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Investors: Avoid These 5 Common Tax Mistakes
For many investors, and even some tax professionals, sorting through the complex IRS rules on investment taxes can be a nightmare. Pitfalls abound, and the penalties for even simple mistakes can be severe. As April 15 rolls around, keep the...
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Investing: The Art Of Making Your Money Work For You
There is a lot to know about investing. It all depends on what type of investing you are interested in as well. There are many different types of investment options out there. So what is investing, specifically? When you invest, you are paying in a...
Rebuild Your Investment Portfolio Today
Its time to change your thinking about this beaten-up stock market and get excited about the tremendous long-term potential. If you find the current market makes you feel like sticking your head in the sand and you long for the "good old days" of...
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A REMAKE OF THE STING; THE MODERN DAY MUTUAL FUND!
Arthur Levitt, during his tenure at the SEC, experienced many cases where the non-indexed mutual fund manager bought shares for their own accounts before the fund bought the shares. The fund’s purchases drove up the price of the stocks and the fund...
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How Do You Rank in The Investing Hierarchy?
Copyright 2006 CashFlow Avenue
You probably have heard this saying before - "It is lonely at
the top." If you find yourself in this position, then you are
probably at the top of your own niche. Our society is made of
hierarchies. Most countries are headed by Presidents, and Prime
Ministers. It is them who make decisions that would affect the
nation's fate and success. Corporations follow the lead of their
Chairmans and Chief Executive Officers. Below these leaders you
would have the Vice Presidents, Deputies Vice Presidents, Senior
Managers, etc. A hierarchy essentially looks like a pyramid.
Whoever sits at the top of the pyramid normally makes the most
money as well as has the most influence in that "society." This
pyramid can also be applied to nature where they call this a
food chain. Predators are normally at the top of the food chain
while small defenseless herbivores are at the bottom of the food
chain. The higher you are in the pyramid the fewer predators,
(that may have you for lunch) are out there.
The same can be said in the Investing World. How do you, as a
retail investor, rank in this food chain? Let's try to
understand how the Investing Hierarchy looks like.
Stock prices are normally moved by information (good or bad).
Whoever can access and react fastest to these information would
be placed right at the top of the Investing Food Chain.
Capitalist and Entrepreneurs who manage to get their companies
public listed would be the first to know of critical information
that would affect their stock prices. One level below these
individuals is high worth individuals who would provide initial
capital to ambitious Entrepreneurs. Venture Capitalists, who
provide significant funding to take the corporation to higher
levels, are next on the hierarchy. One step below the venture
capitalists is the Investment Bankers who provide
financing,
underwriting, and distribution to take a corporation public.
These individuals are the top predators in the world on
investing. They would have access to information that is not yet
made known to the investing public.
Do retail investors rank below these groups of people?
Definitely NOT!
Above the retail investors, we would have Financial
Professionals (Mutual Funds, Hedge Funds, etc) who would analyze
stocks for their clients. Brokers and Floor Traders are also
ranked higher than retail investors in the Investing Food Chain.
And finally, the retail investors are right at the bottom of the
food chain. No wonder more than 90% of retail investors end up
losing money. Ask yourself, how many times have you bought
stocks due to good news in the news or newspaper only to see it
go down as soon as you enter into position? Most of us have been
there before. By the time, this information reaches the public;
it is normally too late to buy. The big guns are already in
position weeks ahead and would be ready to take profit when
stock prices starts to move up dramatically.
Fortunately, through stock charting, retail investors have a
chance to interpret and to understand what the big guns are
doing in the stock. Heaving buying and selling by the elite
group leaves footprint and trails on the stock market. It is up
to us, as retail investors, to understand what the stock charts
are trying to tell us. Understanding charts can move us up in
the Investing Hierarchy.
However, a word of caution, technical analysis is an art and can
be very subjective. It should only be used as a roadmap or
guideline to enter and exit a position.
About the author:
CASHFLOW AVENUE is established to provide Low-Risk Options
Trading Recommendations to the common traders in their pursuit
of financial freedom and a better lifestyle.
http://www.cashflowavenue.com
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