Sharemarket crash survival guide

By Bruce Jackson - Tuesday, November 22nd, 2011

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Shares are being trashed, again. The temptation is to sell everything and run for the hills. Instead, take a chill pill and consider The Motley Fool’s patented sharemarket survival guide.

Down down, shares are going down.

After weeks of worrying about European sovereign debt woes, focus has again turned back to the U.S. and its own debt crisis.

In the U.S, the S&P 500 has posted its worst losing streak in 2 months.

Over the last 3 weeks, our own S&P/ASX 200 index has fallen almost 7 per cent in the last 3 weeks. Some shares have fared even worse…

Company	% Share Price Fall Oct 28 2011 to Nov 21 2011
Australia & New Zealand Banking Group(ASX:ANZ)	(10.6)
National Australia Bank (ASX:NAB)	(10.7)
Iluka Resources Ltd. (ASX:ILU)	(11.3)
Incitec Pivot Limited (ASX:IPL)	(12.5)
Lend Lease Group (ASX:LLC)	(11.2)
Mesoblast Limited (ASX:MSB)	(14.1)
David Jones Ltd. (ASX:DJS)	(13.1)
BlueScope Steel (ASX:BSL)	(29.5)
White Energy (ASX:WEC)	(72.4)

With the exception of White Energy, these are all big companies. It has been a tough time for investors.

So what are the keys to surviving market downturns? Here are some suggestions:

1. Don’t get absorbed in despair and panic. Ignore the violent emotional swings, and instead simply maintain a degree of detachment with regard to the whole business.

2. Be a regular saver and investor. That way, a market downturn becomes nothing more than a buying opportunity.

3. Reflect that Anne Scheiber, the U.S. lawyer who invested $5,000 in 1944 and died in the mid-1990s worth over $20 million, never sold a share and invested only in common, easily understandable companies. To her, we must presume, market fluctuations were an irrelevancy.

4. Finally, stop buying the newspapers, don’t watch the TV and go away on holiday. In short, switch off the market. Life’s too short for all that hullabaloo.

(As an aside, if you are worried about the market crash, you might want to first check out our new free report, Read This Before The Market Crashes. It could save you hours of heartache, and thousands of dollars. Click here to request your report now, whilst it’s still free and available.)

As our Investment Analyst Dean Morel said just a couple of weeks ago…

“When bearish volatility, caused by emotions and a lack of reason, leads humans to herd, sharemarkets become irrational and oversold. That irrationality allows investors who are able to control their emotions and act in a calm, balanced manner, to take advantage of the many opportunities the market throws up.

There is no need to make big decisions. You don’t  need to be fully invested in, or totally out of the market. Gradually building positions in the best companies while maintaining a cash cushion will make investing easier and less stressful.”

Stock market falls are like the seasons of the year. They are a natural part of the investment landscape, they are normal and can even be very healthy.

This latest crisis, like all crises before, will pass. And those that survive will prosper.

http://www.fool.com.au/2011/11/investing/sharemarket-crash-survival-guide/

Stories of frugal females who amass their fortunes through hardwork, consistent savings and wise investing.

