider before investing in forex trading. You can not make a million U.S. dollars for this advice, but it can help save a nest egg. Top retailers know that the risk control is as important as knowing how to trade for big profits.

- Do not invest all your money in a trade, no matter how safe you are. An experienced trader will continue to diversify. Diversification is your safety net for the tragic loss. Without diversification you can be out of the game before you have a chance to play.

- You should know how much you are willing to invest in trading. You must enter any market with the amount of money you are willing to accept as a loss without too much damage to your total money. Search for personal comfort level and stick to it.

- Listen to your natural intuitive power. A smart investor follows a plan, and that plan is in place way before the first currency exchange is ever made. It can be difficult to follow your instincts when the emotions living in the development of trade. If you are trying to keep the same state of mind as you developed your strategy, you'll be more successful.

- Control your trade. If you see a trade takes off, stay in control, do not pull too fast or wait for the bottom to drop out. Keep track of your strategy, you should have a projected stop-loss in place. Just let it happen. If you see weaknesses in your strategy, set between trades not during them.

- Trial and error. Always test a new strategy. You can find or have heard of best strategies everywhere, but what your personality does not always work for the others. Try all the new trading strategy with paper trades or your account before taking it live or use a free demo account. You may need to adapt to a new strategy, you do not know until you try it.

These steps should help to avoid costly learning curve because Forex is very risky. Forex market is always there when you're ready, so it will take time to assemble a work plan until you are sure you can do a constant, and then always think positive and be a winner trader.

Little Secret Creates Wealth for Anyone Who Uses It

Oil Trading for Amateurs

I gotta tell ya, the last thing I ever wanted to do was sit in front of a stock or oil chart all day making trades. But I knew that people were making a fortune trading oil and I wanted to learn how.

So I started doing my research into oil trading strategies and nothing sounded appealing to me. Not only did I not want to sit in front of an oil chart all day long, but neither did I want to read all the news stories every day about the price of crude oil and if it was going to go up or down.

I surely didn't want to have to understand how the value of the dollar or the S and P 500 affected the price of crude oil, so I had almost given up on the idea thinking that I had to be an expert analyst in order to trade successfully.

Then I was fortunate to find a small group who taught me the basics of oil trading and all by myself I developed this simple strategy that allowed me to extract five to ten pennies from the market every single week day with almost no risk of loosing.

The strategy is simple and I'm going to reveal it right here right now.

During the first few minutes of the opening US oil trading session I identify the parameters of the range in which the market is moving. Then in anticipation of the morning breakout I place a pending order to buy a long position and a pending order to buy a short position just outside that range.

Now all I do is sit back, relax and wait for the market to go dramatically in either direction until I have gained my desired five to ten cents. Once it reaches my desired profit margin, I close out my trade and leave the session a winner.

After loosing money trading I learned that the only thing standing between me and a fortune was greed. If I could control my greed I could get rich, and if I could not I would loose everything.

Take your time and learn this strategy well and make your fortune trading oil for just a few minutes a day.

Coca-Cola - A Value Stock?

There has been much talk lately about Coca-Cola and its potential as a value stock - as it now spots a dividend yield of 2.6% (which is the highest dividend yield since the late 1980s) and a P/E or less than 21 - right at the bottom of its five-year low. Moreover, the current price of approximately $43 a share is also near the bottom of its nine-year range - (nine years ago, the last former great CEO of Coke, Roberto Goizueta, was still at the helm of the company). Sure, Coke has had its own set of problems, but it is a great company, they would argue - and heck, Warren Buffett is also an owner of Coke shares.

Don't get me wrong. I really like Coke as a company. Its brand is as American as can be, and yet over 70% of all its sales are derived from outside of North America. The country with the highest consumption per capita of Coca-Cola is Mexico. According to Interbrand.com, the brand name of Coca-Cola is worth approximately $67 billion and is the world's number one brand name. Who could forget the famous declaration of Coke's patriarch, Robert Woodruff? When the United States made the decision to enter World War II, he placed his hand on his heart and famously declared that he would "see that every man in uniform gets a bottle of Coca-Cola for five cents wherever he is and whatever it costs." Of course, it didn't hurt that Woodruff's friend, General Dwight Eisenhower, was a great promoter of Coke as well. By the time the war ended, hundreds of thousands of fighting men and women became a fan of Coca-Cola for the rest of their lives.

