More Than Basic Survival

When you've tried almost everything what is it going to take to finally SUCCEED?

2006-10-01T06:56:00.000-07:00

When you've tried almost everything what is it going to take to finally SUCCEED?

"You can have all the knowledge and skills in the world, but if your
"blueprint" isn't set for success, you're financially doomed."
--T. Harv Eker

T. Harv Eker is a bestselling author and one of the world's top trainers. His newest book, Secrets of the Millionaire Mind, is a publishing phenomenon, reaching #1 on the NY Times, Wall Street Journal and USA Today bestseller lists in its first week out! In the book, he reveals 17 specific ways that RICH people think and act differently from POOR and MIDDLE-CLASS people.

Simply put, he teaches people how to master the "inner game" of wealth in order to create outward success.

It is Harv's personal mission to help people realize their full potential by applying the principles he struggled to learn the hard way. If you can grasp the powerful principles of success he outlines in his book you, too, can achieve financial freedom .

The most powerful truths are simple and indestructible; you can use them to create a foundation upon which to build your own "rich life," no matter how much or how little success you have experienced up until now. And a "rich life" is about more than just money...

You can transform your life from the inside out!

The sad thing is that most people don't achieve their full financial potential. It's an absolute shame that they don't know what keeps them from achieving the wealth and happiness they desire. There are unlimited ways to fail--people find them every day! But there is one proven way to ensure your success: think and act the way rich and successful people think and act.

So, what is keeping you from breaking through?

"Give me five minutes and I can predict your financial future for the rest of your life!"
--T. Harv Eker

Sound unlikely? Well it's true. In just a few minutes of conversation, T. Harv Eker can predict your financial future by identifying what he calls your "inner blueprint" for money and success.

Right now you're probably trying to figure out whether your own blueprint is set for wealth, moderate success or poverty. The answer is simple! Look at your results in the real world: your income, assets and net worth. Your results reflect your inner blueprint.

You can't build a mansion from a bungalow blueprint. In fact, the only way to become the architect of your new financial destiny is by revising your own internal blueprint and setting it for automatic success. Fortunately, that's exactly what Harv and his Master Trainers will teach you to do.

At the Millionaire Mind Evening seminar our trainers will:

Reveal the root causes of money problems

Demystify the destinies of rich and poor

Explain how (and why!) some people are programmed to fail

Show how to generate amazing results

Help you expose your unconscious conditioning

Spell out how you can reach your full financial potential

As if that isn't enough, at the end of the seminar you will learn how you can receive a bonus worth $2,590!

Due to the incredible popularity of the Millionaire Mind Evening, the event
dates are filling up quickly. I strongly suggest that you find the city nearest you and reserve your seats today.

The Millionaire Mind Evening will be presented in these cities:

UNITED STATES:

Dallas, TX

Seattle, WA

New York, NY

San Francisco, CA

Los Angeles, CA

Atlanta, GA

Denver, CO

Ft. Lauderdale, FL

CANADA:

Calgary, AB

Toronto, ON

Vancouver, BC

Montreal, QC

For dates, venues and to register your seats today please visit:
http://www.millionairemind.com/a/?wid=382990&page=/preview/preview

If you are not able to attend one of the live events presented by T. Harv Eker or one of his Master Trainers, you can participate in a LIVE TeleClass from the comfort of your own home. For information on the next scheduled class, please visit:
http://www.millionairemind.com/a/?wid=382990&page=/preview/preview

At this powerful three-hour seminar you will learn to identify the childhood conditioning that created your personal money blueprint. You'll learn that even if you have extensive marketing, sales and other business training, you will never achieve the level of success you desire without updating your personal success blueprint.

Prepare for a life-changing event!

Each ticket to the Millionaire Mind Evening seminar is a $39 value but if you register using the link I've provided, you'll be able to reserve your seat at absolutely zero cost! In fact, the only thing you'll have to spend is a few hours of your time.

To be completely honest with you, the value you'll take away from this program is so great I recommend that you do whatever it takes to be there. Reschedule your existing plans if you have to. Financially speaking, your life could depend on it.

Register for the city of your choice here:
http://www.millionairemind.com/a/?wid=382990&page=/preview/preview

An Actual Covered Call Option Example.

2006-08-11T14:48:00.000-07:00

On June 27th I purchased 1,000 shares of ATI stock with the intention of writing a covered call against these stocks. The stocks after all commissions and trading expenses cost $14,945.00. The option premium was $1.00 and net proceeds after all costs was $965.00. The strike price was for $15.00 and expiry was for the third Friday in July, the 18th of July. This call option contract was sold on the same day as the stocks were purchased.

On the Friday the call was to expire the stock surged in price closing well above the strike price. I was unable to determine until after the market closed when it was revealed that AMD was rumored to make a bid to purchase this company. However, since I was unsure of why the stock price was surging I let them be called away. I could have purchased enough call options to cancel that ones I had sold earlier but choose not to. The proceeds of the sale of the stock was $14,965.

My profit on this trade was (14,965+965-14,945) $985 dollars. This represents a return of 7.04% in a one month period, or an equivalent annual return of 84.5%. ( I do not put very much stock in annual returns since it assumes you can repeat this trade each month and that in my opinion is rarely the case.)

A final note on this particular trade. The following Monday AMD did in fact announce that they were going to purchase ATI Technologies and the stock jumped up immediately over $3.00. In hindsight, I would have been very smart to have purchased the canceling call options on that Friday or possibly never sold options on this stock at all. However, you can always do better after the fact. I made this trade based on the fact that I expected it to meet or exceed the rate of return I had for the month based on my goals that I had set much earlier.

