Global Profits Alert – Scanning The Globe For Extraordinary Profits RSS Feed

No matter whether the financial markets are headed up our down, there are investment styles and techniques you can learn about to allow you profit from what’s happening today.

Whether you are a bull market investor or a bear market inverse fund enthusiast, there is always something to learn. Knowing more about the styles and tools available to you is the best way for you tool build an investment  portfolio that’s right for you.

Investment areas and styles will go through cycles of popularity because different investment areas and approaches work best in different market conditions. Investment areas and styles you will want to be educated in include:

Bear Market Investment Techniques
Prior to  the evolution of ETFs, investors really only had two options for attempting to profit from bearish moves in the stock market: Directly shorting a particular stock or buying put options. Bearish, or inverse, ETFs are far more attractive choices to be short stocks or the broader market. Inverse ETFs attempt to replicate the inverse performance of particular index and they trade just like traditional ETFs.

On the other hand, when you buy a put option, time decay immediately starts working against you. You may be right about a bearish hunch, but if the scenario doesn't play out before options expiration day, you puts expire worthless. Directly shorting a stock is even more risky because you need margin from your broker to do that and your risk is unlimited because there is no limit to how high a stock can rise. Stick with inverse ETFs if you're feeling bearish.

Currencies and Forex
The foreign currency market is the biggest financial market in the world with daily trading volume of up to or over $2 trillion by some estimates. That is well all of the world's bond and equity markets COMBINED. Currency trading is risky and highly speculative, but that doesn't mean longer-term investors shouldn't have currency exposure in their portfolios. They should because in the forex market, there truly is always a bull market to be found.

Currency ETF trade just like regular equity ETFs and represent the best option for conservative investors to add some currency holdings to their portfolios. Nearly every major currency in the world and a few exotic currencies as well have corresponding ETFs.

Dividend Investment Techniques
Investing for dividends may be the most potent investment theme average investors can gain access to. The estimates vary, but dividends have accounted for at least 40% of the S&P 500's total returns for a multi-decade period. Steady dividend payers with histories of consistent dividend increases are great stocks to own in sideways markets because you'll still make money even if your stock doesn't move much.

Dividend stocks are also the cornerstone of  long-term, income generating portfolios. Collecting and reinvesting dividends for multi-year time frames can exponentially increase your returns. On a sector level, consumer staples, financials, industrials, pharmaceuticals, select ener

Fundamental Analysis
It can be argued that fundamental analysis is the backbone of investing, particularly long-term investing. When we evaluate a company's fundamentals, we look at a variety of factors including: The balance sheet, profit and sales growth, market share and position, dividends and the ability to pay dividends, institutional ownership of the shares, price-to-earnings ratio, book value, price-to-sales ratio and many other factors.

That list may seem long, and believe it, there are more factors, but fundamental analysis boils down to a few simple points: Does a company have the ability to build, maintain and expand market share so it can consistently produce higher sales and profits? Is the debt load manageable? Is the dividend safe? And most important of all, does the market historically recognize that this is a fundamentally sound company? When companies with solid fundamentals trade below their intrinsic value, that's when investor can make value bets, acquiring strong names at discounts.

Growth Investing Techniques
Growth investing is the school of investment thought with the highest risk/reward scenario. That does not mean the risk is extraordinary, it simply means that investing for growth, or capital appreciation, usually means investing in companies that are not as well-known as value stocks. In addition, many young growth companies don't have the solid financials of an old value company and most growth stocks do not pay dividends.

Consider that immediately after going public, almost every stock is considered a growth play. Some lose the growth label over time, some don't. Growth stocks are compelling because of the potential for outsized capital appreciation. Perhaps the most famous growth stock in the U.S is Apple. The stock price just keeps going and going higher. That is the risk with growth stocks. In the absence of a dividend, you have no other way to make money absent capital appreciation. The shares of a growth company must go up or investors will jump ship.

Value Investing Techniques
Value investing is obviously quite different from, but no less important than growth investing. The basic premise of value investing is to buy shares of companies that highly regarded blue-chip names that have fallen out of favor with the market for some reason.

Maybe the market is in love with growth stocks or maybe risk appetite is higher. Regardless, there are scenarios that opportunities to acquire value stocks at below fair value. Value stocks are typically older companies that have fairly predictable sales and earnings growth and they pay dividends, too. Good examples of value stocks would be McDonald's, Procter & Gamble and PepsiCo.

