Saturday, August 11, 2007

Some Random Stock Market Investing Ideas

The following are a few ideas I have gathered from my years as an investor.
The stock market usually does well when there is gridlock in the government. Less “work” gets done on Capitol Hill when there is gridlock and that is good for business.
It is wise to sell stocks and buy bonds before taxes go up. When Bill Clinton got elected in 1992, I moved all my money into simple bond funds and made over 40% on them in less than a year.
Buy bank stocks when a recession is ending. Banks benefit from low interest rates.
If the global warming lobby wins big, I would expect big things from alternative energy stocks.
This is risky, but if you buy a company before it becomes profitable, you could make some pretty large gains.
If you think you have found a company that is going to be acquired, buy some. If you are right, you will likely profit well.
During the next 25 years, we can expect to see massive gains in nanotechnology, biotechnology, neurotechnology, alternative energy, robotics, and organics. The gains from these sectors will not all come from small companies. Big companies like IBM and BASF could end up being among the big winners in Nanotech.
A simple but effective strategy is to buy when the masses are selling. Buy the shares of excellent companies at low prices. It is surprising how many people screw this one up in each recession. All I can say is: fight the “chicken little” within. Remember to take profits when the market really rallies.
Buy a stock that is going to buy back shares. If your buy back pick is right, you will make some pretty good gains. Stock buy backs happen a lot in recessions too.
During a recession, look for what is known as a “Cash Cow”. That is, a company with a lot of money in the bank. A Cash Cow has money to make acquisitions and other investments.
When the bull market ends, the smart money goes into real estate. Real estate investment trusts (REIT) will do fine. You can buy REITs through any broker.
When a stock is at IMPOSSIBLE highs, sell short. Don’t leverage yourself too much though.
Follow stellar fund managers, not necessarily the stellar funds. If a real good fund manager quits managing a fund, then the past performance doesn’t mean as much.
Follow the proverb of Wall Street: “Buy on the rumor, sell on the news”. You pretty much have to get in early. If a mania develops, take profits.

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