Blue Ocean Investment Strategies - 10 Reasons Why Everyone Should Utilize the Long Tail of Investing

Defined within the realm of the statistical Bell Curve, the long tail would reside in the skinny tail at the borders. The long tail, in regards to goods and services, refers to the evolution away from mainstream offerings towards more niche products and services. With the internet drastically reducing the costs of establishing distribution channels, the ability of entrepreneurs to focus more on the longtail sector to fit their customized needs is gaining increasing appeal.

However, almost no one speaks of the longtail of investing. To me, longtail investment strategies are the strategies that do not heavily rely on fundamental or technical analysis, but exploit other strongly predictive factors to produce not only superior returns to traditional investment strategies but also investment opportunities with far better risk-reward paradigms than those produced by traditional investment strategies. Here are 10 reasons why the longtail of investing is the only way to build wealth.

(1) You will never achieve the level of wealth you desire by handing your money over to a large investment firm. The vast majority of private investors hand their money to large institutions and allow them to invest their money for them. If this were truly the best way to achieve financial freedom, then almost every one you know would be ecstatic with their financial consultant. Think of how many people you know that absolutely rave about their financial consultant.

The fact that 90% of people you know do not rave about their financial consultant should tell you that niche investment strategies, or longtail investment strategies, are far superior. The ones that are happy with the large investment houses already were independently wealthy before they sought out their help. Think about how many people you know that have ever told you, “I wasn’t wealthy before, but thanks to my investment firm, I am wealthy beyond my dreams now.”

(2) Thanks to evolving information technology, there are many other means of making investment decisions than just utilizing fundamental and technical analysis. Though people have been really slow to grasp this, once they do, longtail investment strategies, like those invented by SmartKnowledgeU™, will boom. There is no doubt that the level of top-notch financial, political and corporate information available to the average investor has increased by leaps and bounds within the past decade.

There is a virtual treasure map that was created by the flattening of the world over the past decade to selecting stocks that are poised to explode. However, because the largest, most powerful investment institutions in the world have kept the masses of investors fixated on traditional investment techniques such as value and fundamental analysis, the longtail of investment strategies is currently much further behind in its developmental phases than it should be.

The best analogy I can use when explaining why people have ignored the long tail of investment strategies is to compare it to the incredibly slow adoption of Internet Protocol Version 6 (Ipv6) by the United States. When China started preparing its country for Ipv6 a decade ago, the benefits in increased security and its added value properties in e-commerce were evident even back then. However, people in the U.S. were comfortable with the lesser Ipv4 so did not take any action until the progress and superior internet and business capabilities of China, Korea, Taiwan, and Hong Kong finally embarrassed the U.S. enough to move forward and catch up with Asia.

I see the same thing happening in the educational realm of investing. Everyone is comfortable with the traditional investment strategies that have been propagated for the last several decades so nobody sees a need to move forward even though much better strategies exist today. Just as with Ipv6, the world will eventually realize that the safest and best means of investing money reside in the longtail, and they will eventually adopt these strategies.

(3) With so much investor skepticism of corporate integrity sparked by past accounting scandals at Enron, WorldCom, General Motors and the like, and the current, ongoing backdating option scandals, investors will increasingly seek alternate means of making investment decisions other than crunching numbers that they feel are untrustworthy. Furthermore, technical analysis often yields false positives as well. A chart will show indexes that appear bullish having just broken through a ceiling of resistance only to have the index turn back downward for a prolonged period of time, or a chart will appear bearish having just broken through a floor of resistance only to turn around and begin another bullish ascent.

In fact, you have seen some of these turnaround trends with some of the technical posts that I've placed on my blog in previous months. In fact, that is why I always state that I never rely solely on technical indicators to make my decisions. I rely only on technical indicators to confirm or dispel what my long tail investment strategies tell me. Of the three types of analysis, fundamental, technical and long tail, long tail investment strategies yield by far the least amount of false negatives and false positives. That's why I rely on them so heavily.

This sentiment will lead to an evolution of longtail investment strategies, and the discovery of more efficient and better predictive means of making investment decisions than even those that already exist. Even current longtail investment strategies, such as those utilized at SmartKnowledgeU™ are constantly evolving as access to reliable information increases every year. Making decisions as if you were a fly on the wall of boardrooms is no longer a fantasy. It is possible, thanks to the evolution of the information landscape.