Under the leadership of Goizueta, Don Keough, and Doug Ivester, Coca-Cola emerged as a growth and must-own stock during the late 1980s and up to the mid to late 1990s. Keough was the great motivational speaker, while Goizueta was unmatched in his ability to "manage" the stock price and the Wall Street analysts who covered the non-alcoholic beverage industry and Coca-Cola. Goizueta had a habit of watching the stock price of Coca-Cola on an intraday basis on a computer in Coke's headquarters. When Warren Buffett was buying shares of Coca-Cola back in 1988, he and Keough figured it out by watching the action of the trading and tracing those purchases to a broker based in Omaha. Ivester, a former accountant, could have been regarded as a great financial alchemist. Under the financial leadership of Ivester, Coca-Cola bought out many of its bottlers and named the entity as Coca-Cola Enterprises. The bottler went public in November 1986.

When Coca-Cola Enterprises (CCE) went public, Coca-Cola (the company) owned 49% of its outstanding shares. Because of this, Coca-Cola had the ability to raise syrup prices at will (the former agreement mandated that Coca-Cola only adjusted its price to match inflation for its syrup in the North American market) - thus squeezing the profit margins of the bottler but increasing its own revenues and profits. The stroke of genius was this: Because of the fact that Coca-Cola only owned 49% of CCE, it did not have to consolidate any of its financial statements with CCE. At the time, not one single analyst totally understood this relationship. Year-after-year, the company delivered. Goizueta carefully (personally) managed all the information that came out of Coca-Cola. He would personally call Wall Street analysts. Any analyst that dared to question him openly or disagree with Coca-Cola's earnings projections would be rebuffed. One such analyst was Allan Kaplan from Merrill Lynch, who at one point wrote a note to his clients observing that Coca-Cola may be depending on Japan for too much of its profits. When Goizueta found out about the note, he responded angrily with letters to both Kaplan and his bosses at Merrill Lynch. Kaplan was banned from attending analyst meetings at Coca-Cola for more than a year. From that point on, analysts knew not to mess with Goizueta and Coca-Cola.

Keough officially retired in 1993 while Goizueta passed away in October 1997 - succumbing to lung cancer. Ivester succeeded as CEO but behind the scenes, the company was in disarrays. People loyal to Keough and to Ivester clashed - with the former group bearing the brunt of the hardship. The current CEO, Neville Isdell (who was loyal to Keough and the only true competitor for the top job back then) was sent into "exile" to Great Britain to head up a bottler. According to a recent Fortune article, "The biggest problem [with Ivester], though, was his tin ear. Ivester was high in IQ but terribly short on EQ. A self-made, stubborn, very shy son of North Georgia millworkers, he had gotten where he was through brains and hard work. He resented Keough's grandstanding, say people who knew him well, and never fully appreciated the importance of Goizueta's almost daily chats with directors. (Ivester declined to comment.) Before long, head-down and full tilt in a turbulent market, Ivester had alienated European regulators, executives at big customers like Wal-Mart and Disney, and some big bottlers, including Coca-Cola Enterprises (on whose board sat Warren Buffett's son Howard). As he raced to put out fires, he became increasingly isolated from his own board of directors. One person was keeping in touch with them, though, even in his retirement--Don Keough."

By December 1999, Ivester was out as CEO, after board members Warren Buffett and Herbert Allen told him that they have lost confidence in his leadership. If anything, the next CEO Doug Daft fared even worse than Ivester. Daft, an Australian and who ran Coke's Japanese operations, did not have a clue about the culture in Atlanta. In a sort of retaliation for Ivester's handling of Keough's loyalists, he also made many of Ivester's favorite executives leave the company. He also looked for quick fixes - for example, by trying to boost Coca-Cola's profitability by simply reducing headcount. By May of last year, Daft was out as CEO, and Neville Isdell - a former darling of Keough - came out of retirement to run Coca-Cola.

