Research - Five top macroeconomic websites - Video - investmentexecutive.com

 
Ian Campbell, founder of Campbell Valuation Partners Ltd. and owner of stockresearchportal.com, describes his top five macroeconomic websites. He spoke with Gavin Adamson of Investment Executive at the TMX Broadcast Centre.






Research - Five top macroeconomic websites - Video - investmentexecutive.com

 http://www.investmentexecutive.com/-/video-26637-five-top-macroeconomic-websites


 Investment Executive
 
Investment Executive (IE) is Canada's national newspaper for financial services industry professionals. Launched in 1989, Investment Executive is published 16 times a year and reaches more than 120,000 financial advisors and managers. No other financial media has the depth of IE. The brand has gained the respect of its readers by offering intelligent, informed coverage of the financial services industry and by providing insightful information for advisors on topics as diverse as mutual funds, investment research, technology, estate planning, tax, building relationships with clients and developing products and services for the client of the future.


Our sister publication, Finance et Investissement, offers similar content for francophone advisors.
 
investmentexecutive.com

Our web site is the leading destination for Canada's financial services industry professionals. It delivers complete, comprehensive and up-to-date information. The day's breaking news and building your business stories always appear on our home page. We've also organized stories by categories, such as Industry News, Products or Practice Management, to help you keep up to date in your area of interest. All news stories are fully searchable. IE:TV features videos with a wide range of experts in the financial services industry discussing issues pertinent to advisors and their practices. And in our multimedia centre, you'll find webinars designed to help advisors build their business.

Canadian Investment Guide (CIG)

The Canadian Investment Guide magazine is aimed at consumers and can be kept as a reference tool. It is also used by advisors to prospect and build long-term client relationships.

CIG 2013 is an educational tool designed to help you guide your clients through these uncertain times. It also highlights the long-term track records of the top performing funds as selected by the Morningstar Canadian Investment Awards™

The Art of the Sale

 A revelatory examination of the alchemy of successful selling and its essential role in just about every aspect of human experience. When Philip Delves Broughton went to Harvard Business School, an experience he wrote about in his New York Times bestseller Ahead of the Curve , he was baffled to find that sales was not on the curriculum.  Why not, he wondered?  Sales plays a part in everything we do-not just in clinching a deal but in convincing people of an argument, getting a job, attracting a mate, or getting a child to eat his broccoli.  Well, he thought; he'd just have to assemble his own master class in the art of selling.  And so he did, setting out on a remarkable pilgrimage to find the world's great wizards of sales.  Great selling is an art that demands creativity, mindfulness, selflessness, and resilience; but anyone who says you can become a great salesperson in 15 minutes is either a charlatan or a fool.  The more Delves Broughton traveled and listened, the more he found a wealth of applicable insight.  In Morocco, he found the master rug merchant who thrives in Kasbah by using age-old principles to read his customers.  In Tampa, he met with Tony Sullivan, king of the infomercial, and learned the importance of creating a good narrative to selling effectively.  In a sold-out seminar with sales guru Jeffrey Gitomer, he uncovered the ways successful selling approaches religion, inspiring faith and even a sense of duty in customers.  From celebrity art dealer Larry Gagosian to the most successful saleswoman in Japan, Broughton tracked down anyone who would help him understand what it took to achieve greatness in sales.  Though sales is the engine of commerce and industry-more Americans work in sales than in manufacturing, marketing, or finance-it remains shrouded in myth. The Art of the Sale is a powerful beam of light onto the field, a wise and winning tour of the best in show of this endeavor which is nothing less than the means by which all of us, one way or another, get our way in the world.