Wednesday, February 15, 2006

Frugal Females Found

Occasionally we hear amazing stories of frugal females who over a lifetime of living beneath their means and saving and investing have managed to amass fortunes. Generally because these women do not have immediate family they bequeath this wealth to a private university, non-profit organization, or even to our government to help pay down our national debt. Margaret Elizabeth Taylor, a widow since 1977, died at age 98 (Nov. 2005) and having no surviving siblings or children "bequeathed her $1.1 million estate to the federal government and requested that it be used to help pay down the $8.1 trillion national debt."Woman Leaves Fortune to Pay Nation's Debt Anna Patocka, who worked as a cook, died at age 95 (July 2005), and left "$1 million to local organizations". "She didn't make a million by inheriting it," friend Helen Linhart said. "She saved it." GRAFTON, N.D.: Woman leaves behind $1 million Anne Scheiber, who worked for the IRS as an auditor, died at age 101 (1995), and left $22 million to "Yeshiva University, with the stipulation that the money be used to establish a scholarship and loan fund for deserving female students at YU's sister institution of Stern College" The Butterfly Effect (Anne Scheiber) The fact that these women had so much wealth to bequeath surprised the folks who knew them. Each was a secret millionaire. The money was accumulated by hard work, consistent savings, and wise investing.  Anne Scheiber made quite the news splash when her bequest was made public in 1996. I remember the article in TIME magazine and the news stories which made much of her stagnant career at the Internal Revenue Service. She was someone who had a law degree and was obviously smart, but because of her gender she spent her entire IRS career in a junior position and never received a promotion nor much of a raise. This prompted her to vow never to enrich the IRS if she could help it. To keep that vow she never sold the stocks she purchased and each stock had the dividends reinvested. This meant her money just grew and grew since only sales would trigger a tax payment. While she was a wise investor, she was also an extremely frugal woman. She saved approximately 80% of her take home pay when working. She lived in a rent controlled apartment, almost never purchased new clothes, and for entertainment attended annual shareholder meetings of corporations she invested in and after using her auditing background to grill the executives would fill her handbag with the free food at the buffet and live off that for days. I find reading these stories inspiring. There is something about knowing that these women had control of themselves and their wealth and did with it as they saw fit. While some may say "but how deprived they must have been, wearing the same clothes and eating left-over stale food". I really don't see it that way. They obviously felt that clothes were not important. You could almost look at it as they were wearing a self-made uniform day in and day out. Nothing so wrong with that. I enjoy food too much to eat stale stuff, but who knows how much I will enjoy food when I am 90? I think that is part of the problem, these women lived so long that most of the folks who did know them and spoke of them reminisced of the 80, 90, or 100 year old woman. What were these females like in their 20's, 30's, or 40's? What personal experiences kept them on their frugal paths? I wish we found these ladies while they were still alive and could tell us their full stories... http://www.bostongalsopenwallet.com/2006/02/frugal-females-found.html

Stock Selling Strategies: The Buy and Hold Strategy

Stock Selling Strategies
The Buy and Hold Strategy

The selling strategy of what is commonly called the buy and hold approach to investing can be expressed in one word - don't! And the arguments in its favour are strong ones. For one, it has a solid record of success. Such famous names as Warren Buffett and John Templeton made their fortunes with it.

Or consider the remarkable case of Anne Scheiber. She represents, not only the superb returns that can be enjoyed from a skillful buy and hold strategy, but also the pluck to jump back in the game after losing everything.

In 1933 and 1934, at the height of the depression, 38 year old Anne invested most of her life savings in the stock market. She let her broker brother make the picks and they were good ones. Unfortunately, his company went bankrupt and she lost everything. But Anne did not give up.

On her modest salary as an auditor for the Internal Revenue Service (just over $3000 a year), she managed to save another $5000 over the next ten years. In 1944 she invested in the stock market again. When she died in January 1995 at the age of 101, that modest investment had grown to $20 million. That's not a misprint. $20 million! That represents an annual compounded rate of return of 17.5%, ranking her among the top investors of all time.

Her secret? Miss Scheiber invested in stocks of companies that she knew and understood. Companies whose products she used. She loved the movies. So she invested in Loew's, Columbia, Paramount and Capital Cities Broadcasting. She drank Coke and Pepsi and bought shares in both. She invested in the companies that made medications she took - Schering Plough and Bristol Myers Squibb. And so on. And she hung on to them through thick and thin for over forty years. Through the bear market of 1973-1974. Through the crash of 1987.

Miss Scheiber left virtually the entire fortune to New York's Yeshiva University. By the time the estate was settled in December of 1995, it had grown to $22 million. You'll find links to her story and to investing tips based on her approach after this article.

The Buy and Hold approach to investing focuses on the buying, not the selling. The aim is to buy stock in companies that are solid and growing with long term potential. It focuses on the underlying value of the stock.

The approach is often considered synonymous with value investing. It ignores the stock market, the general economic climate, and prevailing sentiment.

Warren Buffett, considered by many to be the greatest investor of all time, has said that he pays no attention to the stock market, and in fact, would not mind if the market shut down for a few years. He buys stock in a company as if he was buying the entire company. It's the value of the company that interests him, not the value assigned to it by the market. He wants companies that generate consistently growing profits.

Value investors tend to focus on buying undervalued stocks. And value investing is not completely averse to selling a stock, though the preference is to hold. As the Templeton Fund puts at their website, "Templeton buys stocks with the intent to hold them until they reach their "fair" value-- typically five years."

