Monday, September 3, 2007

The Investment Philosophy of Warren Buffett - In 23 Quotes

Warren Buffett is the most successful investor of our time, perhaps of any time. He is famous for his pithy quotes, which often appear in his annual letter to shareholders.

Taken together, his quotes pretty well sum up his investment philosophy and approach. Here are his best sound bites of all time on being a sensible investor.

1.Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

2.Investing is laying out money now to get more money back in the future.

3.Never invest in a business you cannot understand.

4.I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.

5.I put heavy weight on certainty. It's not risky to buy securities at a fraction of what they're worth.

6.If a business does well, the stock eventually follows.

7.It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

8.Time is the friend of the wonderful company, the enemy of the mediocre.

9.For some reason people take their cues from price action rather than from values. Price is what you pay. Value is what you get.

10.In the short run, the market is a voting machine. In the long run, it's a weighing machine.

11.The most common cause of low prices is pessimism. We want to do business in such an environment, not because we like pessimism, but because we like the prices it produces. It's optimism that is the enemy of the rational buyer. None of this means, however, that a business or stock is an intelligent purchase simply because it is unpopular; a contrarian approach is just as foolish as a follow-the-crowd strategy. What's required is thinking rather than polling.

12.Risk comes from not knowing what you're doing.

13.It is better to be approximately right than precisely wrong.

14.All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.

15.Wide diversification is only required when investors do not understand what they are doing.

16.You do things when the opportunities come along. I have had periods in my life when I have had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing.

17.[On the dot-com bubble:] What we learn from history is that people dont learn from history.

18.You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.

19.You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.

20.You should invest in a business that even a fool can run, because someday a fool will.

21.When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

22.The best business returns are usually achieved by companies that are doing something quite similar today to what they were doing five or ten years ago.

23.Diversification may preserve wealth, but concentration builds wealth.

If you would like to learn about a stock investment approach that that uses similar strategies as those reflected in this article, please consider purchasing Sensible Stock Investing: How to Pick, Value, and Manage Stocks. The book has a perfect 5-star reader rating on Click on this link to learn more about the book and its systematic, user-friendly approach to investing, designed specifically for the individual investor:

Day Trading Courses

Day trading is the practice of buying and selling currencies before the close of the Foreign Exchange each day hopefully for the most profit. Anyone with a little money to invest can now trade over the internet. But its best to know a little bit about what youre doing first and theres no shortage of day trading courses to teach you about that.

Courses can be studied online or in face-to-face classes and duration differs between one day to five days - or indefinitely if you teach yourself in an internet correspondence course.

You dont need any specific paper qualifications in order to trade but you do need a few skills and a bit of knowledge that you could gain through a day trading course.

You will need to shop around, because courses can cost anything between $2,000 and $12,000 and they vary massively in quality for these prices its not always true to say that the most expensive option is the best one; it all depends on what you are looking for.

Here are a few of your options so you can see which one might be right for you.


Since Day Trading University came online, there have sprung up literally hundreds of websites offering day trading courses supposedly to university standard but be wary of these claims. These courses are unregulated, especially on the internet. You want to make doubly sure that they offer you the tuition you need.

Makes sure that the website you give your hard-earned cash to, to teach you day trading, is not simply an article directory. Thats not a substitute for a proper course in day trading and is probably not something that you want to be paying too much for. To maximize the benefit of an online course, it should offer you multimedia audio or video clips as well as downloadable activities and charts to continue and consolidate your learning.

Home study courses in day trading are also available in book form. They are easy t peruse at your leisure and you can browse before you buy, so you know exactly what youre getting. But books dont have the multi-sensory approach that a good website will have, with audio and visual streaming. It works for some people though. Many are written by experts in the field.

Face-to-face courses
This is where you might be spending big bucks to learn about day trading: make sure its worth it.

