Thursday, January 29, 2015

What is the Allure of the US Dollar?

In the last 5-6 months, USD index has risen a lot in comparison to other major curencies. This has puzzled me, as I analyzed that the QE1 and QE2, should have made the value of greenback to fall. However, on the contrary the vakue of dollar has risen.

I see several reasons for this phenomenon. 

First, it is macro stuff. The economies of major countries is in freefall, and governments all around the world are trying to weaken their currencies so that exports become more competitive.

Second, the political uncertainties, happening around the world, investors ususally try to park capital in US Treasuries. What does one need to purchase treasuries, he or she has got to buy US Dollars (!)

Third reason, and the most important reason that I see, is the dominance of US based companies. When you go outsied, please have a look around. What people are eating? KFC, Burger Kings. What people are wearing? GAP, Old Navy, New Yorker, Tommy Hilfiger, Victorias Secrets. What people are using to communicate? Iphones! What people are using to drive? Fords and Escalades. So, what happens when people spend their disposable income for the products of US based companies. The sales are converted into US Dollars, because, these companies operate in US Dollars.

These are simplistic reasons that at least explain the phenomenon. Thirs reason, has many implications, that I will open the topic later. But, for now, let me state this: Politicians should stop telling people lies, and talk about the whole BS conspiracy theories of US and others. This is plain and simple, US has a system in place that is working, US has a system that has a capacity to unleash human potential.

Just to give a better idea, please see this link to the 1Q,2015 Report of Apple Inc. This is a companye, that is growing like a mad. The reason is that company is investing into both human potential and technology. That shoukd be a lesson for all countries, that are whining about the US currency hegemony. But again, it is always easy to lat the blame on others than make necessary steps to correct real problems.

Markets are down considerably - what to make out of for DGI fans?

Markets are down considerably in the last couple of days, or maybe weeks. I have not checked the exact data, but anyone can go to cnbc.com and get the factual data about the market movement as of late.

My question for this article is, what should a DGI fan to do when markets are in taispin?

The short answer is "nothing". What do I mean by that?

Well, as a person who has chosen to become a real investor, instead of a pseudo-investor (ie traders of all sorts), we have a great advantage, which is time. Simply put, we have a tool on our side that has a capacity to make or break true results. Over time, every business that earns money and puts back some of it in the form of retained earnings, has got to grow its capitalization.

In any case, the on ly question an investor should ask if this is an opportunity to add to his positions or new positions to his portfolio. Ina true sense, the downward movements of stocks are good. They should frighten us, on the contrary we have to use these moments to make money.

Therfore, one thing a DGI fan should do is take his spare capital and put it to a use.

Wednesday, January 28, 2015

When To Take Profit In A Stock?

When one should decide to sell the stock? This is one of the mostly sough after questions. Different people use different methods, and try to make a living.

Also, we should make it clear: being in the black, i.e. having gains to think about is a nice problem to have. As Mae West says, "Too much of a good thing can be wonderful", having too much profits might can be wonderful, for anyone.

Here is my perspective on the question of taking action in selling a position.

Taking action and not taking any action, are actually equal in the their functionality. A person who takes action to sell, is takinga real action by stating that the position has more downside risk (in case of long), than an upside move potential. On the other hand, a person who decided not to touch the position, states that the stock has more upside than a downside.

An investor, has to consider the time horizon he is considering to hold the stock and the respective gains he can receive. In any case, a person, who considers that a stock will move higher, has to consider a new target to be reached and think about selling then.

But, if a an investor sees another opportunity that might provide a better optionality in the direction of his trade, then he can also consider selling the position.

Another factor to consider the valuation of the stock. Once  the stock reached a certain valuation, then it might become not an attractive holding. As one of the investment gurus, said, a stock at a certain price is a buy, and at another price it is a sell. Therefore, if an investor consider the stock reached an unattractive valuation then he might consider selling some of the position, and holding to some of the position. This matter should be considered by the investor, abd he should take into his personal circumstances.

For me personally, when I hold a stock and have gains to be taken, I ask myself a question, whether I would buy the stock at a presrt price, if I didn't have a position in it. If my answer is definitely now, then I might seriously consider selling the position altogeter or sell some of the position.

Hope this information might help to my fellow investors.

Doing Nothing is Doing Something - Holding AAPL

Investing as well the best things in life, should be simple. However, simple doesn't mean easy. The most difficult thing is to hold the shares and watch how it is being sold down. It is not easy, trust me. 

But, AAPL is an interesting company, that it knows how to shock the wider audience. Being a long time shareholder, I was galdly shocked byt eh last nights results. Company seems to be doing everything right. Most people, have been blaming AAPL that it is a one trick pony company, however, many people don't realize that producing the best possible phones are not easy. One has to know how to sell them as efficiently as possible. AAPL has opened many more stores in China, and is planning to open many more stores in the future. How can a company, that sells phones for much higher ASP, succeeds to grow in China?! No matter what naysayers say, AAPL is a real BEAST!

One conclusion, that come to my mind, is that one has to just buy it and hold it. Over time, AAPL will make do good to its shareholders.

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