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It’s Stocks, Not Markets, that Bring Investment Success
By Gabriel Nijmeh
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If you are fairly new to investing and looking for some guidance
or if you are seasoned investor, let me introduce you to NAIC.
National Association of Investors Corporation (NAIC) is a non-
profit, tax exempt organization whose membership consists of
investment clubs and individual investors. Founded in 1951, the
mission of NAIC is to provide investment education, information
and support. They prescribe to four basic, yet timeless
investment principles:
1. Invest regularly, regardless of the present outlook for the
economy or stock market. 2. Reinvest all earnings, letting the
power of compounding work for you. 3. Discover growing companies
so that your wealth can grow as their sales and earnings grow
over the years. 4. Diversify your holdings, and don't put all
your eggs in one basket, regardless of how carefully you watch
that basket.
The late George A. Nicholson, Jr. CFA - father of the modern-day
investment club movement, gave these principles to a good friend
in 1939 and told him that if he followed them he would make the
money he needed to start his own business.
"I never thought these principles would be so aggressive,"
Nicholson once told Better Investing editors. "They were meant
to be defensive, to protect investors from losing money. They
turned out to be quite offensive, too." He enjoyed comparing
this approach to investing with his college football
experiences. "The best offense is a strong defense."
I can attest from own experience of such a disciplined
investment program. For the most part, I have invested
exclusively in mutual funds because I never had the time or
experience to properly research and analyze individual stocks.
One day as I was reading through the business section of my
local newspaper, I came across an organization called the
Canadian Shareowner Association (CSA) which piqued my interest.
I started researching it a little more and as a result of my
research stumbled on NAIC's web-site, which then lead me to
learn about Warren Buffet and his style of disciplined
investing. The Canadian Shareowner Association follows a lot of
the investment principles of the American based NAIC.
Membership to CSA is inexpensive and the educational materials
are very informative and drive home the above noted investment
principles. For only $79 a year, I decided to join the CSA which
includes a bimonthly magazine with two company stock studies,
market outlook, financial planning and more. In addition, I have
access to the low cost investing program where I have set-up my
investment plan. The great thing about such a program is that
you can buy shares in any dollar amount from such companies as
Johnson and Johnson, Microsoft, Pfizer, Wal-Mart. Your money is
pooled with other investors and trades are executed during
specified trading windows. For example, if you invested $50 in a
stock that is trading at $30, you will own 1.67 shares. Another
great feature is that dividends are automatically reinvested
allowing for compounded growth.
Whether you join an investment club or are a self-directed
investor, you work at your own pace. Learning how to analyze
companies using the stock selection guide which is a tool that
was created over fifty years ago and is organized in five
sections. The section guidelines will help you determine if the
company would be a good investment by:
1. Evaluating historical sales and profit growth and estimate
future growth 2. Analyzing historical management performance 3.
Analyzing historical profit and price data 4. Evaluating risk
and reward and; 5. Determining the potential return on an
investment.
The software is easy to use and you can download company
profiles with historical information thus saving you data entry
effort. As company financials are released quarterly and yearly,
you just enter the information and keep an eye on performance.
For more information, you can check our
http://www.better-investing.com or http://www.shareowner.com to
find out more information.
Finally, if you want to be a successful investor keep in mind
the following:
1) A focus on the long term. 2) A discipline to apply in
building and managing a portfolio. 3) Patience to persevere.
Bear or bull markets, a sound, disciplined investment strategy
will bring you investment success over the long-term.
About the author:
Gabriel is the editor and webmaster of The Money Advisor -
http://www.the-money-advisor.com. He believes that everyone is
capable of controlling their financial destiny with the right
combination of rich thinking and smart action. The Money
Advisor, a knowledge network of people, articles, tips, e-books
and ideas about making money, saving money and building wealth!
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