Finance and Investing Related Posts

How to achieve financial planning, management, and investing success. How to become a successful investor in stocks and other investment alternatives.

STRATEGIES FOR LOSS MITIGATION AND BUYING INTO STOCK MARKET DOWNTURNS

Posted on by Joseph M. Brennan Jr.

There is opportunity no matter what happens in the stock market. In a previous post, I talked about how taking too much risk in the stock market at the wrong time can shred your life savings. If you experienced downturns in the past, you probably learned this painful but valuable lesson several years ago. I learned this valuable lesson during the dot com bubble 20 years ago. Also, in a previous post, I shared the eye-opening fact that if the stock market drops 50%, then it has to gain 100% just to break even. I am now going to show how you can take advantage by buying into a falling market like this.

Consider the following set of loss/gain percentage pairs. If from peak to trough the stock market (or individual stocks for that matter):

  • loses 20%, then, if you are fully invested at the time, you will gain 25% at the break even point (not including dividends)
  • loses 25%, then, if you are fully invested at the time, you will gain 33% at the break even point (not including dividends)
  • loses 33%, then, if you are fully invested at the time, you will gain 50% at the break even point (not including dividends). This is about where the stock market is right now.
  • loses 50%, then, if you are fully invested at the time, you will gain 100% at the break even point (not including dividends)
  • loses 75%, then, if you are fully invested at the time, you will gain 300% at the break even point (not including dividends)

Most of the time it takes just a few years for the stock market to recover to its previous high. So, it helps to not only have a loss mitigation strategy in your stock market investing toolbox but also a strategy for buying into stock market downturns.

No one knows where the bottom will be in this current downturn, but I just continue buying into the market as new lows are experienced. I am currently about 35% invested and plan to grow that over time. Now, although I learned a valuable lesson during the 2000-2002 dot com bubble which helped a lot during the 2007-2009 financial crisis, the additional lesson I learned from the financial crisis which I plan to apply to this downturn is resisting the urge to sell too early. This time I plan to buy into the stock market and hold it for a lengthy period of time. To be a successful investor you have to evolve and adjust your approaches over time. Because, no matter what happens, there are lessons to be learned and ways to improve performance.

Now, if you were getting fairly close to reaching your financial goals, prior to this current downtown, and found you’ve been taking too much risk, well, learn these valuable lessons now and make adjustments for the future and it will help you tremendously. If you are a long distance from reaching your financial goals or are a new or future investor then learn these lessons for the years to come and remember to reduce your risk as you begin approaching your financial goals and then buy into downturns so you can capitalize on them. Remember, there is opportunity no matter what happens in the stock market.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing (https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/).

Make it your goal to learn these investment techniques so that you can progress towards achieving the financial freedom and independence you’ve always dreamed of.

#stocks #investing #stockmarket #success

A DISCIPLINED APPROACH FOR INVESTING IN A FALLING MARKET

Posted on by Joseph M. Brennan Jr.

There is opportunity no matter what happens in the stock market. One of the worst things you can be as an investor is an emotional investor. So, try to get your emotions out of it and execute with a sense of discipline.   Fortunately for me, I’m still strongly in positive territory for 2020 which is not bad given that the overall stock market has taken quite a tumble.

Over the past year I’ve been employing my stock market correction strategy which involves shorting the overall stock market and selling periodic gains and repeating this (I used the UVXY to short the market).  

At the beginning of March, I switched things up and started using my bear market strategy which involves buying into the stock market a little at a time, selling significant rallies, and then continuing to buy into the stock market until it appears to go through a bottoming process. I first developed this strategy after the 2000-2002 dot com bubble. I lost a lot of money then (as most people did).   My first use of this strategy was during the 2007-2009 financial crisis and I did much better than I did during the dot com bubble. Since then I have refined it a bit more. We’ll see how well it works this time. Hopefully, the refinements will allow me to do even better this time than I did during the financial crisis.