There are risks in value investing and we're referring to value traps. It's one thing for a stock like McDonald's to fall from $60 to $50 over the course of a year in a bad market. It's a whole other ballgame when $50 turns into $35 and $35 turns into $20 and so on. There is a reason or reasons why stock falls so precipitously and the reasons are never good. Some investors may think “Wow this was a $60 stock not that long ago, now its $20, I'm getting a good deal.” The reality is that stock stands an equal chance of going to $5 as does of returning to $60. In other words, be aware of value traps.

Technical Analysis
Technical analysis is the other primary school of securities analysis along with fundamental analysis. While these methods of evaluating a stock's potential returns do frequently work hand-in-hand, there are key differences between the two.

Technical analysis does not look at factors like P/E ratios, earnings, etc. Rather, technical analysis studies a stock's price movements and chat patterns to form an investment thesis. Technical analysis also includes terms like support and resistance and can use a dizzying array of indicators to generate buy or sell signals and while all of this may sound intimidating, the basics of technical analysis are actually quite easy to learn and can be potent tools for any investor.

Trend Trading
If you've ever heard the expression “The trend is your friend,” you probably understand what trend trading is about. Using the S&P 500 as our example, history shows that 75% or more of the index's constituents move with the index, meaning if the index is moving higher, most of the stocks within in the index are moving higher as well.

That means trading with the bullish trend is the right thing to do at that time. Fighting an obvious market trend is not only difficult, but inherently risky. Why be short when the market is telling you to be long or vice-versa? Following an obvious trend is not only easy, but usually quite profitable.

Small Cap Stocks
While the definition of small-cap varies, it is widely held that this asset class includes stocks with market values that do not exceed $2 billion. Small-caps are usually growth stocks and many are fairly new stocks as well. Those factors do not diminish the efficacy of investing in this asset class. In fact, small-caps have the potential to deliver large returns. Small-caps historically outperform their larger peers coming out of recession, making them a valuable tool just as a bear market is ending.

There are plenty of ETFs that focus on small-caps and investors may want to consider those funds as a way of gaining access to this asset class because picking individual stocks here can be extremely difficult.

Micro Cap Stocks
Micro-Caps are even smaller and more speculative than small-caps. The maximum market value for a micro-cap is usually $300 million. Stock-picking among micro-caps is critical because many companies with this designation are not profitable and can be here today and gone tomorrow. With those risks comes the potential for big rewards, but be careful when investing in micro-caps.

Mid Cap Stocks
Mid-cap stocks include plenty of companies you've probably heard of before and with a maximum market cap of $10 billion by definition, this group of stocks is not all that speculative and can be embraced by investors of all stripes. Mid-caps can include both value and growth stocks from all industry groups. A portfolio that already has the proper allocations to large- and small-caps can become properly balanced by adding a few mid-cap names.

Large Cap Stocks
Large-caps are generally considered to be any stock with a market cap above $10 billion, there some in the investment community believe there is a separate asset class called mega-caps for stocks with market values above $100 billion. Either way, large-cap stocks are the names most investors are most familiar with.

These are the stocks that generate the most news and are most frequently owned by institutions and money managers. The large-cap designation does cover both value and growth stocks and there is no limit to what sectors these names reside in. Many large-caps are dividend payers and while every portfolio should have at least a couple large-cap names in it, these stocks are usually most appealing longer-term investors.

International Investing & Emerging Markets Stocks
There are key differences between international and emerging markets equities that investors need to be aware. Obviously, not every international market is an emerging market. Investors can easily buy shares of companies based in developed markets like Canada, France and Germany here in the U.S. because many of these companies list their stocks on U.S. exchanges.

International large-cap stocks from developed markets don't face the political and economic risks that emerging markets do and global blue-chips often pay better dividends than their American counterparts. Value investors can safely consider global blue-chips.

On the other hand, emerging markets are long on growth potential, but they can also be long on risk. Emerging markets are a compelling investment thesis because countries like Brazil, China and India are experiencing economic growth that far outpaces more mature markets. That rapid growth can lead to exponential returns for stocks from the emerging markets, but these markets are also highly volatile making it hard to buy and hold emerging market equities for extended periods.

That said, it is hard to ignore the growth potential of the emerging markets and having some exposure to this asset class is a good idea. ETFs represent perhaps the best way of accessing the emerging markets because they take the burden of stock-picking off the investor.

Investing in Specific Investment Areas and Styles

As you can see, there is a wide of array of asset classes and investment styles to choose from. One of the best ways to stay up to date on current trends and what's working in the market now is to read Global Profit$ Alert regularly.

Investors that want to learn more about opportunities in specific asset classes or investment styles should click below:

There are many ways to get more educated about investing in specific investment areas or in using diverse investment styles. One of the best  efficient ways to do this is to read Global Profit$ Alert regularly.

Investors seeking to learn more about investment opportunities in specific investment areas or using various investment styles should click below: