Most of the things that you think you know about investing are part of a mythology that is designed to make you purchase investment products. The 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:
Send me your answers to the 30 True & False statements below. If you get them all correct, you win a copy of "The Brainwashing of the American Investor" and 25% off on your purchase of the complete workshop series --- a $61 value.
If you fail the test (three or more wrong answers) you agree to sign up for the complete workshop series --- which comes with a free book and 10% discount.
Are the following statements mostly True or mostly False?
1) The proper gauge of your Investment PortfolioPerformance is the change in your market value vs. the S & P 500 Average 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 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)Your total Working Capital line will rarely 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 Mutual Funds (CEFs) are not popular with Wall Street professionals because they are inherently more risky than normal Mutual Funds.
15) It's better to buy shorter duration corporate and municipal bonds, because their market value doesn't fluctuate as much with anticipated changes in the direction of interest rates.
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) Packaged Investment Products are designed with a sincere concern for the financial well being of the average investor, and are good for everyone.
18) Stock Brokers are well trained in all aspects of investing and investment portfolio management. Consequently, a significant portion of their compensation is tied directly to how well they help their clients develop high quality, properly diversified, and goal directed portfolios.
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 (more than 25%) 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.
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