Wrong. Wrong. Wrong.
Market timing does not and never has worked.
Short term market shifts are little more than unpredictable noise. It is not what markets are doing that counts…it is value.
Yet it is hard to determine value without first having beliefs.
Selecting good shares is a unique personal art that begins with what you know. The ups and downs of markets have almost nothing to do with your investing success at all. Just because a stock market is dropping does not mean you cannot increase your wealth through owning shares. In fact recessions and depressions are the best times to rake in cash.
Here are three principles for getting in touch with your beliefs so you can create wealth regardless of whether markets are rising or falling.
First, invest in what you know. There are always things unknown, but when you focus on areas where you have deeper understanding it is easier to develop and maintain a belief.
Second, invest with people you know, like and trust. This will also help you hold on to good shares through downturns.
Third, look for companies that have a unique competitive edge. Invest in areas that have growth potential.
Many investors miss real growth because they look back instead of ahead.
For example during the recent dip in the market many investors fled into US dollar treasury bonds because in the past these had been viewed as the safest investment of all. Today they are almost guaranteed to lose buying power!
Spotting trends in the future is the way to preserve wealth. People think and buy differently today than they did in years past.
A few years back there was a survey taken of rich and famous people asking them what they considered luxury to be. Do you think that the old world luxuries like champagne, caviar and big yachts topped the list?
“Yawn, yawn” the wealth of the world said to these things.
Things are going out of fashion. Luxurious things are “just stuff”.
That which money cannot buy now top the luxury list. A few examples included a home without a phone, a garden, a raspberry bush, living next to a young child, time, being able to read the whole paper in the morning, walks with a dog, long lunches with friends, a clothesline, rain on the roof, a good old fashioned snow storm, a roaring fire, a jigsaw puzzle and the inability to go anywhere for a couple of days.
So how can you use the unique knowledge you have to cash in on this information?
Use the concepts of “Inspired Investing” and look at how your own business or investing relates to these ideas and what you know. How do you interface with nature, authenticity, friendship, simplicity, health or aging?
Use this understanding and the evolutionary cycle of business to expand the knowledge you have. Let your current knowledge create ideas, let the ideas build enthusiasm which leads to education. Use the education to take action and the action will result in a profit or loss. Whether profitable or not, you will gain information and this new knowledge leads to more ideas so the whole process can start over again.
How can you organize, innovate or take risks in these areas? Figure these out and you may be among the next waves of millionaires and billionaires that come along.
You will also find that when you get on the right track your luck magically improves. I stumbled on this fact as I learned these rules by accident, by following what I knew about conducting seminars (which I have been doing for over thirty years). I bought a farm to create an atmosphere I thought would be better for learning. Yet I ended up with a place full of wood, water and fresh air, with houses lacking phones and gardens, raspberry bushes, clotheslines, roaring fires, rain on the roof and when the snow storms come we often cannot go anywhere for a couple days. When I sign off I have time to read the whole paper and then feed the horses, chickens, geese and go walk the dog!
Until next message, may your investments bring luxury to you.
Join us in luxury at a low cost. Come to Ecuador where we will share the future trends we’ll test in our 2008 model portfolios next month. Join us and Jyske Bank at our Hotel Meson de las Flores for International Business & Investing Made EZ in Ecuador, November 9-10 and 11.
Stay on for our real estate tour and shamanic mingo and save $398.