Buy and hold investors do sell when the fundamentals of a company change or when a stock becomes so grossly over-valued by the market that it would be foolish not to take profits. But in general, short term market fluctuations are ignored.

Downside to Buy and Hold

Of course, while buy and hold investing has definite advantages, there is a downside.

There have been major bear markets in the past and such markets tend to drag down all stocks, even those of good companies. If such risks can be minimized, wouldn't it be worth it?

The question is, can it? In the June 19, 2000 issue of the Hulbert Financial Digest, Mark Hulbert points out that there are newsletters who have been able to minimize investor losses during severe market corrections. Five in particular stand out. These five market timers were able to keep their readers' losses to one or two percent during each of the last five major market corrections since August 1987 (while the Wilshire 5000 averaged a 15% loss and the NASDAQ Composite lost 20%).

But...and here's the rub - those five newsletters failed to capture the tremendous gains made during the up cycles. Their average returns for the entire period from August 31, 1987 to May 31, 2000 ranged from 2.3% to 7.2% while the Wilshire averaged 14.3% and the NASDAQ 17.1%. Safety comes at a serious price!

In fact, Buy and Holders disparage the notion of market timing. It is folly, they say. And a pamphlet from the Templeton Fund in 1997 demonstrates that better than anything. Follow the link below for a summary.

The Folly of Market Timing

Summary of Advantages and Disadvantages
of the Buy and Hold Strategy

Advantages	Disadvantages
Don't have to worry about the market.	Doesn't protect against bear markets and corrections.
Don't have to worry about the economy.	Stocks should be extensively researched and carefully chosen.
Don't have to pay attention to short term fluctuations.	Long term strategy.
Easy to manage portfolio.	No quick short term profits.
Ideally, don't have to sell at all.
Notable success stories and history.

http://breakoutreport.com/investingcanada/library/weekly/2000a/aa062900.htm

The Othmers' Story

The Othmers' Story

James K. Glassman | July 14, 1998

The Washington Post, Tuesday, July 14, 1998; Page A15

Donald Othmer, a professor of chemical engineering in Brooklyn, died three years ago. His wife Mildred, a former teacher and a buyer for her mother's dress store, died in April. Both were in their nineties. They lived quiet, unpretentious lives -- which is why it came as a shock to their friends to learn that their combined estates were worth $800 million and that they had given nearly everything to charity.

How did the Othmers get so rich? Like many other Americans, they simply put their money into sound stock market investments and left it there for a long time.

This they had in common with a woman named Anne Scheiber, who worked as a government drone, never making more than $4,000 a year. In 1944, she put a total of $5,000 into stocks such as Coca-Cola and Merck, and when she died in 1995, she left her estate to Yeshiva University. It was worth $22 million.

As for the Othmers: In the early 1960s, they turned $25,000 each over to Warren Buffett, an old family friend from their hometown of Omaha. "They just rode along," Buffett told the New York Times. The investment "never changed their lives."

In 1970, when the Othmers received stock in Buffett's new company, Berkshire Hathaway Inc. (which invests in other companies such as Gillette and American Express), it was trading at $42 a share. Last week, it was $77,000 a share. Mildred Othmer's 7,500 shares alone are worth $578 million. Donald's, which were sold on his death when the price was lower, were worth $210 million.

The Othmers were smart -- or lucky -- to pick Buffett to manage their money, but that's not the lesson of this story. After all, even if they had simply put their funds into the broad market, they still would have ended up with a fortune of between $50 million and $100 million.

No, the lesson is to live modestly, invest sensibly, don't touch the money and grow rich. This lesson is at the heart of the current debate over transforming Social Security.

Today, it is a government-run plan by which Americans retiring over the next few decades will get minuscule (or even negative) returns on a lifetime of payroll contributions. But reformers, including New York Democratic Sen. Daniel Patrick Moynihan, want instead to create a system of private accounts by which retirees can get the returns that the stock market has been generating for the past century.

Why shouldn't every worker be able to get the returns -- and build the nest eggs -- that Anne Scheiber and the Othmers built? They can -- but only if they have money to save. Currently, 10 percent of every worker's pay is going to taxes to fund Social Security retirement benefits. No wonder Americans are strapped.

William Beach of the Heritage Foundation has calculated that the average single black woman born in 1960 will receive lifetime benefits from Social Security totaling $173,000. But, Beach found, if the woman invests the same money that now goes to Social Security taxes in a mixed portfolio of stocks and bonds instead, she will accumulate $414,000.

