Ross Jardine's Personal Investor

Midwestern Dental School Presentation

2009-12-14T14:14:00.000-08:00

Here's a link to the presentation I did recently at the Midwestern University Dental School in Phoenix Arizona. The presentation was titled "what I wish I knew about money before I graduated from Dental school" You'll need to enter your name and email address to access the recording. Enjoy!

What I wish I knew about money before I graduated from dental school

Ross

Where to get the highest interest on your savings in 2010

2009-12-14T13:28:00.001-08:00

Have you looked at the interest your bank is paying you on your cash balances lately? It's never been lower in your lifetime. It just doesn't make much sense in this economy to have a bunch of cash sitting around doing nothing. There are ways to get higher interest on your cash, but most require you to "lock-up" your dough for some period of time to get the higher rate. When I talk to folks, the biggest hesitation in doing this is giving up access to their money in case they need it.

If you want the highest return on your money without exposing it to the risk of investing in the stock market, there is an option that i'll bet you've never considered...Whole life insurance. That's right, the insurance companies are still paying pretty good interest on the money you put into a policy. Most are paying around 4% and if it's a mutual insurance company, you'll also get a dividend each year, which is your share of the profits earned by the company. Only mutual companies distribute dividends to the policyholders. Public companies pay their dividends to the shareholders. There is a big difference, so make sure you get the right kind of company when you purchase your policy.

Considering that an insurance policy has a contractually guaranteed interest rate, these are returns you can count on in even the most dire financial circumstances, like the economic meltdown of last fall. Good old whole life insurance has survived all 13 of the recessions since the great depression and policyholders have never lost a penny of principal. That's a great track record that should allow you to sleep at night knowing your money is in safe hands.

LIke I said at the start, the primary concern of most people I talk to is giving up access to their money for a higher interest rate. That's not a concern with whole life insurance as you can borrow against your policy to get your money if you need it. Because the balance you're getting interest on doesn't go down by the amount you borrow, you're still earning interest on all your cash that will offset much of the interest you're being charged on the amount you withdraw as a loan. Many people use this approach to "borrow from themselves" to buy their cars, pay off high interest credit cards, and even send their kids to college. When you pay the money you borrow back with interest (just like you would if you got the loan from a financial institution) you'll be saving yourself a ton in interest expense and be building your retirement nest egg at the same time.

Considering that most people pay about a third of every dollar they make in interest to some financial institution, reversing that flow of interest back to you is one of the most power ways to accelerate your retirement savings and rapidly increase the size of your nest egg.

So you can get a higher interest rate and still have access to your money. You win both ways. But that's not all the benefits of this alternative savings vehicle.

Because it's an insurance policy, you'll also have a death benefit that will go "tax free" to your beneficiaries in the event of your unexpected death. What bank provides that benefit for a savings account?

So if you're looking for the best place to get a great interest rate on your cash and a few other great benefits, consider whole life insurance. I'd love to show you how to use this powerful vehicle to guarantee a tax free retirement. This is not your grandfathers insurance policy and it pays to have someone who knows how to structure this properly to help you get it right the first time. I can help you set this up to maximize the cash value and death benefit to levels few people know how to get. Drop me a note if you'd like a free analysis.

The Decade of NOTHING – Why your 401k won’t get you the retirement you’re expecting

2009-11-19T11:03:00.000-08:00

The past decade has thrown a monkey wrench in the gears of traditional investing and financial planning. Regardless of where you get your investment advice, the pitch for the past generation or two has gone something like this:

1. Save part of what you make
2. Avoid debt
3. Buy Term Life Insurance and invest the difference
4. Max out your 401k contribution
5. Invest in a well-diversified portfolio of stocks and bonds

What the “experts” said is, “if you follow this plan over your working years, you’ll enjoy a comfortable retirement.” Ask anyone who planned to retire anytime over the past 10 years who followed this traditional plan and they will tell you it didn’t work!

The assumptions we’re asked to accept when we accept this advice is where the problem begins. I’ve had a few financial plans created for me over the years and they all start off with the advisor making an assumption on the annual returns I should expect over my lifetime of retirement saving and investing. That “assumed” return has ranged from 5-25% depending on the credibility of the advisor.

Never once in these presentations did they ever mention how the overall plan would be impacted if the “real return” of my portfolio in any given year was ZERO or even negative, let alone what the impact would be for a decade of ZEROor negative growth. But now we know…

The fact is that most retirement plans see the greatest growth in the few years right before retirement. If you took any 10 year period and set the return in your plan to zero, your nest egg wouldn’t just fall a little bit short of your projected retirement goal, you wouldn’t even come close. If that decade of nothing occurred in the 10 years just prior to you hitting retirement age, you’re doomed. That’s exactly the situation a large percentage of hard-working baby boomers are faced with right now. IT SUCKS!

Too bad you can’t wind back the clock and get a “do-over” on your planning and investing. Unfortunately, you only get one shot at this, so you need to get it right the first time. It’s almost impossible to play catch-up in order to make up for a shortfall when you near retirement age.

So what’s the solution? Did anything work over the past decde? What can a person do to avoid this terrible situation in the future?

There are dozens of strategies that will make you tons of money when stocks fall. They’ve been around since as long as investing, but they are only used by a few very sophisticated investors, and rarely would you be able to employ one of these bearish strategies in a qualified retirement account, like a 401k or and IRA.

Even if you did know a few bearish strategies, most investors are not sophisticated enough or simply don’t pay close enough attention to the market trends to recognize when to employ these strategies. It’s too easy to just “diversify and ride out the rough spots.” At least that’s what those that get paid to dispense advice and sell you those types of investments would like you to believe.

In reality, there is one approach that worked perfectly over the past decade, just like it worked perfectly during the bear market of 2000-2003 and even the Great Depression. In fact it’s worked perfectly during the last 13 recessions. When it comes to winning percentages, this approach is undefeated. This approach utilizes a product that’s been around for over 100 years and the companies that offer it are some of the most successful and stable companies in the world.

So what is this amazing wealth-building strategy?

Old-fashioned permanent life Insurance. (My personal preference being the dividend-paying Whole Life variety)

Before you hit the escape button and write me off as a lunatic, check out the facts.
Unlike your 401k or IRA, an insurance contract has the following features and benefits:

1. A Tax-Free death benefit that will pass to your heirs in the event of an untimely death (that’s only benefit of life insurance that most people know of)

2. A contractually guaranteed rate of return on the cash value of the policy, typically in the 4-5% range these days(Do your mutual funds offer guaranteed returns? What are you earning on those CD’s these days?)

3. Annual dividends on top of the guaranteed return that have been paid by some companies for over 100 years

4. Strict Government regulation that requires the company that issues your policy to hold cash reserves to back up their promises to you (If you think the FDIC can back up everyone’s deposits at the local bank, I’ve got some swampland in Florida I’d like to talk to you about)

5. Access to your money anytime you need it, even if it’s before age 59 ½ without penalty or tax consequence.
Tax-deferred growth on all gains within your policy (this is about the only benefit in this list that most qualified plans can match)

6. Lawsuit and judgement-proof (in our sue-happy world, your money is safe here)
Those who have permanent life insurance didn’t lose a penny of principal in the recent economic crisis, just like those who had these policies during the Great Depression didn’t lose any principal. In a time when safety and security are on the minds of all investors, those are some pretty impressive statistics.

So if I’m right, why isn’t everyone rushing to their local insurance agent to take out a policy? Honestly, it’s mostly ignorance. Unlike any qualified retirement plan, a knowledgeable agent can give you an illustration for your policy that you can literally bank on. Try getting that from your financial advisor or broker.

Insurance isn’t as exciting as trying to pick the next great growth stock in the market, but it works for nearly every single person who uses it and sticks to the plan. If you expect more of the same from the market over the balance of your working years, you owe it to yourself to consider a permanent life insurance policy as part of your financial foundation.

I’m just about finished with a new book outlining a powerful strategy that incorporates these concepts. If your retirement dreams have been shattered or you simply don’t know who to trust, Stay tuned!

