TACTICAL INVESTOR NEWSLETTER

December 7,2003The Edge you need to be on the right side of the market
Investing?

Investing 

Investing is a bit like learning to swim. One usually begins by going into the shallow end of the pool, so that drowning can be avoided simply by letting your legs touch the bottom, as you get better you slowly venture out further and further. Finally you are a pro and you don’t need to swim in an area where the water only is waist high, now you can swim in the deep end where you have several feet of water without any fear.

Why then do most investors instead of slowly taking the time to learn what investing is about, feel that after they read one book they have what it takes to dive into the depths of the market only to get killed. If one could graphically depict this process in terms of people get beheaded, you would witness a massacre taking place every month. 

I am going to suggest a few little strategies one can implement. 

First go to our tools page and familiarize yourself with Technical Analysis. A good place to begin is our site,  go the to section titled tools for better investing http://tacticalinvestor.com/page17.html 

www.incrediblecharts.com make sure you read the sections on the psychology of the markets. Then download the free charting programs; the links are on our site.  Spend 30-60 minutes a week learning and fully understanding the basic concepts of TA. Understand the premise behind trend lines and also make sure you drill the trend is your friend concept into your head. 

If you spend enough time going through the links on our tools for better trading I can assure you, you will be a better investor than you were before you took the time to educate yourself. For those of you looking for a system without having to do any work, John Tyler from the info gnome has come up with some very unique systems, I have actually looked at them all and can honestly say they do work, however you must put in a little time. http://tacticalinvestor.com/tacticaltoppicks.html 

Of course if you are prepared to do some work you can do just as well by spending time on our site using the free tools, the above books and courses are for those of you who are to lazy or just don’t have the time.

One important factor to note if you are paying some advisory service, is to make sure that they don't quote their gains as annualized gains, the difference between actual gains and  those  that are annualized are extremely huge, this is very deceptive and sneaky. Example say they invested in a stock its up 30% for the month, instead of saying its up 30% they chose to state those figures as 360% or so.  See the difference.  Services that have to use deceptive means to lure customers in usually have something to hide and should be avoided like the plague. 

The point I am trying to make is education is always good. It never hurts to learn new concepts, in addition would you not like to be able to spot a good or a bad service immediately. Empowering oneself is the key to successful living and investing. 

Taking a look at the geo political scene we see that the war in Iraq has gone from a victory to a screaming tragedy, as every aspect of the military operations have been mishandled, the sad part is that poor young innocent American soldiers are getting killed like flies. Many of them have far different opinions on the war, but their opinions matter little. With the way this administration is spending money like its water we can expect the costs to keep rising higher and higher. This off course will be very bullish for Gold and all commodities. I am currently looking at oil very closely with my close and trusted Associate John Tyler and if the pattern we envision unfolds then the cost of a barrel will be heading of towards the 48-50 range in the not to distant future. Off course we cannot reveal all our plays here as our paying subscribers would string us up to the nearest pole if we were to do so, however we can give you the macro view of what is going on and reserve the micro for our paying subscribers. In addition we will mention sectors which we think will start performing well and every know and then we will drop some specific company names. 

On a different note it was rather surprising and offers the appearance of nobility, I am referring to Bush’s trip to Iraq. Lets hope he was truly sincere and this is not just some politically planned event.  Whatever the reason the public will take this as a positive and it should have positive effect on the markets.

 

Currently the natural gas, oil service sector, natural gas exploration and drilling sectors are pretty much extremely oversold and from a contrarian perspective offer the opportunity for better returns in the next 2-4 months then other sectors. For the more aggressive I see the biotech sector is oversold and close to putting in a short-term bottom, if this bottom holds there could be a very large rally in the works. Many of the stocks that we were and still are bullish on have should some incredible gains since we took positions in them. We still think the oil service sector is extremely oversold and still think there is very significant up ward potential left in the natural gas and independent oil exploration sectors. 

 

Today we are going to mention some stocks  in the above sectors that we think have great potential, however we recommend that you do your own research and talk to your financial advisor before taking positions in these stocks.

WEL, seems positioned  to benefit tremendously should the oil and oil service sector take off. they are coming out of a nice base. 

DYOLF they are a natural gas and independent oil producing and exploration company their revenues doubled this quarter and profits increased by 87%

TLM also looks very strong if you can buy shares in the 50-51 range you should be rewarded nicely in the future.

CHK is another very good play that has great long term prospects.

John Tyler From the Infognome

Moving over to my Associate John Tyler  from the Info gnome as he completes the Series on the Great Financial  Pox

I am going to put the link to the last two reports also here, they are updated and contain my comments at the bottom 

http://tacticalinvestor.com/financialpox1.html 

 

 

ETFs EASY TRADING FUNDS 

No folks, an ETF is an exchange traded fund, but they are easy trading funds as well.