The Art of the Sale | Vancouver Island Regional Library | BiblioCommons

THE ART OF THE SALE (reviewed on February 15, 2012)

Sales was not part of the curriculum at Harvard Business School. Former Daily Telegraph journalist Broughton (Ahead of the Curve: Two Years At Harvard Business School, 2008) explains why that’s a big problem.
For the author, sales is where the rubber hits the road, where the deals are done. If a business can't sell its product, of course, it won't survive. More Americans are employed in sales than any other line of work. Not to be confused with marketing, the author's definition of sales goes from his sons' lemonade stand to the Dalai Lama representing the Tibetan people against Chinese repression. Broughton has met with top sellers around the world, traveling to Japan, Morocco and the United Kingdom in search of the keys to success in sales. In addition to his interview research, he examines academic studies, history, self-help literature, academic research on the psychology of selling and the character attributes of sales people. He explores the differences in theory and practice, and he draws from the history of the field, by way of P.T. Barnum and Joseph Duveen, who brought fine-art sales to the U.S. Broughton does not exclude the seamy underside—e.g., pharmaceutical companies recruiting college cheerleaders to “sell” their products to the country's doctors, who “buy more and prescribe more to please ex-cheerleaders than they do for salesmen who look like themselves”—but he supplies plenty of success stories, including Ted Turner, casino magnate Steve Wynn and former AOL executive Ted Leonsis.
Entertaining, balanced and provocative.

---

Pub Date: April 12th, 2012

ISBN: 978-1-59420-332-9

Page count: 320pp

Publisher: Penguin Press

Review Posted Online: Jan. 30th, 2012

Kirkus Reviews Issue: Feb. 15th, 2012

18 Tips For Success From Richard Branson - Business Insider

Richard Branson founded Virgin in 1970 at the age of 20, and he hasn’t looked back.

He’s the only entrepreneur to have built eight separate billion-dollar companies in eight different industries — and he did it all without a degree in business.

"Had I pursued my education long enough to learn all the conventional dos and don'ts of starting a business I often wonder how different my life and career might have been," he writes in his new book,

Like a Virgin: Secrets They Won’t Teach You at Business School.


1. Don't do it if you don't enjoy it.
Running a business takes a lot of blood, sweat, and tears (and caffeine). But at the end of the day, you should be building something you will be proud of.

Branson says, "When I started Virgin from a basement in west London, there was no great plan or strategy. I didn't set out to build a business empire ... For me, building a business is all about doing something to be proud of, bringing talented people together and creating something that's going to make a real difference to other people's lives."

2. Be visible

Sir Freddie Laker, a British airline “tycoon.”

“Make sure you appear on the front page and not the back pages,” said Laker. “You are going to have to get out there and sell yourself. Make a fool of yourself, whatever it takes. Otherwise you won’t survive”.


3. Choose a unique name for your brand


4. You can't run a business without taking risks.


5. The first impression is everything. So is the second.

Branson thinks of one of his favorite sayings when advising about taking business risks: “‘The brave may not live forever—but the cautious do not live at all!’”

Every business involves risks. Be prepared to get knocked down, says Branson, but success rarely comes from playing it safe. You may fail, but Branson also dares to point out that "there's no such thing as a total failure."


6. Perfection is unattainable.


7. The customer is always right, most of the time.


8. Define your brand.


9. Explore uncharted territory.


10. Beware the "us vs. them" environment.

The workplace should be one in which the boss and his or her employees communicate well and work together toward the same goal. “If employees aren’t associating themselves with their company by using ‘we’, it is a sign that people up and down the chain of command aren’t communicating,” says Branson.

If you think there might be discrepancies or tension between employees and management, Branson advises to check with the middle management first to try to uncover the source of the problem and address it head-on.


11. Build a corporate comfort zone.


Employees must feel free and encouraged to openly express themselves without rigid confines so they can do better work and make good, impactful decisions.

"This may sound like a truism," begins Branson, "But it has to be said: It takes an engaged, motivated and committed workforce to deliver a first-class product or service and build a successful, sustainable enterprise."


12. Not everyone is suited to be CEO.

A manager needs to be someone who “brings out the best in people,” someone who communicates well with others and helps an employee learn from a mistake instead of criticizing them for it.