The impact of Oil on the econmic recovery

2009-08-05T13:44:00.000-07:00

As I read all the reports about the glut of oil sitting in storage facilities around the world, it's hard to understand why the price of oil continues to climb past $70. I guess it's time to throw all conventional wisdom out the window or just conceed that the oil market is no longer driven primarily by supply and demand, but by some other force. Speculation?

When I hear the stories about commodities traders paying for full oil tankers to sit offshore in hopes of delivering the goods when the price of oil is higher, I get concerned. When you consider the impact the price of oil, and more specifically gasoline, has on everyone's personal budget, it's a bit unnerving to imagine how quickly the economic recovery can stall if the price of a tank of gas continues to escalate.

While speculators provide needed liquidity to the commodities markets, I'm of the opinion that they have become a much more influential participant in these markets than anyone could have ever imagined. The wild swings in energy markets has caught the attention of regulators as they consider how to curb the influence of non-market participants (speculators) in the energy markets in hopes of smoothing out the peaks and valleys. One of the biggest proponents of that are the airlines who are getting killed every time oil takes off to new highs. It's hard to manage an airline when one of your largest expenses (fuel)can fluctuate by 10% or more every 30 days.

A real economic recovery must have an increase in jobs and disposable income to be lasting. The gains in the market over the past few months have been built through cost cutting, not growth. Unless the growth follows shortly, the recent rally will have no foundation to serve as a base for a higher trading range.

Enjoy the rally! Hope you make a ton, but watch out for the wall on the horizon in the form of higher energy prices and the impact they have on each of our personal budgets. It's nice to see the market go up, but I'm not back to feeling rich again. We've still got a ways to go before you can call an end to the economic crisis.

Have we reached the bottom yet?

2009-06-08T10:45:00.000-07:00

That's the question that's on most investor's minds these days. It's not hard to see that things are a bit better in the housing and credit markets and fewer people are losing jobs if you believe the latest round of data. I think it really comes down to whether you believe "less bad" news equals "good" news. I don't.

This entire three month rally in the markets has been built on the assumption that less bad equals good news. The fact remains that the economy is still in the dumper and jobs are being lost by the hundreds of thousands each week. These jobs are not being replaced by the stimulus spending or business growth. That means that more and more people don't have money to spend on anything but necessities, and many don't even have money for that.

While I don't expect a return to the depths of despair witnessed in October and September, I do expect there will be tough times ahead and many will be caught off guard having fallen prey to the notion that less bad is good.

So the real question is how can you make money on your personal investments in this market. We've experienced an almost unprecedented period of high volatility over the past year and especially over the past six months. Volatility is returning to more normal levels with the VIX dropping under 30 for the first time in months.

In this environment, I favor strategies that create income from selling options. The most conservative of those strategies would be selling covered calls on the stocks you own. I would suggest giving a little upside room to reach the strike prices of your covered calls to benefit if the market rally continues, but don't go too far out or you'll lose the protection the premium income will provide in the event of a sell off.

With oil spiking over the past few weeks, we're back into a position of having to worry about higher energy costs impacting the potential for recovery. It doesn't seem to be big news yet with oil now nearing $70 per barrel, but when it starts to push $80 in a few weeks, it will once again dominate the headlines as we all brace for gas prices at or above $3 per gallon.

If you want to be able to survive the peaks and valleys of the market in the years to come, I suggest you learn to trade options. Not many people have been able to make money in the past 12 months on their investments, but the majority who have traded options to do it.

I'll be teaching a small group of investors the strategies that are working now in a special personal mentoring program that begins in August. You'll get four months of instruction from me and my team of personal coaches. I think it's the best way to learn how to protect yourself and prosper in these tough economic times.

Call me office at 1-888-300-1892 and get the details.

Also, if you're struggling with debt check out my new book at rossjardine.com. If you'll pay the shipping, I'll send you a copy for free. Learn my seven steps for getting out of debt and building real wealth.

Happy investing.

The Solution to the Economic Crisis - Who do you trust, Government or Business?

2009-02-12T11:21:00.000-08:00

I watched in amazement the past couple days as the leaders in our Goverment put the beat-down on a group of bank executives in Washington DC. If you missed it, check out youtube for the highlight reel. I wouldn't call it political drama, I would call it political comedy.

After watching our elected officials do their best to embarrass, demean and ridicule this group of executives all I could think of was, "who elected these people and how can they possibly stay in office after this pathetic performance?" The come across as a bunch of blow hard with little real knowledge or experience in these complex financial issues. There's an old saying that goes something like this, "Better to be thought a fool than to open your mouth and remove all doubt."

Before anyone thinks I've lost all sanity, let me first say that nearly all these executives have made poor decisions that contributed to and helped create the economic mess we're in. They are clearly the most out-of-favor group of business leaders in the entire world right now and the primary target of the populist crowd who blames them for all their personal financial challenges. For anyone in government to do any more to help these men and their companies would likely be political suicide.

But step back for a moment and put your anger on the shelf and consider that these same elected officials are the "executives" of the largest enterprise in the free world, the US Government. The very things they are attacking these men and their companies for they are guilty of themselves by several orders of magnitude.

Where is all the outcry and criticism of our Government for spending far beyond their means and leveraging the future generations of Americans with a burden of debt equally as troublesome as any created by the mortgage or banking industries? This is like the pot calling the kettle black. It's the pinnicle of hypocrisy!

If our Government officials could simply grasp the concept of "living within our means," just like we all must do in our personal households, we likely would have had the resources to stimulate the economy from a rainy-day fund rather than spending over a Trillion dollars of money we don't have. The criticism should cut both ways, but the populist crowd is giving Government a pass on this, or still thinking it's George Bush's fault. Government was broke long before George Bush came along and he just helped get the problems out in the open a lot faster. Government is unable to make the tough decisions and sacrifices needed to turn this crisis around, because they are too sensitive to the minority groups that will be impacted by those sacrifices. They can't make tough decisions.

Every responsible exectuvie at a real business is making the tough decisions of cutting back, laying off and restructuring to keep their businesses viable in the face of the worst economic environment in decades. They don't pass the buck, the make the tough decisions. Sure lives are impacted and dreams are crushed, but these tough choices were necessary to keep the business afloat. The executives in the business world rarely ascend to those key authority positions without first demonstrating they have the education, knowledge, and leadership skills needed to make the tough decisions required of a senior executive. That's simply not the case when it comes to Government.

I've done a fair bit of investing in real estate over the years and I remember talking to a man who had a great deal of experience working with cities and municipalities on development issues like zoning and density and the like. Those are complex issues that take specialize knowledge, training and experience. I watched him deal with city councils and managers that had zero education or experience in development and land planning but who held total decision-making authority over decisions that involved hundreds of millions of dollars of taxpayer money and resources. They were more likey to be be swayed on a critical issue by the opinion of their next door neighbor than a skilled expert from that field.

Just think, even a small rural city may have an annual budget in the tens of millions of dollars, but the people of the city entrust the management of those precious resources to a group of lay people who are elected in a popularity contest. Even a small city budget dwarfs the budgets of many very well-known public companies. Can you ever imagine having a group of lay people making the decisions on how to run IBM, Microsoft or General Motors. (some of you cynics may say that might not be such a bad idea considering how those companies have been run lately)

The point is that we have a group of poweful elected officials that lack the expertise and skill to deal with the serious and very complex issues facing our country, and we're all stake-holders. Given the rank state of national and state politics, it's no surprise to me that the most qualified people have zero interest in running for elected office. Who would want to go through the political gauntlet to get a low paying job with millions of ignorant people taking pot shots at your every decision. Power in Government is granted by seniority rather than qualifications.

It's pretty easy for Maxine Waters to beat down those bank executives and rant and rave like she did on C-span this week, but if you let a person like her make those tough and complex decisions instead, do you really think we'd be better off? Not a chance! To protect her status and authority, she would never even venture to offer a solution that would make sense, but she can take all the pot shots she wants without fear of losing power. Why doesn't the same standard apply to her and every other elected official on the decisions they make as a member of Congress?

The more government gets involved in business, the worst things are going to get. If you can't run a business profitably, it's going to fail. That's capitalism. If government wants to regulate business more than they already do, it's going to add more cost and reduce profits even more, meaning more business will fail and fewer entrepreneurs will even consider starting a business, which means fewer jobs for the populists and more challenges for the country.