(4) With the growth of blogs and pure information sites on the web, the stranglehold of global investment myths, including the Modern Portfolio Theory of diversification, will soon be exposed for what they are – cleverly disguised sales strategies posing as investment strategies. Once people realize this, longtail investment strategies will gain wider acceptance, much like acupuncture and herbal medicine eventually gained credibility as healing regimens in the schools of Western medicine.

(5) Wider acceptance of alternative, longtail investment strategies that far outperform those utilized by global investment firms will happen as word of successes via these strategies spread throughout the world via the internet. The internet distribution channel can and will be used to change the mindset of investors.

(6) The Do-It-Yourselfers are Growing – With the success of books such as Stephen Covey’s “The Eight Habit” that emphasize personal accountability to achieve excellence versus handing control over to someone else, cultural shifts will happen whereby people will seek to seize control over their own financial future versus just handing their money to a firm to manage. As this cultural shift happens, multitudes of people will realize that they are shorting their returns significantly every single year by handing their money to global investment houses.

(7) The flattening of the world and accessibility to previously inaccessible investment information will undoubtedly yield an increasing amount of investment strategies that reside in the longtail. People will realize the foolishness of believing in the one investment strategy thrust upon them by global investment houses for the past half of century as “the only viable and safe way to invest.” If the younger generation takes an interest in investing, adding their creativity to the investment arena will result in explosive growth in the longtail of investment strategies. However, since the odds of this occurrence are quite low, a more gradual shift towards niche investment strategies is much more likely.

(8) The explosion of social networking sites like YouTube, MySpace, Friendster, and so forth, will amplify the viral marketing of longtail investment concepts. Again, ignorance of longtail investment strategies causes fear and hesitancy to use them. Viral marketing of longtail investment concepts will increase millions of investors’ comfort level with these different and unique concepts.

(9) People are ultimately interested in returns, no matter how much global investment firms try to separate themselves from their competitors with smoke and mirror service claims. All the gratitude for luxury box suites at Los Angeles Lakers games, suites at the Four Seasons Hotel, conferences at world-class golf courses and resorts will quickly wither once people realize how much more money they are earning with longtail investment strategies.

(10) Again, because people will readily abandon all the perks they get as a preferred client at a large investment firm for far superior returns on their portfolios, longtail investing will eventually reach a critical mass. Eventually the longtail of investing will migrate towards the center and become the mainstream methods of investing, though this may take several decades to occur.

This article may be freely reprinted on another website as long as it is not modified, changed, or altered in any way and as long as the below author byline is included along with the active hyperlinks below:

J.S. Kim is the Managing Director of SmartKnowledgeU™ and editor of the SmartKnowledgeU™ investment newsletters. He is the inventor of the revolutionary SmartKnowledgeU™ investment strategies that are designed to grant the average investor a very high probability of earning 25% or more returns annually from his or her investment portfolio.

To learn how to build wealth from the coming investment crisis, click the following link, Use advanced wealth planning techniques to get rich!

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Visit our blog "The Underground Investor" for much more commentary on global markets.

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Getting a Global Investment Exposure in the Direct Way

Many of American investors considers that getting global investment exposure just means buying some US exchange listed Pepsi shares or some other such international company which has a huge part of its income outside USA. But this is not the real investing way to get global exposure. Global Investment for the most part is not just buying US companies with source of income around the world, it means owning the real thing, and its not Pepsi.

It means investing to non-US exchange listed companies in select foreign countries! Buying US listed companies with high non-US Dollar revenues have the same baggage/handicap other US companies have, among them: very high employee expenses, possible unfunded US pension liabilities, too much complex balance sheets and a few the executive options perk back dating nonsense. And mostly US stocks have very high p/e ratios' and very low at dividend yield. Most of all US stocks are priced in US currency, likely to be very weak currency from now on.

Foreign shares are priced daily in dollars to US based investors but the point is the underlying stock is in a foreign currency. So if A,B or C's stock price does not move at all, but the US Dollar continues to decline its value, his stock price in US dollars will move-up nevertheless.