13. Seek a second opinion. Seek a third.

Branson says you must learn to be a good listener in order to succeed, and that means bouncing “every idea you have off numerous people before finally saying, ‘We’ll give this one a miss,’ or ‘Let’s do it.’”

That means being thorough and deliberate before executing any decisions. In business, seeking a variety of opinions "can save you a lot of time and money," says Branson. "Don't tell people about others' suggestions until you've heard what they have to say. In the end you may decide that the best advice is to walk away—and later find out it was the very best solution."

14. Cut ties without burning bridges.

Business ventures with another person, be it a friend or a partner, don’t always work out. If this is the case, successful entrepreneurs know when to part ways.

But just because you decide to go in another direction doesn’t mean things have to end badly, especially with a friend, says Branson. Handle any problems quickly and head-on, and end the relationship as amicably as possible.

15. Pick up the phone.

great to be tech-savvy, but don’t text or email when you should be calling. "The quality of business communications has become poorer in recent years as people avoid phone calls and face-to-face meetings, I can only assume, in some misguided quest for efficiency," Branson says.

Problems are more difficult to solve by text or email, and “there is nothing efficient about allowing a small problem to escalate,” says Branson, when it could have been easily addressed with a phone call.

16. Change shouldn't be feared, but it should be managed.

“Companies aren’t future-proof,” says Branson, and nothing lasts forever. An entrepreneur should be prepared to adapt, and avoid being nostalgic about the company itself.

"Sometimes you have to take your company in a new direction because circumstances and opportunities have changed." If this is the case, Branson advises that you should "find ways to inspire all employees to think like entrepreneurs ... so the more responsibility you give people the better they will perform."

17. When it comes to making mistakes, bounce back, don’t fall down.

Your decision will not always be the best decision. Everyone makes mistakes, but the best thing you can do in the face of a mistake is own up to it.

Honesty isn’t just the best policy, it’s the only policy, notes Branson. When a mistake is made, don’t let it consume you. Uncover the problem and get to work fixing it.


18. Be a leader, not a boss.

Branson sees the classic image of “the boss” as an anachronism. Being bossy is not a desirable trait in a manager, he says. A boss orders while a leader organizes.

"Perhaps, therefore, it is odd that if there is any one phrase that is guaranteed to set me off it's when someone says to me, 'Okay, fine. You're the boss!'" says Branson. "What irks me is that in 90 percent of such instances what that person is really saying is 'Okay, then, I don't agree with you but I'll roll over and do it because you're telling me to. But if it doesn't work out I'll be the first to remind everyone that it wasn't my idea.'"

A good corporate leader is someone who doesn't just execute his or her own ideas, but also inspires others to come forth with their own.








18 Tips For Success From Richard Branson - Business Insider

Source: "Like a Virgin: Secrets They Won’t Teach You at Business School."

Read more: http://www.businessinsider.com/18-tips-for-success-from-richard-branson-2012-9?op=1#ixzz26rh8ZEcB



 

What you need to know before dumping stocks - The Globe and Mail

 Blogger Preface:  This article rang a bell for me.  All my Yuppie friends, who still have money after the 2008 meltdown, feel they need to keep adding to the mutual funds they own in their retirement funds.  They worry about not having enough money to retire as soon as they want or in the style they want.

How about taking the least possible risk (inflation is always a risk, deteriorating buying power) and making adjustments to your retirement plans?  Financial Planners have done a good job of promoting mutual funds and the stock market as the best form of investment to grow your wealth for retirement.  Some people see no alternatives to having their money work for them other utilizing the equities and bond markets.

Careful budgeting is out of fashion with our consumer oriented, 'must-have-it-all' North American society therefore, not bei ng seen as an alternative to aggressive investment plans to produce the extra money to keep the party happening in retirement.


 .........................................................................

 

What you need to know before dumping stocks

Rob Carrick

The Globe and Mail

Last updated Thursday, Jul. 26 2012, 7:01 AM EDT

“If you do not want to invest in equities, that does not make you dumb,” says Carl Richards, author of

The Behavior Gap: Simple Ways to Stop Doing Dumb Things With Money.