The Highlanders Trading Club has been leading the way in helping investors understand the ETFs, and showing how to build wealth. Now more professional advisers are realising the benefits, and it won't be long before we see more wholesale desertions from the mutual funds!

The $7 TRILLION mutual fund industry has been accused of improper trading. This may just be then tip of the iceberg! Investors are looking more carefully at what the mutuals have been getting up to, and the huge salaries that are paid to help you lose money.

About 50% of U.S. households have money in mutual funds. All are now suspicion since a wave of government probes began looking into late trading and market-timing. Late trading is an illegal practice. It involves trades in mutual fund shares after the market closes, but booking the trade at a pre-close price, rather than the next day's valid price. This wasn't done to help the widows and orphans who were making withdrawals to buy a loaf of bread, but to help curry favor with hedge funds, who we know are always desperate to eek another cent of whatever's going around. 

The ETFs provide an ideal alternative invest vehicle to the mutuals. Currently, there are 117 ETFs trading in the United States. ETFs are instruments that allow investors to buy and sell shares that represent entire baskets of stocks. This basket can be representitive of a whole index such as the Dow Jones Diamonds (DIA), the S&P Depository Receipts (SPY), and the Nasdaq 100 QQQ , which tracks the Nasdaq 100 index (NDX).Others focus on just defined sectors, such as networking, biotechs, or pharmacueticals. Many global markets are also covered.

Now there is even a dividend fund.

The ETF market is growing. The Investment Company Institute reports that the combined U.S. ETF grew from $119 billion in September to $128 billion in October, although this may be partly a bull market effect . 

As an investment vehicle, ETFs offer certain features that guard investors against the abuses purported in mutual funds. Unlike conventional mutual funds, ETFs can be purchased at any time the exchange is trading, and because they trade like a stock, they are seen as less vulnerable to price manipulation. The Amex has the largest market for ETF trading. 

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Inflation: The Great Financial Pox Part IV 

10 Life Saving Strategies

Part I considered inflation as a disease of the human condition, and that once started, the course is unstoppable, and how in its early stages its a great party. Part II revealed the similarities of inflation to "The Great Pox" of syphilis, and Part III likened "General Paresis of the Insane" to financial paralysis.

The longer an inflation lasts, the fewer survive its effects. A prolonged and severe inflation leaves no one unscathed, and we all lose. However this damage can be limited, and if we follow wise strategies, we may even turn this cycle of inflation toStrategy I: A graded response

Every year, several tourists and even the ocassional local, are swept to their death off Queensland's beaches. Beneath the shimmering surf lays a dangerous rip. Try swimming against it and you're soon exhausted. You need to let the rip carry you, but gradually swim to its side, and soon it will lose its grip.

So don't over-react. You have time now. The first step is not to get caught up in a panic response. There will always be "Blood in the streets" predictions, and I see that Bob Precther is getting in the act again. It's all fun reading, but its a bit like trying to swim against the rip.

So lets apply strategy I to Strategy II!

Strategy II: Turn Savings into TIPS

Strategy I applied says don't sell everything and throw it all in, but consider these as your prime savings vehicle. Build a nest egg with these inflation protected vehicles.
Inflation-Indexed Bonds are promissory notes that guarantee they will outpace with inflation if held to maturity. "I-bonds" are backed by the United States government and are indexed semiannually to the Consumer Price Index (CPI), a major inflation indicator. 

Inflation-indexed bonds rise in value based on the rate of the Consumer Price Index. Here's how they work. Let's say you have a inflation-indexed bond worth $1,000 and a coupon that pays 4 percent. If, after one year, inflation is 3 percent, the bond is worth $1,030, so your interest payment is 4 percent of $1,030.
A conventional bond does not take inflation into account, so the value of your investment -- the worth of the bond -- buys less over time if inflation is rising.
Inflation-indexed bond funds haven't caught the attention of the investing public yet, and there aren't many to choose from, Jacobson said.
American Century Inflation Adjusted Treasury Fund and the PIMCO Real Return Fund, which has a large component of its portfolio in inflation-indexed bonds. The FPA New Income Fund has part of its portfolio in inflation-indexed bonds.



The Tactical investor, Reproduction of any portion of this letter is prohibited without written permission. The Tactical investor presents information and research believed to be reliable, but its accuracy cannot be guaranteed. The Latin maxim caveat emptor applies-let the buyer beware. log onto our website for the latest updates
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Mark Twain 1835-1910, American Humorist, Writer
The first half of life consists of the capacity to enjoy without the chance; the last half consists of the chance without the capacity.
Mark Twain 1835-1910, American Humorist, Writer
Where a blood relation sobs, an intimate friend should choke up, a distant acquaintance should sigh, a stranger should merely fumble sympathetically with his handkerchief
  
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