Knowledge is Power

Idea number two for improving your ability to invest wisely is to remember that knowledge and information are not the same thing.

This goes hand-in-hand with the first idea: educating yourself.

There is so much information out there, but you have to sort it out and learn from it. You don't need to read every news service, every magazine, every newsletter to become educated in the markets. Study the markets first and foremost, then read material that supplements your goals.

Tomorrow... idea three!

An Educated Investor is a Smart Investor

Now that we're into a new year, Portfolio Bunny would like to give you some basic ideas about investing and trading that you should know, especially now that the market is in a defensive mode and you should be preserving cash.

Idea #1 - Become Educated

This doesn't mean more student loans, late night studying, and pop quizzes. It means learning how to invest by yourself using technical analysis layered over fundamental analysis. It means learning to find a registered investment advisor. It means keeping abreast of the markets and their trends.

Just like back in school, you have to ask questions. Question your advisor. Get to know your portfolio well, not just the bottom line.

If you do your own investing, ask yourself what you would do if you were using someone else's money? Would the next trade you have in mind be something you'd feel comfortable offering to a business associate or loved one?

Above all else, though, never forget to keep emotion out of your equations.

For more ideas... stay tuned.

The Stock Market Will Self-Destruct In...

Alright, it isn't quite that bad... yet.

But last week's market performance was amazing. Technically, it was destructive. Psychologically, it was a disaster. Even the major averages were a disaster. The S&P lost 4.4%. The NASDAQ lost 6.4%. The biggest loser, the Russell 2000 (RUT) lost 6.7%. There were more than 500 new weekly lows last week.

Some people on CNBC were saying it was the worst week since 2002!

Ah, but they are wrong. They are misleading you. They are making things seem worse than they really are. You only need to glance at August 2007 to see the reading was at 1100 new weekly lows.

Remember, don't believe everything you read or hear from those talking heads.

As for our headline... well... made you look! ;)

Crystal Balls and Other Such Nonsense

Well, the crystal balls are dusted off and on the table. All the talking heads are making predictions. According to Bloomberg News, Byron Wien said the US economy will fall into recession in 2008 and stocks will tumble before rallying in the second half. He said the S&P will post a 10% drop.

And how effective is Mr. Wien's fortune telling? According to the same Bloomberg article, he has been totally wrong the past two years. And Wien himself admits his predictions have at least a 50% chance of coming true (or failing, depending upon your perspective).

Actually, flipping a coin is just as effective and takes less time to read.

So much for predictions...