This needs to be said because we live in a world where stocks long ago won the image war in investing. Stocks are for hunters, while bonds and guaranteed investment certificates are for gatherers. Smart people buy stocks, sheep buy the other stuff.

If all that’s keeping you in stocks is peer pressure, for God’s sake get out. Don’t be naive about it, though. The move out of stocks requires both sacrifice and the ability to resist temptation.

“I know plenty of people who don’t want to take equity risk any more – it’s not a problem,” said Mr. Richards, a Utah-based adviser who regularly contributes sketches explaining investing concepts to The New York Times’ Bucks blog. “But let’s build a plan where you save a little more and work more in retirement.”

Mr. Richards’ book doesn’t tell you how to invest – it tells you how to think about investing so you make better decisions. The approach makes him the perfect person to consult on the case of the frazzled investor who wants out of stocks.

People who have lost money in stocks may question why he believes that safe investing requires you to save more and work longer.

 Here is a Statistic that might seem surprising:

bonds and stocks have generated nearly equal returns in the past 10 years at roughly 6.5 to 7 per cent annually.  (in Canada)

Can this be repeated in the next 10 years?  

In fact, it’s not unreasonable to expect a big stock market rally at some point in the years ahead that will be coupled with a bear market for bonds.
 ...............................................................

 Blogger Comments: The bull market in bonds has actually persisted for 20 years...

Avoid stocks if you want to shun stock market risk.  This does not mean you are forced into the bond market which may be getting 'long in the tooth' as far as producing high returns.  Maybe you want to stay in shorter term GIC's or buy government of Canada Savings Bonds for yield and liquidity.  If rates begin to rise you will be able to benefit in the money markets and short term instruments, whereas the bond market would enter a bear phase and bonds would lose lose value.
 .................................................................

 Mr. Richards suggests you look at the long-term numbers for the stock market. In Canada, the S and P/TSX composite index averaged 8.7 per cent annually for the 20 years to June 30, a period that includes the bull market 1990s and two market plunges since 2000. The S and P 500 made 8.3 per cent annually over that period, although this return slips to 7.4 per cent for Canadians as a result of our currency appreciating against the U.S. dollar.

If you still feel abused by the stock market, it could be because you have more stock market exposure than you should. Mr. Richards describes an overweighting in stocks as speculating in the market...

While he believes that decades of stock market history argue for having some stocks in your portfolio, he’s realistic about the possibility of more upsets to come.
 ...........................................................................................................................

 Blogger Conclusion:

 RISK and REWARD is the name of the Game and the Financial Services Industry has sold the Returns 'Possible' investing in Mutual Funds, managed accounts and common stocks in general to  the extent that public perception has seen these promises as near guarantees.  Bad idea.


 The 2008 meltdown in equities and financial markets caused by the housing market collapse in America did a great deal to educate the general public about the risks inherent in all markets.

______

What you need to know before dumping stocks - The Globe and Mail

 LINK:  http://m.theglobeandmail.com/globe-investor/personal-finance/drawing-on-your-better-judgment/article4441484/?service=mobile

Define Success to properly set your compass

I found one day in school a boy of medium size ill-treating a smaller boy. I expostulated, but he replied: The bigs hit me, so I hit the babies; that's fair. In these words he epitomized the history of the human race.
- Bertrand Russell

“All you need in this life is ignorance and confidence; then success is sure. ”
― Mark Twain

 
"In the confrontation between the stream and the rock, the stream always wins
- not by strength but by perseverance."
- H. Jackson Brown 

 “Don't mistake activity with achievement.”
― John Wooden

 “Supreme excellence consists of breaking the enemy's resistance without fighting.”
― Sun Tzu, The Art of War

“Whatever the mind can conceive and believe, it can achieve.”
― Napoleon Hill, Think and Grow Rich

 

