A Time for Analysis
--- by Guy Baker
Thanksgiving is always a time to assess the year retrospectively and gauge whether or not there are any things that need to be adjusted or changed for the coming year. It is also a time to do tax planning and budgeting. The jury is still out on 2009 but if all the economic news holds steady, it has been quite a ride.
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Successful Investors Avoid Picking Individual Stocks
One of the most dangerous temptations for investors is the potential for buying the next big hit stock, a stock that will grow at supersonic speed, far in excess of the overall market’s growth.
The hunt for the next Microsoft (a few generations ago it was the search for the next IBM) has probably been responsible for more wealth destruction than any other investment fallacy.
Downfall of the King of Market Timers
So you still think that it is possible for a smart investor to time the market, selling out before stocks drop and buying back in before they rise?
Even after countless studies show that this feat is next to impossible to accomplish except by luck, many investors are intrigued by the possibility of market timing. If the studies don’t convince you, take a look at the results achieved by a newsletter writer who was hailed as the greatest market timer of all a few bear markets ago.
. . . -READ MORE-Roth IRA Conversion Has Its Benefits, but Deciding Is Tricky
Financial services companies are using a temporary change in Roth IRA conversion rules to roll out a marketing juggernaut to convince you that conversion is the greatest opportunity ever. Coincidentally, they also hope to convince you to use their services.
Temporarily next year anyone can convert a traditional IRA to a Roth, regardless of income. Currently only those with incomes of less than $100,000 can make the switch.
. . .-READ More-Scared Investors, No Retirement, & More
The 2008 bear market may have chased away a generation of investors, found a new survey by international consulting firm AlixPartners.
The August survey found that 49 percent of respondents who identified themselves as “previous investors” had either stopped or reduced their investing in stocks or mutual funds.
Investors Should Look for Funds with Big Manager Stakes
Mutual fund investors may want to restrict their purchases to funds whose managers eat their own cooking, says a new report by Morningstar Inc.
The mutual fund analysis service looked at the levels of fund ownership by their managers and found those who put more than $1 million of their own money into their funds outperformed their peers.
“The best managers that we’ve followed and respect a lot tout the fact that they’re investing alongside investors,” Karen Dolan, director of fund analysis for Morningstar, recently told Investment News.