Described as "charismatic," Isdell may be the best man for the job, but it is still too early to see what he can do at this stage to revitalize the brand. Under the leadership of the trio of Goizueta, Keough, and Ivester in the 1980s and much of the 1990s, the shares of Coca-Cola were a must-have and Coca-Cola was regarded as a growth stock. Please also keep in mind, however, that the run of KO during that time also occurred in the midst of the greatest bull market in U.S. stock market history.

Again, readers should recall that I have always contended that we are still in a secular bear market - a bear market not unsimilar to the 1966 to 1974 secular bear market. While indices such as the Dow Industrials, Transports, the S&P 400 and S&P 600 have recovered nicely since the cyclical bear market bottom in October 2002, large caps such as Coca-Cola, Microsoft, or even GE have never really covered, and it is my belief that large caps will continue to underperform once the bear reasserts itself sometime this year. The dividend yield of 2.6% may or may not help, but who would want to hold a "value stock" once the Fed Funds rate is greater than its dividend yield (as of right now, the Fed Funds rate is 2.5%)? I really do not see deep value here. While a P/E of 20 is at the low end of its five-year range, it is interesting to note that Warren Buffett started buying his shares of Coca-Cola in 1988 when the P/E was only 13 (with a market cap of less than $15 billion) - and analysts at the time were proclaiming the stock to be expensive! S&P currently projects a fair value of Coca-Cola at $46, so there is really not a great margin of safety here.

While I believe Coca-Cola is a very strong brand and should be a part of every investor's long-term core holdings, I do not believe it is a good time to buy at this point. The growth in the stock price of KO was neither due to luck nor coincidence - it was due to Goizueta's shrewd management of the stock price, Keough's salesmanship of the company, and Ivester's financial genius - along with a roaring bull market more than anything else. Despite the lack of leadership in Coca-Cola during the last seven years, part of the old dream of KO being a growth stock has still hung on - for far too long. For KO to be an attractive stock once again, this author will need to see a more compelling valuation, such as a stock price of $25 to $30 a share. At some point, however, I believe KO may be a glamour stock once again (as it still has a lot of potential in China and India where only a total of about 850 million cases of Coke finished products were shipped in 2004, compared to 20 billion cases for the entire world), but not until some of the weak hands have been shaken out from the stock.

Buy and Hold Investment Philosophy

Wall Street has been preaching the doctrine of Buy and Hold forever. The worst part about it is the small investor (and some big ones) actually believe it. Brokers and financial planners believe it, but when you show them they can get a better return by timing the market they just say, "It can't be done". They are either lazy or stupid.

Most brokers have not learned their trade - investing. Webster says that means putting money into something (stocks) for the purpose of obtaining an income or profit. When people look at their brokerage statements these days they must wonder where their broker went to school. Investors could have done better with a dartboard.

Brokers are not taught to make money. They are taught all the regulations that come out of Washington that must be followed so the brokerage company will not be sued. To my knowledge none of them are taught the basic fundamentals of increasing customers' wealth or protecting the customers' capital from loss.

Brokerage houses hire people to do reports about companies. They call them analysts, but today those jobs have deteriorated into snow jobs to get people to buy stock in a particular company. When you read the report you will find it very professionally done with pretty pictures and graphs and charts. Wow! I'll buy that. And a few months later you will wish you hadn't.
When you have a loss the standard reply is, "Don't worry. You are in for the long haul. The market always comes back". In your lifetime? Today there are hundreds of stocks that have lost 50% to 90% of their value and there is absolutely no hope they will ever recover those losses. But....you are in for the long haul. You now have the Buy and Hold philosophy.

Why do so many people cling to this doctrine?

You have a stock you bought for $40 per share that went up to some profitable number and now is down below $10/share. You're out 75% of your money. You are waiting for it to go back up so you can get out "even" and I will tell you "even" is a loser.

Many years ago I heard a story about how they used to catch monkeys in Africa. A hole was made just big enough for the monkey to get his outstretched hand in a hollowed out coconut shell. Fruit and sweets were placed inside. The monkey put his hand in and gripped the goodies, but could not remove his clinched fist. It refused to let go even when the hunter came to put him in a cage. All the monkey had to do was let go of the candy and he could have escaped.

Many investors are the same way about the stock they bought. They won't let go. The investor does not want to admit he was wrong. You are not wrong until you sell - just broke. Small losses will not hurt you, but holding on can put you in the poverty cage.
Buy and Hold conventional wisdom will break you. Learn to let go of the losers quickly and you will preserve your capital.