You can learn more about using options and optons trading by reading this blog or by purchasing Stephen Cooper’s course. I recommend doing both.

Profitting in a Down Trending Market

2006-06-26T13:03:00.000-07:00

People seem to have a more difficult time understanding put options. I do not fully understand this as it seems no more difficult than call options. In Canada you cannot use put options in your registered retirement account at all and in the United States you can only purchase put options in your IRA account. It is very odd, that Canada disallows even the purchase of put options since this can be a very conservative strategy. I suspect that this is because options and put options in particular are not understood by most investors.

The most conservative put option strategy is to use put options as insurance. Suppose you own Stock in ABC company and are concerned that it may fall in price. You could sell your stock and thus avoid the fall in price, however, if the stock continues to increase in value you will miss out on those profits. You could also purchase sufficient put options to cover all of your stock with a strike price at which you would want to sell the stock in the event of a decline. The premium or cost of this put option contract is usually quite small and insures that you can sell ABC stock for the strike price until the expiry date of the put option contract. This is a defensive strategy and is designed to prevent a loss and will not make you a profit.

A profit making strategy is to purchase this put option contract without owning the underlying stock. ( In this case you are said to be “naked” on this contract.) In this case you are expecting the price of the stock to fall and you intend to be able to sell the put option contract before expiry at a profit. Your entire capital at risk is the cost to acquire this put option contract and this is the maximum loss you can occur if you allow the contract to expire worthless. If the stock price does not go down as you expected then you may want to attempt to sell the contract early and recoup some of your loss. This is a fairly low risk strategy in that the capital at risk is fairly small. Compare this to a covered call writing strategy where you must hold the underlying stock and risk much more capital.

Another profit making approach is to sell a put option contract. Two slightly different strategies can be at work here. One approach is to use this technique to purchase a stock you desire at a discounted price. For example, you wish to purchase ABC stock but think the current price is a little to high. You could sell a put option contract with the strike price at a level at which you would be willing to purchase the stock. You will get a premium for selling the put option contract that can also be applied to the purchase price of the stock reducing it even further. However, the purchaser may not choose to exercise the option and you will only have the option contract premium. ( A good thing, you have made some profit but you don’t have your stock. yet. You can repeat the process once the option expires. ) If the price of the stock is above the strike price the option contract will not be exercised. You need to have enough capital in your account that you can honor the contract and purchase the stock or your broker will not allow you to write this contract.

The other approach is to simply sell the put option with the expectation of the stock price continuing to increase. Here you expect the option to expire worthless. If the stock price goes down you will be expected to honor the contract and purchase the stock or purchase a canceling put contract. If the stock price goes up you make a profit, and if the stock price goes down you will realize a loss.

Humbled by a 4 year old

2006-06-26T10:18:00.000-07:00

This is an off topic post but I think it is an important lesson. Was for me anyway.

I have recently had a couplee of humbling experiences as a result of the actions of my four year old daughter. My spouse and I frequently discuss financial topics and the children are often present and apparently listen in. The other day my four year old daughter was discussing money issues with me and while I do not remeber exactly what lead up to her remark, I definitely remember her words as they caught be very much by surprise. She said, " Daddy, I am already rich, I just need some more money." Where does a 4 year old get insight like that?

The other incident that is very memorable occured on father's day and has been in my thoughts regularily since then. We were going to go strawberry picking but since it has been an unusually cold spring it was to early. She was very upset. She insisted that I stop what we were doing and talk about it. "Daddy we need to talk. Now." She didn't give me much choice and nor was that request that unusual. She regularily needs to talk about something but this was the first time when she was upset with something. So we sat right there on the stairs and discussed this. In a few minutes, we had sorted this out and she was OK with it and happily went off and played.

My spouse came by and said: "Oh I am glad that you were able help her out by discussing this."

"Yes. But she is only 4! How does she know to do this?"

"Well, she has been watching us."

My spouse and I work hard at resolving our difficultites in this way but it is still a bit of struggle for us. Our daughter at 4 years of age mastered it in her first attempt somehow. I really hope that she continues to solve many of her problems like this. It has definitely been both an inspiration and motivator for me to put more effort into resolving my difficulties in this manner.

Using Naked Call options.

2006-06-08T12:55:00.000-07:00

You are doing your stock analysis and looking at the option bid and ask prices when you notice something. The stock price is trending down and yet someone is bidding on an option with what certainly seems like an unrealizable strike price. To use an example from today’s charts, Whole Foods ( WFMI ) has been drifting down mostly for the past 3 weeks. It is trading today in the $64.00 range. Yet you notice that there is open interest of over 3000 units for the June 70 call option. The June call option expires next week Friday and it seems very unlikely, well impossible for the stock price to soar to $6.00 to reach $70 by then. The June 70 call option seems certain to expire worthless. However, there are buyers bidding 0.05 per stock for this option, and sellers asking 0.10. It certainly seems possible to be able to sell 100 contracts and realize a quick $500 profit. ( 100 contracts times the call option premium of 0.05 times 100. Remember call option premiums are quoted per stock but always sold in lots of 100. I am ignoring commissions, which could be as low as $6.00 with a discount broker.) If you decide to implement this strategy without owning the underlying 10,000 shares of WFMI you are said to be writing a naked call.

