Friday, December 19, 2008
(Cont'd from above)...

Jim (cont'd):   

 

Rule #21 Don’t Mess With Money You Set Aside For Your Retirement
Jim:      Don’t invest the money that you have earmarked for your 401k and your IRA, your tax blessed retirement accounts, all at once. Space out your contributions over 12 months. So that every month, your putting in one 12th of your annual total. Almost no one does this, I do it ritualistically. Then, by the way, if the market declines more than 10% from it’s peak, double down for that month. I need you to take advantage of the declines that are going to occur. Because they are always going to be a part of investing, instead of panicking. This is our defensive retirement strategy. Deploys cash in a systematic fashion, take advantage of big declines.

Rule #22 Mutual Funds, Just Like Everything Else, Should Be Diversified
Jim:      If you are investing in mutual funds, make sure that don’t have all of your money in the same kind of mutual funds. Small cap growth is typically a trap. You should be able to buy just one diversified mutual fund. But if you are going to have money in multiple funds, like so many want. Don’t have it in all small cap growth. I recently viewed a woman’s portfolio, I usually don’t do this kind of thing, but it was for the mother of a friend. And I was concerned, because she had 3 mutual funds. What were they? One was aggressive growth, one was a small cap, and one was a technology fund. When I looked thru the labels, closer look. They were practically the same fund. Beware of the names and objectives when you look at mutual funds, the funds can be the same even as the titles are quite different.

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Rule #23 Playing Defense Is Crucial When There’s Volatility In The Market
Jim:      Stop waiting for a stock to come back in a tough market. To come back to where you bought it. You don’t have the option of waiting around, when the market is being difficult. You have to be defensive. If you own a stock that is down, and you don’t like it, come on. Don’t wait until it gets back to even before trying to sell it. Probably won’t get back to even. Stocks are not kids in the mall, who knows their parents will always come back for them. There stocks. And the bad ones are even more likely to go lower, than they are to come back. Stop hoping, hope is not part of the equation. That’s why, taking losses is defensive.

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Rule #24 This Market Isn’t Easy To Play, Try Picking Stocks With Big Buybacks
Jim:      Pick stocks with good buy backs. In volatile times you will own stocks with a ton of cash flow, that believe in and buy their own stocks. Especially, when there is a decline to be taken advantage of. A buy back can stabilize the stock long enough for other buyers to come in and stop the decline. Consider it a safety cushion. That is what you want to see.

We make jokes on the show... we call it the Sir Mix A Lot. Corollary #1... "I like big buybacks and I cannot lie"...
That is just to keep it in front of you (keep you interested)...

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Rule #25 Keep Your Eyes Open And Your Head In The Game
Jim:      Don’t stop looking at your statement. The worst thing that people did in 2000, is that they just put their monthly statements in their drawers. The losses were so big and painful that they couldn’t stand to watch. You have to stay current no matter how much it hurts. The moment you stop looking, is the moment that things go really bad. You could have saved fortunes if you looked in 2000, and figured out which companies were falling apart for their losses. If you don’t look, you can’t. Their stocks went down after those losses and you could have avoided a ton of pain, by paying attention and getting out before the losses hit.
 

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Here’s the bottom line... You can’t play defense with your eyes closed. So keep em open at all times...


The Bottom Line!:     No One Ever Won The Game With Their Eyes Closed And You Won’t Either...
 
[verbatim recap]

[ End of show ]

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