Tuition can be large group, small group or even one-to-one, although you may have to pay through the nose for one-to-one tuition. Be sure you really need it before you lay out your course fee, bearing in mind that if you are assertive and confident enough, *any* face-to-face tuition offers you the chance to ask the tutor(s) any specific questions which you might have.

Here are a few things you should be looking for in a good day trading course, whether that be face to face, online or in a book:
What to trade in
OK so that one was obvious, but how do you spot an opportunity for bigger trading profits? A good course should tell you this. On the flip side, they should inform you of what sort of trading to avoid and why, so you dont make big, costly mistakes.

Trading psychology
What is the best mindset for a successful trader? What opportunities should you look for? Who makes the most money?

Long-term and short-term trading
Now, as were talking day trading here, there is no real long-term, but a good trading course will differentiate between deals you strike every few minutes and ones you should sit on for a few hours. You need to recognize these in order to maximize your profits. Find out how to pick momentum stocks every day to squeeze the most out of your money. Tools of the trade

A good course will not be trying to sell you anything, so watch out for courses and books linked to a particular product or automated trading software. Of course theyll tell you that is the best one but you know your own mind. Make it up yourself without the sales pitch.

However, day trading need not be about constantly sitting at your computer, glued to currency reports. Automated trading is a great boost to day trading, and a good course should give you some ideas of what automation software is out there and how to discriminate between the packages available.

Now you know some of the options as far as day trading courses go and what to look for, you should be able to find the right training option for you.

Frank J Vanderlugt owns and operates

Day Trading

How to Avoid Forex Trading Scams

Currency trading scams can take many forms. Essentially it means defrauding individual traders by convincing them that they can make huge profits by trading in foreign currency.

A retail trader can be asked to pay commissions, buy some sort of software promising high profits, participating in fake managed accounts, false advertising, ponzi or HYIP schemes and plain fraud. All of these will constitute currency scams.

Foreign currency trading involves equal potential for both profits and losses. If somebody claims that there is minimal risk and great profit potential in forex trading, that is also forex scam.

Forex scams mostly occur with non-bank forex traders. The main reason being ignorance of individuals, greed, lack of education, improper selection of brokers or trading platforms and lack of control.

One main reason for forex frauds is that this is a highly unregulated market. There is no central agency which regulates it nor is there any central clearing agency.

There is some regulation of forex market in US by the US Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA), but it is quite loose. CFTC has reported an increase in dishonest practices in non-bank forex trading.

Individual forex currency trading has increased significantly over the last few years and so have fraudulent activities. This may continue like that unless there is further regulation.

According to CFTC, about 23,000 customers were defrauded to the extent of $300 million between 2001 and 2006, leading to the prosecution of 80 people mostly in managed accounts.

Since there is no central currency market, it is very difficult to prove scams and frauds. Technical, over the counter (OTC) and unregulated nature of the forex market make currency trading vulnerable to fraud.

CFTC has recommended 9 guidelines that every individual forex trader should follow while trading foreign exchange. These are:

1.Beware of companies which promise huge profits with minimal risk.

2.There are no guaranteed profits. One should avoid any scheme which promises a fixed amount of return or any other guaranteed level of returns.

3.Avoid companies which guarantee no or least amount of risk. Dont risk your retirement funds in a forex market.

4.Watch your investments in inter bank market. If some forex brokers claim to be engaged in such a market, be cautious and ask for full information.

5.Dont trade on margin. One should understand that one can lose amounts much larger than margin amounts that one pays. One should clearly understand margins, before committing.

6.Dont send or transfer cash on the internet as it can be lost for ever. It is highly unsafe. Many companies do not indicate their addresses or contact numbers on their websites. Avoid these companies.

7.Members of ethnic minorities like Russian, Chinese and Indian should particularly beware of fraudulent companies. They should not trade with their own funds if appointed on these companies as company executives etc.

8.Before committing with any company, one should obtain as much information about the company as possible. It should be verified from 3rd party sources.

9.Avoid dealing with anyone who refuses to divulge their background.

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