“Don't aim at success. The more you aim at it and make it a target, the more you are going to miss it. For success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended side effect of one's personal dedication to a cause greater than oneself or as the by-product of one's surrender to a person other than oneself. Happiness must happen, and the same holds for success: you have to let it happen by not caring about it. I want you to listen to what your conscience commands you to do and go on to carry it out to the best of your knowledge. Then you will live to see that in the long-run—in the long-run, I say!—success will follow you precisely because you had forgotten to think about it”

― Viktor E. Frankl, Man's Search for Meaning

“I want to do it because I want to do it. Women must try to do things as men have tried. When they fail, their failure must be but a challenge to others.”
― Amelia Earhart

“Over the years, I have come to realize that the greatest trap in our life is not success, popularity, or power, but self-rejection. Success, popularity, and power can indeed present a great temptation, but their seductive quality often comes from the way they are part of the much larger temptation to self-rejection. When we have come to believe in the voices that call us worthless and unlovable, then success, popularity, and power are easily perceived as attractive solutions. The real trap, however, is self-rejection. As soon as someone accuses me or criticizes me, as soon as I am rejected, left alone, or abandoned, I find myself thinking, "Well, that proves once again that I am a nobody." ... [My dark side says,] I am no good... I deserve to be pushed aside, forgotten, rejected, and abandoned. Self-rejection is the greatest enemy of the spiritual life because it contradicts the sacred voice that calls us the "Beloved." Being the Beloved constitutes the core truth of our existence.”

― Henri J.M. Nouwen

Robbie Burns: To A Mouse

 

 

TO A MOUSE

ON TURNING HER UP IN HER NEST WITH THE PLOUGH, NOVEMBER, 1785

by: Robert Burns (1759-1796)

I

 

EE, sleekit, cowrin, tim'rous beastie,

Oh, what a panic's in thy breastie!

Thou need na start awa sae hasty,

Wi' bickering brattle!

I was be laith to rin an' chase thee,

Wi' murd'ring pattle!

 

II

 

I'm truly sorry man's dominion

Has broken Nature's social union,

An' justifies that ill opinion

Which makes thee startle

At me, thy poor, earth-born companion

An' fellow-mortal!

 

III

 

I doubt na, whyles, but thou may thieve;

What then? poor beastie, thou maun live!

A daimen-icker in a thrave

'S a sma' request;

I'll get a blessin wi' the lave,

And never miss't!

 

IV

 

Thy wee-bit housie, too, in ruin!

Its silly wa's the win's are strewin!

An' naething, now, to big a new ane,

O' foggage green!

An' bleak December's winds ensuin,

Baith snell an' keen!

 

V

 

Thou saw the fields laid bare an' waste,

An' weary winter comin fast,

An' cozie here, beneath the blast,

Thou thought to dwell,

Till crash! the cruel coulter past

Out thro' thy cell.

 

VI

 

That wee bit heap o' leaves an stibble,

Has cost thee mony a weary nibble!

Now thou's turn'd out, for a' thy trouble,

But house or hald,

To thole the winter's sleety dribble,

An' cranreuch cauld!

 

VII

 

But, Mousie, thou art no thy lane,

In proving foresight may be vain:

The best-laid schemes o' mice an' men

Gang aft a-gley,

An' lea'e us nought but grief an' pain,

For promis'd joy!

 

VIII

 

Still thou art blest, compared wi' me!

The present only toucheth thee:

But och! I backward cast my e'e,

On prospects drear!

An' forward, tho' I cannot see,

I guess an' fear!

"To a Mouse" is reprinted from English Poems. Ed. Edward Chauncey Baldwin & Harry G. Paul. New York: American Book Company, 1908.

 Source:
 http://www.poetry-archive.com/b/to_a_mouse.html

  

 Robert Burns by Alexander Nasmyth
(By permission of the National Galleries of Scotland) 

Neuroscience and Financial Markets

This discussion leaves many questions to be answered by investors, like - 

Do you want money managers gambling with your pension money?  Emotional stability is one hallmark of a good investor according to Warren Buffett and John Coates is suggesting that the financial markets are dominated by bipolar emotions exaggerating moves in both up and down movements.  Markets may eventually revert to the mean but do you have the constitution to stay the course amidst the volatility?

