Sunday, December 24, 2006

Investing New Year Resolutions for 2007

As the new year approaches, many individuals will provide their best guesstimate on what will unfold for the markets and the economy in 2007. The one resolution I believe many investors should adopt is that of committing to gain a better understanding of their investments and why they choose to invest in particular companies. Over the course of the next week, I intend to highlight material on different investment and wealth management topics, such as financial planning, etc.

A quote in the recent newsletter from Investment Quality Trends:

"To some market valuations are hostile. To others, market valuations offer opportunity. We will leave the discussion about the market valuations to others because we don't know how to value markets; we do know how to value stocks."

To facilitate staying on track with this type of resolution, following are links to posts and/or articles that might enhance ones investment understanding as we enter the year 2007.
  • Taking the Spin Out of Earnings Announcements. This article from the CFA Institute and featured on the American Association of Individual Investors website covers nine key points to consider when analyzing corporate earnings announcements.
  • For the new investor, Starting an Investment Program with Dollar Cost Averaging.
    "The first step is always the hardest. And individual investors taking their first steps in an investment program must also confront a sea of stock market uncertainty. Some plunge headlong into the market with all their savings. Others barely wet their feet before heading back to the safe shores of their money market funds. The problem, however, with these two all-or-nothing approaches is one of timing—the risk of entering the market at a high point in the market cycle...."
  • Read a book featuring details on some of the more successful market investors.
    • The Intelligent Investor by Benjamin Graham. Ben Graham is often called the "Father of Value Investing" and the "Dean of Wall Street". Warren Buffett often cites Ben Graham material. Warren Buffett studied under Ben Graham at Columbia University and Warren Buffett was the only student to ever get an A+ in a Benjamin Graham class.
    • The Future for Investors by Jeremy Siegel. The Future for Investors reveals new strategies that take advantage of the dramatic changes and opportunities that will appear in world markets. He finds new technologies, expanding industries, and fast growing countries that stockholders relentlessly seek in the market often leads to poor returns. In fact growth itself can be an investment trap, luring investors into overpriced stocks and overly competitive industries. The book challenges conventional wisdom and provides a framework for picking stocks that will be long run winners.
    • The Essays of Warren Buffett by Warren E. Buffett, Lawrence A. Cunningham. The Wall Street Journal, July 6, 2000, Front Page, "Cunningham's Buffett Essays ranked #3 on JP Morgan's 10-book list of "Summer Must-Reads for Millionaires"

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