Blacks, in particular, are victimized by the Social Security retirement system, since they don't live as long as whites -- and thus don't collect benefits for as long. Under a private retirement plan, they could pass assets on to their heirs.

There are other lessons in the Othmers' story:

(1) Frugality pays. Donald Othmer was a smart scientist who contributed to more than 40 patents at Eastman Kodak. But his wealth came from following the simple virtues. The Times wrote that as a boy "he developed a lifelong frugality as he earned money picking dandelions from neighbors' lawns [and] delivering newspapers." He and his wife "lived comfortably but not ostentatiously and rarely talked about their money."

Thomas Stanley and William Danko, authors of the surprise bestseller "The Millionaire Next Door," came to similar conclusions about the rich people they studied for their book. They wrote that "frugal" is the best adjective to describe millionaires. More own Fords than any other car, and only 25 percent of the men studied paid more than $600 for a suit in their lives.

(2) Saving pays. This is a notion that should be drummed into the head of every young person. Put away money early, and don't touch it. If you can leave it undisturbed in a decent investment for a long time, it will grow to immense proportions through the miracle of compounding.

Savings can also be eroded by capital gains taxes, but both Scheiber and the Othmers managed to avoid them by not selling their stocks, then passing them on to their heirs. Still, the cut in capital gains from 20 percent to 15 percent that Congress just passed is a move in the right direction that will boost savings.

(3) Philanthropy will boom. The Othmers' estates will provide $190 million to Brooklyn Polytechnic University, where Donald taught, $160 million to Long Island College Hospital, $75 million to Planned Parenthood and so on.

Rich people, more and more, are giving back what they've earned in an effort to make society better. They would rather make these choices themselves than leave them to Uncle Sam, so they are preserving their estates against taxes.

Eliminating the estate tax entirely could touch off a philanthropic flood. But, even without that change, generous Americans like Scheiber and the Othmers are turning frugality into wealth into good deeds. They deserve attention and praise.

http://reason.com/archives/1998/07/14/the-othmers-story/singlepag
e

Portfolios awash with red ink

Portfolios awash with red ink
John Collett
December 14, 2011

Ups and downs … the share price of many blue chips have fallen in the past decade.

More than 1 million Australians became the owners of shares - many for the first time - in the 1990s when the government off-loaded institutions such as the Commonwealth Bank and Qantas, and mutuals such as the NRMA and AMP were privatised. The shares were often free or heavily discounted.

These new, accidental shareholders have held on to their shares in the belief that blue chips will outperform the market over the long term.

But analysis by Lincoln Indicators of the performance of some of the most widely held shares shows the price of many is well down on 10 years ago.

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Tough decade for popular stocks

Tough decade for popular stocks.

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The chief executive of Lincoln Indicators, Elio D'Amato, says inertia can be costly.

''At the end of the day, it [investing in shares] is about picking good companies rather than thinking that every demutualisation is going to be a winner,'' he says.

As the table shows, AMP, Qantas and Telstra have lost varying amounts of their share value. The best performers include biopharmaceutical company CSL and the Commonwealth Bank.

While the table shows only share-price changes, many of the companies have paid good dividends over the years. The total return (share price appreciation plus dividends) can be much higher than the change in share prices alone suggest.

CBA

The Commonwealth Bank is by far the best performer. The first tranche of shares was listed in 1991 at $5.40. CBA shares are now trading at about $50 and, on that price, have a cash yield of 6.4 per cent, fully franked. D'Amato says the bank's shares are in the ''buy'' zone. ''CBA is definitely the preferred bank for us at the moment,'' he says.

TELSTRA

Telstra, with its 1.4 million shareholders, is likely to have the largest number of small shareholders of any listed Australian company. The first tranche of Telstra shares was floated in 1997 at $3.30, which is close to today's share price. But when its dividends are taken into account, shareholders will be ahead.

The same cannot be said of those who bought Telstra in subsequent floats. Those who bought shares in ''T2'' in 1999 paid $7.40, while ''T3'' shares in 2006 cost $3.60.

Still, many analysts think that with a dividend yield of about 8.7 per cent, fully franked, the telco is still worth holding and perhaps even adding to.

