By Reece Matthews
It’s not uncommon to be told that diversification is the key to profitable investment trading. Although it is only just one word, it can have powerful implications. If you take it to heart, you can either end up earning tons of cash or you could join the loser’s circle at the bottom of a pit. You should therefore carefully assess the advisability of this crucial step.
Diversification is actually a very simple concept that can significantly increase your profits. It simply means that as an investor, you should choose to put your money in not just one kind of market but in many. If for example, you already have a strong stock portfolio, you should take your capital and spread it across other assets such as real estate, commodities and assets.
A diverse investment trade portfolio seems to focus a lot on ensuring more gains. Because you have many investments, you can expect to enjoy more profits. This however is not entirely the reason why you should spread your capital. The main reason is actually a practical one. When you go for a wide portfolio, you are ensuring your survival. This is because specific markets can have slumps that can affect every investor. If the stock market for instance, experiences a prolonged dive or lack of movement, you always have your other sources of income to rely on. In other words, diversification is the key so you don’t end up in a ditch which is what will happen to those who put all their eggs in one basket.
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Jim Van Meerten submits:
One of the hottest stock this week is Intergrated Silicon Solutions (ISSI). The company designs, develops and markets high performance memory devices including static random access memory, low and medium density dynamic random access memory, and nonvolatile memory, as well as voice recording devices and certain microcontrollers and embedded memories. Their memory devices are used in networking applications, telecommunications, data communications, disk drives and other peripherals, personal computers, office automation, instrumentation and consumer products. Can you have too much memory.
I was screening on Barchart for stocks having the most frequent price increases in the last 20 sessions and ISSI had 15 in the last 20 sessions plus 5 in the last 5. The price appreciation has been 82.58% for the period. Barchart’s technical indicators signal 12 of 13 buy for a 96% buy rating.
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Carl T. Delfeld submits:
Looking for value, not chasing economic growth, is the key to successfully investing in emerging markets.
The Credit Suisse Global Investment Returns Yearbook, is an annual research project from Elroy Dimson, Paul Marsh and Roy Staunton, three academics at London Business School.
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Zachary Scheidt submits:
PRAA)” hspace=”6″ vspace=”6″ width=”200″ height=”50″ />Investors in Portfolio Recovery Assoc. (PRAA) have to be pretty pleased with the way 2010 has treated them. The stock is up nearly 20% so far this year despite the fact that the market has been sluggish. At issue has been both a positive earnings announcement for the fourth quarter, and a successful stock offering last week. The stock offering allowed the company to raise capital to pay down its debt level and gives the company more flexibility for future strategic purchases.
Portfolio Recovery operates in an industry that doesn’t have too many friends. The company purchases receivables from financial institutions and other corporations and then attempts to collect enough of these receivables to cover its purchase price and generate a profit. That’s a nice way of saying the company is a glorified debt collector. This business has been profitable for quite some time, but in the last decade many market participants have faced competitive challenges.
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Paul Carton (ChangeWave Alliance) submits:
By Jean Crumrine and Paul Carton
ChangeWave’s latest survey of corporate software buyers shows the business software spending environment continuing to improve. The January 12-22 survey points to the best overall spending outlook in more than two years.
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Zacks.com submits:
The oilfield services giant Schlumberger Ltd. (SLB) has acquired lesser rival Smith International Inc. (SII) for approximately $11 billion in an all-stock deal, which is the biggest acquisition in the United States so far this year.
The Wall Street Journal had reported on Friday that Schlumberger was in advanced talks to buy Smith. Following this news, Smith’s shares jumped 13% but Schlumberger’s shares fell 2.9%.
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Hannah Hsu submits:
The recession weighed on the global economy and weakened many firms. But robust spending by the US government has bolstered companies such as defense contractor L-3 Communications (NYSE: LLL).
New York-based L-3 is a key player in the defense industry. It operates in four main business segments: electronic systems; government services; aircraft modernization and maintenance (AM&M); and command, control, communications and intelligence, surveillance, and reconnaissance (C3ISR).
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Dobromir Stoyanov submits:
Three well-known dividend aristocrats raised dividends last week. The companies include Coca-Cola (KO), Abbott Labs (ABT) and Sherwin-Williams (SHW). Another promising dividend raiser included Swiss Company Nestle (NSRGY). In dividend investing it is important not only to concentrate on companies with solid competitive advantages, but also ones which grow earnings and dividends along the line.
The Coca-Cola Company manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. The company’s board of directors recently approved the Company’s 48th consecutive annual dividend increase, raising the quarterly dividend approximately 7 percent from $0.41 to $0.44/share. This dividend aristocrat currently yields 3.20%. (analysis)
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Phil Davis submits:
Unfortunately, I am ill today.
Tina, Madeline and I are all sick with some kind of virus but Jackie (8) has been taking care of us this morning. Sadly, she must go to school and we’re on our own for the rest of the day. Anyway – don’t expect much from me this morning – fortunately I gave an extensive outlook over the weekend and not much has changed this morning other than Schlumberger buying Smith for $11Bn but we pretty much knew that was going to happen last week.
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Stephen Castellano submits:
Part of our work at Ascendere Associates LLC entails generating a model long/short portfolio strategy that keys in on factors like operating momentum, earnings growth and relative value. These ideas taken together and updated monthly generally and over time seem to work well. In another context, we use the model portfolio to generate ideas for more in-depth research coverage.
Our strategy is based in part on a 1997 Harvard Business Review case study on Numeric Investors L.P., McKinsey & Company’s approach to valuation, other sources and our own insights. Numeric’s approach was probably cutting edge at the time but is now considered quaint by today’s standards, though we find such a general approach very useful.
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optionMONSTER submits:
By Bryan McCormick
US stock index futures are moderately higher this morning after strong trading in most Asian markets, with the exception of mainland China, and a mixed session in the eurozone and UK markets.
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Jim Van Meerten submits:
Each weekend I use Barchart to screen for a list of stocks that I think may be of interest to my readers in the coming week. I am not recommending these stocks, I just want to share with you a screening process and it’s up to you to do further research and see if there is a place in your portfolio for these issues.
I start with the list of stocks hitting new highs and lows for the last 20 days and sort for frequency. I then take the top 10 from each list that have hit new milestones in at least 50% of the last 20 sessions. That list of the 10 top gainers and 10 top losers is where I start.
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Trefis submits:
DirecTV (NASDAQ:DTV) is the biggest satellite pay-TV provider in the US. It competes with other satellite and cable providers like Dish Network (NASDAQ:DISH), Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC). The company added about 939,000 net subscribers in 2009 while maintaining growth in its average revenue per user [ARPU].
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Precious metals have been showing signs of an impending breakout to the upside. I’m not one for technical analysis or price action in equities or anything else for that matter, but the current rebound in the precious metals, notably gold, has caught my eye. While gold held its own around $1,100/oz, reaching a low around $1,080, it is currently trading above $1,125/oz.
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Zman submits:
Company quick look:
TransAtlantic Petro (TAT) – $2.95.
Nutshell: Small cap E&P focused on Turkey, Morocco, and Romania. Management founded Riata which IPO’d as SD, sold out of majority there, and while the team has more lawyers and less G&G types on it than I generally like to see, the staff has a good amount of experience in their target countries. The objective is fairly straight forward: Apply new technology and capital to under explored and exploited areas in good oil and gas finding territory with favorable financial terms (more favorable than in the U.S. at least). Selling into the captive gas market of Turkey is also bonus (see below).
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Investing, stocks | admin February 22, 2010 | 
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