US investors especially should consider owning value shares in emerging market for high dividend yield, high growth, low p/e's and US currency declination protection. Especially in Asia market, countries like Thailand, Malaysia and India still has a lot of very good potential and low risk shares to buy and hold for a least 1-2 year from now (2007).

To US investors whom want global exposure, I suggest to own the real thing, and it is not just Pepsi !

Have been investing in asian stock markets for more than 10 years. Source: http://www.bullish.info

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Is a Global Real Estate Market Crash Really Imminent?

Have you heard of the butterfly effect?

It’s a chaos theory concept whereby theoretically a butterfly flapping its wings in one part of the world and creating a tiny change in the atmospheric conditions around it could cause a chain of events leading to a catastrophic tornado reaping havoc on our lives elsewhere in the world for example.

It sounds dramatic doesn’t it?

Well, it’s a concept being cited right about now in many media reports, articles and press releases relating to the state of real estate marketplaces around the globe which is why it’s important that we understand the basic concept of the effect.

The reason why the butterfly effect is being cited is quite simple - recently construction industry shares on the Spanish stock market crashed down as a result of just one more alleged scandal being heaped on many other horror stories relating to the real estate industry in Spain – so now many people are saying that this could just be the catalyst that causes property markets around the world to come crashing down around our ears.

But is a global real estate market crash really imminent?

This is an incredibly interesting question to examine. Never before have so many property markets around the world been so closely interlinked and intertwined. In part property markets are now more linked than ever because we can all travel about and buy real estate pretty much anywhere in the world. In part it’s because a number of countries have actively courted our attentions with regard to their real estate marketplaces because for them foreign direct investment is critical to the success of their economies. Additional reasons include the fact that an increasing number of us recently decided to get in on real estate investing meaning that more of our wealth than ever before is now resting in property markets around the world. Furthermore, we have just been through a sustained and intense period of property price appreciation pushed up by our demand for multiple properties and by our strong purchasing power at a time when many of the world’s economies are doing well, unemployment levels are low and interest rate levels have remained attractively low as well allowing ever greater numbers of people to borrow ever greater sums of money.

So many markets are directly linked and many other markets have simply been similarly affected by patterns of purchasing power for example…therefore theoretically, if one market does crash it could affect all other markets right?

Wrong.

The two main reasons being given for a potential (and probably actually imminent) property market crash in Spain are over supply and lack of affordability. So in markets that are suffering the same conditions a real estate market crash could well be imminent.

In other locations where supply is still well below local and international demand and where property stock remains attractively priced and affordable there is no exact and definite reason why the butterfly effect starting in Spain should cause a crash.

However, if you are considering investing in real estate in a given location/nation you should always consider these primary factors: -

1) What is your investment approach – a) acquiring capital growth or b) earning rental income?

2) If a) acquiring capital growth, what local factors suggest that prices are going to keep on rising? Be sure there is room for sustained growth and that you will be able to exit quickly from the market when the time is right to sell. Make sure oversupply will not become an issue and ensure your potential resale audience will have funds available when it comes time for you to sell.

3) If b) rental income, what does your tenant market desire, how much can they afford to pay for your product, can you buy low enough to attract a decent yield? Select appropriate stock for your tenant market demand.

4) Always, always do extensive due diligence on your market demand – you will not resell or rent real estate that is not in demand so know your market and know the factors driving and affecting your market’s property based decisions.

5) Never put all your financial eggs in one basket – in this case I mean in one commodity such as real estate or even in one single piece of real estate. The key to investment success is diversification.

6) If in doubt, don’t buy!

Rhiannon Williamson writes about international real estate investment and buying property abroad - to keep up to date with global property market movements visit her site http://www.shelteroffshore.com/

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Options Trading - The A,B,C Of Options Trading

Like futures trading, an option gives a trader the right, but does not obligate him, to buy the underlying stock at whatever the specified price on a preset time in future.

You make profits if the stock value ends up higher than what you purchased at. On the flip side, if the prices drop, then you lose out on your investment.

There are 2 kinds of options: the put option and the call. When you purchase a call option, you expect that the value of your investment will rise and you buy a put option when you expect the prices to fall.

In either case you make a profit, provided your foresight was correct, unlike other derivatives where you get a profit only when value of shares increases.