There are plenty of strong, well-managed businesses out there that could instantly create new good-paying jobs that will last a long time if we gave them a little bailout money to prime the pump. Having witnessed the inefficiency and ineptness of government many times in the past, I'd rather gamble my financial future (and that of my next couple of generations) on them rather than the buffoons who run our Government.

Just so you don't think I'm just a chronic complainer without any constructive input, let me suggest a good starting point to get real change in Government. I would immediately institute term limits for all elected officials. Eight years is all you can serve in office no matter what position you're in. We do it for the President, why isn't it equally good for the House and Senate. There's enough blame for all the woes in America for everyone to take some. Until we can get past putting so much energy into pointing the fingers of blame and redirect it into creating bipartisan long-term solutions to the very complex problems facing our world, nothing is going to change, and it's likely going to get a whole lot worse.

How to play an emotion driven market

2009-02-10T11:54:00.000-08:00

Over the past year I've seen the same scenario play out about half a dozen times. I want to make sure you see what I consider to be one of the best money-making opportunities available in the current market. You've probably heard the old cliche, 'buy the rumor and sell the news." Well it's just as true (maybe more) today than ever before.

Fear is the strongest of the emotions we feel as investors. For most investors, fear is paralyzing. When stocks drop they freeze up and do nothing. This often leads to the catastrophic losses that many investors have experienced this past year. Doing nothing when the market is being driven by fear is the worst possible thing you could do. When things are tough, you can't ignore them because they are likely going to get worse, and in the case of this year, a lot worse.

What few investors realize is that stocks don't always have to go up to make money. I would say less than 5% of investors have ever made a profit on an investment that dropped in value, like almost every stock has in the past 12 months. What they don't understand is that movement is all it takes to create opportunity and it doesn't matter which direction the movement is in. Let's face it, 2008 and 2009 so far have provided lots of movement in both directions with the biggest moves to the downside.

If you look back over the past year and identify the big news stories that affected the market and the economy, you'll notice a common theme. Every market has a catalyst. In the late 90's it was the dot com boom. From 2003-2008 it was the real estate boom. Today, the catalyst for the market is the government. Like it or not, the biggest mover of the market right now is the government, and more specifically the news of any new programs they are coming up with to turn the economy around.

Think about it, the market is starving for any sort of positive news on the economy and jobs, so when the latest plan is starting to brew in Washington, investors get all excited and start buying back into the market to be in position to benefit when the plan is approved. That's the rumor part of the equation.

When the plan is finally revealed, the market tanks as everyone once again realizes that the latest plan isn't going to fix anything quickly and may not fix anything at all. Want a few examples...

How about the first bailout package, the one known as the TARP program. We were told that we needed this plan or a number of major banks were going to go under. There was enough proof in the form of WaMu and Wachovia to make us all believers. As the details of this huge plan were leaked to the press and discussed each night by the Government big shots, there was a swell of optimism that it would fix the problem. The market took off. When the bill came up for the first vote, the market raced higher in anticipation of approval. I was speaking at an investment conference in Spain that week and got on a plane to fly home the day the first vote was scheduled to take place. The news that came out at the end of the day prior was that the plan was going to pass easily. The market raced higher right up to the closing bell.

When I landed in Minneapolis after an entire day of flying, the market was now closed and when I saw a ticker tape in the airport with a steady stream of big name companies that were down for 10% or more that day, I figured something major had happened. When I finally reached a TV in the airport lounge, I saw that the vote had failed. The market immedately responded to the reality of the situation with one of it's worst day's in history, losing almost 1000 points on the Dow in a single session. Buy the rumor, sell the news. That's what it looks like my friends.

How about the election. I don't think anyone was surprised by the outcome of the Presidential election this past November, but in the weeks and days before the election the market took off in anticipation of the expected change in Washington. When the final votes were all counted nobody was surprised by the result, but the market plunged for nearly two weeks after that to it's lowest point of the year. The money was made on the upside the two weeks prior to the election and anyone foolish enough to think the pre-election rally would continue, lost it all and more the next two weeks.

We've seen the same scenario play out for the auto bailout, the inauguration and now with the massive economic bailout plan. The market rallied over the past week in anticipation of the stimulus bill only to have a huge sell off once we find out the details of the bill.

So how can you use this information to make money? Just look for the next plan to come out of Washington and determine the companies most likely to benefit from the plan. You can almost count on them rising from the first day the plan is mentioned and see them tank once again after the plan is approved or fails.

With the anticipation of each new bailout plan, the volatility skyrockets, so if you're an option trader, look to take advantage of that situation by selling spreads that are "out of the way" of the market. Put spreads as the plan is being developed and call spreads after the release. It's been as predictable as anything I've ever seen in 20 years of investing.

Buy the rumor and sell the news. Some things never change.

You MUST learn to trade options if you want to survive and prosper in 2009

2009-02-06T09:25:00.000-08:00

Millions of people around the world have seen their retirement dreams crushed as a result of the bear market. Most of those people trusted a broker or financial advisor to help them build a diversified portfolio that would help them weather any market condition and still see their money grow over time. They did everything right, following the textbook of the traditional investment community.

Those people are now looking back at the past 10-12 years and seeing that they have made nothing! That's right, nothing. Call it the decade of nothing. I don't care how well diversified you were over the past 10 years, if you owned stocks and did nothing, you've lost 10 years of potential compounding of your investments. Most people I talk to would have done better had they stuck their money in long-term CD's or even their passbook savings account at the local bank.

Now as they near retirement, they are coming to grips with the fact that they don't have enough money in their nest egg to send to work to generate the income they need to sustain the current lifestyle they live now in retirement. Retirement just got pushed way back for most, or eliminated altogether.

Buy and hold works if you've got enough years to make up for the bad ones you're most certainly going to experience over your lifetime of investing, but if the bad years come right before you're ready to retire, you're hosed.

It's my opinion that 95% of investors fall into this category. They ALWAYS lose money when the market is flat or down. Very few investors make money when stocks are not going up. Which group are you in? What are you going to do about it? Doing nothing may be the biggest mistake of all.

It's also my opinion that the majority of investors in the 5% group that actually made some money in the past year used options to protect themselves and profit when stocks were flat and down. The biggest weakness most investors have, and ALL traditioinal brokers and financial advisors have, is that they are afraid to sell anything. So they hold on to everything and watch it decline substatially and deal with the anxiety and stress that comes with watching your life savings go up in smoke.

There are two things that every investor needs to do immediately if they want to survive and prosper in 2009 and beyond. Things are tough right now and I expect them to get much worse before they get better.

First, you've got to stop losing money when the market tanks. If you've ever had a catstrophic investment, one that lost 40, 50, 60, 80 or even 100% of it's value, I've got three words for you, "Shame on you!" Make it your New Years resolution to never have a catastrophic investment again. It's simple to do, just use stop loss orders and make sure you put in them the moment you make any new investment. My rule is never lose more than 10% of the money I put into any new stock investment and 50% of any new option investment.

Use automated orders to eliminate emotions and stick to your stop loss levels. NEVER lower a stop loss. If you get stopped out of an investment and it begins to come back, just buy it back. Commissions are cheap, staying on the wrong side of a stock or the market is expensive.

The second thing is learn a few strategies that actually can make a profit if a stock is flat or down. Other than shorting stock, the majority of these strategies involve the use of options. The benefits of options trading has never been more apparent.

You can use options to create a limited risk and unlimited reward trade on virtually any stock. Using this basic strategy, you can create trades to profit in both rising and falling markets. Millions of investors are discovering the power and benefit of options trading as evidenced by the explosion of option trading volumes in recent years. There is a reason options trading is exploding, because they can give you an edge to profit in any type of market conditions.

Options are given a bad name by many as being too risky, but in reality there are a number of option strategies that are less risky than owning a stock or mutual fund. Those false rumor are simply used by financial professionals who don't understand options and don't want to accept the liabilty of having their customers trade an instrument they don't understand.

Most investors I meet have NEVER made money on a stock that dropped in value after they invested in it. They simply don't know a single strategy that will make money in a falling market, so they are resigned to hoping their losses are small, rather than planning to eliminate their losses and potentially replace them with profits. That's like taking off for a drive in your car and only being able to turn left. That may work in the world of Nascar, but that won't get you to your destination in real life. The secret to making money in a bear market or even a flat market is knowledge. If you don't take the time to learn how to use options to protect yourself and profit when stocks are not going up, you'll continue to lose every time the market drops.