1 Billion Reasons To Invest In Resources

The last decade has seen tremendous changes in the global economy. The US superpower has increasingly taken on debt. Then they have turned around and monetized that debt. The result long term will be a greatly devalued currency. Inflation will also be a concern when the economy rebounds a little. This may lead to questions around the validity of the USD as the reserve currency. And that could be very interesting. Contrary, China has been slowly building its economy. With over 1 billion people, China is poised to be a resource black hole. That gives you 1 billion reasons to invest in resources.

Resources cycles tend to move in a very long fashion. But that super cycle can be exploited. People who were investing in resources when the industrial revolution was taking off did very well. But now the US, and other developed nations, are debt laden and waning. China, however, is on the verge of its own revolution.

Per capita GDP has to fall in the range of about $3000-$5000 for an economy to garner a consumer, middle class. Once that happens, resource needs start accelerating as the economy starts developing. That means that China, with 1.3 billion people, will start consuming more and more resources. It's hard to wrap our minds around the enormity of that kind of consumption. But let's make a comparison of the US and China.

The US tallies about 310 million residents thereabouts. China, as we've already seen, weighs in at about 1.3 billion residents. Oil usage in the US runs around 68 barrels per capita. China, on the other hand, runs around 5. Think about the demand side of things when China starts moving to 5, 7, 9 barrels. And we're talking 1.3 billion people here. And that's not even considering all the other resources that China is stockpiling. Likewise, we haven't mentioned India's economy. Though I believe India will lag behind China.

The story is the same with electricity. The US consumes around 12 kWhr per capita. China currently consumes 1 kWhr per capita. Again, the story remains the same with other resources like copper, silver, steel, uranium, etc. And a look at China's nuclear facility proposal would make you blush. It's very,very aggressive. Any way you slice it, resource demand is going to go through the roof.

Resources are great because they are tangible goods. They have intrinsic value. Yes, resources are volatile in the short term. But the super cycle of resources is set and ticking. Once China and India move to prominence, resource usage is going to sky rocket. It would be prudent for an investor to consider resources in one's portfolio.

Knowing The 5 Rules To Wine Investment

If you are looking for the perfect investment then you have found it! Investing in wine is the best way to invest your money and if you play your cards right you will surely succeed. You can easily profit from your wine investment if you follow these five rules. First, choosing the right wine is important and you can never go wrong with Bordeaux. Make sure that they are GREAT vintages, not just good ones, and know where to buy. Once you have purchased it, make sure that you take care of it properly in order to ensure its success. And lastly, but most importantly, follow the critics' reviews, and live by them. Their ratings are highly regarded by your future clients.

When choosing the wine you plan to invest in you have to make sure that you find one that is going to grow. Bordeaux wines are the most popular and are also the most successful. Knowing what you are aiming for is the first step. From there you can continue your search. After that you have to begin looking for the right vintage. If you plan to make a serious investment, you have to find the right vintage.

Yes, you can get a good vintage that some people are aware of, but the true wine lovers look for a GREAT vintage. If you plan on making money with your wine investment, look for the ideal vintages that will guarantee a payoff. Lastly, when looking for the perfect wine consider where you buy it. The history of the wine is extremely important at an auction and the fewer owners from the winery itself, the better.

Once you have an idea of what you want to buy, make sure that you have prepared the way you will store it. You need to make sure that it is in a dark place that is neither too humid nor dry. Also, try to keep it either in a wine cooler or in a separate space specifically made for it as it absorbs outside smells so if it is not stored correctly it will be ruined.

Lastly, and probably most important, make sure that you follow the critics. Follow what they say and base your wine investment on their opinions. Though it may seem obvious, many people do not trust the critics, however, the consumers trust them, and you need their approval. Investing in wine is a growing business that many people are depending on. If you play your cards right and make sure that you do your research and follow the five important steps you can secure your and your families future.

How to Make Big Money Safely in Stock Market

(1) Stock Market is Tough Place to Make Any Money
Consistently

NASDAQ or SP&500 averaged about -6% per year for 5 years
between 1999 and 2003. Many individual investors who made
killing in the internet bubble period got wiped out during
those 5 years. Many who trusted Wall Street experts by
investing their life savings into mutual fund had rude
awakening after the huge loss and scandals in many of the
famous fund names.