You could use the hedging strategy when you are unsure if the price of your stocks is going to go up or fall down. What you should do in such case is go for a put option. If the price dips, you make a profit and if it goes up, at least you do not lose the investment, only the profits.

If you are sure your stocks are going to dip in value, it would be better to sell out and re invest in put options.

Another strategy could be to sell out before the expiry date of your options so you can purchase the underlying profitable stocks. Selling on the options is not a problem because there are bodies responsible for the purchase of so as to maintain a balance in the system.

Do take the time to be a part of forums and online discussions on the possibilities of options trading. You will find up to date information there that no book can provide. Some websites can offer free training material as well, which is a great boon for beginners.

Like any investment, options trading requires you to be updated with regularity, on the economy and businesses of different trading companies, if you would like to buy stock options on their company. It is great when you have a good idea of who you will need to trade with.

When you have the adequate information on the goings-on of the market, you are best equipped to make your self a good profit. Secondly, the timing with which you make your moves is vital, so make sure you make regular observations of the market if not continuous in your business day.

To conclude, although trading with options can be a risky business, it can give you good returns when you play your cards right. So make sure you are getting regular information updates and that you have a strategy to work with.

Abhishek has an uncanny insight into Trading! Visit his website www.Trading-Masters.com and download his FREE Trading Report and learn some amazing Trading tips and tricks for FREE. His tips would save you thousands and make you better at Trading! But hurry, only limited Free copies available! www.Trading-Masters.com

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Beginning Investors Top Investment Strategy

There is an investing technique that will lower market risk and allow young investors to benefit from long-term growth. This technique is called dollar cost averaging; and it's a great technique to combine with broad based index fund investing.

Long-term gains using a dollar cost averaging plan.

Dollar cost averaging allows young investors to purchase stock investments consistently over a longer period of time. This stock market strategy works especially well with broad-based market index investments like the mutual funds and ETF's that mirror the return of the S&P 500. This powerful and simple investment plan will help lower risk and you have the potential for higher returns.

For young investors looking for consistent gains over time, establishing a dollar cost averaging plan could be a perfect solution. Young investors are able to purchase more shares when the stock market experiences short-term corrections. That way when the index turns around and starts heading up in value young investors are able to profit more because they own more shares.

When the market is rising young investors are able to capitalize on the market trend because they are following a consistent investment plan. As they purchase more and more shares in a bull market that money is going to work for them right away.

Dollar cost averaging spreads the prices that you purchase stock market investments (cost basis) over a longer period. Investors are protected from stock market corrections and benefit from long-term gains in the market.

Steps to creating an effective dollar cost averaging plan.

For young investors creating a successful dollar cost averaging plan is simple. There are two basic steps that will get your money working for you:

1. Decide on the exact amount of money you will invest each and every month. The key to a successful dollar cost averaging plan is consistency. You can increase your investment over time but avoid investing different amounts each month.

2. Set up the exact times you invest. If you decide to invest once per month do so on the same day. For instance, the fifth of every month invest $150. This is made simple with help from an automatic investment plan. Set this up one time and your investments are made automatically for you each and every month. All you have to do is check your statements to see how your investments are doing.

Improve your dollar cost averaging plan through diversification.

Diversification is a simple spreading out the risk of owning a stock investment by owning many different stocks in a variety of sectors. Owning a group of stocks, instead of an individual stock, could further reduce your risk. This will reduce the risk of owning any single investment. The investment of choice for many young and beginning investors is broad based indexes.

An example of a broad based market index is the S&P 500. By investing in the S&P 500 index you own a piece of every stock that makes up the S&P 500. Stocks like American Express, Google, Ford, Nordstrom, Home Depot, Staples and Yahoo are a few of the stocks that make up that index. That way you're protected in case one of the stocks in the S&P 500 drops 70% of its value, you're only invested 1/500th, and you won't experience too much loss from that. In comparison, if you just owned that stock by itself you would have lost 70% immediately.

For young investors, keeping your investments diversified and using a dollar cost averaging investing technique - you have effectively reduced risk and are in an excellent position to achieve long-term profits.

Vince Shorb, the leading financial literacy advocate and author of 'Financially Free by 30' gives young adults practical investment strategies they can use now to achieve long-term benefits. Visit http://www.FreeBy30.com now for his free 5 step video course visit.

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