Profitable Techniques for Long Term Investments

You can find the best seller 'Multiple Streams of Income' written by Robert Allen who advises investors about the schemes they should follow for investment for a longer time. He suggests that the investor should divide his stake in the stock market and trading capital as follows: Invest your 50% amount in the everlasting long term index funds, 30% of it should go to Accelerated Stock schemes and the last portion can be invested in the in those schemes which have more threat.

This article will deal with long term investments. Investor will understand how technical studies can give the alert signal to make profit and sell the stock at the proper time. It is no fun to put your finance senselessly here and there only for the sake of investment in the different plans. The purpose of long term investment is that you have a nice sleep and at the same time your investments give you substantial gain for longer time.

Robert Allen had written his book 'Multiple Streams of Income' in the year 2000. For nearly 18 years there was a continuous rise in the value of farm stocks. It could make rich anyone who just invested in these stocks. As usual many people who invested never thought of any tactic to get out of the market if the stock starts falling. It was a practice for the people to go on purchasing stocks when there was a fall and kept them assuming up trend will yield them huge profits. As a result of it most of the people made losses when suddenly stocks had gone down in 2000.

As an investor unlike traders, you need to select a definite approach when to sell the stocks and get out of market. An exceptional approach can be to keep your stocks when there is rise in index and exit out

Or hedge the position when the moving average moves down. Watch the moving average to sustain the gains. It is easy to understand. When there is no addition in value why to keep the stock.

When you want to expand you resources in the long term, invest your fund cautiously in the stocks which are picking up. However there may be some minor short time ups and downs

It is better to plot a moving averages chart. The two moving averages highlight any significant drift in the market. When it is upward trend the average will hang about for long. If it is declining trend, the averages drop down and alert you to safeguard your position or move short.

Using the chart you need not exert to know which way the market is moving. It will keep your money safe as the chart will warn you when you have to exit.

It is observed that Index fund managers dislike such clients who go on changing over the funds or get them converted to cash when there is a drift in the movement of index. They prefer the customers who stick to the funds with a long term view. They like investors should hold these funds for extended period. There may be some implication of some management fees or commissions at times.

The advice is to be in at right time always rather than trying to time the market. When the fund managers tell again and again it looks it has some reason.

The chart is a perfect graphical tool to time the market. You can make your destiny if you follow in the right prospective and build your capital. Never hold the stocks if they are loosing value. It will be utterly stupid to stick to them in this situation.

Those who watched the moving average charts re -entered the market only in May 2003. This happened only after two months of end of bear phase. Those who did not hedge or got away from the market in Nov 2000 just ruined their money losing up to 70 % of the resources they kept invested in.

Peter and his friends although invest for long but follow a proper strategy and don't go into speculative holdings. They have plans to make sufficient capital to serve them when they retire. If the market shows the signs of falling down, fund managers mostly describe the situation as instability rather than calling it a Bear Market.

It is commonly known that fund mangers will not like to loose their fees and commissions. When the market is in going through the bear phase, it is unlikely they advise any customers to take out their funds in such a condition. They will simply like them to hold the investments on the pretext that it is just some instability in market for some time. Unfortunately the customers keep holding their funds and get into disaster.

No on can forecast the behavior of the market. Can any body tell with confidence that the bear phase is over? The people can tell only when things are over.

If you consider the above, we find Peter and his friends wise enough to use a definite plan to follow the moving average pattern and act at the right time as signaled by their chart. They will surely gather huge resources for their retirement as perceived by them.

They ride the uptrend in the market and leave it when it is a down trend. During bear phase they invest in the index funds and wait for the opportunity when it is a bull market.

The other method used by them is buying Put options to cover their investment in the index funds. They prefer to go for a long expiry time. This way they sort of insure their index funds against a bear phase moving further down. Their idea is when you insure all your other assets why to leave these market investments uncovered.

The decline in the value on option is an issue. But just watching your investments getting eaten up say up to 50% or more and not doing anything is serious. A long term investor has to act and protect his money.

It is a very easy plan. Follow as Peter and friends do. Uphold your all positions with every trend whether it is stock, funds, property or bonds. They keep their positions hedged when there is prolonged downward trend. You can make profit when the stocks gain the price and increase your wealth going up the escalator. When it is a falling trend in prices, you are rather going down and will decrease your capital. Work a bit harder to save your position. Otherwise you are likely to make losses as happened to many people in the falling market of 2000.

As stressed by Peter put the moving average in a few long term holdings and keep an eye on the trends.

If there is no rise and you insist to hold still, better be wise enough to make your position safe.