Can you do this? Possibly but it is unlikely. The broker that you are using is unlikely to be as optimistic as you are that the price of the stock will stay under $70.00. Say the price actually goes to $71.00 by next Friday. You would need to be able to buy 10,000 at $71.00 each, an expenditure of $710,000. You would then be required to sell them to the investor who purchased your call options for $700,000. You would be out $10,000 plus significant commission costs. ( Actually, in this case you would more likely purchase 100 June 70 contracts to cancel out the ones you had sold. This would also set you back $10,000 but the commission costs would be lower.) If the broker is certain that this is the maximum price the stock will reach and you have $11,000 in assets in your account, then you could make this trade. The problem is that the broker has no idea as to what the possible stock price might be next Friday and as such has no way of knowing how much money you need to be able to come up with to ensure that you can meet your obligations should things go wrong. For these reasons you are very unlikely to be able to make this trade.

There is a way to get around this sometimes, and that is by using a call option spread. In this strategy, you sell the 70 call option as before but at the same time purchase the 72.5 call option. You have now limited your loss if things go wrong to $250 per contract. If you have sufficient assets in your account to cover this loss you will likely be able to proceed with this trade. For this to work the premium of the 70 call option must be higher than the 72.5 call option. Your profit is the difference in price between the call option premiums should the stock price remain under 70.00 by the expiry date. In the example I used today, this strategy will not work since the premiums of the two call options are identical. However, the strategy may work at other times or with other stocks.

I have paper traded this strategy a few times. My experience has been that it is difficult to find a call spread that has a decent profit for the risk level assumed. I have found that other strategies work better for me and are a more effective use of my time. I have included this post for completeness. I have also found that sometimes something that didn't work for me in the past later makes sense and works well. Some of you reading this may see something here that I do not see.

Using Option Calls as a Highly Leveraged Investment for Above Normal Returns

2006-06-07T05:25:00.000-07:00

Today’s entry is about using call options as a leveraged investment. This is something I have only started doing very recently and am mostly still doing on paper. This is much riskier than using covered calls and requires more effort but the returns are also much higher. It is possible to get a 1000 % return on a single trade for which you are in the market for less than a year! However, these are the exception rather than the rule. However, the occasional trade that that does work with this approach I suspect is used by some less the fully honest options course marketers to promote and increase sales of their course. There may be get rich quick schemes out there but this isn’t one of them. However, some traders do make a decent living using this approach so I think it is worth looking into.

In this approach you are looking to buy call options and then sell them a short time later for a significant profit. For this to work you need to locate a stock that is about to increase in value and then purchase an “at the money” call option on this stock. If the stock does increase in value, the option will also. An example may be helpful here. You do some market analysis and come to the opinion that Microsoft stock is about to surge upward. If Microsoft stock is currently selling for about $23 you could purchase 100 shares for $2,300. If Microsoft stock does in fact surge upward by say $3.00 in the next two weeks, you could sell your Microsoft shares for 26.00 each and realize a quick 13% gain and net cash increase of $300. However is you had instead purchase 1 option contract ( remember option contracts are always sold in lots of 100 shares ) which was selling for perhaps 2 dollars with a strike price of 23.00 and an expiry date at least 1 month away, then two weeks later you call option would be worth about 5.00. You total investment would be $200 and your return in two weeks would be $500. A return on your money of 150%. Significantly better.

What could go wrong? Two things basically. Microsoft’s stock price goes down instead of up or stays the same. Actually, a third thing can and does go wrong with option investors. The stock could increase to $26.00 and then immediately drop back to $23.00 before you sell your options. If you are an options investor and this happened you would lose you initial $200 investment. That is the full extent of your risk. If you are a stock investor your entire investment is at risk, however you have no real time limit in which Microsoft stock’s price needs to surge upward. ( There is some opportunity cost involved if it takes a year before it goes up, but your stock certificate will not expire.) If you own the option, the stock’s price must increase beyond $25.00 in this case before the two months are up or you will take a loss on this investment.

So how do you know that Microsoft stock is going to go up? You don’t! Anyone who tells you otherwise is not being honest. You can however do a market analysis and increase the likelihood that your opinion that the stock is going up has some validity to it. This is the domain of technical analysis and I will write more about this in another post sometime.

There are also many sites on the internet that will help you learn this. You can also find books on this in the library. Two site that I have found helpful on the internet are Insight: Online Stock Trading System and Stephen Cooper’s course ( Full disclosure: I get a commission if you purchase the program through this link.) Of the two I like Stephen Coopers approach much better. This is a much more thorough course and system and he starts with the very basic concepts. ( He also includes a free course on effective daily money management with money saving tips etc.) You can also access his forum though I have yet to find this helpful. Students do post their trades but rarely provide very helpful reasons if any. I am mostly paper trading this approach since until recently I thought this was too akin to gambling. My spouse and I work through this material several times a week in the evening and we are seeing some possibilities. It has been a fun and learning experience for us. I have also had some friends look this material over and they are also interested.

The Power Options site may also contain information about this approach. I signed up for the free 14 day trial period and since I was more interested in the covered call writing at the time I spent my time at this site working with that material. They do a good job on that. The other two sites also have information on covered call writing though the insight site’s focus is on this trend trading approach.

If this investment approach appeals to you, you will need a minimum of $2,000 to open a discount brokerage account in the US and a $5,000 minimum to open a discount brokerage in Canada. If you use a full service brokerage the minimums typically increase to $15,000 and many brokerages will require more. As I mentioned in a previous post it will be a challenge to find a broker familiar with trading options. If you sign up with ether of the two sites I mentioned, you can get assistance through them in locating a broker. I did not use this service so I do not know how effective either are.

Using Covered Calls to Boost Your Investment Returns

2006-06-01T14:57:00.000-07:00

I am writing about using covered calls in today’s entry. I cannot cover this topic in proper detail in a blog entry so I am just going to try and illustrate the possibilities. If this interests you I suggest you also check out what Bill Cara has to say on this topic. If this intrigues you to the point that you wish to start using this technique I suggest you discuss this with your broker, or even better purchase Stephen Cooper’s course. The Power Options site also does a very good job of covering this topic. You can sign up for a free 14 day trail using this link.