CSL

Apart from CBA, the other good performer has been CSL. D'Amato says CSL is a ''great company'' with a ''global brand that is growing''. The dividends are relatively small, with a yield on current prices of 2.5 per cent and franking levels of just 4 per cent. But shareholders won't be too fussed about that, given that the CSL share price has doubled from $16 to $32 over the past decade.

AMP

AMP has been one of the real under-performers among big, widely held, stocks. It has a share price of about $4, compared with about $12 a decade ago. However, many analysts are positive on the stock, saying the company will improve its market share and make cost savings with its recent acquisition of AXA Asia Pacific.

But AMP is not on the list of stocks that Austock Securities' senior client adviser and strategist Michael Heffernan believes long-term investors should hold.

His preferred picks include Telstra, CBA, BHP Billiton, Woolworths and Wesfarmers. ''In my book, they are all good companies, with a good spread of industry sectors,'' he says.

BALANCE

For those with only a handful of shares, the obvious industry sector most likely missing from their portfolios is resources. Those looking to diversify their portfolio could add BHP Billiton, D'Amato says.

''If you believe most growth in the world is going to come from Asia in the next three decades, BHP is a must have,'' he says.

How to sell shares you no longer want

The easiest and cheapest way to dispose of small parcels of shares is through company buybacks. These are usually ''off market'', with the price paid being the average share price during a fixed period. Usually, no brokerage is charged.

However, small shareholders tend to miss out on buybacks, either because they don't pay attention to company information or don't act on the offers. Elio D'Amato says some companies have frequent small-parcel buybacks and shareholders should contact companies directly to find out about them.

''If you have got a holding of under $500, it really does not end up being that economical holding a small parcel and having to account for it, and the time that should be spent monitoring it,'' he says.

The cheapest way to sell shares ''on market'' is through an online broker. Online trades start about $15 for casual users; it's a little less for those who trade regularly. Selling shares through a broker over the phone costs a bit more and full-service brokers typically charge $60 a trade.

The worst option is to take up the deals of dubious operators who offer to buy the shares for far less than their market value. D'Amato says many holders of small parcels of shares are vulnerable to such offers because they don't know how the market works or where the shares can be sold. ''It only takes a little bit of research to check what the shares are really worth,'' he says.

The share price can be checked at the ASX website (asx.com.au) by entering the company name or three-letter ticker code, or by phoning the company directly. ''When it comes to direct offers to buy shares, the only ones you can really trust are those that come from the companies themselves,'' D'Amato says.

Read more: http://www.theage.com.au/money/investing/portfolios-awash-with-red-ink-20111213-1orwu.html#ixzz1geRSnfLi

