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Beating the Market, 3 Months at a Time: A Proven Investing Plan Everyone Can Use

Name: Beating the Market, 3 Months at a Time: A Proven Investing Plan Everyone Can Use
ISBN: 9780768681789

by Gerald Appel, Marvin Appel

January 2008

Beginner

240 pages

4h 37m

English

Pearson

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Copyright
Dedication
Acknowledgments
About the Authors
Introduction
Financial Planning and Sharp Investing Are Not Just for the Older Folk...Which Is Where This Book Comes In...Why and How to Become a Self-Sufficient InvestorTo Sum Up the AlternativesWhat You Will Learn from This Work
1. Putting Together a Winning Investment Portfolio
The Stock Market Will Not Be Neglected...The Key Elements of Your Winning Investment PortfolioBalanceDiversificationCommodity-Based Investments as a Hedge Against InflationOutperformanceGoalsRisk Levels Associated with Investments of Varying Investment ObjectivesObservationsThe Preferred Mix for Most InvestorsHow Do You Decide on Your Blend?“He Who Fights and Runs Away Lives to Fight Another Day...”But What Happens if You Lose?Just to Restate...Portfolio Composition
2. Advanced Diversification and Risk Management
An Example of Well-Balanced DiversificationPortfolio Diversification Based on Industry Sector and GeographyUsing Mutual Funds to Represent Diversified SectorsA Basic StrategyActive Diversification Strategies—To Maintain the BalanceCase HistoryDrawbacks to RebalancingA Compromise Solution That Provides the Best of Both WorldsOne More ExampleSumming UpReferring to Historical Drawdowns to Measure RiskThe Perils of Minimizing RiskThe Midcap SPDR Exchange Traded Fund—Another ExampleDrawdowns Are Often Worse Than You ThinkMentally Making the CorrectionRisk Control Is Vital, Financially and EmotionallyBond-Stock Balanced PortfoliosThe Two Major Vehicles for Diversified Investment: Mutual Funds and Exchange Traded FundsPooled Capital—Professional ManagementBenefits of Mutual FundsBuying and Selling Mutual FundsYou Get an Immediate PortfolioThe Downside—Nothing Is for NothingScurvy Selling Practices of Mutual Funds and How You Can Beat ThemHow to Beat the SystemSumming UpSources of Information Regarding Mutual FundsExchange Traded Funds (ETFs)—The New Kid on the BlockEnter the SPDRsSpecial Perks Provided by ETFSNothing’s for NothingExamples of ETFsFurther Information
3. Prelude to Long-Term Wealth—Introduction to the Stock Market
Broad Portfolios at Bargain Rates—Index FundsThe Types of Mutual Fund and ETF Portfolios You Should Invest inWhales Versus Minnows: Large and Small Company StocksBargain Hunting or Headline Chasing: Value Versus GrowthOwn Real Estate Through the Stock MarketConclusion
4. Nothing Succeeds Like Success
Most Investors Behave as if Past Performance Will Repeat ItselfHow to Pick Superior ETFs—A Momentum StrategyFirst Step: Select ETFs to Represent the Key Investment StylesSecond Step: Select the Two Top ETFs Every Three MonthsHistorical Results of the Quarterly ETF Selection StrategyThree-Month Strategy with Mutual FundsResults of Quarterly Fund Selection Based on MomentumHow to Find Which Funds Are in the Top 10%Diversification Is Important—Do Not Use This Strategy on Individual StocksConclusion
5. Worldwide Opportunity
An Overview of the International Equity LandscapeStrategy 1—The One-Decision International Mutual Fund PortfolioThe Importance of Currency Exchange RatesHistorical Performance of Different International Markets: Europe, Japan, and Emerging Market Countries—The Old World Still Packs a PunchJapan and the Rest of the Pacific/Asian Region: Two Very Different StoriesEmerging Markets: The Leaders of TomorrowDiversificationStrategy 2—Three-Month Momentum Selection Strategy with Europe, Japan, and Emerging MarketsHow to Put the Three-Month Plan in Motion with ETFsConclusion
6. Bonds—An Investment for All Seasons
How Much Should You Put in Bonds?Interest Income from Bonds—You Become the BankerInterest Rate RisksYield to MaturityA Simple Strategy to Manage Interest Rate Risk—Bond LadderingHow to Tell if the Bond Market Is SafeReducing Interest Rate Risk While Keeping the ReturnPerformance of the Interest Rate Trend IndicatorImplement the Interest Rate Model Using Exchange Traded Bond Index FundsInvestment-Grade Bond Mutual FundsConclusion