A covered call approach is possibly among the most conservative of the various techniques that can be employed when trading options. There are still risks involved and I will detail these but a covered call position can be setup to be a very conservative investment.

With a covered call approach, you must first own the stock on which you are going to sell or write the call options. When you have selected the stock you are going to use and purchased this stock in lots of 100 shares you are in a position to begin using cover options. ( Selecting this base stock is an entire blog entry in itself. It is covered in Stephen’s course and many other places on the internet as well.)

When using covered calls you are selling or “writing” call options. A call option if you remember from a previous post is the right to purchase stock at the strike price. This approach is referred to as covered since you own the underlying stock. If the call option is exercised, you already own the stock and will not need to go into the market and purchase stock to meet your obligation if the stock is exercised. There are three slightly different approaches that can be used.

The first approach requires that you at least 100 shares of the stock and it is a stock you wish to hold for the long term. If you owned 300 shares of wonderful widgets and wanted to boost your return on this stock, you could look at selling 3 out of the money call option contracts. Say the stock was trading at 54.35. A call option with a strike price of 60 dollars 5 months in the future is listed as selling for $1.00. ( This is the bid price if you look at the price quote table for this option.) You can sell 3 of these contracts netting you $300.00 less your commission costs. If the stock price is under $60.00 in 5 months when the option expires, it will not be exercised and you get to keep the entire proceeds and the stock. ( and any dividends the stock may pay ) If the stock price is above $60.00 you will be forced to sell your stock. You will get $60.00 per share plus the proceeds of the sale of the call option contract. You would also collect any dividends paid during this time. ( With a North American option, it is possible though rare for the option to be exercised before the expiration date. Those rare occurrences happen when the stock announces an unusually large dividend that will be paid to shareholders before the expiration date.)

You have two risks with this type of investment. Since you are required to hold the stock, if the stock were to suddenly drop you would face a large loss. ( Though the loss would be $1.00 per share less than if you held the stock without selling a call option. ) Second if the stock were to have a large unexpected rise to in price to $65.00 you will realize an opportunity loss of $4.00 per stock. The first risk can be mitigated by proper selection of the underlying stock, and if things still go very wrong selling the underlying stock and purchasing 3 Call option contracts to cancel out the contracts you sold. ( You are unlikely to be able to continue to hold an obligation to sell a stock in your account. Brokers will not allow this and I will get into why in a later post.) The only way to mitigate the second risk to really know the underlying stock and not get caught with any surprises like this. This is not always possible. In the example, you realize a return of about 12% in just 5 months, ( a ROI of almost 30% annually) and this should be within you planned return. You should not be making the trade if you do not realize the ROI you have set as your goal in the planning stage.

A second approach to using call options is even more conservative. Here you would buy a very conservative stock and look to sell a “deep in the money” call that is perhaps a year away. Bank stocks work well for this. Say ABC bank stock is selling for $50 per stock. You would try and sell a call option with a $40.00 strike price a year out for perhaps $14.00. Here is how the trade works. You purchase 200 shares of ABC bank stock, costing you $10,000. You then sell 2 call option contracts 1 year out with a strike price of $40 and realize a immediate cash return of $2,800. The net effect is you have $7,200 invested. One year from now, it is expected that your ABC bank shares will be “called” away and you will receive $8,000. A better than 10% return on your money. The price of ABC bank stock would need to decline from $50.00 to less than $40.00 in a one year period for this trade to not work out. The price would have to decline to $38.00 before you started loosing money. Unless you pick a really poor bank stock this is unlikely most of the time. I have ignored commissions and dividends in this example. Commissions would reduce your return and dividends would boost your return.

The third approach is to use the second approach but do it for a shorter term. However to get a decent return in the shorter term you will need to find a more volatile stock, ie stock whose price moves around a lot, and this means that you are in a higher risk position. If the price is not very stable it can as easily go down as go up.

An Introduction to Options Trading

2006-05-30T09:45:00.000-07:00

This is the first in a series of posts that I intend to write focusing options. I have used option trades for a number of years now to boost the returns on my investments. I intend to explain what these two financial tools are and show the many ways they can be used. This is exciting stuff. This is also not for the beginning investor!.

Options trading is not for everyone and in fact the majority avoid it. My experience has been that most brokers do not understand this either and that finding a broker who is willing and able to work with you on this can be a challenge. I now use a discount brokerage myself for these trades and that has worked best for me. However, I worked for years closely with a broker before doing this on my own.

I have been reading a number of books on investing and obtaining financial freedom and many if not all of them insist that in order to succeed you need to set specific goals. I do not have time in interest in writing about goal setting now, but this is an important step. I can say this quickly though, goals must be very specific. There is no point, in saying your goal is top make money. That is a given and of no help. A useful goal is to say you want to achieve a 15% return or a 20% return on every trade. One of the purposes of the goal is to eliminate emotion from the investment decision. A goal like a 20% return on every trade helps with this. If the return is less than 20% you do not make the trade, if it is 20% or more you make the trade. This is the type of decision a computer could make and get right every time. This is the sort of system you need to have in place to ensure success.

Now on to options and a quick introduction. This first post is just a quick look at the terminology involved. In subsequent posts I will review some of the strategies that can be used to successfully trade in the option market. If you are impatient there is a link at the bottom of this post for an excellant course in options trading.

An option is a type of financial instrument known as a derivative. It is basically an agreement between parties to exchange ownership of a stock at an agreed upon price within a certain time period. The exchange of the stock is optional and the owner of the option decides if this optional exchange takes place. The agreed price of the exchange is called the strike price. The date on which the agreement expires is the expiry date. The cost to purchase this agreement is referred to as the option premium. If the exchange does take place, then you have exercised the option.