Investing: You Don't Have to Learn the Hard Way

Little minds are interested in the extraordinary; great minds in the commonplace.  -  Elbert Hubbard    All of us have heard the expression that experience is the best teacher.  Like many old expressions, you must be careful how you interpret its meaning.  In reality, the best way to learn is by observing the past successes and failures of others.  Our own lifetime is limited.  By utilizing the knowledge gained by others, we can determine the financial strategies most likely to succeed without wasting the time and effort required by our own trial and error experiences.  A logical place to start our observations is to review the investment guidelines used by some of the most successful stock market investors of all time.  Their guiding principles, based on decades of experience, should be thoroughly tested against most of the conditions any stock market investor is likely to encounter.  The following brief biographical sketches summarize the wisdom provided by five super successful stock investors:  Benjamin Graham, 1894 - 1976.  Benjamin Graham, considered one of the fathers of modern stock market investing, achieved a 17 percent average annual return on his stock market investments from 1929 to 1956.  This is extraordinary, considering that the time period from 1929 to 1945 included the 1929 stock market crash and the Great Depression, and represented one of the most difficult time periods in economic history to make money in the stock market.  Graham argued that the distinction between investment and speculation was an important one that was often misused by financial professionals.  Graham felt that investors should concentrate on the task of locating the stock of companies with sound financial standing that was priced well below the value of the company, irregardless of the general outlook of the economy or the stock market.  By applying these principles to select a diversified group of stocks and by maintaining a long-term approach, the investor separated himself from the speculator and would eventually be rewarded.     Warren Buffett, 1930 to present.  Warren Buffett is probably the most successful stock investor of all time.  Solely due to his stock picking abilities, on any given day Buffett is either the richest man in America or one of the richest men in America.  From 1957 to the present (over 40 years!), Buffett has achieved an average annual return of more than 25 percent per year on his stock investments.  However, Buffett did not achieve this enviable record using some complicated investment strategy or by borrowing money to magnify his investment returns.  Instead, some simple, familiar themes begin to emerge when you study his investment philosophies.  Buffett buys stock in what he calls franchise companies - companies that produce products that society needs or wants.  He buys these stocks with the intent of never selling them.  He meticulously studies each business of interest, and only buys the stock of companies in sound financial condition that can be purchased well below his assessment of their intrinsic value.  Buffet only buys stocks of companies that he understands.  Some of his largest stock investment returns have been made in household names like Capital Cities/ABC, Coca-Cola, and The Washington Post.  Anne Scheiber, 1894 - 1995.  Anne Scheiber is probably unknown to most people.  However, her accomplishment of creating a $20 million estate by investing in the stock market over approximately 50 years makes her a very successful amateur investor.  There is some debate over her true investment return over the 50-year time span, but it appears that it probably ranged between 12 and 17 percent per year.  Scheiber learned by reviewing the tax returns of wealthy individuals during her career as a tax auditor with the Internal Revenue Service that stocks were a proven way to get rich in America.  Her investment strategies were simple: invest in companies that create products that you know and admire, continue to invest, never sell stocks you believe in, and keep informed of your current investments.  In fact, Scheiber's top ten stock investments before she died included such well known companies as Coca-Cola, Exxon, and Bristol-Myers Squibb.  National Association of Investment Clubs (NAIC), 1940 to present.  NAIC is probably the best, well kept secret for the individual stock market investor anywhere.  NAIC is a national organization that anyone can join that assists individual investors and investment clubs by providing investment education.  Over the years, NAIC has developed an investing philosophy that can be used by anyone to identify a diversified group of growth stocks that are selected to double in value in five years.  The national annual average return for the stocks owned by thousands of investment clubs associated with NAIC throughout America have frequently outperformed stock market averages for the past 30 years.  Peter Lynch, 1944 to the present.  Peter Lynch may be the most widely recognized stock market investor.  From 1977 to 1990, Lynch piloted the now famous Magellan Mutual Fund to an amazing 29 percent average annual return.  He is the author of several popular books, appears as a guest speaker on numerous television programs, and is a columnist for several magazines.  Lynch's investment philosophy and advice for others is simple: invest in what you know, ignore the advice of others (including professional investors), ignore market fluctuations, and look for companies undiscovered by professional investors.  These biographical sketches should convince you that anyone, regardless of background or training, can succeed in the stock market.  Individual investors can compete head to head with professional investors and, more importantly, investment principles between successful individual and professional investors are often very similar.  Considering the complexity of the stock market, it is surprising that so many common threads run through these widely diverse, but successful, stock market investors.  These common threads or guidelines for stock market success can be summarized as follows:       ·        Invest for the long term       ·        Diversify your investments       ·        Invest regularly       ·        Avoid market forecasting       ·        Know what you are investing in. What could be easier?  The financial community seems to always make things more complicated and confusing than they need to be.  Never confuse sophistication with success.  Simple, proven strategies followed religiously often produce superior results.   http://www.mind-like-water.com/Rogue_Investor/RI_Articles/Rogue_Investing/RI_HardWay.html

Building Wealth Through Stock Market Investments

Sound Investment Strategies Which Will Stand Out All The Time:
 
It is sad to say that the majority of investors like to listen to tips from all sources instead of doing their own homework prior to investing. Even fund managers conveniently buy shares listed in the top actives of the day. Thus fund managers of yesteryear lost heavily when their shares  dropped heavily, and unit trust holders also lost heavily.

Wise investors must follow the following steps before deciding to buy any share in the market if they want to avoid heavy losses when the market collapses. They are as follows:

1) Has the company been making money for the past 3 years out of the lst 5 years at least.

2) Has the company been paying consistent dividends for the last 5 years as you can manufacture profits, but you cannot manufacture cash to pay out the dividends if the accounts are phony.

3) Is the dividend yield based on the share price which you intend to buy has a yield of at least 4%, i.e. if the share you are buying is $1,000, you must get at least $40 in dividend even consider it as a safe investment. If not, don't buy at all. 

If this passes the above 3 guidelines, you are reasonably assured that it is an investment grade share and not a speculative buy. It will automatically eliminate some 80% of all shares listed on stock markets throughout the world.  