I've spent the past 12 years of my life teaching investors around the world how to use options to profit in any market condition. Last year I published a book titled, "Build Wealth in any Market" that outlines the specific strategies and tools you need to stop losing money and start making money when the market tanks. You can get a copy at www.traderslibrary.com for the best price online.

There is nothing more heartbreaking and devastating than losing money we worked so hard for. So stop it! Learn to trade options today and give yourself a chance to get into that 5% group that actually makes money when stocks are flat or down. Every day you wait is literally costing you money. A little investment in education will pay a lifetime of returns in the form or fewer catastrophic losses and more profits when stocks drop.

Visit my website at www.rossjardine.com to get my latest books and courses on money and investing. Make an investment in education in 2009 and I promise you'll enjoy the returns over the rest of your investing life.

Bailouts, Stimulus Packages and reality

2009-01-27T11:24:00.001-08:00

With all the talk about bailouts in Washington and on main street I thought I'd throw out my two bits on the subject. Governments around the world have reacted to the economic crisis by pledging trillions of dollars in corporate aid to shore up the banking and credit markets. Their collective actions are unprecedented in world history. A great deal of this money has already been spent and much more is on the way as soon as details of President Obama's stimulus package are negotiated and the bill is passed.

From where I sit (the cheap seats) it appears that all this money has done little to restore the confidence in the banking and credit systems that are so crucial to our economic prosperity. If people don't trust these systems and start spending money more like they have in the past, there is no amount of money that can make these problems go away. Consumer are the only sure solution, but they won't spend if they lack confidence. Fix the confidence problem, and you'll solve the economic ones along with it.

The wealth that drove the economy higher for the better part of the past 5-6 years was created from easy access to credit. This easy credit helped push property values artificially higher, along with many other goods. Now that the easy money well has gone dry there are far fewer dollars chasing a glut of overpriced real estate and we're seeing the natural correction in prices. The prices of the past couple of years weren't justified and so we've got a painful correction to endure. This correction is impacting people at every level of the economic food chain from the wealthiest to the poorest.

Businesses are seeing the slowdown in spending and trying to stay one step ahead of the correction by laying off thousands of workers to keep their businesses healthy, or at least stable. The dramatic loss of jobs is adding momentum to the slowdown as there are fewer people with money to spend. It's a vicious cycle that seems to be picking up steam rather than reaching the bottom of the hill.

The real crisis we're facing is more a crisis of confidence than a banking or credit crisis. Banks don't want to lend until they know the asset they accept as collateral isn't going to continue to drop in value. People don't want to spend for major purchases, like homes and cars, until they know the prices are at the rock bottom. If we have to keep waiting, the prices are just going to keep falling and the consumers are going to keep holding on to their precious dollars to make things even worse. There are lots of tremendous bargains in the stock market and the real estate markets, but that's not enough to motivate fearful consumer to part with their precious dollars.

So will all the bailout money really help us find a bottom in the economy and financial markets? I hope so, but I'm not too optimistic. Government has never been able to do anything efficiently and I don't think that's about to change. The people who are being targeted for the stimulus package are not those that will use that money to create jobs to help the economy grow, but rather people who will spend that money on basic needs to stabilize their financial lives. Remember those $600 checks that went out over a year ago to stimulate the economy. All that's left from that round of bailout money is the debt that it created for the next generation of American families. Giving away money will never solve the problem. Never has - Never will!

Unfortunately the people who can do the most good to turn things around, business owners and corporations, are about as out of favor as any group of people could be right now. Everyone hates the executives who took the million dollar pay package and flew on the private planes and they want to make them pay. It's a political impossibility to think that these villains will get any love in the upcoming stimulus package. It's simply not going to happen. So fewer businesses are going to be started and fewer existing businesses are going to expand. Government simply can't fill that void. Unfortunately punishing businesses (deserving as they may be) isn't going to help grow the economy or create any new jobs.

The stimulus money will only stabilize things for the short-term and it won't create nearly as many long-term jobs as the politicians want us to believe. Once that fact is exposed, we'll be right back on the slippery slope with one major difference, we won't have more billions or trillions to throw at the problem to fix it.

Let's face it, we have just lived through a period of unbridled excess and we're going to have to pay a heavy price to get things back in line. We collectively broke the first rule of finance, "live within your means."

Gone are the days when a home was your "best" investment. From now on, where you chose to live is a lifestyle choice. The myth that saving a portion of all you earn in a 401k or IRA and investing in a well-diversified portfolio of stocks will get you to a secure retirement has been exposed. Until we as a country come to grips with the fact that we simply can't afford all the government programs our politicians have created to reward their loyal constituencies, we're not going to really fix the problem.

If you want to survive and prosper in these tough economic times, you must take action now. You can't trust anyone to do this for you. It's simply too important to trust someone else to do for you.

I've created a blue print to help you in the form of my new book, The Golden Rules: 7 Steps to a Debt-Free Wealthy Life. It's available on my website at rossjardine.com for half off the cover price (Just $10) for a limited time. Get your copy today and get on the path to a debt-free wealthy life.

The 3 Fatal Flaws to avoid in 2009

2009-01-06T11:24:00.001-08:00

2008 will be a year to forget for most investors I know. With the major market indexes plunging by 40% or more, many investors lost their shirt. I saw a story on the news today recognizing the leading money managers of the year and found it interesting that these managers were winning awards even though their performance in 2008 resulted in their clients losing money. I don't know about you, but I don't find much consolation in "not losing as much" as the major market indexes. A loss is still a loss.

The only investors who made money in 2008 were those that used bearish strategies, like shorting stock and any number of option strategies. This year, more than any in my investing lifetime (0ver 20 years) separated the winners and losers based on strategy. If you don't know any bearish strategies or when to apply them, you lost money in 2008.

So the big question I hear most investors asking now is, "is the worst behind us, or is 2009 going to be more of the same?" Given the unprecedented steps taken by governments around the globe, I wouldn't rule out a quick recovery in the market, but I wouldn't bet on it either. If all the money and credit being pumped into the world economy doesn't do the trick, what tools are left to stop the next meltdown? Not many.

So here's what I think every investor needs to look at if they want to survive and prosper in 2009. I call them the three fatal flaws. Time for a little honest self-evaluation.

Fatal Flaw #1 - No Plan.

Most investors simply have no plan. Ask them to describe their trading or investing plan and they may describe a strategy or two they use, but most simply can't provide specifics in such things and portfolio and trade management, risk tolerance, profit objectives and other very important things.

So to start 2009 off right, you need to create a plan, and it should be written. Your plan needs to specifically define your goals, objectives, strategies, tolerance for risk, profit and loss targets and decision making process. The more mechanical you can become in your decisions, the less emotion will influence them. The hardest part of creating your trading plan is to keep it focused. If it takes you several pages to define these things you're likely not focused enough. Keep it simple applies here.

Fatal Flaw #2 - No protection

If you learned one lesson in 2008, I hope it's that you need to have a plan for when things go wrong. The strength of your emotions will make it nearly impossible to make a wise decision in the heat of the battle (when the market is tanking) if you've not clearly defined those things in advance.

The conventional wisdom of the investment community has always said that if you're well diversified, you can ride out anything. If you believe that, chances are you've made nothing over the past decade, even though we've had two incredible bull markets followed by two painful bear markets. I don't believe buy and hold is the answer anymore. I'm not advocating day trading either, but to survive the volatility we've seen over the past decade, you need to be "actively involved" in your investments. A simple stop loss on each new trade is a good start. The low cost of trading makes it easy to get back in if you get stopped out before you wanted to, but if you set a stop loss point with each new trade you place in 2009, you'll eliminate completely the catastrophic losses that most investors experienced in 2008 for the rest of your investing life.

Think about this. If you took the total amount you lost on your worst trade this year and figured out what percentage of your overall returns you could have saved by eliminating that one loss, you'd likely see a simple way to do 1-2-3% better every year going forward by simply eliminating one catastrophic loss. A stop loss can do that.