7. Special Bond Market Investment Opportunities
Higher Interest Payouts... But Greater RiskBonds Have Credit Scores TooFloating Rate Bank Loan Funds—A Special Kind of High-Yield InvestmentThe Safest Investment Anywhere—Treasury Inflation-Protected Securities (TIPS)Municipal Bonds—Don’t Share with the Tax CollectorDifferent Types of Bond Investments to Suit Your StyleConclusion
8. Treasure in the Junkyard—How to Tame High Yield Bonds
Bond Default—The Big Risk in High Yield BondsHow to Protect Yourself: DiversificationInvest in the Best High Yield FundsRespond to Market ChangesThe First Step in Managing Risk Is to Recognize ItHow to Pick High Yield Bond FundsThree Months to Success with High Yield Bond FundsMore Gain, Less Pain! Results of Risk-Control with High Yield Bond FundsThree Special High Yield Bond FundsConclusionAppendix to Chapter 8: How to Download Total Return Data from Yahoo Finance
9. The Definitive Portfolio—The Whole Is Greater Than the Sum of Its Parts
Alternative Portfolio HoldingsThe Four Key Strategies—A Performance ReviewTwenty-Eight Years of OutperformanceDiversifying and Combining to Make the Definitive Portfolio More Profitable Than the Sum of Its PartsFirst Mission Task—Produce Higher Rates of Return at Lower Risk in Your Equity PortfolioDiversification Again Improves ResultsImproving Returns by Changing the Portfolio BlendYou Can Eat Better or Sleep Better—The Choice Is YoursThe Income Component—Preparing a More Profitable Brew from High Yield and Investment-Grade BondsImproving Results with a 50–50 BlendThe Definitive Portfolio of Stocks and Bonds—Returns Sufficient to Meet Your Financial Goals, with Acceptable Levels of RiskThe Final Culmination of Your Study ProgramThe Solution—Blend in the BondsImproving Returns—If You Can Afford the RiskA Final Review of the Steps You Will Need to Take to Achieve Investment Success with the Definitive PortfolioStock Components
10. Don’t Let Them Blow You Off the Planet!
The Bad NewsProjections of Trouble Time FramesSumming Up the SituationWorse Yet?Government Employees May Be No Better Off...Corporations Have Already Begun to Welch on Their Promises...Rising Medical Expenses, Reduced Medical Cost Protection...Are They Trying to Blow Us Off the Planet?
11. Maybe the Politicians Can’t Do It, but You Can—Planning and Carrying Through a Long-Term Financial Program
Flying Today, Paying Tomorrow Has Become the National Pastime...Credit Cards Feed the FantasyTake the Quick Credit Card Self-TestInstant Money-Saving IdeaSecond Instant Money-Saving IdeaExtending the Concept of Paying by Cash to Accumulate the Assets You Will Need Throughout LifeHow Much Money Will You Need for Retirement Purposes?The Magic Twenty!CalculationAdjustments That May Be RequiredMaking the Adjustment for InflationCommentaryExamples of Asset Growth—Relatively Modest Rate of Growth of Relatively Moderate Capital Base, with Relatively Moderate Annual Additions to Your AssetsThe Effects of Higher Rates of Return Are ConsiderableEven Smaller Asset Bases Can Add Up Over the Years if You Stay Consistent...Starting Earlier in Life Can Make a Substantial Difference in the Growth of Your AssetsThe Power of CompoundingOne Final Example of the Power of Compounding—The One Contribution Retirement FundSumming Up
Internet Resources for Investors
ETF WebsitesHistorical and Current Mutual Fund, ETF, and Stock Performance DataHistorical Economic Data
Endnotes
Chapter 1Chapter 2Chapter 3Chapter 4Chapter 5Chapter 6Chapter 7Chapter 8Chapter 9Chapter 10
Financial Times Press

Content preview from Beating the Market, 3 Months at a Time: A Proven Investing Plan Everyone Can Use

Chapter 7. Special Bond Market Investment Opportunities

In the previous chapter, we discussed investment-grade bonds, which represent most of the U.S. bond market. You also learned a technique to identify when interest rates trends are favorable for holding investment-grade bonds, and when they are unfavorable. The biggest problem with investment-grade bonds as of mid-2007 is that the interest rates they are paying are relatively low by the standards of the past 25 years. There are two negative implications of historically low interest rates:

Even the most carefully selected portfolio of investment-grade bonds is unlikely to return more than 6%/year over the long term, because that is the level of current interest rates.
Because interest rates have ...

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Beating the Market, 3 Months at a Time: A Proven Investing Plan Everyone Can Use

by Gerald Appel, Marvin Appel

Chapter 7. Special Bond Market Investment Opportunities

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
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