To be a successful investor you have to evolve and adjust your approaches over time. Because, no matter what happens, there are lessons to be learned and ways to improve performance.   The reason I developed this bear market strategy is because once the overall stock market loses a significant percentage of its value, it takes a much larger gain to break even. Consider the following set of loss/gain percentage pairs. If from peak to trough the stock market (or individual stocks for that matter):  

  • loses 20%, then it has to gain 25% to break even
  • loses 25%, then it has to gain 33.3% to break even
  • loses 33%, then it has to gain 50% to break even
  • loses 50%, then it has to gain 100% to break even
  • loses 75%, then it has to gain 300% to break even

So, it helps to have a loss mitigation strategy in your stock market investing toolbox.   Another disciplined approach I’ve used as a loss mitigation strategy involves the following:  

  •  Case #1: If a majority of my investment account is invested in the stock market, I ask myself, based on where the overall stock market is right now (e.g., the S&P 500 Index is what I frequently use), what is the probability of the next 10%+ move in the stock market being down? If I assign a 15% probability of this happening (which means I think there’s an 85% probability of the stock market going up by this much), then I adjust my investment account such that 15% of it is in cash (or other low risk alternatives).
  • Case #2: If a majority of my investment account has been cashed out, I ask myself the opposite: based on where the overall stock market is right now (e.g., the S&P 500 Index), what is the probability of the next 10%+ move in the stock market being up? If I assign a 20% probability of this happening (which means I think there’s an 80% probability of the stock market going down by this much), then I adjust my investment account such that 20% is invested (and 80% remains in cash or other low risk alternatives). I invest in individual stocks, index funds, and other stock alternatives at times. Index funds tend to move with the market indexes they track while individual stocks tend to exaggerate the moves higher or lower by the market indexes.
  • Case #3: If my investment account is only 50% invested in the stock market, then I ask myself: based on where the overall stock market is right now (e.g., the S&P 500 Index), is it more likely for the next 10%+ move in the stock market to be up (Case #2 above) or down (Case #1 above)? I then assign a probability and make adjustments to my investment account accordingly as shown above.

 It’s not easy assigning probabilities (and being right), so many people might be tempted to just stay put. However, you should at least be mindful of the appropriate risk you should be taking given where you are today. If you are a long way from reaching your financial goal, then a majority of your investment account should be invested in the stock market for much of the time (Case #1 above). If you are close to reaching your financial goal, then a majority of your investment account should be cashed out or invested in low risk alternatives for much of the time (Case #2 above).  

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing (https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/).

Make it your goal to learn these investment techniques so that you can progress towards achieving the financial freedom and independence you’ve always dreamed of.

#stocks #investing #stockmarket #success

A DISCIPLINED APPROACH TO INVESTING USING PERCENTAGES AND PROBABILITIES

Posted on by Joseph M. Brennan Jr.

I wanted to offer something which might be helpful to some of you because a lot of people are freaking out about the stock market right now. But there is opportunity no matter what happens in the stock market. One of the worst things you can be as an investor is an emotional investor. So, try to get your emotions out of it and execute with a sense of discipline. Here’s a disciplined investing approach you can try which I’ve used which might be helpful:

  • Case #1: If a majority of your investment account is invested in the stock market, ask yourself, based on where the overall stock market is right now (e.g., the S&P 500 Index is what I frequently use), what is the probability of the next 10%+ move in the stock market being down? If you assign a 15% probability of this happening (which means you think there’s an 85% probability of the stock market going up by this much), then adjust your investment account such that 15% of it is in cash (or other low risk alternatives).
  • Case #2: If a majority of your investment account has been cashed out, ask yourself the opposite: based on where the overall stock market is right now (e.g., the S&P 500 Index), what is the probability of the next 10%+ move in the stock market being up? If you assign a 20% probability of this happening (which means you think there’s an 80% probability of the stock market going down by this much), then adjust your investment account such that 20% is invested (and 80% remains in cash or other low risk alternatives).  You can invest in individual stocks, index funds, and other stock alternatives. Index funds tend to move with the market indexes they track while individual stocks tend to exaggerate the moves higher or lower by the market indexes.  
  • Case #3: If your investment account is only 50% invested in the stock market, then ask yourself: based on where the overall stock market is right now (e.g., the S&P 500 Index), is it more likely for the next 10%+ move in the stock market to be up (Case #2 above) or down (Case #1 above)? You would then assign a probability and make adjustments to your investment account accordingly as shown above.  