Fatal Flaw #3 - No strategies

There's many strategies that will profit in virtually any market condition. The problem is that most investors only know the ones that work when the market is going up. If you've never made money on a stock that fell in value, you've got a great lesson to learn. As you start 2009, you'd be wise to expand your strategy base to include a few bearish strategies. Get a book, attend a seminar or webinar, or hire a personal coach to teach you, but please make an investment in education to expand your strategy base.

I'd specifically suggest learning to use options as they offer investors a simple way to play directional moves up or down in the market with limited risk and unlimited potential. You can also use options to hedge your stock positions against the unexpected. They are not as complicated as many make them out to be.

If you are a victim of any of my 3 fatal flaws, now is the time to take action. I tell people that if they don't what they are doing, it's never a good time to invest, but if they know what they are doing, there is always opportunity in the stock market. Now that interest rates are nearly zero, you're going to need to invest if you want to reach your retirement goals. Your goal should be to learn to make money no matter what the market is doing. It's possible.

Best of luck in all your investments.

Ross

3 keys to success in this financial crisis

2008-09-16T05:46:00.000-07:00

These are shocking times for many people as they witness firsthand the erosion of the equity and value of their homes and begin to feel the financial pain and uncertainty this has brought into their lives. Yesterday the markets dropped more in a single day than they have in any day since 9/11. Pundits will be out in force today telling you things will come back. They always have and this time will be no different, or will it? I'm not convinced it will, at least not very quickly. So if you want to survive and prosper in the next few years, I've got 3 keys that you simply can't afford to ignore.

The cause of this crisis is clearly uncontrolled greed. It's not the bank's fault of the government's. We have nobody to blame but ourselves for wanting more than we could afford. The market simply filled the biggest need that we had and created lending programs that allowed us to access sources of capital that allowed us to raise our lifestyle without inflicting much immediate financial pain.

The economy was awash in lots of easy and cheap money that we used to drive up the cost of everything from homes and condos, to cars, boats, clothes, and food. Now the easy money is gone. The shell game the banks and lenders were playing has been exposed in a very public way. As a society, we broke the #1 rule of personal finance "live within your means" and now we're all going to have to pay a heavy price to bring things back into their proper perspective.

The irony in all this is that at the time we're all feeling the most pain, there are some of the greatest opportunities that will be leveraged by a small group of wise investors to create amazing wealth. Will you be one of them? Not if you're sitting on the sidelines.

When times are tough the typical thing most investors do is run for cover. They move to cash or money market funds, they stop opening their brokerage statements thinking it will make the losses they would see easier to take. Doing nothing in times like these will assure that you get the worst of what the market has to dish out. Now is the time for action, not paralysis

Here's 3 essentiall keys to help you weather this storm and come out on top when this crisis ends.

1. Always plan for the unexpected. In just the past 4 months we've had a the worst single month in the markets since the great depression, and the worst one day drop since 9/11. More bad news will inevitably come out and further dampen and already dismal investor sentiment which in turn will lead to more selling and more lost money for most investors. It's not too late to put up the safety net if you haven't already. If you used stop loss orders on your holdings, congratulations the money you saved will give you a solid leg up when the market turns again.

I tell people who take my courses that if they ever have a catastrophic loss after they finish my class - Shame on them! That's right. If you make a rule to never lose more than 10% on any single investment and use the tools at your brokerage firm to help you stick to that rule no matter what the market does, you'll be able to eliminate completely the catastrophic losses from your future. Imagine what an extra 2-3% overall would add to your retirement account if you didn't have that one massive loss each year. Compound that savings over your lifetime of investing and we're talking some serious money.

So key number one is to cut the bleeding. Put up the safety net and stop losing money when the markets tank.

2. Learn to trade options and ETF's. If you've been told options are risky and that you have no business trading them, you need to take a second look. I personally don't know how any investor could have survived the carnage in the markets in 2008 without using some simple option strategies. The fact is that a well diversified portfolio won't help you weather this storm. That's the primary risk management strategy employed by the traditional brokerage community (I'm talking about all those companies on the verge of bankruptcy and insolvency). I guess they forgot to practice what they preach to all their clients. The fact is that diversity is way over hyped. If you're well diversified, it just means you have more stocks that went down this year.

I read a story recently by a very successful investment manager who made the comment, "diversity is for amateurs." When I meet very successful investors, the majority got rich by making substantial investments in the right sectors or stocks at the right time. They also all practice risk management in every trade they make.

Options will give you a tool to play either direction with limited risk and unlimited potential. This is the single best way to play the bearish side of the market in my opinion. You can also use options to hedge the positions you own in stocks or mutual funds against unexpected drops in value. When these holdings hold their value, the options will help you generate consistent and reliable income from your investments, even if they don't go up in a value.

The wide range of index and sector ETF's now available offer so many advantages over picking individual stocks that I'm amazed anyone buys individual stocks anymore. If you can spot a trend, you can pick an ETF to play it. If you want a little more leverage, you can now find an ETF that offers 2:1 leverage to play the market in either direction. Check out the QID and QLD for the nasdaq and the DIG and DUG for oil. If you use these vehicles, you can always invest in something that's going up.

So spend a little time and money and learn to trade options and ETFs. You won't be able to survive in the future economy without using these powerful tools and strategies. They are some of the most efficient vehicles for investing available. They are almost universally easy to use, and cheap to trade when compared with traditional stocks and mutual funds.

3. Stop listening to your broker and financial advisors and take control of you own money. I have a saying and it's that, "nobody takes care of Ross' money like Ross." It's the rare exception when a broker or financial advisor will actually watch your account and make the recommendations to sell or change strategy when the market trends change. They are taught to get your account so diversified that you won't get the best of the rallies, but you'll avoid the worst of the sell-offs. The goal of traditional portfolio diversification and management as taught by the major brokerage firms is simply to get you to the point where you don't feel the need to call your broker every day to talk about your investments. They simply don't have time to talk to you because they are too busy trying to raise more money to increase their assets under management. That's all that matters in their world. Their education is limited to asset allocation models and portfolio diversity. Most brokers couldn't recommend an individual stock or ETF to save them. The fees you'll pay are not in line with the value you receive.

Get an education if you need one and take control of your own money. You'll be happy you did.

My views on Microsoft and Yahoo

2008-05-05T14:31:00.000-07:00

Today the news came out that Microsoft is pulling their $40+ billion dollar offer for Yahoo. When I first read the story I couldn't help but think, "What are these guys thinking?" I believe Jerry Yang will forever be remembered for not accepting this generous offer. Too bad that one of the greatest entreprenuers of our generation is going to be remembered for something so negative.

Having started a few very successful companies myself, I sympathize with Jerry. Sometimes it's hard to let go of a business that is so much a part of you as Yahoo is to him. Unfortunately, often the guys who come up with the great ideas are not always the best guys to run the business, especially something the size of Yahoo.

From the stock standpoint, I think he blew a great opportunity to get an amazingly fair deal for the Yahoo shareholders. The number he and his board had in mind for the company was obviously a much greater number than the market valued Yahoo. Personally, I trust the market to set the value of a company and that's just what it did today with Yahoo shares. If the company is really worth $37 per share, why is it trading for $24?

I always wondered who came up with the concept of paying a huge premium over the current market price to buy a company. Yahoo just tried to play that game and lost.

Now Mr. Yang is faced with the challenge of building the company up in the eyes of the market to a value greater than the offer that was withdrawn by Microsoft. That's a tall order given the current state of the company and the market. I sure wouldn't want that expectation staring me in the face every day I came to work.

Personally, he also missed a huge opportunity to turn a new page in his life. To walk away on the top of the mountain with a ton of money and respect to build his next deal with. Now he may end up with less of both.

So here's my prediction. There are no better offers out there that will get the value they just passed up on this deal. In a few months when that become obvious the the Yahoo board and Mr. Yang, will be begging Microsoft to buy them at a lower price than the one they just passed on. We might have just witnessed one of the biggest corporate blunders of all time. Time will tell.

What Stock Investor is NOT!

