Kiawah Golf Investment Seminars

Investment IQ Test

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Submitted by Steve Selengut | RSS Feed | Add Comment | Bookmark Me!

Many of the things you think you know about investing are part of a mythology designed to make you bounce around between investment products. Modern day "conventional wisdom" just isn't all that its cracked up to be. Concepts you worship are inaccurate; indices and averages you trust do not tell the complete story; the basic investment concepts still work --- but Wall Street won't tell you what they are.

It's time to determine your investment IQ, here's the deal:  

Just take the True-False test below and send me an email list of the statements you feel are generally TRUE --- where necessary, please include any rationale or explanatory remarks you feel would help me understand your answers. 

Once I've responded with your results, you can determine if you want to proceed with any of the KGIS workshops or more advanced programs.

Here we go:  Generally speaking, are the following statements mostly True or mostly False? Note: you'll do better if you research terms that you are unfamiliar with. Terms in "quotes" have very specific meanings in the Market Cycle Investment Management/Working Capital Model methodology.

1) The proper gauge of your Investment Portfolio Performance is the change in your market value vs. the S & P 500 or Dow Jones Industrial Averages over the course of a calendar year.

2) Mutual Funds are a safer route to long-term investment success than trying to create your own portfolio of individual equity securities.

3) You really don't need to worry about growing your "Base Income" until a year or so before you plan to retire. That's the time to begin designing a safe income portfolio.

4) The Day-Limit Order assures you of getting your trade executed no matter what happens during the trading day.

5) The Dow Jones Industrial Average is comprised of "investment grade" companies, and generally gives a clear indication of what is going on in the Stock Market.

6) In the long run, investing in the Stock Market will assure you of keeping up with inflation.

7) Annuities are perfect investments at retirement both for people of limited resources and for the wealthy, particularly Variable Annuities.

8) Technical Analysts can predict the future movements of the economy, individual securities, and the Stock Market with a very high degree of accuracy.

9) If you were to chart them, your total "Working Capital" line will almost always exceed the portfolio Market Value line.

10) There is no such thing as a freebie on Wall Street.

11) It is important that you take your tax losses regularly, particularly if you have held the losing position for less than one year.

12) Asset Allocation is a strategy used by investors to move assets from weak markets to strong ones in order to improve the growth of the investment portfolio's bottom line.

13) Sell your losers and let you profits run is the essence of sound Investment Management thinking.

14) Closed End Funds (CEFs) are not popular with Wall Street professionals because they are inherently more risky than normal, open-end, Mutual Funds.

15) It's smarter for income investors to buy short duration individual municipal and corporate bonds, even at a premium, because it assures them of less market value volatility in the income portion of your portfolio..

 16) DRIPs and Dollar Cost Averaging are recommended strategies because they are guaranteed to enhance the long term performance of a properly diversified portfolio.

17) There are fewer than 400 "Investment Grade Value Stocks" traded on the NYSE.

18) Closed End Muni-Bond Funds are a much maligned and little appreciated income generation machine in spite of the fact that they generally maintained their 6% or so tax free dividend yield during the recent financial crisis and outperformed the DJIA in market value growth during 2009.  

19) "Smart Cash" is an integral part of any Asset Allocation formula because it allows investors to time the market successfully. Professional market timers know precisely when to move into or out of cash in anticipation of the next major directional change in the market.

20) Buy and Hold continues to be the proper investment strategy for most individual investors.

21) It is a well known fact that there are certain Core Portfolio issues that belong in all investment portfolios if long term success is to be expected.

22) Every properly diversified portfolio will have up to 5% in each of these areas: miscellaneous speculative opportunities, gold or other commodities, small cap stocks, and global index funds.

23) Zero Coupon Bonds are an important part of the fixed income portion of the investment portfolio, especially when retirement is contemplated within five years or so.

24) These are the FOUR most Important elements of successful long-term investing:

  • Diversify properly.
  • Establish a target for taking profits.
  • Buy high quality securities.
  • Increase annual income.