It’s not easy assigning probabilities (and being right), so many people might be tempted to just stay put. However, you should at least be mindful of the appropriate risk you should be taking given where you are today. If you are a long way from reaching your  financial goal, then a majority of your investment account should be invested in the stock market for much of the time (Case #1 above). If you are close to reaching your  financial goal, then a majority of your investment account should be cashed out or invested in low risk alternatives for much of the time (Case #2 above).

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing (https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/).

Make it your goal to learn these investment techniques so that you can progress towards achieving the financial freedom and independence you’ve always dreamed of.

#stocks #investing #stockmarket #success

PROTECTING GAINS IS PARAMOUNT TO INVESTING SUCCESS

Posted on by Joseph M. Brennan Jr.

Always be cautious about finance and investing statistics. I can’t tell you how many times I’ve read something like: “Stock X fell 75% last year and is now up 150% this year!”

Hooray! Let’s break out the wine glasses then! Oh, but wait a minute. If I started out with $100 on Stock X, and it dropped 75%, that means I ended the year with $25.00. Now, if Stock X has jumped 150% this year, that means I now only have about $62.50 which is still about 38% less than what I started with.

Yeah. You might want to put those wine glasses away for another couple of years or so. This is why when you are nearing your investment goals that protecting your gains becomes of the utmost importance. So, always remember this, learn this valuable lesson, and don’t be misled by finance and investing statistics such as the above.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing (https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/).

Make it your goal to learn these investment techniques so that you can progress towards achieving the financial freedom and independence you’ve always dreamed of.

#stocks #investing #stockmarket #success

ONE KEY TO INVESTING SUCCESS IS FLEXIBILITY OF APPROACH

Posted on by Joseph M. Brennan Jr.

I would argue that perhaps the worst trait you can have as an investor is overconfidence. Many investors who experience outsized gains, attribute this success to their superior knowledge, skills, and expertise. The resulting overconfidence often leads to excessive risk taking and catastrophic failures in future years.

It’s okay to make an educated guess on how you think things might go and to position yourself accordingly, but never bank on it 100%. Because the finance and investing world is influenced by a complex, dynamic multitude of variables. And while some of these might be somewhat apparent, many others will not be. And the combined interactions and overall effects across these can result in outcomes far different than you might have initially anticipated.

So, while I do spend time trying to predict how things might go and positioning myself accordingly, it’s never 100%. If I feel very strongly about something, I might go as far as 70% (if that). I then simply observe and react to whatever happens instead of sticking to some static initial position.

As such, either way things go – whether up or down – I always have a plan. If the opposite happens from what I anticipated and positioned for, I’ll still earn gains. Just not as much as I would had things gone my way. And it’s this flexibility of approach which can lead to steady and consistent gains over time. Because you never know what might actually happen even though you might think you do. And coming to this realization can be one of the most important lessons you can learn as an investor. Simply have a plan no matter which way things might go and react to whatever happens however it happens. If you do this, you will earn steady and consistent gains over the years and decades of your life.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing (https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/).

Make it your goal to learn these investment techniques so that you can progress towards achieving the financial freedom and independence you’ve always dreamed of.

#stocks #investing #stockmarket #success

HAPPINESS TIP: EMBODY AN ATTITUDE THAT EMPOWERS SUCCESS

Posted on by Joseph M. Brennan Jr.