Option premiums are always quoted per stock but are sold in lots of 100 shares minimum. Call options are always an agreement about being able to purchase the stock at the agreed upon price. Put options are an agreement about being able to sell the stock at the agreed upon price. Options come in both European style and American style. European style options are sold on European exchanges while American style options are sold on North American exchanges. The difference is quite simple. European options can only be exercised on the expiry day while American style options can be exercised at any time during the life of the option.

Options are frequently described by the relationship of the strike price to the stock price. An option for which the strike price is equal to the stock price is said to be an "at the money" option. With call options if the strike price is above the stock price the option is said to be an "out of the money" call option. A put option is the opposite of a call option, if the stock price is below the strike price then the put option is “in the money”. Remember a put option is an agreement to sell the stock. Finally, if the strike price is less than the stock price, the call option is said to be "in the money" and the opposite is still true for the put option which is now “out of the money”.

Increase your investment Returns Using Options

Understanding Market Capitalization

2006-05-25T13:37:00.000-07:00

Market capitalization is important as it gives the investor a sense of the size of the company. It is determined by market forces and is only loosely connected to the actual value or size of the company in terms of physical assets. Market Capitalization is dependant upon the stock price and the stock price tends to be more reflective of what the market expects the company to achieve in terms of earnings than the actual assets it controls.

Market Capitalization is calculated by multiplying the price of the stock by the number of stocks issued. For example if the stock of company Wonderful Widgets is selling for $20.00 and there are 1,000,000 million stock shares issued by Wonderful Widgets then the market capitalization for Wonderful Widgets is $20,000,000. Since the stock price typically varies from day to day the market capitalization for a particular company also varies from day to day.

Market capitalization is only one of many ways to value a company. Another common method used to value a company is the book value. The book value is calculated as the difference of the assets of a company and the liabilities of the company. If company Wonderful Widgets has $30,000,000 dollars worth of assets; buildings, inventory, etc and $15,000,000 in liabilities; mortgages, loans outstanding, accounts payable, etc then the book value of Wonderful Widgets Wonderful Widgets is $15,000,000. The book value is also referred to as the net worth of the company. The market capitalization of a company and the book value of a company rarely are the same value. A high growth company will typically have a much higher market capitalization than book value while an established company with little growth expectations will have a market capitalization that is closer to the book value.

It is very important to realize that both market capitalization and book value are really just opinions. Market capitalization is the consensus opinion of what the market thinks the company is worth. Book value is based on what the accountants think the assets and liabilities are worth. There are many rules and principles that accountants use to base these opinions on but at some point some one makes a judgment call as to what a building is worth, or what the amount of inventory is worth. The recent Enron failure is an glaring example the fact that the value accounts assign to a company is really just another opinion.

It is disagreements with these opinions in part, that give rise to the market. If I think the market capitalization is too high with respect to the book value I will be trying to sell the stock and if I think the market capitalization value is to low then I will be trying to buy stock in the company.

Market capitalization is used to compare companies based on size. If the Tinker Toy company has a stock price of $40.00 and 100,000 shares outstanding then its market capitalization is $4,000,000. Tinker Toy is a much smaller company than Wonderful Widgets even though its stock price is much higher. Comparing companies based on market capitalization is much more meaningful than comparing companies based on stock price alone.

A stock or company is said to be a large cap stock if it's market capitalization value is between 10 billion and 200 billion dollars. General Electric is an excellent example of a large cap stock or company. Large cap stocks are generally considered safe stocks. Large cap stock are also referred to as blue chip stocks. The sheer size of these companies tends to make the stock price fairly stable. It is unusual for them to experience significant growth or to see large declines in the value of their stock price. For this reason, many investors tend to park their money in large caps during times of uncertainty in the stock markets.

However, not all large cap companies can be considered safe. Even among the stocks considered safe there are better choices than others. A diligent investor will still review the specific company's financial statements and perhaps the industry outlook before investing.

A mid cap stock is a stock that falls into the mid market capitalization stock rank and represent companies whose total market capitalization is between 2 billion and 10 billion dollars. Mid cap stocks are more risky than a large cap stock but less risky than a small cap stock. Generally risk of company failure decreases as the company increases in size. On the positive side, a mid cap stock has better potential for growth than a large capitalization company. A very large company may have completely saturated its market while a mid capitalization company will have more room to grow into a larger company. So when considering an investment in a mid capitalization stock, you are basically trying to decide if this company has the potential to grow into a much larger company. If you are right and make the investment, you will have a successful investment.

A small cap stock is a stock that falls into the small capitalization stock rank and usually refers to companies with a market capitalization of 50 million dollars to 2 billion dollars. Companies whose market capitalization is less than 50 million are referred to as micro cap stocks or penny stocks and should be avoided unless you have specialized knowledge to trade in this extremely risky market.

Small cap stocks have two growth paths; they can grow either through organic internal growth, or through acquisitions, or even both, into a much larger company, or they can become a take over target and become absorbed into a much larger company. Either way if you are holding stock in this company you will profit. Unfortunately, neither scenario is assured. Some small cap stocks remain small cap stocks for a very long time and the money you have invested will not show a good return and would have been better invested in other investments.

As a potential investor reading this you may now have a dilemma. You can make a low risk return and invest in a large capitalization stock and see a reduced return. You can increase your possible return and invest in mid cap stocks but at greater risk, or try and hit an investing homerun by investing in a small cap stock at the risk of striking out. One way to solve this dilemma is to diversify across all three types.