2008-03-21T15:59:00.000-07:00

Because I've spent millions of dollars promoting my various companies and products over the years, I'm a pretty easy target on the Internet. I understand that it comes with the territory. Many investor like to do their due diligence online before getting involved with a new product or program and I applaud that. There are a lot of shady programs out there and it's always best to do some homework before spending your hard earned money. If that's what's brought you to my website and blog, great! You appear to be someone that has one of the most important skills you'll need to become a successful investor, skepticism.

There are many motivations for wanting to be a better investor. I've met many investors over the years and their motivations ranged from wanting to get a nicer car, a bigger house, get out of debt, send their kids to college and a million other excellent answers. Whatever the motivation, I know that investing has the potential to get you there...eventually.

Too many people have unrealistic expectations when it comes to learning about investing. I've been investing my own money for over 2 decades and I still don't know it all. I make stupid emotional mistakes just like I bet most of you have made at one time or another. It's a constant battle that every investor faces every time they put their money at risk in the markets.

I believe we've put together a great program to help anyone learn some very basic principles about investing. I'm confident that I can help you shorten the learning curve on the path to becoming a successful investor, but the most important ingredient for your success is you!

I've been teaching many of the same concepts and strategies for the past decade to thousands of investors all over the world. Many have enjoyed great success as they have applied the lessons I've taught and used the tools I've put together. I wish I could say that every single investor is successful, but that simply would not be true. Investing involves risk and that's something that none of us can control completely. It's something that we all try to manage as best we can, but sometimes it gets the best of us and we end up losing money. If you ever have someone tell you they never lose a trade, run in the opposite direction. Losing trades are one thing that every investors has in common. It's how they are managed that determines if they ultimately find success or failure.

I feel strongly that you should have a chance to check out my programs before you risk any money on my courses and tools. So that's what I do. It costs me money to allow anyone to get a free trial, but I feel strongly enough about what I've created that I'm willing to take that risk to afford you an opportunity to check out my program. All you risk is your time. I think that's fair and I hope you agree. If after your free trial you are not impressed, or feel you would rather go with another program, or simply stick with what you're doing, I say great! Thanks for giving my program a look and best of luck in whatever course you choose.

If you wish to continue on with my tools or invest in some additional training programs with my company, I believe you'll find them to be very professional, valuable, and fairly priced. I instruct all of my staff, my sales team, my coaches and support staff to always be professional, tell the truth and do everything in your power to make our customers happy and successful. In my company we have a very clear mission statement posted all over our office. It reads "Educate and empower people to make positive change."

My courses are not designed to be a black box that spits out the stock of the day that's guaranteed to make money. It's not a system in that sense of the word as it's commonly used in the day trading world. I consider my program to be more of a process or a checklist of activities designed to help you make better investment decisions. No two investors are likely to always find the same investment opportunities using this simple process.

I'm not going to be giving you my stock picks or ever tell you what to do with your money. Those are decisions that only you can make. If that's what you're expecting. Don't buy my programs. What you need is a good broker or financial advisor or maybe you should just buy a newsletter and follow the recommendations of someone you believe knows what they are talking about. I believe that only you know what's best for you and that you should learn how to invest your own money yourself. Get help when you need it, but ultimately it's too important to trust anyone when it comes to making the important decisions about how and where to invest your money. I'd like to help you avoid a few mistakes and gain confidence in your ability to make those decisions a little faster.

This isn't about doing it Ross' way. It's more about learning the best way to do it for you.

I often get asked what kind of returns you can expect when using my program. That's a very tough question to answer because I have no idea what your objectives are, what tools you'll use, what strategies you apply or how disciplined you'll be in following the simple process that I teach. My goal in creating this program and these tools is to give you a realistic opportunity to beat the market, any market - any time. Only you can determine how much risk you're willing to take to reach your objectives. I just want to teach you a variety of strategies so that you'll be armed with the knowledge to find the best opportunities no matter what the market is doing and be able to apply them correctly.

It's not realistic to think that you'll actually do every strategy I teach in my courses. I don't use them all myself, but I understand them all and can teach them to you. What you will do as part of the learning process is determine the best strategies for you. Those that fit your objectives, your tolerance for risk and the size of your investing account. In my course I teach both bullish and bearish strategies because the market doesn't always go in one direction and you must learn to invest in any market condition if you're ultimately going to survive today's volatile markets. I'll expose you to a wide variety of strategies and approaches and you'll pick the one to start with. Maybe that's the only one you'll ever need. I know that I use a couple of strategies over and over again, month after month, because they fit my lifestyle and help me accomplish my personal objectives. It works for me and I'm happy with the results. You need to find what works for you. I've designed my courses and training to expose you to a wide range of stratgies and approaches so you can get a good fit. That's very important. You're likely not in the same situation financially or experience wise that I am, so it's unrealistic to think that doing exactly what I do would be best for you. At Stock Investor it's not one size fits all, its more like a size for every investor. Through our unique training programs I'm confident you'll find a good fit that works for you. That's a success if you ask me.

In my experience most investors want to buy stocks that are going up, no matter if the market is going up or down. Right now the market is clearly in a bearish trend, but most investors are spending the bulk of their time trying to find the one or two stocks that are going up against that trend. If you look hard enough you'll usually be able to find a few needles in the haystack, but wouldn't it be easier to find the needles when the entire haystack is full of them. That's why you'll find in my courses a great deal of training on recognizing and following the trends in the market. If you know which direction the current is flowing, it's much easier to get into an investment that follows it. That's a mistake many investors make over and over again. I will teach you a simple process for spotting the trend in the market and then it's up to you to choose the best strategies for making money in that type of market. I'll teach you both bearish and bullish strategies so you're prepared for anything. I'm also a big fan of using cash as a strategy. For some the best strategy when the market is falling is to just sit in cash and collect some interest until it's safe to get back in the market. I believe that's OK too. Interest isn't such a bad return when stocks are falling, especially if you don't know how to use bearish strategies.

I wrote a book on investing in a bear market called the Bear Market Game Plan. When the market turns bearish, like it is now, you can't keep using bullish strategies and expect to make money. It's hard for most investors to get comfortable investing when stocks are going down, but there is great opportunity if you do. The market tends to drop much faster than it rises, so often bearish investments have great returns in short periods of time. It's all about timing. Knowing the trend and following it.

One other think I want to make perfectly clear is that Stock Investor is NOT a seminar company. Because of my severe hearing loss, it's difficult for me to do seminars anymore. I love to speak and teach in seminars. But for most people it's a poor way to learn. There is too much information in too short a period of time and we physically and mentally just can't absorb it all. Seminar are also very expensive to put on and that's one reason they cost so much to attend. I've built some of the largest seminar companies in the business, so it should say something that the company I have now is NOT doing seminars.

All of my training programs are designed to incorporate the best learning techniques available. My courses are taught on video, over the web, through printed materials and exercises, and for those that would like a little extra help, you have the option of working witha personal coach or mentor. you choose the approach that fits your personality and budget. You learn a little bit at a time and then have time to apply what you've learned before you go on to the next topic. You control the pace so you can keep up and absorb it all. That's how adults learn best. Bit by bit over time. Learning to invest will be no different.

I do teach a few seminars but only as a bonus to those who have gone through my basic courses or coaching programs and would like to meet with me and my team in a small intimate setting for some real hands-on, real-time instruction. When I teach seminars I spend all the time teaching. I'm repulsed by companies that say they do seminars and when you go all it is is a hyped up sales pitch for something more expensive. I think the seminar industry has really lost their way in that regard. I still accept invitations to speak in other investment seminars from time to time because I really enjoy it, but that's not the business stock investor is in. I just returned from three weeks in Europe speaking in a series of seminars on how to invest with Options in the US markets. That's one of my favorite topics and it was a lot of fun to share it with a great group of new investors.

Ultimately I'd love to be your teacher and I hope you're a star student. Like I said earlier, I've been teaching the same stuff for a decade and some students end up making more with what I taught them than I make, while others fail miserably. The difference is not the training or the tools, but the person at the controls. You control your own destiny when it comes to investing and your money. If you need to be rich next week or next month, my programs are not for you. Investing is not get rich quick. Sure you can make money fast, but it won't happen every time and you shouldn't expect it. I'd rather look at investing as get rich eventually. That's more realistic. Like any other pursuit it's likely going to take some time. I like the odds of getting wealthy investing over starting a business, or waiting for a big inheritance.

