Data for Wall Street Investors – September 2010

There are two fundamental pieces of information that stock brokers like to hold back when asking a client to invest their money.  One is that you can beat the market.  The other is that you cannot.  Sounds confusing?  Allow me to explain.

 

The world of professional traders does not like the home gamers to know that they can beat the market.  The biggest assured profits in the industry come from running funds where they handle all the hard decision making (day to day trading) for the masses.  Some traders will even steer their investors into index funds that will behave exactly the same as the market (or an individual sector) as a whole.  By doing this, it allows them to collect entry and exit fees that allow them to make money regardless of the fund’s actual performance.  They do not want individual investors to know that it is very possible to outperform the market on your own.  Simple math tells us that the market is going to outperform 50% of the money invested into it, and it is going to underperform the other 50%.  If a person does their research, analyzes trends, and shows foresight towards upcoming performance – there is no reason that person cannot finish in the better 50% consistently.  There is numerous anecdotal evidence available for people that have routinely beaten the market on their own time – too much to believe that is just a series of lucky coincidences.

 

But wait a minute; didn’t I say that you also cannot beat the market?  Yes, I did.  The fact of the matter is, no matter what your broker will tell you during a down market, even good stocks rarely provide gains when the market is falling.  Some investors put their faith in a portfolio of “counter-cyclical” stocks.  These are stocks that are believed to perform better in market recessions or pull backs.  While there certainly are a number of stocks that do perform better than others during these periods (i.e. Wal-Mart, by virtue of offering cheap products), they still typically go down as the market falls (just at a lower rate).  Technically, one can still beat the market by losing less than the Dow, but – at the end of the day – he or she is still losing.  If one were to foresee the market as a whole falling in the near future, they would always be better off to pull his money off the table altogether as opposed to just shifting it into counter-cyclicals, where he will still feel losses.

 

Note:  Please bear in mind for the purpose of this article; I have ignored the concept of shorting (betting against the market).  While shorting can make a significant amount of money in a down stock or market, it is also a bit dangerous for the laytrader to consistently engage in.  While regular stock buying puts a limit on your losses (no stock can go below zero) and allows for limitless gains (the upper cap is only the price that the public is willing to pay), short selling allows for limitless (and immediate) losses and does place an upper cap on gains.

Heike Ziegler

HEIKE ZIEGLER – YOUR #1 MARKET MULTIPLIER & BRAND MAGNIFIER Heike Ziegler is Founder and CEO of HZH International Brandconsulting UG and CELEBRITY BRAND MOVEMENT a company of HZH INTERNATIONAL BRANDCONSULTING UG specializing in brand, market and business development of brands, retailers and technology service partners in the fashion & lifestyle industry. Heike´s goal is to help you achieve brand-performance and enter new markets faster and easier than you ever imagined. As a veteran fashion designer with an international background, Heike masters complex topics such as the organization of an Omni-channel platform from the ground up and the implementation of new technologies as a service. Future-oriented trading strategies are made possible through advanced automated marketing and the analysis of the difficulties of users (brands & retailers) with a focus on the development and expansion of their intensive B2B relationships. Heike Ziegler provides solutions to strengthen the business performance of hundreds of fashion brands and retailers across Europe, from support through dedicated service networks and data conversion from marketing to providing a complete retail platform for brands and retailers to bring about long-term results. HZH-IBC serves as a platform for e-commerce, web application services/professionals, and for the creation of automated online marketing for the development of Omni-channel e-commerce solutions and trade applications for brands and retailers in the fashion & lifestyle sector. To transform the HZH-IBC platform into a marketplace where fashion and lifestyle brands meet with the trade for the successful sale of products and the joint business development, existing co-operations are being expanded and new partnerships are being developed. If you have any questions about Heike Ziegler success strategies and services, please email hzh@internationalbrandconsulting.com or call +49-172-913-999-5 or skype heike.ziegler60.