Most people consider knowledge, skills, and expertise to be the key determinants of one’s success in life. And while these aspects certainly do contribute to one’s success, I would argue there are two underappreciated factors which probably contribute much more to success than most people realize or give credit for:

Luck. The under appreciation of the role luck plays in the successes experienced in life often leads to overconfidence in one’s knowledge, skills, and abilities. Most people who experience outsized success, attribute this success to their own superior knowledge and expertise. The resulting overconfidence often leads to excessive risk taking and catastrophic failures and outcomes. Daniel Kahneman in his outstanding book, “Thinking Fast and Slow,” indicates that poor performance is typically followed by improvement. Likewise, good performance tends to be followed by underperformance. Each of these are due to random effects alone. This is why many of the best fund managers, athletes, and CEOs celebrated one year, tend to underperform in future years and why the worst performers often outperform their peers in the years that follow. Kahneman identified multiple studies in his book which supported this. It’s simply a reversion to the mean effect.

Attitude. Having a positive attitude towards yourself, towards others, and towards life overall is instrumental for success and is something I never take for granted. If you are the type of person who genuinely cares about others, cares about the planet, cares about yourself, generously shares what you have with others, and lives with a sense of genuine appreciation then success is virtually guaranteed. The more you fill your life with caring, sharing, and appreciation, the happier you will feel and the more rewarding your life will become. Three ways to achieve this include thinking good, doing good, and being good:

  • Thinking good involves having positive thoughts towards yourself, towards others, and towards the planet whether focusing on the past, present, or future.

  • Doing good involves making positive contributions towards others and towards your surroundings.

  • Being good involves having a positive disposition and a good-hearted nature as well as a high level of integrity.


Filling your life with caring, sharing, and appreciation in these regards not only creates a happier you, but also creates happier surroundings, success, and abundance throughout the months, years, and decades of your life. 

Of the above factors, I would argue that attitude is the key determinant of success and that this is probably more important than the other two factors combined. For example, if you have been following my investment related activities (https://brighterdayslifecoaching.com/stock-market-activities/) you know that this year I have experienced outsized gains in the stock market. And while most people would tout their superior knowledge and skills as being the primary factor for their success, I attribute this success much more to attitude than knowledge or skill.

For example, anytime something great happens for me, financially speaking (or otherwise), I’m a big believer in using at least part of the proceeds to offer unique opportunities to others. I create a Beneficiaries Reserve Fund for this purpose which I add to over time.

Essentially, the way my Beneficiaries Reserve Fund works is this: I have a financial target to meet and if I exceed that target, then half of the excess amount goes to me for personal use and the other half goes to the Beneficiaries Reserve Fund. It’s just a promise I’ve made to myself and kept over my years of investing.

Well, I’ve been building up this fund over several years and on the 4th of March I decided to put it to good use by helping someone who has struggled for years with a large amount of debt and high-interest-rate credit cards. I simply wanted to offer this person the stress-free experience of living debt free and the wonderful peace and joy and freedom that it brings. Earlier that day, I had earned a 13% gain on my investments. What’s interesting is what happened after I made that decision. As of Thursday (9 April), my gains had sky rocketed to 64% in only a month’s time. I earned much more in those four weeks than everything I had offered to help the friend in need. Coincidence? Perhaps. But I don’t live my life believing in coincidences. And although luck and skills might have played a role, I believe the largest factor was due to attitude and the way I live my life.

And the above is just one example of the many times I’ve been blessed with happiness and success in my life. For another recent example, a year ago I sold my house for $335,000 and used the proceeds to buy CDs paying 3.2% interest. Well, when I checked recently, the value of the house I sold was only $280,000. So, had I waited to sell, not only would I have sold it for much less but the CDs I bought would have paid about half of what I got a year ago.

