Investment U
HomeArchivesThe ExpertsReportsTools of the TradeRetirement Planning
August 28, 2008

The Five Secrets Every Investor Should Know

The Investment U E-Letter: #333
Thursday, April 29, 2004

The Five Secrets Every Investor Should Know
By Brian Hunt
Vice-President, Investment U

[Once again, we welcome Investment U Vice President Brian Hunt to this space. Enjoy. - Steve Sjuggerud, President, Investment U]

Here I was in Argentina last week, about to give a speech to subscribers of Steve Sjuggerud's investment newsletter, True Wealth.

My topic was supposed to be tiny "micro-cap" stocks, but I was hesitant… "These folks don't want to hear about that," I thought.

So what I revealed in my speech, and what I'll share with you today, are the five most important things I've learned from Steve about becoming a great investor.

The Five Things

1) Be flexible with your investments

When I became Investment U's vice president a year ago, I was very focused on stocks. Watching Steve, I learned that you've got to consider everything if you want to build a sound portfolio.

In the last year, I've bought gold coins, I've traded commodity futures in my account and I'm closing on some raw land. This diversified approach is what now allows me to make more from my investments than I do from my job.

I now understand that you've got to be willing to consider anything, not just stocks, when it comes to investing.

2) It's all happened before

Some of the best advice I can give is that it has all happened before… So study financial history. Even 100 years in the past, it doesn't matter, as the human emotions of fear and greed are the same as they've always been - and they'll never change.

One of the best books on this topic is Devil Take the Hindmost, by Edward Chancellor. If you have not read it yet, you're missing out. It is a fun read, and you will be a smarter investor after reading it.

3) Limit your risk

Steve once told me: "Novice investors shop for returns, while experts size up the risks, as they know the returns will come."

You've got to assess risk. It's even more important than what you can potentially make. And you've got to limit your risk. Use trailing stops. Limit your position size (don't bet it all on one position). By doing these things, you'll never have a "catastrophic" portfolio loss, and you'll likely make money year in, year out.

4) Assess the tide, not the ships

One thing that surprised me is how much time Steve spends "assessing the tides" of the market. He studies overall markets and asset classes much more than he studies individual securities. When I started working with him, I'd rarely considered "the tide" - I was just looking for a hot stock.

Now I understand his 1-2-3 Stock Market Model. And concerning stock prices, I do believe Steve is right when he says, "A rising tide raises all ships (and vice versa), so assess the tide not the ships."

5) When everyone owns something, it's too late

Whether it's China in late 2003 or the dot-coms a few years ago, you simply must avoid what's popular. I fell into this in 1999, putting a lot of my eggs in the tech-stock basket. I made a lot of money for a little while, then I got crushed.

Buying what nobody else wants is extremely hard to do. But that's the way you make money.

These five principles have made me a much better investor, miles ahead of where I was a year ago. If you can learn these now, maybe you can prevent yourself from making the mistakes I made before I met Steve.


Today's IU Cribsheet

Good investing,

Brian Hunt

Related Articles:

Investment U Archives

We Value Your Privacy

Search Investment U

Full Index of IU Articles and Free Reports



Learn More About The Oxford Club

Investment U is the educational arm of The Oxford Club - one of the world's most distinguished investor networks, with a long track record of success. The Hulbert Financial Digest recently ranked the Club's twice-monthly Communiqué one of the Top 10 investment newsletters nationwide, based on performance. Overall, the Club's portfolios rank 3rd for five-year, risk-adjusted return. Learn how to become a member of The Oxford Club for as little as $79.
RSS Feed

The Investment U RSS News Feed!
The Investment U RSS Feed

The Road Map to A Rich Life
The Road Map to a Rich Life

The IU RSS Feed Powered by FeedBurner
What Is RSS?

Recommendations


Conferences

SEE THE FULL LIST OF IU
EVENTS & CONFERENCES

Investment Books

Visit the Investment U Book Store to see what the experts are reading. 


Home | About IU | Investment U Archives | Investment Research Reports | IU Resources | Site Map

Copyright © 1999 - 2008 by The Oxford Club, L.L.C
Contact Information  -  Privacy Policy  -  Disclaimer  - Public Relations  - Link to Us

Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation.  No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.