There are many mutual funds that are aligned with this market capitalization differentiation of stocks. This is an easier way to invest your portfolio and diversify across this type of stock segregation. It avoids the need to research a great number of stocks yourself or even determine which bracket a particular company falls into.
Remember too that segregating companies by size is just one way of many to segregate the market. You can also segregate by product category, ie finance, industrial good, technology etc. You can also separate by location, ie North American stocks, European stocks, etc. And you can combine these different categories, ie large cap European financial stocks. It is no wonder new comers to the stock market can find it overwhelming. However, if you have read all the way to the end of this entry, you will eventually understand all of this also. Hopefully, I have helped to make this aspect of it somewhat understandable.

Increasing your Investment Returns

2006-05-23T09:31:00.000-07:00

The other day I was doing some modelling of various savings approaches and was a little surprised to learn how important the rate of return is to acheiving my eventual savings goal. So I am back to focusing on increasing my returns,

I have succesfully used options to increase my returns and am slowly learning how powerful this financial tool can be. Options give you leverage and when you know how to use this properly you can realize above average returns. You do want to be sure you know what you are doing as leverage can also exaggerate your losses.

There are conservative approaches to using options and very risky approaches. I have been focusing my real trading on a very conservative approach and starting to paper trade a much more aggresive approach. The returns I am achieving on paper are breath taking. So far though, my trades on paper have moved as expected and this cannot continue. Even so I am very excited about the possibilities.

You can learn more about stock option investing by following this link and continuing to read this blog. I will be posting more articles on effective use of this powerful concept.

$1 dollar a day.When do I reach 1 million?

2006-05-22T05:22:00.000-07:00

Here is the plan. You save $1 a day in a jar. At the end of each month you transfer
this amount to a savings account earning 3.5% annually compounded monthly. Then at the end of each year you transfer the balance in the savings account to a tax sheltered investment account such as an IRA account or RRSP account. You continue to follow this routine until you reach $1,000,000. The rate of return that you will earn on your savings determines how long it will take to reach $1,000,000.

At 8% annual return this will require 68 years.

At 10% annual return this will require 57 years

At 12% annual return this will require 50 years

At 15% annual return this will require 42 years

At 20% annual return this will require 34 years

At 30% annual return this will require 25 years

This table assumes compounding annually.

So what happens if you increase the amount to two dollars a day?

Here is the table for the same assumptions using a $2 a day savings plan.

At 8% annual return this will require 59 years.

At 10% annual return this will require 50 years

At 12% annual return this will require 44 years

At 15% annual return this will require 37 years

At 20% annual return this will require 30 years

At 30% annual return this will require 23 years

The interesting thing to note from this is that you will get there faster if you focus on your rate of return instead of the amount that you are saving. I was surprised to learn this. I intend to research ways to improve the rate of return on my investments and apss some of these investment tips along in this blog.

Learning to Think Like a Millionaire!

2006-05-19T13:25:00.000-07:00

My spouse recently attended a week-end training session with Peak Potentials and came away very impressed. Peak Potentials is a personal growth training company developed by T. Harv Eker and quickly became the largest such company in North America. Judging by my spouse’s response to this seminar there is good reason for this. The seminar appears to be very effective. I have seen a definitive change in her attitude and the results she is now getting since she took the course. As a result, I am very much looking forward to taking the seminar myself.

You can get an invitation for two to attend this seminar by simply purchasing his book, Secrets of the Millionaire Mind. If you follow the links, you can purchase this book for as little as $8.00. ( This will probably vary as the book is purchased through amazon.com) It is very interesting to read some of the comments on the amazon web site. Purchasers of the book seem to leave positive comments and those who do not purchase the book leave negative comments. ( I find it odd that you can or would leave comments about a book you have not read.)

I have read the book and found that it contains some interesting ideas though most of this material has been covered elsewhere. He succeeds I suspect in part due to an effective presentation and in part due to a certain amount of credibility in that he has achieved financial success. It is a short read and definitely worth the effort.

You do get an incredible deal in my opinion if you purchase the book and follow up by attending the free 3 day seminar. This great deal can be offered in my opinion since during this 3 day seminar you will be presented with a number of other products offered by Peak Potentials. My spouse said that a large number of people signed up for these additional courses and it is these backend sales that support this first seminar. This is a very common marketing technique that has been in use for a long time. ( A technique known as a loss leader.) It is used because it works. My spouse said that you can learn a great deal just by watching how they run the seminar.

If you are interested in living a full filling life free from the worry of financial constraints you ought to check this out. I am going to!

To MLM or not MLM?

2006-05-01T14:16:00.000-07:00

Multilevel marketing has received a bad rap but I am not sure it deserves it. Admittedly it has failed many people and this is no doubt the reason for its bad press. I know some people for whom it has worked and worked very well. This does not get as much press.

There are many reasons why it has failed for so any people but few if any of the reasons can really be faulted back to the MLM concept itself. I think the biggest reason for the large number of failures is the ridiculous promises of incredible earnings and the implied ease of attaining those earnings. There may be easy ways to make money, MLM is not one of them. To build a business MLM or otherwise requires a good deal of effort.

The second big reason for the frequent failure of the MLM attempt is the focus on building a downline. Most MLMs and I suspect all legitimate ones are setup to sell product. My experience with MLMs though is that everyone focuses on building a downline. If you cannot sell the product and make a living selling the product how can you help your downline to succeed? You need to believe in the product to be able to sell the product. You need to be able to sell the product, to be in a position to help you eventual downline succeed.