CBC Books - The high stakes of Wall Street



John Coates  explains his ideas: 




"The Hour Between Dog and Wolf: John Coates Research in Neuroscience" suggests that the physical reactions on trading floors are similar to war zones or elite sports where the pressure to perform and survive is great. 

In such situations, the Visceral trumps the Rational.

The man behind that view spent years on the trading floor for the big players on Wall St. before studying neuroscience.




The trading floor looks like an adrenaline-fuelled battle zone and the truth isn't far off. 

Research in neuroscience suggests that being a part of this whirlwind world of buying and selling leads to physiological reactions akin to fighting in a war zone or playing in the NBA playoffs. The pressure to perform is huge and the instinct to survive is powerful.



One man who knows much about this is John Coates, author of The Hour Between Dog and Wolf.





Coates was a Wall Street stock trader for years,  at  firms like Goldman Sachs and Deutsche Bank during the dot.com boom of the 1990s.

 Seeing the behaviour of other traders,  he observed hey seemed to operate contrary to how economics is supposed to work.

"Well, I think everybody was seeing it, but I guess I was particularly struck by how anomalous the behaviour was from the point of view of economics," Coates said.

"Traders on the floor had become delusional and euphoric ... They were putting on trades in ever-increasing size with worse and worse risk-reward trade-offs. And I thought this was odd because they hadn't been this way before the bubble, and after it crashed or popped, they weren't like that any more, in fact they were like revelers with a hangover. And they couldn't believe that they had just blown five years' worth of profits on a handful of stupid trades."

There are some chemicals that your body producing that was basically having this narcotic effect on you. And that got Coates to think about the influence of the body on financial risk-taking.

We'd like to think that financial trading is based on solid reasoning and rationality, but human beings are not robots, even if some purport to operate that way.

Emotions get in the way. Fear can sink in. So can the natural instinct to fight. 

 

Through studying neuroscience, Coates explored his theory about what he was seeing on the trading floor: that physiological changes happening within traders as they gain and lose vast amounts of money may be driving the instability of the financial markets.

"The trouble is right now we've got an unstable biology coupled with risk-management practices that expand risk limits during the bull markets and contract them during the bear, and a bonus scheme that rewards high-variance trading."

Coates concludes the biology increases volatility by exaggerating movements on markets whether up or down because the reward system of bonuses encourages high risk trading;  flight or fight drives behavior when markets start crumbling and adrenaline , testosterone, and pleasure seeking kicks in when market start running to the upside.... more bonuses and more high risk taking behavior.  Egos expand brashness and the "greater fool" theory takes precedence over value investing.


Coates suggests: "I think also if there is the biological contributor to this instability, then a way of dampening it is to have more women and older men managing money because they have very different biologies from young men."



First aired on The Current (28/05/12)

Link:

http://www.cbc.ca/books/2012/06/the-high-stakes-of-wall-street.html

There Are No Shortcuts in Investing: Nobel Laureate William Sharpe - YouTube

There Are No Shortcuts in Investing: Nobel Laureate William Sharpe - YouTube



ploaded by stanfordbusiness on Jan 11, 2010

Nobel Laureate William F. Sharpe explains how futile it is to read sure-thing investing books or watch the latest financial guru to find easy answers on weathering the financial crisis or filling the holes in your portfolio.

Sharpe is the Stanco 25 Professor of Finance Emeritus and Nobel Laureate.

Part of a series discussion on "Stanford Pioneers in Science", a program sponsored by Stanford Continuing Education.