Numerous academic studies have shown that more than 90% of
mutual funds failed to beat market over the long run and
that more than 90% of individual investors lost money in the
stock market. Too many people and too many Wall Street
experts or mutual fund managers are buying and selling
stocks like madmen, with no sound strategy or any hope of
long term success. Ironically, they're the ones who create
opportunities for prudent, long term oriented investors.

To be successful in stock market, you either have to become
an expert yourself or to seek help from real successful
experts. Stock market is such a brutal place that there is
no room for half-expert or expert pretenders. The truth is
that only a small percentage of disciplined and experienced
people earn disproportionate huge amount of return, many
times at the expense of the rest. It is an insult to "Wall
Street expert" professional title when so many of such
"expert pretenders" failed to beat index or merely stay
break-even.

(2) Majority of huge performance claims in Ads by "Experts"
are not real

Too many investment newsletters or hot mutual funds touted
their huge past performance and went into disaster later on.
Who do you believe? I have been in this stock market long
enough to know that majority of their claims are not "real".
I will tell you why below.

The first reason is simply due to "cheating". Let's be
honest about many Ads. Many of them do not tell the whole
and true story of their performance. For example, they would
tout huge percentage of gains for certain winning stocks and
hide the losing stocks. If you look deeper into their whole
portfolio performance, their portfolio performance was not
impressive at all. Many investment newsletters will have
multiple portfolios in publication. In their ads, they will
only mention the performance of the winning portfolio and
hide the losing portfolio. The problem with multiple
portfolios is that when you subscribe to their newsletters,
you would not easily know which portfolio out of many will
have best performance in the long run. Which portfolio do
you follow? Most important of all, which portfolio out of
many does the newsletter author invests for his/her own
money? If the newsletter author or the mutual fund manager
does not invest into a portfolio himself or herself, how
would you trust their services?

Even if past performance of a newsletter or a mutual fund
was pretty good, it may not indicate good performance in the
future. Many hot technology mutual funds jumped up 100% or
more in the 90's and dived to their death after 90% to 99%
of loss. Certain investment methods such as growth stocks
investing are known to be risky. Momentum investing or day
trading methods are known to be extremely risky methods that
can wipe out life savings over night. There is simply no
free lunch. While a risky method can produce fabulous gain
in relative short term, over the long run, a risky method is
more likely to make people poorer rather than richer even if
a short term gain was gigantic. Gigantic short term gain is
just a dangerous stock market trap to lure the inexperienced
people into the market. Dreaming for instant satisfaction of
huge short term gain overnight with speculation is just a
recipe for disaster ahead.

(3) Value Investing is the Only Proven Safe Method

Value mutual funds are well known to have lower volatility
than growth mutual funds. Numerous industry and acedemic
studies have shown that value stocks as a group performed
far better than growth stocks in bear market. Many
technology and internet so called "growth stocks" lost 90%
to 99% of value in just a couple of years after 2000 while
many value stocks went up during the same time frame.

In fact, the single most important element to obtain high
investment performance over the long run is to maintain
MARGIN OF SAFETY of a portfolio. That is why the greatest
investor Warren Buffet once quote "Rule No.1: Never lose
money. Rule No.2: Never forget rule No.1.".

(4) Value Investing is the Proven Method to Make Big Money
in the Stock Market

I know that I'm going to catch a lot of flak for saying
this, and that many people will misunderstand what I'm
saying. There are certainly other methods of investing or
trading, which made people rich. There are certainly many
under- performing value mutual funds, which give people
wrong impression that value investing is equivalent of low
performance with less risk.

However, I want to emphasize that in fact value investing is
investment style that can obtain high performance with less
risk. I want to stand by my above statement for the
following reasons:

* In the early years of my investment career, I have studied
and tried all kinds of well known methods of famous
investors or traders, Short term trading, Momentum trading,
Technical Analysis, CANSLIM, growth stock long term buy and
hold, Random Walk theory, etc. I have been there and I have
done there. Evidenced by my past investment performance,
value investing is the only method that delivered gigantic
investment return consistently for me over past many years.
In 2003, I have made more than $150,000 in stock market with
value investing method. In 2004, I have made even more money
than 2003 so far. With the power of compounding, there is
really no upper limit for the investment profit with value
investing.