Whether you learn from me or someone else, I hope you'll take the time to learn how to invest before you put your money at risk in the stock market. If you don't know what you're doing, it's NEVER a good time to invest, but if you learn how to do it right, there are always great opportunities in the stock market.

I'm very biased, but I think investing is the single best way for most people to achieve some level of financial security in their lifetime. It's not going to happen over night. That's certainly not what I promote or teach. You're also going to make mistakes and have losing trades from time to time. That's an important part of the learning process.

But if you manage things well and stay with it for the long-term it can work for you. I've seen in many times as students have shared with my their exciting success stories. I'm just a big fan of investing. It's my business, my hobby and my passion.

I'm not afraid to say that I think I'm one of the best investor teachers around. So don't believe everything you read on the internet. Don't take anyones word for it when it comes to spending money on investor education. I invite you to check out my programs and products and judge for yourself.

No matter where you decide to get your education I applaud you for wanting to learn before you start investing. Investing in an education first is one of the best investments you'll ever make. Happy trading. Ross

Is now a good time to invest?

2008-03-01T02:56:00.000-08:00

I get asked that question all the time. What I usually tell people is that if you don't know what you're doing, it's NEVER a good time to invest. If you know what you're doing, it's ALWAYS a great time to invest.

When the market is falling as it has since the start of 2008, most investors lose money. It's a fact. I would guess that less than 5% of investors make money when the market falls. Are you one of them?

I think one of the biggest myths in the investing world is that if you're "well -diversified" you can ride out any dips in the market. Ask anyone who was well-diversified when the last bear market hit in 2000 and they will all tell you the same thing. I lost a ton of money and I'm still trying to get it back. Diversification is a false sense of security.

When the market gets rough there are two things you simply must do if you want to survive and prosper, protect yourself and change your strategy. The first is mandatory and the second is optional.

Before you make another trade you need to protect the ones you have. Often when I'm speaking to groups of investors, I ask how many had a catastrophic loss in their account in the past year. Usually almost every hand goes up. I then ask them if they could have eliminated that one bad investment from their account how many could have done better overall by 1-3% for the year. Again, almost every hand goes up.

What does all that mean. It means that for most investors the quickest way to make another 1-3% per year for the rest of their investment lives is to eliminate from now on the worst investment they make each year. Honestly, that's a VERY easy thing to do.

There is not a high-wire act or trapeeze artist that would ever consider going out on the wire without first putting up a safety net. It's not that they expect to fall into it, they don't. But if by some freak event they fall, they are happy the net is there to catch them. That's the same way you need to be with your investments.

Put up the net every time you make a trade. It's called a stop-loss order. It won't cost you a dime to place it with your broker. They only earn a commission to FILL orders. You'll only pay a commission if you hit your stop-loss price and the order is filled. You can place those orders today as "good until cancelled" and they will stay on the books at your broker to protect you against the unexpected dip in the market.

I suggest that you use a 7-10% stop on stocks and 30-50% on long option positions. If you ever lose more than that on a stock or option trade, SHAME ON YOU! It's very easy to protect yourself with a stop order if you just place it. Get in the habit of doing it every time you place a trade. The time to place a stop is not after the stock is already moving against you. That's very difficult to do with the powerful emotions we will be feeling. Do it first when you're not expecting your stocks to fall and you'll be happy you did. Adjust your stops as the stock rises to lock in your profits.

Secondly, you need to change your strategy when the market is falling. Most investors have NEVER used a bearish strategy in their lives. They think that diversity is the only option and they're about to find out that diversity will not protect you from losing money when the market tanks.

There is only one sure way to avoid losses when the market drops - Move to Cash. Unfortunately most investors don't believe cash is a strategy. I think it is and it's one that's used far too little. Ask anyone that lost their entire portfolio in the bear market of 2000-2003 and they will all tell you they would have much rather gotten the return on a passbook saving account at the local bank. That was an option. Why didn't they take it?

Before you can apply a bearish strategy you first have to be able to recognize when the trend changes. Here's a few tips to help you stay on the right side of the market.

I like to use moving averages to help me determine which direction the market current is flowing. I use a 21 day exponential moving average to spot short-term market trends and a 100 day EMA for longer term trends. I have a simple rule that I follow - I will never buy a stock until it crosses above it's moving average. It's that simple and it works. A stock will never make a big move when it's below it's moving average. The big moves come when it's above. So don't buy stocks that are below their moving averages and you're going to avoid some real losers.

Most stocks are going to follow the trend of the overall market, so I make sure I check the major market trends first. Just add the QQQQ, SPY and DIA to your portfolio and check a chart each day along with your other holdings. These ETF's will help you spot the changing trends in the major market. When these stocks are below their moving averages, chances are most stocks that make up these indexes are also going to be below theirs.

When stocks are below their moving averages you need to be content to earn interest in your money market account and preserve your capital, or consider applying a bearish strategy. If your analysis leads you to conclude that the dip will be short and the long-term up trend will continue, you may consider hedging your postion with options. The covered call strategy is one ofthe most basic and underused strategies available to all investors. If you'd like to learn more about covered calls, I would invite you to visit my website at stockinvestor.com and check out my variety of training programs. You can also check out optionsXpress.com and learn some basics in their education area.

A covered call is only a temporary short-term solution to a falling stock. Once the stock falls farther than the income you collect from the covered call, you're losing money that you started with. The only safe solution to avoid further losses is to sell the stock and move to cash.

When the market is bearish you can also use option strategies that allow you to profit even if you don't own a stock. I like to use a bearish call spread to make money on stocks that are tanking. In this strategy you basically sell a call option that gives another investor who you will never know or meet the right to buy shares of a falling stock from you at a price that is higher than the current price of the stock. Think of this as finding the worse stock you can find and then getting a sucker to pay you for the right to buy it at a higher price. That's what you're doing. Then you hedge your bet by using some of the money they are going to pay you for that right (the premium on the call option) to buy some insurance in the form of another call option with a higher strike price than the one that you sold.

If the stock doesn't move or continues down, you keep the premium you collected as your profit. If the stock rises higher than the strike price of your call plus the premium you collect you begin to lose money. The maximum loss is the difference between the strike prices of the call you sold and and the call you bought less the premium you collected. That's the most you can lose.

You make money in two out of the three possble outcomes (down and sideways) and can even make money if you're a little bit wrong and the stock goes up, as long as it doesn't go up a lot. I like the odds of that and it's one of my favorite strategies in a bear market.

I perfer this to buying puts or shorting stock because with those strategies I will only make money if the stock drops and I will lose money if it stays the same or goes up. The attraction of those strategies is that the profits have no limit, but I'm content to take the better odds on a limited profit and limit my risk substantially as well.

Bottom line, in a market like we're had thus far in 2008, you need to first get a stop in place on every stock you own. If the stock is already below it's moving average, you're a little late, but still do it, because it could get worse. Don't be afraid to sell those losers and move to cash. You'll likely have a better chance to earn back your loss on a new investment when the market improves than waiting it out in a bad investment hoping it gets better. HOPE is NOT a strategy.

If you protect yourself and apply bearish strategies when the market trends turn south, you'll be able to survive and prosper in any market.

Happy Trading.

Ross

Who is Ross Jardine?

2008-01-24T15:26:00.000-08:00

Welcome to my blog! My name is Ross Jardine and I've been teaching and training individual investors for over a decade on how to take control of their personal investments and profit in any kind of market conditions. My introduction to investing came in the form of working in the commodities brokerage business as a fresh graduate right out of college in 1987. I was instantly hooked. While I loved investing and being a broker, I struggled with the obvious conflicts of the brokerage business and decided to pursue my passion from the "other side of the phone."

I'm an individual investor just like you. I've been active in the markets for over 20 years and teaching and training others how to succeed is my life's mission. My life took a dramatic turn in 1994 when I was introduced to the internet by a friend and neighbor. I can still remember leaving his office that day after seeing the online world for the first time and feeling like I had just been let in on the greatest secret in the world. I instantly realized this new technology would change the way business was done forever. I knew I either had to jump in or it would pass me by and I'd look back years later and say, "I wish I would have gotten involved in that earlier."