The third big reason is that most MLMs are too easy to get into and too easy to give up on. I know two people who attempted a MLM opportunity with the same company. One succeeded and one failed. The one who succeeded had to succeed to put food on the table and a roof over their heads while the one failed tried it as a part time venture. The reason for the failure was the lack of commitment not the part time nature of the attempt.

Many MLM failures also blame their upline. Some uplines are going to be better coaches, teachers, leaders, etc. than others. It is the nature of the business. However, ultimately success in any venture depends the person making the attempt.

I intend to eventually become part of a MLM network. I really like the idea of being able to help someone to succeed and the MLM system provides a great way of doing so. I really like the idea of peer to peer marketing. If I find a great product, it is awesome to share that with others and see them get excited also. Most of us do this all the time already. This is what a MLM opportunity needs to be about! The focus needs to be on the product. I am still looking for that great product!

A huge Increase in Revenue!

2006-02-20T09:30:00.000-08:00

A huge Increase in Revenue!

I found something that has made a huge difference in my adsense revenue. Adsense-Xchange. My page impressions per day increased by a factor of 10. Even more impressive I make more in revenue in one day now after signing on then I had made over the previous two months. There are two plans; one plan costs nothing to join or you can pay a monthly fee to belong. In either case you will need to spend some time surfing member sites. This provides another benefit as you get to see some really well done interesting blogs and sites. You also see many really bad ones! This has really worked for me so far. I have also read posts in other blogs where it has worked for them. Adsense-Xchange.

Free Internet Course!

2006-02-16T10:07:00.000-08:00

Free Internet Course!

I found a free course on the internet that is worth looking into if you are interested in getting a home based internet venture going. I have only reviewed the first chapter so far but this contains some good material. I am excited! Niche Profits Course

Million Dollar Strategy

2006-02-07T14:16:00.000-08:00

Million Dollar Strategy

I read Michael Decter’s book “Million Dollar Strategy” during the holiday break. In this book he details how in 10 years he grew his RRSP portfolio from less then $50,000 to over $1,000,000. An average annual rate of return of 46%. Very impressive. If anyone reading this is thinking of managing their own investments this is definitely a book worth reading. It obviously has a Canadian perspective but most of the principles he discusses are universally applicable. It is an easy read and very inspiring. He gives a very detailed account of how this was achieved. If you are looking for a simple formula that you can simply plug into and repeat his success though you will not find it here. I doubt that one exists. However, he does detail his approach and thoroughly documents every one of his deals so that you can certainly approach your managing your own investments in a similar style.

I found it interesting that he states that his goal initially was a 15% annual return which is similar to my current goals for my RRSP account. In many ways his approach is quite similar to mine. ( Does this mean I can expect eventually to achieve a 46% return? ) In my first year managing my own RRSP account I achieved a 18% return though I was on target to achieve a 21% return until the last two days. ( I worked closely with two brokers for several years before combining my accounts last year and going entirely on my own. I went from relying entirely on their advice to making all of the decisions on my own so I saw no need to continue to use a full service brokerage.)

If this sort of thing interests you, I would recommend this book. I think he provides enough details that anyone can implement the approach he used. Will you get the same results? Unlikely, you may not do as well or perhaps you will do even better. The important thing is that you can do it and I think achieve some measure of success.

Michael Decter’s Million Dollar Strategy
Building your Own Retirement Fund in Just Thirty Minutes a Day.
Stodart ISBN 0-7737-3086-9

Home Based Typist/Data Entry Specialist Scam Exposed

2006-01-27T06:03:00.000-08:00

Home Based Typist/Data Entry Specialist Scam Exposed

Have you ever seen those small ads for home based typists or data entry specialists? Have you ever wonder what that could be all about? I mean they are sending you all of the work via EMAIL already so what additional typing or data entry could be required? So what happens if you respond?

Well, first you will receive an EMAIL similar to what follows. If you make the payment requested, they will send you another document a copy of which I have also listed. In case you do not want to read the entire document, it basically tells you to place your own ad for home based typists, whatever, and repeat the scam on the next person, only this time you get paid. Hopefully. A list of web sites on which you can post your ad is usually also included. Some sample ads are also listed.

I did place two ads as suggested and I did get some responses. No one purchased the package though. Of course this may have had something to do with the fact that I gave it away up front labelling it for the scam that it is.

Watch out for this one.

I am still looking for a legitimate home based job.

Hello!

Thank you for your fast inquiry about the work at home position. I received your E-mail and I know you will like what this is all about, providing long-lasting income from the comfort and privacy of your own home. We are all about customer service satisfaction. Here is the description of what you would be doing:

The Data Entry Specialist position requires that you have a reliable computer with internet access and capabilities, and a valid E-mail account, basic internet knowledge, and minimal typing skills. You must also be able to conduct yourself in a professional manner. This includes having excellent grammar and spelling when communicating with clients via E-mail.

In addition to the above requirements, you MUST be able to follow instructions closely and completely.

All contact is via E-mail, so you will not be required to call anyone at any time. This allows you to work whichever hours are most convenient for you (days, nights or weekends). You will be processing applications, as well as filling out forms (this tends to be tedious at times, but good money, so please be sure that you have the patience to do so before proceeding). This is why we expect you to have basic internet knowledge, though the training provided will give you step-by-step instructions on how to perform these tasks properly. There are no "down-times" with this position, so you will have a constant flow of work to complete.

You will get paid $20.00 for each application completed. The amount of money you make each week is entirely up to you, and how much time and effort you are willing to put forth with this position. The average person makes $200.00-$400.00 each week.

When you have been accepted as a Data Entry Specialist you are considered an Independent Contractor. This means that your taxes will not be taken out; therefore, you will not be provided with any tax forms. THIS IS ENTIRELY YOUR RESPONSIBILITY. The training provided will go more in depth about what to do with your taxes.