* In 1984, Warren Buffet gave a speech titled The
Superinvestors of Graham-and-Doddsville, which categorized
performance of many famous value investors who beat market
year in and year out. Many of people mentioned in this
article are legendary multi-billionaire right now. It is
true that only a small percentage of investors can beat
market consistently. However, it is not by chance at all
that so many of students of Benjamin Graham became super
riches in America while other methods have not produced that
many rich people. It is also not coincident at all that the
second richest person in the world is a value investor named
Warren Buffet, a student of Benjamin Graham as well.

(5) Value investing will not distract your regular job

The nicest thing about value investing is that it will not
distract your regular job if you choose not to stare at the
stock market frequently in your office. In fact, it is quite
healthy to forget about stock market in your office and
worry about that only at your home after work.

Many newbies in the stock market still believe that if they
stare at stock price quote closely, they can obtain better
chances of winning. It will not. Staring at the stock quote
is least important part of this game. In fact, staring
closely at the stock price quote is more likely to create a
loser rather than a winner because of greed and fear in the
stock market. The more one is unable to resist the mad mood
of Mr. Market, the more likely one is unable to invest
successfully with value investment method.

I am not saying that successful value investing does not
require time. The time you will need in value investing
depends on the investment vehicle you utilize. If you invest
with a value mutual fund, you will not need much time in
stock market and you only need to follow up quarterly with
your fund's performance. If you are a passive investor of my
investment newsletter Blast Investor Real-time Plus and you
follow my model portfolio passively, you will only need to
pay attention to my infrequent trade alert closely and read
my newsletter issues every 2 weeks. If you invest by
yourself, you will certainly need hours of time every week
to look at hundreds of value stock leads and do your own due
diligence by reading 10Q or 10K SEC filling, or by listening
to conference calls, or by talking to company's management.

(6) Successful Value Investing is Hard, But You can Do It!

I certainly do not want to make you to believe that value
investing is as easy as reading couple of books. Value
investing not only requires tons of knowledge and expertise
in financial analysis, accounting, US tax law, US bankruptcy
law, etc., it also requires real life training of right
psychology to fight against greed and fear in the stock
market. It is hard to do.

However, successful investing certainly can be done and I
have done it over past decade myself. You certainly want to
look at my investing articles of this web site for more
information.

(7) You need to start early in value investing

Let's be honest about value investing, it is not a get-rich-
quick scam and it takes time to really make living with
value investing without need of your regular job. You need
large starting principle if you want to make living from
stock market investment than your salary.

By reading Warren Buffet's article above, you can pretty
much guess that successful value investors can achieve 20%
to 30% per year performance consistently over the long run
regardless of whether market is bear or bull although it is
possible to obtain significantly higher performance in
earlier investment years due to smaller fund size and luck.
20% or 30% more consistent investment return is already very
high return over the long run. Since Peter Lynch retired
from Fidelity, you can rarely find a mutual fund with that
kind of performance over past many years.

The best approach is to treat stock market investment as
side business in addition to your regular job. Your regular
job help you pay your bills and help you earn the initial
principle for value investing. Once your investment net
worth surpasses $100,000, sooner or later you will realize
that your regular job salary can hardly keep up with
compounded rate of investment return. Too many people
naively believe that they can get rich quick with
speculative trading method in stock market rather than a
hard work with a job and value investing at side. It is a
lot easier to make your first $50,000 net worth with a job
rather than speculation in stock market.

Even if you do not have large sum of money right now as
principle to make really big profit out of value investing,
you still want to start value investing early so that you
can learn in and out of value investing in your earlier
years of investing in the stock market. Successful
investment is long term process. The earlier you start
investing successfully, the better off your pocketbook will
be, and the quicker you will reach your financial freedom.
Let's do a quick math, if your starting capital for
investing is $50,000 and your annual compouned rate of
return is 30%, you will need 9 years to surpass $500,000 net
worth. However, to turn $500,000 net worth into 1 million,
you only need 3 more years, think hard!