Interviewed by Paul Costello, communication and public affairs director, School of Medicine

Story: http://www.gsb.stanford.edu/news/headlines/sharpe_interview_09.html

Recorded: October 7, 2009

Category:

Education

Tags:

• Nobel
• investing
• portfolio
• financial crisis
• advice
• continuing educatin
• Stanford

License:

Standard YouTube License

Characteristics of Great Investors - YouTube

Characteristics of Great Investors - YouTube



ed by stanfordbusiness on Aug 5, 2009

Thomas Barrack, Founder, Chairman, CEO, Colony Capital gives the keynote address to the Principal Investment Conference. Recorded: February 13, 2008

Category:

Education

Tags:

• real estate
• principal investment
• private equity
• investment

License:

Standard YouTube License

Philosophy
My Philosophy of Blogging



There are two ways of spreading light: to be the candle or to be the mirror that reflects it.


- Edith Wharton

Ms. Wharton sums up how I think of blogs. My desire is to reflect the articles and pictures that inspire me when surfing the Web by posting them on my blogs. Blogs create a scrapbook of events to review later inspiring me for a second time. This is a great pleasure and an educational activity providing me with learning missed when I was in school. The Web has demonstrated its great value in generating and spreading new ideas. Tunisia, Egypt, Libya, Occupy Wall Street and other revolutions have gained momentum on the Web.
If you have a favorite cause like animal rights, you can play a part in education the world by posting to your blog. The possibilities are limited only by your imagination.


"To read means to borrow; to create out of one's reading is paying off one's debts."


- Charles Lillard

Communicating my worldview, as seen from my backwater home town situated on an island in the Pacific, is my way of staying engaged with current events.  Multiple Sclerosis has reduced my physical energy and keeps me close to home so I need to adapt and find new ways of relating to the world at large

Principles of Investing

1. Start Investing Now


We say this not just to discourage procrastination, but because an early start can make all the difference. In general, every six years you wait doubles the required monthly savings to reach the same level of retirement income. Another motivational statistic: If you contributed some amount each month for the next nine years, and then nothing afterwards, or if you contributed nothing for the first nine years, then contributed the same amount each month for the next 41 years, you would have about the same amount. Compounding is a beautiful thing.

2. Know Thyself

The right course of action depends on your current situation, your future goals,and your personality. If you don't take a close look at these, and make them explicit, you might be headed in the wrong direction.
Current Situation: How healthy are you, financially? What's your net worth right now?What's your monthly income? What are your expenses (and where could they be reduced)? How much debt are you carrying? At what rate of interest? How much are you saving?How are you investing it? What are your returns? What are your expenses?
Goals: What are your financial goals? How much will you need to achieve them?Are you on the right track?
Risk Tolerance: How much risk are you willing and able to accept in pursuit of your objectives? The appropriate level of risk is determined by your personality, age, job security, health, net worth, amount of cash you have to cover emergencies, and the length of your investing horizon.3. Get Your Financial House In Order

Even though investing may be more fun than personal finance, it makes more sense to get started on them in the reverse order.If you don't know where the money goes each month, you shouldn't be thinking about investing yet. Tracking your spending habits is the first step toward improving them.If you're carrying debt at a high rate of interest (especially credit card debt), you should unburden yourself before you begin investing. If you don't know how much you save each month and how much you'll need to save to reach your goals, there's no way to know what investments are right for you.

If you've transitioned from a debt situation to a paycheck-to-paycheck situation to a saving some money every month situation, you're ready to begin investing what you save. You should start by amassing enough to cover three to six months of expenses, and keep this money in a very safe investment like a money market account, so you're prepared in the event of an emergency. Once you've saved up this emergency reserve, you can progress to higher risk(and higher return) investments: bonds for money that you expect to need in the next few years, and stocks or stock mutual funds for the rest. Use dollar cost averaging, by investing about the same amount each month. This is always a good idea,but even more so with the dramatic fluctuations in the market in the past 10 years. Dollar cost averaging will make it easier to stomach the inevitable dips.

And remember, never invest in anything you don't understand.

4. Develop A Long Term Plan

Now that you know your current situation, goals, and personality, you should have a pretty good idea of what your long term plan should be. It should detail where the money will go: cars, houses, college, retirement. It should also detail where the money will come from. Hopefully the numbers will be about the
same.

