Being Ready to Buy When the Market Drops

The markets often crash. Yes, this is nothing new. This happens more often than we realize, if only for a day or two.

The question is: were you prepared?

Ready to sell marginal positions
Ready to buy
It is one thing to jettison marginal positions. They are the easy ones to spot – barely making any gains or sliding backwards slowly but surely. When the market hits a bump or sell-off, why not throw these out.

On the other hand, the tough one is being ready to take advantage of a downturn in the markets and but when the prices are low.

Here are a few ideas on how to take advantage of sell-offs to grab new positions:

Look at the equity curve of the ticker symbols in your groups or groups in your investment software to see which ones have had the most upward momentum.
If you are using a trading strategy, check the rankings of the symbols in your groups to see which ones have been at the top the past few weeks or months.
Compare your ticker symbols against a benchmark like the S&P 500 in either a combo chart or in a ranking to discover those symbols out-performing the market.
Note of caution, many big market drops last only a few days. This means:

It may not be necessary to sell any positions.
The opportunity to buy at a lower price is limited – time is short.
If your investment software has a number of trading strategies then abrupt market changes can be a good time to evaluate your strategies.

Compare your strategies performances in a combination chart to see if one is out-performing the others
Examine the equity curve of your strategies to make sure you are using one that is performing well and not in decline.
Keep a positive outlook. The market always rebounds. The only question is how quickly. But apply these ideas with some investment software and you can find safe profitable investments.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He is the author of the book, “Invest Safely and Profitably.” He began investing in the markets in his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana.

Two Alternatives to Getting Cash for Coins

Exchange kiosks at big stores often provide cash for coins poured into the machine. While many people appreciate the opportunity to convert their piggy banks and mason jars of spare pocket change into paper bills, others see different kinds of value in metal currency.

Metal Exchange

From the dime to the quarter, many denominations have ridges on the outside edge. The reason for this design feature is a common scheme for making money throughout history. Back in the Roman and Medieval eras, when the currency was stamped in a way that left uneven blobs of metal around the edges, enterprising criminals could shave off the outer surplus from the edges. The shavings from those pieces minted in gold and silver quickly amounted to a sizable profit.

Modern American versions rarely contain anything as valuable as gold or silver, yet the copper in pennies has risen high enough to rival the value of the individual coins. Over the decades, as the worth of copper increased and supplies were cut short during wartime, many different materials were used to mint the tiny Abe Lincolns. Bronze, brass, and steel have been used to make pennies in various periods in the past. Since the 1980′s, pennies have been made of 97.5 percent zinc, though it’s still possible to find older pennies in circulation. When the copper market hit a high point in 2011, a 95 percent copper penny (like many of those from before zinc was used) was worth three times its face value.

Assembling Collections

A popular hobby among children and adults alike, coin collecting provides hours of entertainment and rewards attention to detail. Collectors acquire cardboard displays or booklets, which they use to arrange quarters from every state or collections along other themes. As an affordable alternative to collectible cards, children can be encouraged to collect pennies minted in all the different years. Special pennies were minted for the Lincoln bicentennial in 2009, and it can be interesting to note how the wheat cent was replaced by the Lincoln Memorial and later the Union Shield.

People who travel internationally or have an interest in foreign cultures may also enjoy collecting money from other parts of the world. Seeing the figureheads, shields, and symbols chosen by other countries provides a window into different cultures. After a period of time overseas, it may not be possible to get American cash for coins from other nations, at least not at a fair rate of exchange. The monetary leftovers from last-minute purchases tend to become souvenirs for that practical reason.

Whether you appreciate the metal in a coin or its historical value, it’s worthwhile to take a second look at the pocket change that many people take for granted. For those who are living on tight budgets, simply getting cash for coins at the bank may be the best option. Many banks provide paper rolls so that you can organize stacks of quarters and dimes, etc. Even when that practical route is necessary, it’s worth considering whether any older coins may be of greater value to collectors.

The New-Age Investment – Alternative Investment

Alternative Investment implies investing in assets other than the traditional methods such as stocks, bonds, cash, etc. These could be private equity, hedge funds, real estate, commodities, precious metals, wine, art, etc. These type of investments are held by high net worth individuals, or institutional investors. The addition of this type of investment to the portfolio allows diversification, reduces risks and enhances returns.