You will receive your pay through Paypal. When an application is completed,$20.00 will be credited to your Paypal account, which can be withdrawn into your bank account at your leisure. You can read about the security policies at www.paypal.com. There is a one-time non- refundable fee for the training package. This also includes all processing fees and training costs.

This is a one-time fee, and there will be no other charges to you. We must accept this fee to cover training costs, processing fees, as well as to ensure that only those only serious applicants apply. This is a non-refundable fee, so be sure that you understand what you are doing before sending in your payment for the training materials. This fee will not be waived, and cannot be deducted from your first pay. This is because if you do not process any applications, you will not have a first pay, and we will have already taken the time to set you up and train you.

You will be able to get the training materials, and begin working as soon as payment is received. Most applicants typically complete the training within 24 hours or less. However, you can do this at your own leisure. Keep in mind that the sooner you get through the training materials, the sooner you will start making money.

If you are serious about this position, meet all the requirements, and are responsible enough to work from home, then read on to be informed on the cost of the training packet, and how to set up your paypal account.

There is a one-time fee of $12.95 to begin. This is the cost of the training materials. The training materials give you step
-by-step instructions on how YOU get started. When you receive your training materials you may begin working that same day. Once you have processed your first order you will have made your money back for the cost of the training materials. You will receive your training materials through your E-mail.

If you are serious, and are willing to put forth some time and effort, then I look very forward to hearing from you again.

Below are the answers to some most commonly asked questions:

Q: How do I get paid?

A: You are paid on a daily basis. All the money you earn is placed in

A secure online paypal account at www.paypal.com. You can transfer money from this account on a daily basis to your own
personal bank account once paypal has verified you. This process takes about 2-3 days.

Q; How much do I get paid?

A: You are paid $20.00 for each application you process.

Q: How can I be assured that I will be paid?

A: You will be the only person with the completed order and you do not release it until you have been properly paid for that
specific order.

Q: How many orders will I get?

A: The average person gets between
25-30 orders to process per week which translates to $500.00-$600.00 per week.

Q: Will anyone have my information or contact me on the phone?

A: NO, Absolutely no one will ever contact you on your personal phone.
All information, orders, interviews, payments are handled online through your E-mail. If however, you wish to be paid by
check sent in the mail that is an option you have. In that instance I would recommend a PO Box.

Q: How do I get my training materials?

A: Your training materials are sent directly to your E-mail box immediately after your training fee has been received.

Q: How much is the training fee?

A: The training fee is a ONE-TIME fee of $12.95. There are absolutely no other costs to you what so ever GUARANTEED.

Q: How do I pay for this fee?

A: The quickest way to pay for your training costs is to go to
www.paypal.com and make a one time payment of $12.95 someaddress@gmail.com
To get started today go to www.paypal.com and make your payment of $12.95

Paypal send both you and me a confirmation at which time I will send you your materials to get started.

Your training package will show you step by step how to get started. I hope you will make the decision and join our team.

Thank you for your time.

-Jennifer
This what you get if you pay the fee requested in the EMAIL you are sent.

Fellow Home Based Typist / Data Entry Specialist,

You have taken the first step in attaining your goal of working from home. With the information provided in this training material you will be able to get started working from home today, by reselling the materials. The training material is broken down into 5 easy to read sections:
Section 1 – Getting Started
Section 2 – First Response Letter
Section 3 – Getting Paid
Reference Section A – Employment Ads
Reference Section B – Free Online Ad Placement
Please read each section carefully. Your success depends on how hard you want to work at it. If you put forth the time and effort, you WILL make money and gain valuable time with your family.
Best of luck to you!

ALSO NOTE: This concept is 100% legal, refer to US Postal and Lottery Laws, Title 18, Section 1302 and 1341, or Title 18, Section 3005 in the US code, also in the code of Federal Regulations, Volume 16, Sections 255 and 436,which state a product or service must be exchanged for money received.
SECTION 1: Getting Started
To get you started making money, we have some simple steps for you to follow. Your first steps are to place ads similar to the one you responded to.

- First Step: How to place ads
In order for anyone to respond to you about this opportunity, you must place an ad on the Internet, again, similar to the one you responded to. Use one of your own or one from the Reference Section A. You may need to retype it and put it into your own words. You can place your ads on Yahoo, Google, just to name a few. There are literally hundreds of places to place your ads for free! Remember the more ads you place the more exposure you will have and the more orders you will have emailed to you. I cannot stress this enough: DO a search in any major search engine like Google.com or Yahoo.com for "free job postings" or "free job sites" and that should give you more than enough to get started. When you're on those sites always look at their "links" and this will give you opportunity for more sites. Each site will walk you through the process of placing your own ad. Some places will require you to register with them; you will need to do this to post your ads. The information that you provide them with will not be in your ad unless you want it to be. You will definitely get responses, and you will definitely be processing orders right away! When I got started, I got responses four hours after I placed my first ad. Believe me, everyone's mailboxes are always full.

Use the examples in Reference Section A as a guideline for the ad you will place. PUT IT INTO YOUR OWN WORDS!
Good luck and start placing the ads as soon as possible and at as many places you can find. (See Reference Section B)
SECTION 2: First Response Letter
Now that you've placed your ads and your mailbox is overflowing with inquiring minds, use the following letter (once again as a guideline – use your own words) to respond, and be prompt about it. Remember, people are waiting to make money, just like you.

The Start of something

2006-01-24T12:12:00.000-08:00

The Start of something

A Blog worth reading

2006-01-11T18:48:00.000-08:00

I found a great blog that is very interesting reading. Check it out http://guide2homelessness.blogspot.com/