You must read the latest Annual Report and analyse the Balance Sheet, Profit & Loss Statement, etc. If you don't even bother to do this, you deserve to lose money as there is no such thing as a free lunch. 
Initially all will make money when the market is going up, and when the market collapses, some 90% of them will be losing money. Remember this, if it is really so easy to make money, nobody will be working today. All of us will just be buying shares to be rich. Alas, this is just a pipe dream.

http://www.sap-basis-abap.com/shares/building-wealth-through-stock-market-investments.htm

Crises Equal Opportunities - History Makes Money

 
What $10,000 invested at times of various historical calamities would be worth today?
 
In 1962, the missile crisis brought us close to World War III.  At that time, if you had invested $10,000, the value today would be $156,661.
 
In 1965, we bombed North Vietnam and were attacked in the Gulf of Tonkin.  The value of $10,000 invested then would now be worth $109,602.
 
In 1968, there was a six-day war in the Middle East and five days of rioting in Detroit, the value of $10,000 invested then would now be worth $87,429.
 
In 1980, Iran was holding American hostages, the value of $10,000 invested then would now be worth $48,700.
 
The recession in 1982 caused the market to hit 730 in August and by February the following year the market was up 57 percent to 1150.
 
On October, 1987, the country saw the most severe drop in market history.  $10,000 invested at the bottom of the market on October 20 would be worth approximately $24,000 today.
 
These down markets caused by crises events are opportunities only if you have cash available to seize the opportunity of the moment of the down markets.  If you are caught fully invested in stocks when these events occur and your quality stocks go down, ride them out and stay fully invested as the market always recovers and given time, eventually heads to new record highs.


http://www.sap-basis-abap.com/shares/history-makes-money.htm

Essence of Successful Investment

Common stocks should be purchased when their prices are low, not after they have risen to high levels during an upward bull-market spiral.  Buy when everyone else is selling and hold on until everyone else is buying - this is just more than a catchy slogan.  It is the very essence of successful investment.
 
History shows that the overall trend of stock prices like the overall trend of living costs, wages and almost everything else is up.  Naturally, there have been and always will be dips, slumps, recessions and even depressions, but these are invariably followed by recoveries which carry most stock prices to new highs.
 
Assuming that a stock and the company behind it are sound, an investor can hardly lose if he buys shares at the bottom and holds them until the inevitable upward cycle gets well under way.
The wise investor realizes that it is no longer possible to consider the stock market as a whole.  Today's stock market is far too vast and complex for anyone to make sweeping generalized predictions about the course the market as such will follow.
 
It is necessary to view the present day stock market in terms of groups of stocks, but it is not enough merely to classify them as, say, industrials or aircrafts, and so on.  This is an era of constant and revolutionary scientific and technological changes and advances.  Not only individual firms, but also entire industries must be judged as to their ability to keep pace with the needs of the future.
 
The investor has to be certain that neither the products of the company in which he invests nor the particular industry itself will become obsolete in a few years.

http://www.sap-basis-abap.com/shares/essence-of-successful-investment.htm

Simple Stocks Purchase Principles

Get-rich-quick schemes just don't work.  If they did, then everyone on the face of the earth would be millionaire.
 
This holds true for stock market dealings as it does for any other form of business activity.
Don't misunderstand me.  It is possible to make money and a great deal of money in the stock market. But it can't  be done overnight or by haphazard buying and selling.
 
The big profits go to the intelligent, careful and patient investor, not to the reckless and overeager speculator.   Conversely, it is the speculator who suffers the losses when the market takes a sudden downturn.
 
The seasoned investor buys his stocks when they are priced low, holds them for the long pull rise and takes in between dips and slumps in his stride.
 
"Buy when stock prices are low, the lower the better and hold onto your securities," a highly successful financier advised me years ago, when I first started buying stocks.
 
"Bank on the trends and don't worry about the tremors.  Keep your mind on the long term cycles and ignore the sporadic ups and down..."
 
Great numbers of people who purchase stocks seem unable to grasp these simple principles.
 
They do not buy when  prices are low. They are fearful of bargains. They wait until a stock goes by and up and then buy because they feel they are thus getting in on a sure thing. Very often, they buy too late just before a stock has reached on of its peaks. Then they get caught and suffer losses when  the price breaks even a few points.

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