Category: Wealth Secrets

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How to Invest?


Investment is based on rules and guidelines, as well as inclinations and gut feelings. If you could find a wounderfel business at an attractive price, following the strategies we’ve talked about in the previous posts, do not ignore your feeling towards the company!

If, for any reason, you didn’t like what the company produced, or you wouldn’t feel proud had you have to own the whole business for the next 20 years or so, do not buy. As simple as that. There’re thousands of businesses out there to choose from.

On the other hand, don’t ever let your love for the business stand between you and selling your shares (or part of them) once the business stops being wonderful, or once you realize it’s time to cash in your profits.

Investment in stocks is only one kind of growing your capital. There are other investment instruments, but you need to choose something that suits your risk tolerance and the length of time you afford to leave your capital in an investment (assuming you can’t withdraw any proceeds during the investment term).

I’ve talked about HYIP investment, and given several warnings in case you would like to “try your luck” at such investment instrument. Since that post, I’ve found two or three sites that could be safer than the majority of HYIP’s. The main reasons are they have been around for a long time, and they have been paying their members on time. But that does not eliminate the risk entirely.

Now let’s delve into our main topic. In order to invest in any market, you will need a broker to carry on the actual buy and sell activities on the  “floor”. The floor is a term used by brokers to refer to the operation space of a stock exchange. Examples of stock exchanges are: New Your Stock Exchange (NYSE), Toronto Stock Exchange (TSX), NASDAQ, and many others. Almost every major city in the world has its own stock exchange. A stock exchange (SE) is where brokers “change hands”, in other words: Buy and Sell on behalf of their clients.

In the old days, people had to interact directly with their stock brokers in order to “place orders”. Placing an order is another term that means asking the broker to execute a Buy or Sell transaction in the SE, on your behalf. So if you wanted to buy 100 shares of IBM back in the fifty’s or sixties, you would first call the broker, identify yourself, ask for the operation you wanted, and then wait for him or her to call you back (usually after few days), to let you know if your order had been “filled” or not. A filled order is a successfully executed order. In our example it means: Your request to buy 100 IBM shares had been fulfilled. Then the broker would send you a certificate that proved your ownership of those 100 IBM shares.

It’s different nowadays. The whole scenario described above has been minimized to a few mouse clicks, and sometimes, to a few seconds (if the market is open).

In the following post, I’ll exaplain the deatals of today’s stock investment steps (I’m assuming here that you’ve already done your homework and picked the right business, based on the criteria explained at length in the previous posts). Now since we’ve picked a wonderful business at an attractive price, we need to know how to buy shares in that business, and how to sell those shares (or part of them), if need be.

Till the next post, stay safe, and happy investing!

Yaman

The Wealth Maker

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High Yield Investment Programs (HYIP’s)


Looking for quick and easy riches has become a fertile soil for fraud. Today I’ll talk about a trend that has been gaining momentum due to the current financial atmosphere around the globe.

HYIP’s have been popping up out of nowhere every day. They play on the novice investor’s emotions, and to some extent, greed.

The promise is very tempting: Put down as low as $1, and start earning an hour later. If you kept re-investing, you could convert that one buck into $200 easily within 48 hours.

Now try to withdraw all or some of your earnings. To make things look professional, and to get you deeper into the greed hole, the program may actually process your first, and probably second, withdrawal requests. By doing so, it gains your trust, and makes you either leave your profits in the program, or even worse, deposit more cash, lured by the promise of fast accumulation of wealth.

Usually, not all investors ask to withdraw their profits at the same time. This gives the program admin enough maneuvering room to circulate the money among the members, till that admin runs out of spending cash. Now here is the critical point in the life cycle of an HYIP: The organizers wouldn’t distribute all the cash. They keep the bulk for themselves. Absent any real investment activity, such as trading, or real estate investing, the only available cash is the sum of the members’ deposits!

Once they run out of “spending” cash, the modern thieves shut down the site abruptly, disappear, and take with them most of the invested money.

Are there any legitimate HYIP’s out there? If there were, they would be very hard to find. And the only way to test their legitimacy is trial and error.

The web is full of HYIP “monitors”. They invest in a certain program and watch it for a number of days. After that, they give it their blessings as “Paying”. Big deal! Yes, they do pay for some time, but no one knows when they will disappear.

This phenomenon is not new. The proliferation of such programs has increased exponentially because of the web. It’s so easy to find a web host who accepts your site as anonymous, which gives you the freedom to close shop anytime you want!

This is hard to regulate. The only cure, in my opinion, is knowledge. Investing, like any other trade, requires proper training. No respectful training house would encourage you to invest in such programs

Today they call themselves HYIP’s. Who knows what the acronym would be tomorrow? Lucrative Profits Made Easy (LPME), or something else!

I invite the readers of this post to comment, share their experiences, and suggest ways to limit such harmful behaviours from distorting the image of a worthwhile industry like investing.

Till the next post, stay safe and away from suspicious investment vehicles!

The Wealth Maker

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Why Do You Invest?


Have you ever asked yourself this question?

Some people invest because they don’t know what to do with their money! Some to imitate their friends or family.

The reason we invest is two-fold: One is to grow our savings, and the other is to contribute to our society by supporting wonderful businesses.

As a value investor, you should not invest in businesses that harm the society, even if they pass the criteria for a wonderful business at an attractive price. There are hundreds, if not thousands of businesses that qualify without imposing any harm to the society.

Are there other reasons to invest? To put your money on the line? To allow others to make decisions, concerning your money, on your behalf, without consulting with you, most of the time?

Investment, when practised mindfully and full heartedly, gives you the opportunity to sharpen your intellectual faculties: You study, analyze, compare, make decisions, and so on.

You also get to have a broader view of the market and the forces that influence it, regardless of its moodiness!

You realize after a while, that there are businesses out there, you haven’t heard of before, especially if you had been a professional in a specific industry. Here, you almost know them all, but you don’t have to be an expert in any one of them. As a matter of fact, you shouldn’t, to avoid any potential bias.

In my opinion, if you reach that level of neutrality, you can call yourself: a businessman.

You no longer fall in love with technology, retail, energy, manufacturing, or whatever. Your main focus is on the business as a business: A vehicle to produce value to the society, the employees, the shareholders, and of course, to you!

And that value is not only money. It is also a contribution to productivity, to a stronger economy, and to the well-being of all involved.