I make it a daily habit to extend kindness, to be appreciative, and to value and care for the planet (humans and non-humans alike). I won’t get into the details in this post, but for those who might have interest, you can read a summarized version of the “JOE BRENNAN GRAND PHILOSOPHY ON LIFE” here: https://brighterdayslifecoaching.com/happiness-tip-how-to-create-a-happy-priceless-beautiful-life-which-costs-nothing/ 

Try living your life this way and see if you don’t become blessed and showered and empowered with success and happiness in ways you never thought, imagined, or dreamed was possible. This is something which never ceases to amaze me and it’s happened many, many times throughout the years and decades of my life. So, I encourage you to live your life in this fashion. You won’t regret it. Because there is not one day that goes by where I am not filled with an overabundance of joy and loving appreciation for all my life has become. So, be kind to others, be appreciative, and care for the planet and you might be amazed at just how wonderful your life becomes. Because you will create happier surroundings, a happier you, and be continually blessed in the months, years, and decades to come. So do this for yourself (and others). And do it often.

This and other happiness tips and topics are provided throughout my self-help, happiness, and investment oriented books: https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/


#selfimprovement #selfhelp #selfdevelopment #intention #fulfillment #success #inspiration #happiness #peace #mindfulness #investing #stocks

Create Happiness and Abundance Through Appreciation

Posted on by Joseph M. Brennan Jr.

One way in which to create happiness and abundance is through appreciation; appreciation of who you are, appreciation of what you have, and appreciation of who you have in your life. The more you fill your life with appreciation the happier you will feel and the more rewarding your life will become. Three ways to achieve appreciation include thinking good, doing good, and being good.

Thinking good involves having positive thoughts towards yourself, towards others, and towards the earth/universe whether focusing on the past, present, or future.

Doing good involves making positive contributions towards others and towards your surroundings.

Being good involves having a positive disposition and a good hearted nature as well as a high level of integrity.

Filling your life with appreciation in these regards not only creates a happier you, but also creates happier surroundings and abundance throughout the days, months, and years of your life.

Consider this: Imagine that you loaned the use of your home to a house guest while you were away. When you return you find your home has been thoroughly cleaned, polished, and beautified to the extent that it is in far better condition than when you first left. In addition, you receive a card and gift thanking you for the use of your home. How wonderful would you feel and how likely would you be to help and do nice things for this person in the future? Well, the spiritual world operates in very much the same fashion whether your belief system involves God, the universe, or some other higher power or spiritual representation. The more you express genuine appreciation the more you will have in your life to be appreciative of; the spiritual world continually responding to your appreciation by blessing you with more to be appreciative of.

In my own life, I have experienced abundance through multiple channels. For example, I’ve earned an average of 37% per year in the stock market since 2010 which is a five year gain (on average) in each and every year. I have handily beat each of the stock market indices and most, if not all, fund managers and investment firms. Perhaps the success I’ve experienced to date has more to do with the universe blessing me in response towards my appreciation in my attempts to think good, do good, and be good for much of the time and less to do with my investment experience and expertise; a part time experience and expertise which pales in comparison with that of fund managers and investment companies who perform this kind of work on a regular full time basis and have done so for decades or longer. I’m not saying that what I’ve learned about financial management and investing, and the techniques and strategies I’ve developed, evolved, and employed over time, have not contributed to my success in these regards. I’m just saying that there might be something more to the picture. Thus, perhaps this appreciation concept is something worth pondering and carefully considering in your own life.

Now, one way that I express appreciation involves reducing waste through conservation and actively reusing or recycling items to the greatest extent possible. For example, I seek to minimize my use of paper, plastic, and power and actively collect recyclables as I come across them whether walking, running, or performing other day to day activities. Every time I do this, I express appreciation to the universe for all it has blessed me with in the beautiful, wonderful life that I get to enjoy each and every day. In this fashion, I am much like that appreciative house guest I mentioned earlier; creating a cleaner, more beautiful, and more sustainable planet over time in joyful appreciation of the happy life and surroundings that have been so generously loaned to me for all of my days by the most gracious of givers. And the universe continues to bless me for my appreciation.

So always remember: The more you express appreciation the more you will have in your life to be appreciative of. Not only will you feel happier just in realizing how much you presently have in your life to be thankful for and appreciative of, but you will create happier surroundings and be continually blessed in the days, months, and years to come. In addition, every time you express your appreciation you will notice more of what you have in your life to be appreciative of. And this will make you feel wonderful. So do this for yourself (and others). And do it often.

