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Who Can You Trust When Investing?

Guest Article By Irene Mori

Fear and uncertainty caused by the coronavirus pandemic have spread through the world. On top of those problems, the issue of police brutality of black men has been brought to the attention of the world once again. The tragic killing of George Floyd by a Minneapolis police officer and police killings of other black people have flooded the news. The demonstrations, peaceful protests, and sometimes riots and violence have captured the interest of the United States and other parts of the world.

The world is in turmoil, and investing may not be on people’s minds. But with the pandemic, many people have suffered financially so money is an issue. They may be looking for a way to earn some much needed money.

There are still a lot of gurus out there who want you to trust them by signing up for their stock investing newsletters. They promise big returns and make big claims. Their testimonials sound almost too good to be true. Perhaps they are.

The so-called investment gurus are touting their programs even as the unprecedented times caused by the coronavirus have affected everyone. They are saying that there are exciting investment opportunities in oil, banking, crypto, medical companies, and more even during these troubling times. They have common names like Jon, Tom, Ken, Alex, Mark, and Jeff plus some more uncommon names such as Jordan, Derek, and Kyle. Who can you trust? It is hard to know.

Sometimes they promise 100% returns on your investment or they may be bold enough to promise $2,000% in a year. They say that you will most likely get your return on investment with your first trade. If they promise big returns, it is best to make sure they have a money back guarantee if they do not produce as claimed.

If those promises would come true, it would be a great opportunity and blessing. However, too often they are false promises which do not come to fruition. If you can find a program which pays as claimed, you can consider yourself one of the lucky ones.

It’s pretty pathetic when not losing is considered winning, but that is the case in so many investments. We may be happy to just not lose our shirts although the gurus told us we would win 100% or more with their recommendations. When going with the recommendations made by the gurus, it is important to cut your losses before you do lose your shirt so to speak. Winning is the goal, of course.

Fake claims and dead ends can bring a lot of stress. Minor setbacks can be overcome without major losses. It is tempting to listen to investment gurus to follow in their footsteps to get winning trades. However, you can’t trust many or most of them. It is best to research and learn so that you can trust in yourself to make the best decisions.

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Article Source: https://EzineArticles.com/expert/Irene_Mori/366585

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More About My Investing Strategy

I’m going to expand on the details of my investing strategy. Previous posts I have stated which stocks I prefer and basic outline of my criteria in selecting specific stocks to buy. Again, I’m going to state that I am a dividend investor and not a value investor. In my mind, the essential difference is that the value investor focuses on share price of the stock. The dividend investor focuses on whether the company issuing the stock pays dividends or not. I know that this is a very simplistic view, but bear with me.

As a dividend investor the price per share isn’t ignored. But it isn’t the primary importance. Just like the value investor, the dividends paid are not ignored, either, it’s just not as important as the price. The value investor looks for pure growth (i.e. increases in share price) even though they may plan on holding the stock for years. That’s how they view their stock holdings.

Dividend investors, at least for me, look at stocks growing in value also, but I also look at increasing the number of shares increasing by reinvesting those dividends that I receive. Value investors look to increase their stock ownership by additional purchases of the stock, especially during a DIP (Drop In Price). Again, this is another oversimplification.

To me the goal is to increase the number of shares I won with the minimal cost to me. Like a value investor, I will buy additional shares of stock on a DIP, otherwise I maintain my Divident ReInvestment Plan (DRIP). Basically, maximizing benefits and minimizing costs. When I review any potential stock to purchase I look at many factors.

  1. Does the company issue dividends? If no, I then move on to the next potential stock.
  2. If the company pays dividends, how much does it pay?
  3. How frequently does it pay dividends? Quarterly, monthly?
  4. What is the 5 Yr dividend growth?
  5. How long has it been paying dividends?

Once I get the answers to these basic questions, I look at the stock price. I then go through the similar analysis that a value investor goes through to determine if it is a stock to invest in or not. The stock may be one that I don’t feel is right for me at this point in time so I may put it on my Watchlist. Additionally, my strategy doesn’t just deal with buying stocks, I also have a strategy for when I should be selling. Because I am a dividend investor, dividends are key. If a company cuts/reduces their dividends two (2) period in a row, it becomes a prime candidate to be sold. I will now review the numbers in a different light and look at the stock to determine if there is a chance for the dividends to rebound. If in the they reduce it a third time or eliminate dividends, it becomes an automatic sell.

That’s my strategy for dividend investing in a nutshell. You may agree with it or you may not, but it is MINE. I really don’t have a hard and steadfast set of numbers for any of the quantitative elements. It really comes down to what I am comfortable with when I look at the numbers. To me stock selection is a subjective process, unique to the person. I may decide one way about a certain stock and you may decide another way. It has to do with how much risk you are willing to tolerate. Part of my strategy is to avoid high risk investments. How much risk am I willing to take on? Again, it’s subjective. I prefer ETFs over individual stocks for that very reason. If I buy individual stocks, I prefer an established company to a start-up. My tolerance of risk is tied to my timeline, which is now short. So, I don’t have much time to recover from any massive losses that I may incur. And lastly, my investment strategy is a “living thing”. As I progress and learn my investment strategy evolves and changes.

You can look at investment strategies from multiple people and take-away what you feel comfortable with and what lines up with your goals. Don’t let anyone else dictate what your strategy should be because if you find someone that tries to pressure you into adopting their strategy, keep digging and you’ll find out what their hidden agenda is.