Don't try to time the market. Get in and stay in. We don't know what direction the next 10% move will be, but we do know what direction the next100% move will be.

Review your plan periodically, and whenever your needs or circumstances change. If you are not confident that your plan makes sense, talk to an investment advisor or someone you trust.

5. Buy Stocks

Now that you've got a long term view, you can more safely invest in 'riskier' investments, which the market rewards (in general). This requires patience and discipline, but it increases returns. This approach reduces the entire universe of investment vehicles to two choices: stocks and stock mutual funds. In the long run, they're the winners: In this century, stocks beat bonds 8 out of 9 decades, and they're well in the lead again. According to Ibbotson's Stocks, Bonds, Bills and Inflation 1995 Yearbook, here are the average annual returns from 1926 to 1994 (before inflation):
Stocks: 10.2% (and small company stocks were 12.1%)
Intermediate term treasury bonds: 5.1%
30-day T-bills: 3.7%But is it really worth the additional risk just for a few percentage points?The answer is yes. 10% a year for 20 years is 570%, but 7% a year for 20 years is only 280%. Compounding is God's gift to long term planners.

If you buy outstanding companies, and hold them through the market's gyrations, you will be rewarded. If you aren't good at selecting stocks, select some mutual funds.If you aren't good at selecting mutual funds, go with an index fund(like the Vanguard S&P 500).

6. Investigate Before You Invest

Always do your homework. The more you know, the better off you are.This requires that you keep learning, and pay attention to events that might affect you.Understand personal finance matters that could affect you (for example, proposed tax changes). Understand how each of your investments fits in with the rest of your portfolio and with your overall strategy. Understand the risks associated with each investment.Gather unbiased, objective information. Get a second opinion, a third opinion, etc. Be cautious when evaluating the advice of anyone with a vested interest.

If you're going to invest in stocks, learn as much as you can about the companies you're considering. Understand before you invest. Research, research, research.Read books. Consider joining an investment club or an organization like the American Association of Individual Investors . Experiment with various strategies before you put your own money on the line. Examine historical data or participate in a stock market simulation. Try a momentum portfolio, a technical analysis portfolio, a bottom fisher portfolio, a dividend portfolio,a price/earnings growth portfolio, an intuition portfolio, a megatrends portfolio,and any others you think of. In the process you'll find out which ones work best for you. Learn from your own mistakes, and learn from the mistakes of others.

If you don't have time for all this work, consider mutual funds, especially index funds.

7. Develop The Right Attitude

The following personality traits will help you achieve financial success:

Discipline: Develop a plan, and stick with it. As you continue to learn,you'll become more confident that you're on the right track. Alter your asset allocation based on changes in your personal situation, not because of some short term market fluctuation.
Confidence. Let your intelligence, not your emotions, make your decisions for you.Understand that you will make mistakes and take losses; even the best investors do.Re-evaluate your strategy from time to time, but don't second-guess it.
Patience: Don't let your emotions be ruled by today's performance.In most cases, you shouldn't even be watching the day-to-day performance, unless you like to.Also, don't ever feel like it's now or never; don't be pressured into an investment you don't yet understand or feel comfortable with.The following personality traits will hurt your chances of financial success:
Fear. If you are unwilling to take any risk, you will be stuck with investments that barely beat inflation.
Greed. As an investment class, 'get rich quick' schemes have the worst returns.If your expectations are unrealistically high, you'll go for the big scores, which usually don't work.It is generally a good idea to avoid making financial decisions based on emotional factors.

8. Get Help If You Need It

The do-it-yourself approach isn't for everyone. If you try it and it's not working, or you're afraid to try it at all, or you just don't have the time or desire, there's nothing wrong with seeking professional assistance.

If you want others to handle your financial affairs for you, you will nevertheless want to remain involved to some degree, to make sure your money is being spent wisely.

source:
http://www.investorguide.com/igu-article-418-investing-basics-principles-of-investing.html

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