This and other happiness and self-improvement related tips are provided throughout my self-help oriented books: https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/ 

#selfimprovement #selfhelp #selfdevelopment #intention #fulfillment #success #inspiration #happiness

Is it a Time for Caution in the Stock Market?

Posted on by Joseph M. Brennan Jr.

In examining the three year chart of the S&P 500 index (SPX) there appears to be potential changes in the behavior of the SPX over the past few months as indicated in Figure 1 below.

 

image

Figure 1: Annotated SPX chart (SPX chart provided courtesy of stockcharts.com)

For about the first two and a half years of this three year chart the SPX was in a strong uptrend as indicated by the green line in Figure 1 above. This period of time was characterized by what I will refer to as “checkmark” shaped recoveries in which drops from previous highs were followed by higher highs (see blue checkmarks above the green uptrend line).

Since the Summer months of 2015, however, a different pattern appears to be emerging suggesting that the SPX might be in the beginning stages of a downtrend as indicated by the red line in Figure 1 above. I ponder whether the future might be characterized by “reverse checkmark” shaped recoveries in which drops from previous highs are followed by lower highs. We might already be seeing hints of this (see the two blue reverse checkmarks below the red downtrend line).

If the red downtrend line above is confirmed we could see a drop in the SPX of 10% or more from where it is today. Thus, we might be entering a period of time where we’ll start seeing the lower highs and lower lows which are characteristic of downtrends. As such, it might be wise to proceed cautiously and to manage your risk. I’ve written several articles on how to effectively manage risk (click on “Financial Planning, Management, and Investing Related Posts” on the sidebar to the right or below, depending upon which device you are using, for helpful tips on managing risk and how to become a solid investor overall).

Those who are interested can follow my stock market activities here.

You can also follow me on twitter if you like at Joseph M Brennan Jr @ Brighter Days Life Coaching.

Retirement Goal Reached!

Posted on by Joseph M. Brennan Jr.

So… I’ve done it! I’ve reached and exceeded my retirement goal which means next year I will seek to negotiate a part time schedule at work. All of this investing experience has paid off and I can’t tell you how wonderful it feels to achieve financial freedom at last! I have one more financial goal that I am seeking to reach which is why I want to continue working part time next year. Once I achieve that it’ll be “Bye bye working world and paycheck dependency!” If I knew what I know about investing years ago I would have experienced this financial freedom years ago! Have a happy Sunday everyone! I know that I sure will!

2016 Goal of Financial Freedom and Independence

Posted on by Joseph M. Brennan Jr.

Happy Holidays everyone! So… In preparation for the coming year… My primary goal for 2016 is to get to the point that I can fully support myself financially via my investments. I’ve had a record year in the stock market this year so I’m getting close. Based on where I presently stand I’d need to earn about 6.5% per year in the stock market to fully support myself without reducing my account balances. This might be sustainable given that the long term average for stock market returns is about 7% per year, but I’d feel much better about things if I could get down to only needing to earn about 5% per year. We’ll see where things stand at the end of 2016, but my goal is to reach this. If I do I’ll be looking to cut back to part time at my job or perhaps to even stop working the job completely. It’s such a wonderful feeling knowing that I’m getting so close to being able to do this! So now you know why I’ve been spending so much of my off time at Starbucks! I’ve been researching stocks, developing and refining my investment strategies and approaches, and writing a series of financial planning, management, and investing books which I also plan to complete by the end of 2016. So soon, all of my investing “secrets” will be revealed!

I’m determined to achieve this financial freedom and independence goal and I can help you with achieving this as well. Please contact me if you need any assistance with any of your financial planning, management, and/or investing needs as this is one of the areas that I actively perform life coaching in. Also feel free to click on “Financial Planning, Management, and Investing Related Posts” on the sidebar to the right or below (depending upon which device you are using) for helpful tips on how to become a solid investor.

You can also follow me on twitter if you like at Joseph M Brennan Jr @ Brighter Days Life Coaching.

#investing #stocks