Are You An Investor?
Steve Selengut
Private Income Coaching and Investment Portfolio Review for: "The Income Coach"
When an investor buys a security, he or she is hoping (not betting) that the price will go up to a defined and flexible target price so that profits can be realized. But, the investor is also prepared to add (selectively) to the positions taken at reasonable "downside" intervals to reduce cost basis and to increase portfolio yield.
An investor will be quality screening each acquired position based upon several fundamental measures, while assuring that proper "working capital" based portfolio asset allocation rules are being followed. Every investment will be income productive and each will be for sale at all times when a reasonable sell target is reached. Sell price reasonableness is a function of the availability of appropriate replacement securities.
Investors realize that the generation of significant income allows them to take advantage of market downturns; that quality only selection and strict diversification disciplines minimize frequent and/or serious loss taking, and that profit taking can occasionally as much as double the annual realized income production of their portfolios.
Investors learn from other investors while developing a sense of security in their own understanding of what quality, diversification, income production, and profit taking means to them, personally. They develop a patience with prolonged market movements in either direction, at all times preparing to take advantage of the next directional change.
Investors absolutely never ask for (or provide) tips, while instinctively avoiding the popular, the mysterious, the untried, unproven, or un(time)tested "newbies" that overrun the markets annually. They know that age and experience are essential quality measures. They discuss strategy and securities objectively, without buy/sell/hold judgment.
Investors do not try to "time the market". They simply prepare to take advantage of directional change on a day to day basis.
Investors rarely speculate on future market conditions, commodity prices, or IPOs, while at all times being willing to take advantage of short term volatility in all market sectors. They do not place bets, gamble, predict, or even complain about conditions in the markets they travel because they have learned to prepare for movements in either direction.
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Investors understand that an up market is not "good" and that a down market is not "bad', that either direction is merely a consensus of how investors, speculators, prognosticators, gurus, and charlatans interpret the endless mix of economic, political, global, and environmental data that present themselves for interpretation. Markets will always move in both directions; the investor challenge is to prepare for and to take advantage of either.
Investors are not impressed with high market values or "returns" unless they have been "capitalized". They know that fluctuations in market value and total return do not directly impact the income and capital growth of their portfolios, and that both are illusory numbers at best, even in high quality, properly diversified, income producing portfolios.
Finally, investors realize that their portfolios are personal, income producing, businesses that require constant planning, organizing, controlling and management plus a long term perspective that includes both general and specific goals and objectives.
Over the past twenty five years or so, many investors have found that the most productive investment approach takes advantage of full time professionally managed portfolios, that themselves can be traded profitably and added to readily, while producing natural diversification and well above average distribution income. These investors are using hundreds of such investment vehicles representing every possible sector of both equity and income investing.
?Are you there yet?