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Article Title:
Find a Methodology and Minimize Investment Madness

Article Description:
There are many reasons to be investing these days, and too much 
opportunity to not have your money working for you. However, I 
believe the majority of people dread having to deal with 
investment matters...

Additional Article Information:
772 Words; formatted to 65 Characters per Line
Distribution Date and Time: Fri Feb 10 01:36:36 EST 2006

Written By:     Ulli G. Niemann
Copyright:      2006
Contact Email:  mailto:[EMAIL PROTECTED]

Article URL: 

For more free-reprint articles by this Author, please visit:


Find a Methodology and Minimize Investment Madness
Copyright © 2006 Ulli G. Niemann
Successful Investment

There are many reasons to be investing these days, and too much 
opportunity to not have your money working for you. However, 
I believe the majority of people dread having to deal with 
investment matters, and tend to jump into purchases and then hold 
their breath hoping for the best. After a long day at work and 
taking care of the family, it's hard to get excited about reading 
up on your 401(k) options, Morningstar ratings and fund 

If this sounds like you, there are basically 3 choices.

1. You can have your investments professionally managed,

2. you can continue as you have in the past & keep your fingers 

3. or you can find a methodology that objectifies the investing 
   process (that's buying and selling investments) and helps you 
   maximize your long-term results.

To determine if you need help managing your investments(and this 
doesn't necessarily mean having to pay for advice) you might want 
to ask yourself these questions:

 * Do I really have the time and interest to follow the market 
   closely on a daily basis?

 * Have I done well in the past managing my own investments?

 * Do I really want to add another layer of work and 
   responsibility onto an already busy schedule?

If you're like most people, you would answer yes to some and no 
to others, so how do you decide? If you think you could have or 
should have done better with your investments, then you need some 
help. Don't feel bad. Having counseled hundreds of people over 
the past 15 years I can honestly say that everybody needs some 
help, whether they are aware of it or not.

Why? This could come as a surprise, but, in fact, your financial 
life is a lot shorter than your physical life?

Most people who end up investing don't really start working and 
making money until they are about 25 years old. Considering the 
average retirement age of 65, this gives you only 40 years to 
save and invest wisely.

If you make a poor investment decision, such as trying to stay 
fully invested during a bear market, you could lose big both in 
terms of diminished dollars and wasted time.

To drive home this important point, let me give you an actual 
example involving my own portfolio. For ease of illustration I 
have adjusted the beginning portfolio balance to $10,000.

During the period from 1/25/91 to 10/13/00 my $10,000 investment 
grew to $37,840, which is a 14.67% compounded annual return.

On 10/13/00, based on a methodology I was following, I liquidated 
all of my domestic mutual fund positions and moved 100% to the 
safety of my money market account. Thanks to this move, my 
portfolio retained 100% of its value on that date.

As we now know with hindsight, most people held on to their 
investment positions and have so far lost on average 50% to 60% 
of the value of their portfolios. For this example let us use 

If I had held onto my position, my portfolio would be down to 
$18,920. Last time I hit that level on the way up was in 1995.

In other words, not only would I have lost 50% of my portfolio I 
would have lost even more by having used up 20% (8 years) of my 
total financial life.

How can you avoid mistakes like that in the future? Spend a 
little of your valuable research time looking for investment 
methodologies that allow you to side-step bear markets and let 
you move back in during bull markets. In other words, invest your 
time looking at methodologies instead of investments themselves. 
This will lay the foundation for more effective use of your money 
and time.

If you find a methodology that you like, and it matches your 
investment philosophy, stick with it for the long term. It should 
have the aspect of telling you when to get out of, as well as 
when to get into, an investment.

I suggest you follow these broad guidelines:

 * Don't be afraid to take a small loss to avoid bigger disasters.

 * Stay away from commissioned sales people (because they have 
   incentives other than your best interests), and if you use an 
   advisor, be sure he or she is fee based.

 * Above all, don't get overwhelmed by news, rumors and 
   predictions that are irrelevant to your strategy.

If you take this advice, I guarantee that pretty soon sleepless 
nights will be a thing of the past and you'll be on your way to 
more confidently and successfully (that means profitably) 
managing your investments.

© Ulli G. Niemann

Ulli Niemann is an investment advisor and has been writing about 
objective, methodical approaches to investing for over 10 years. 
He eluded the bear market of 2000 and has helped countless 
people make better investment decisions. To find out more 
about his approach and his FREE Newsletter, please visit:



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