I decided to take my own business to the web. I created and marketed sports collectibles for the NFL, Indy 500, Kentucky Derby and America's Cup. My big claim to fame was minting the commemorative coin that was tossed at the start of the Super Bowl each year. It was just a few months before the Super Bowl when I discovered the internet. Coincidentally, I had just returned from a trip to Miami where the game would be played where I had the opportunity to meet the members of that year's Super Bowl host committee.

On a wild lark, I called my contact in Miami and asked if I could build a website for the Super Bowl. He said they had no money left, so I offered to do it all for free. After a few days he called back and gave me the green light. I was able to register the name superbowl.com because nobody had it. (that's a whole story in itself I'll save for another day)

We built a simple website in less than a week with all the info on the big game and an online store where fans could buy my coins as well as all the shirts, hats and programs that would be sold at the game. I set up a drawing for two tickets that I bought from a scalper and started promoting it all over the net. It was a huge success. We got over a million hits, which made us one of the busiest websites on the internet that year. But more importantly, I sold tons of coins, shirts, hats and programs to fans all over the world. I like to think I was doing ecommerce before the term was even created.

I used my success as a springboard to teach other business owners how to do business online. I offered them training and a place to put their electronic storefront. I called the business iMall and it was one of the first and most successful online shopping sites on the internet.

I soon found myself, almost by accident, travelling the country speaking in seminars on how to do business online. I ultimately sold my business to a seminar company who later sold it to Excite@Home for hundreds of millions of dollars in stock.

That experience of being a pioneer in online business exposed me to my next passion, seminars. People were starving for the knowledge to get on a path to financial independence. Live seminars were a perfect way to deliver that training. I had never done any public speaking in my life, but after overcoming the natural fears of being in front of a crowd, I fell in love with it. I love speaking and teaching. My friends used to kid me that they could put in a quarter and I could speak for 8 hours.

I decided to team up with a good friend, Scott Elder, who had helped me with my iMall business and create a new training business that was unlike anything anyone had done before. As a result of the tremendous success of my iMall business I now had more time and money to pursue my passions and that brought me right back to investing. I wanted to create seminars that really provided great value for the time and money people spent to attend them.

At that time investing online was in it's infancy. Everyone wanted to learn how to invest in the stock market. The tools and information that was now available online was far superior to anything I had access to just a few short years earlier as a broker. Unfortunately it was tough for the average person to make sense of all the information and tools that were out there. Quite simply, people were drowning in information and still starving for knowledge.

I taught Scott a few of the strategies I was using to manage my own money and showed him some of the tools that I had discovered online that made the process and decision making fast and easy. Scott made more money after a few weeks doing it himself than his broker had made for him in over ten years. He was hooked.

We decided that it was time to take this simple process to the masses of people searching for information on how to invest online. We started a new seminar business called "Online Investors Advantage." That was 1997 and we were right in the midst of the dot com boom and the stock market was on everyone's mind. Our business was a huge instant success. We revolutionize the industry by offering one of the first "money back" guarantees in the seminar business. If someone didn't think our training was worth the time and money they spent to attend, they could simply turn in their stuff at the end of the class and get 100% of their money back. If we didn't deliver value for the money, we would have been out of business the first week. Nobody at that time had the guts to offer such an amazing guarantee, but we knew our training could potentially create a return for our students many times the price of tuition, and we were right.

Within a few years we had taught tens of thousands of investors how to use our simple process and powerful tools to take control of their investments. We conducted seminars in over 20 countries around the world, including Australia, Dubai, England, Singapore, Hong Kong, Guam, and South Africa. It was so rewarding to meet thousands of individual investors from every walk of life and see their lives change as they learned to invest and started to see the fruits (profits) of their new found knowledge.

At the peak of the dot com bubble we were acquired by a small internet holding company. Our hope was to have the millions of dollars in profits we were earning be rewarded with the crazy multiples that were being lavished in the stock market on companies like Yahoo and Amazon and many others, most of which were still not making a dime. It was a great plan, but the dot com bubble burst a year later and the entire stock market slid into one of the worst bear markets since the great depression. While our business had enjoyed annual growth of 100% or more in our first three years, we were happy that we were able to sustain the business during a time when the many investors lost fortunes in a very challenging market.

During this same time the company that provided the technology and tools we used in our seminars, Telescan Inc. in Houston Texas, was on the verge of collapse and we were faced with the prospect of losing one of the key elements of our training programs, our website.

Over the course of the next year, we decided the best course of action would be to merge the two companies together, so in 2001 we created a new company called Investools and completed the merger between our company and Telescan. Our plan worked and we were able to survive the bear market with the same tools and training intact. Investools continued to flourish becoming a leader in the investor education industry. I'm very proud of what we created and the fact that we were able to touch so many people with our powerful training. Fortunately for us, the bear market soon ended and a new bull market took off and with it, the interest in investing began to grow again.

In 2003 I decided it was time for me to step back and simplify my life a little, so I resigned from Investools and spent the next couple years enjoying time with my wife and four wonderful kids doing some of the things we'd always dreamed of doing. We travelled the world, built a spectacular mountain retreat near Park City, and I played a lot of golf. I still kept active in the markets, but I retooled my approach to allow me to enjoy my new lifestyle without having to sit in front of a computer every day to track my investments. I learned a valuable lesson in my retirement, you can be an active investor AND have a great lifestyle too.

After a couple years away from the business I realized I still had a great passion for sharing my knowledge of investing and I also learned that you can only play so much golf, so I decided it was time to get back into the business of teaching investors how to succeed in today's challenging stock market. Together with my good friends Scott Elder and Mike Gillespie, we started a new business to teach investors the simple process and strategies that I had fine-tuned during my early retirement to help individual investors enjoy success in the markets without sacrificing their lifestyle. We called our new company Stock Investor.

We also started a second company to allow other companies to leverage our unique approach to training for their own methods and tools. We knew that the best way to teach an adult wasn't in a seminar where they get overloaded with the volume of information in such a short period of time. Most people are not able to remember much of what they learned in a seminar a few weeks after they return to their regular life with the responsibilities of work and family.

Our approach to training was to deliver the information in bite-sized chunks over a longer period of time with lots of practice in between lessons and a chance to review the material in a personalized session with an investing expert. It's a lot like how a person learns to play the piano. They have periodic sessions with their instructor with lots of practice in between and over time they begin to master the piano step by step. That's exactly how we teach people about investing and it works! If you haven't tried it, I'd like to teach you too.

In addition to creating a powerful new training program for Stock Investor, we also applied our unique training methodology to some of the biggest names in the world of investing, like Investors Business Daily, Zacks and OptionsXpress. Once again (for the third time in my life) I've got to enjoy the ride on a business rocket ship. It's been another great ride and thankfully it's still going.

Those who know me or have attended one of my seminars know that I'm hearing impaired. Unfortunately my hearing has deteriorated to the point that it's very challenging for me to conduct live seminars because I simply can't hear well enough. That's why I created a powerful new way to deliver my training. With the aid of modern technology, you can now bring me home and enjoy my powerful investor training programs in the comfort of your own home, at your own pace, and for a fraction of the price you would have to pay to get this level of training anywhere else in the world. Everyone wins. I get to continue doing what I'm passionate about and you get the training you need to make money in today's challenging markets.

Through this blog I'm going to periodically share some of my insights and opinions on the markets. I'll share a few of my favorite strategies for making money that I've learned over the years and help you discover how you can use them to get on the path to financial security. Investing isn't easy, but it's not as hard as most people make it out to be. I'm often asked why I do this? Why not just stay home and do my own investing, play golf and not worry about anything else.

Honestly I could do that, but I choose to do both. You see with my simple and fast 3-step approach to investing I can enjoy a wonderful blessed life AND teach you how to have it too. It's not a question of either/or as many might think. I hope you benefit from my insights and experience and you get some small measure of the success that I've been able to enjoy for yourself and your family. There is no better job than being an investor, but it's still just the best part-time job you could ever have.

If you're ready to get started, check out stockinvestor.com and I'll give you your first lesson for free. Maybe the next life I'll change for the better will be yours!

Happy Investing.

Ross

2007-10-30T12:36:00.000-07:00

Coming Soon!