The performance of assets used in alternative investments is relatively lower when compared to those in the traditional methods. They are relatively more difficult to value. They are also less liquid when compared to traditional methods.

Some popular types of alternative investments being widely used are:

Private Equity:

This can be defined as investing in private companies such as start-ups, venture capital, and financing throughout phases of the company’s growth. This investment is done in companies that do not issue public stocks. These firms raise funds through capital invested by institutional and non-institutional investors.

Direct Investment in Private Companies:

This implies investing in a start-up or a private company directly instead of the equity. This is a high risk and high return proposition.

Real Assets:

This implies investing in physical assets which are of high value. Examples of such assets are precious metals, real estate, oil, wine, art, jewelry, etc.

Hedge Funds:

In this case, funds are collected from a number of investors to form a common pool of funds. These funds are invested using different types of strategies to earn the return on investments. They have the advantage that they need less SEC regulations than other funds.

Managed Futures:

This is similar to Hedge funds where a common pool of investor’s funds is created. These funds are invested in various financial instruments such as commodities, currency and interest rate markets.

Financial Derivatives:

A financial derivative is an arrangement where the investor is promised a payment when a certain asset reaches a certain level. These securities include futures, options, forwards and swaps.

Fund of Funds:

This is a means of diversifying investments. It is achieved by investing in multiple managers, asset classes or strategies.

Private Placement Debt:

Investors can receive a steady cash flow by investing in a private company through promissory notes.

As the stock market becomes volatile and unpredictable, people are seeking safe investment methods. At such a time alternative investment schemes have come to a safe secure option to private investors. Therefore, they are becoming highly popular. However, they cannot replace traditional methods completely. They should be used to complement them. This will help to increase and diversify the investment portfolio and minimize the risks of investment.

Wealth Without Risk – An Oxymoron

Discover Life’s Three Chronological Periods

Our investment philosophy is based on an individual’s chronological time line, which consists of three periods: (1) asset accumulation, (2) wealth building, and (3) asset conservation.

The financial journey through life’s time line starts at different levels, depending on whether you were born with a plastic or a silver spoon in your mouth. As you travel through your time line, your investment options change. Knowing where you are and what options are available will help you make the right choices.

A Winning Financial Plan up to Age 35

The first chronological period of your life-mid-twenties to mid-thirties-should be devoted to accumulating assets and acquiring basic necessities. When you’re just starting out, your assets are usually limited and the major portion of your income goes for the basic needs-food, clothing, and shelter.

This is the time to save, save, save! Amass as many investment dollars as possible. Your approach to investing during this period should be through tax-deferred plans at work or Individual Retirement Accounts (IRAs). Your degree of risk should be moderate. Investments included in this category are top rated corporate bonds, blue chip stocks, and growth-oriented no-load mutual funds.

Every effort should be made to purchase a home now. The advantages, from tax savings and equity buildup, historically outweigh the short-term benefits of lower monthly rent payments.

Be careful when sheltering yourself and your family from liability.

Only pay for protection when you’re purchasing life insurance. Purchase whole life insurance if it will yield a higher rate of return than other investments. After reading the chapter on asset protection, you might seriously consider reducing your liability coverage.

Remember, your main financial goal during this time is tax-deferred accumulation of capital. Don’t take risks with your investments. Save as much as you can so that when you enter the next phase of the time line you’ll be ready to move forward.

Investing between the Ages of 35 and 50

After earnings have increased, assets have been accumulated, and basic necessities are under control, it’s time to move on. Ready or not, you must face the challenges during this aggressive investment period of your life, when you are between your mid-thirties and early fifties.

The Best Financial Plan for You

Your best financial plan is to create the maximum wealth during this aggressive investment period of your life. Build financial security yourself: don’t rely on others to do it for you. Many people who relied on major banks and insurance companies for financial security ended up short when these institutions failed. The social security system will not do much better.

You should be careful not to over diversify your assets or adopt a “hold-back” attitude. You must concentrate your assets into one or two aggressive investments rather than spreading them out. Diversification often leads to ineffectiveness.

What if you fail during this period? What is your down side? If you consider your ability to bounce back because of your age, the political clout of your generation, taxes, and inflation, the real risk is minimized. Make your aggressive investments now. As you get older, your ability to rebound declines. If you do not try at this stage in your in-vestment time line, you probably will never do it, and more importantly, you will never know whether you could have done it.

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