25) Greed and Fear are important performance enhancing emotions; those who sell when others are greedy, and buy when panic rules the markets have a much better chance of investing successfully.

26) The second step in every stock purchase should be the establishment of a Stop Loss Order. Such an order assures you that your losses will be limited to a specific percentage of your purchase price.

27) "Investment Grade Value Stocks" will be the next red hot market sector.

28) Mark-to-market valuation of mortgages backed securities has proven to be good for investors.

29) Wrap Accounts provide investors with the opportunity to obtain private, personal, investment management by a well known professional at a reasonable cost.

30) The expression Managed by the Mob with regard to open-end mutual funds refers only to the direct impact of Wall Street and Washington on the movement of mutual fund prices.


 
Kiawah Golf Investment Seminars
3912 Betsy Kerrison Pkwy
Johns Island, SC 29455
Phone (800) 245-0494 • Fax (843) 243-8509
Contact Steve directly for additional information: 800-245-0494
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Please read this disclaimer:
Steve Selengut is registered as an investment adviser representative. His assessments and opinions are purely his own. None of the information presented here should be construed as an endorsement of any business entity; the information is only intended to be educational and thought provoking.

Please join the private article mailing list or Call 800-245-0494 for additional information

Risk Management: Income, 401k, and IRA Programs

Take a free tour of a professional investment managers' private SEP IRA program during ten years surrounding the financial crisis:

CLICK HERE

In developing the investment plan, personal financial goals, objectives, time frames, and future income requirements should all be considered. A first step would be to assure that small portfolios (under $50,000) are at least 50% income focused.

At the $100,000 level, between 30% and 40% income focused is fine, but above age 50, the income focus allocation needs to be no less than 40%... and it could increase in 10% increments every five years.

The "Income Bucket" of the Asset Allocation is itself a portfolio risk minimization tool, and when combined with an "Equity Bucket" that includes only IGVSI companies, it becomes a very powerful risk regulator over the life of the portfolio.

Other Risk Minimizers include: "Working Capital Model" based Asset Allocation, fundamental quality based selection criteria, diversification and income production rules, and profit taking guidelines for all securities,

Dealing with changes in the Investment Environment productively involves a market/interest rate/economic cycle appreciation, as has evolved in the Market Cycle Investment Management (MCIM) methodology. Investors must formulate realistic expectations about investment securities--- by class and by type. This will help them deal more effectively with short term events, disruptions and dislocations.

Over the past twenty years, the market has transitioned into a "passive", more products than ever before, environment on the equity side...  while income purpose investing has actually become much easier in the right vehicles. MCIM relies on income closed end funds to power our programs.

To illustrate just how powerful the combination of highest quality equities plus long term closed end funds has been during this time... we have provided an audio PowerPoint that illustrates the development of a Self Directed IRA portfolio from 2004 through 2014.

Throughout the years surrounding the "Financial Crisis", Annual income nearly tripled from $8,400 to $23,400 and Working Capital grew 80% $198,000 to $356,000.

Total income is 6.5% of capital and more than covers the RMD.

https://www.dropbox.com/s/b4i8b5nnq3hafaq/2015-02-24%2011.30%20Income%20Investing_%20The%206_%20Solution.wmv?dl=0

Managing income purpose securities requires price volatility understanding and disciplined income reinvestment protocals. "Total realized return" (emphasis on the realized) and compound earnings growth are the key elements. All forms of income secuities are liquid when dealt with in Closed End Funds. 



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Please read this disclaimer:
Steve Selengut is registered as an investment advisor representative. His assessments and opinions are purely his own and do not represent the views of any other entity. None of his commentary is or should be considered either investment advice or a solicitation of business. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be or should be construed as an endorsement of any entity or organization. The reader should not assume that any strategies, or investments mentioned are any more than illustrations --- they are never recommendations, and others will most certainly disagree with the thoughts presented in the article.