New Year's Resolutions For Stock Market Investors

It is at this time each year when we make Newdays before, and a couple of days after month end,
Year's resolutions, to help reduce the gap betweenmeaning that you may end up paying higher prices.
where we are today and where we want to be inTry moving your contribution date to the middle of
the future. Having been able to speak to thousandsthe month and avoid the month end price squeeze.6.
of investors over the last five years, I have compiledNever Wait For The WhyHave you ever tried to tell
a list of my favorite New Year's resolutions that willa three-year-old to do something? Inevitably, their
help stock market investors, no matter which wayreply will be a one-word answer, "Why?". Well, it
the market goes this year.1. Reduce CostsWhile mostseems like we never lose that childish curiosity which
investors are focused on how to make more moneycauses us to reply to an instruction, by asking the
in the stock market, it is just as important to try toquestion why.Unfortunately, the stock market is not
reduce your costs of investing. Like any good CEO,in the habit of telling us why we need to do
you must focus on getting the best value possiblesomething at the time we need to do it.If you have
for every dollar you spend. While it would be excitingbeen waiting to take action in the market, and the
to find an area in which you could save a large sumopportunity presents itself, do not stop and look
of money, it is often the little expenses that fly justaround for the answer to the question why. Take
under our mental radar that end up costing us theaction first, and the answer to the question why will
most. Keep an eye on commissions, service fees andcome later.Why sell Enron? Why sell Taser? Why sell
transaction fees. Whether you spend $49, $29, $19,Krispy Kreme? Why sell General Motors?7. Learn The
or even $9.99, to make a trade, in the end, you'll getSkill Of SellingWe live in a society where we are born
exactly the same result.2. Think SmallConcentrate onand bred to be shoppers. From the time we wake up
hitting singles, not home runs. Everyone has dreamsin the morning, until we go to sleep at night, we are
of making it big in the stock market. But the questbombarded with messages that tell us to buy, buy,
to hit a big home run often comes at the expensebuy. So it's no wonder that investors find it very
of taking advantage of the markets' internal ability toeasy to buy stocks, but feel uncomfortable when it
rise over the long-term. If you can just increase thecomes time to sell them. Selling should be about
value of your portfolio by just an extra 1% per year,taking profits, or avoiding loss. It should not be about
it could end up netting you hundreds of thousands ofbeing right or wrong. Some of the greatest investors
dollars in extra profits over the long-term. Ain the world are wrong more than they are right. But
$500,000 portfolio, earning 4%, will be worthwhen they're wrong, they sell quickly and reduce
$1,095,561 in 20 years. Add an additional 1%, and youtheir loss, and risks. And when they're right, they hold
will increase your returns by an additional $231,000.3.on as long as possible, until the market tells them to
Fire Your Mutual Fund CompanyAccording to the lastsell.When the stock market fell in 2000, investors did
count, there are over 10,000 mutual funds in Northnot lose money because they did not know what
America, which means that there are more mutualstocks to buy, they lost money because they did
funds than stocks. Why are there so many? Anot know when to sell.8. The First One Now Will
mutual fund company is one of the most profitableLater Be LastIt was nearly 40 years ago when the
businesses to start, with little or no risk. That is whyfamous singer/songwriter, Bob Dylan, wrote those
every bank, insurance company, brokerage companyfamous words "The first one now will later be last".
and financial institution in the world, also sells mutualObviously, Mr. Dylan was not referring to the stock
funds. And as history tells us, lack of performancemarket, but he could've been. As a society, we love
does not hinder a mutual fund company's ability tosuccess. We love to follow and idolize winners in just
succeed, as it would in say a business like a drugabout any sector of society, including winners in the
company, or an energy company. Remember thestock market. Unfortunately, it is very rare that you
basis of the mutual fund company is to invest withsee a winner repeat its performance, year after
other people's money, and charge them for doing so.year.What was the best-performing stock, mutual
And they do so, while rarely ever beating the stockfund or sector last year, will not be the
market indexes.best-performing stock, mutual fund or sector this
In the previous resolution, we looked at how a 1%year.Don't chase success. Buying last year's
increase, in your return, could earn you an extrabest-performing anything, could be one of the most
$231,000. This is the same 1% return that the mutualcostly investment mistakes you ever make.9. Manage
fund companies are hoping to skim off your portfolioWhat You Can ManageWhen a baseball coach walks
over the next 20 years.Can you tell yourself, in theout, onto the field, is he managing the players on his
next 60 seconds, why you are dealing with yourteam, or the spectators in the stands?
current mutual fund company? Is it because of theWhen you look at the stock market, are you trying
above average returns? Is it because of the lowerto manage all the stocks in the stock market, or are
than average fees? If not, then you may be stuckyou trying to manage your selected group of better
with its $231,000 gorilla sitting on your shoulders forthan average stocks, ETF's, and mutual funds?
the next 20 years.If you do not want to fire yourThere is a logical reason why there are only so
mutual fund company, then, you might be able to getmany players on a sports team; why there are only
by just being more selective in the funds that youso many soldiers in a platoon; and why there are only
choose from their fund family. Most mutual fundso many people working for an accounts receivable
companies today now offer "Index" funds at a lowermanager.Your goal should be to keep the list of the
expense ratio than their normal "Managed" funds.things that you're following as small as possible.
Historically, Index funds, will outperform ManagedIf you're following more stocks than the president
funds over the long run. In many cases, you shouldhas seats of his cabinet table, you're probably
be able to save, at least, 1% in your annual fees.Thefollowing too many.Have a Happy New Year and all
more extreme solution, but increasingly popular,the best to you and your family in 2006.Stephen
would be to move from mutual funds to exchangeWhiteside is the CEO of the online
traded funds.Exchange traded funds, or ETF's, are
very similar to mutual funds, but trade, just likestock market timing service, TheUpTrend.com,
stocks. In fact, some of the major exchange tradedproviding investors with daily,
funds are now some of the most popular stocksweekly and monthly trend analysis, buy & sell
traded on the major indexes.4. Invest In A Mutualsignals, price targets, and
Fund CompanyThe best way to make money inSmart Money Alerts, on over 1,500 leading
mutual funds, is to invest in a mutual fund company.5.North American companies.Stephen Whiteside is the
Avoid The CrowdMany people save for theirCEO of the online stock market timing service , that
retirement by making regular monthly contributions.provides Investors with daily, weekly and monthly
This is probably the best way to save for thetrend analysis, buy & sell signals, price targets,
long-term. Unfortunately, most people make thissupport & resistance price levels, and Smart Money
contribution at the end of the month. With so muchAlerts, on over 1,500 leading North American
new money entering the market at the end of eachcompanies listed on the TSX, NYSE, and the
month, stocks will often trade higher for a couple ofNASDAQ.