Why, How, When.

[Bill Stacy]

Today, (in order to prevent the same happening to you) I'd like to talk about some possible reasons why I think some new investors fail to achieve their financial goals. My aim is to raise points for you to consider in the hope you can avoid the same mistakes.

Some of these lessons, I've learned from bitter experience. Others I have learned by watching hundreds and hundreds of other investors through my role as administrator in several very important and relevant investor forums.

To begin, I think we could argue that before we proceed to risk any money (or anything that is dear to us) we must master 3 key areas of our endeavour...

1) Why?
2) How?
3) When?


In this case we are looking to invest our money for profit in the Australian Stock Market so I will reference investing as an example.

1) Why are you investing?

Know Your Goals Intimately!
(That means WRITE THEM DOWN! - then read them often)


What goals do you have that drive you to risk your money on the stock market or in business? All investing is a risk. It's only the level that varies so why would you put yourself through that?

What do you hope to ULTIMATELY gain from this? I'll give you the free tip...it's not about money.

It will be different things to different people but for most of us it's about freedom. Freedom to do what we want, when we want, for as long as we want, with people we like. Going to work every day can be a drag.

Sure, we get used to it and some of us even "love" our jobs but let me apply this simple test...

Would you go to work for free?

Would you rather be doing something else?

Instead of going to work tomorrow, what would you rather be doing?

If money was no object, what would you be doing right now?

What do you do on weekends? Do you have any hobbies? Would you like to take them to the extreme - just for a laugh?

There is so much more we can do with our lives that we owe it to ourselves (let alone our families or even - dare I say it - humanity itself!) to be all that we can be.

Should we not be free to grow and expand as nature (or whatever you want to call it) intended? Do you feel caged up or somehow forced to do things that you would rather not be doing just for the sake of money?

Don't Waste Your Life!

If you had the choice to either go to work tomorrow or enjoy your most favourite activity in the whole wide world, what would you choose?

Now stop there...how does that feel? How does it feel to have the choice? Feel it. Remember that feeling, you're going to need it in a minute.

What emotions are your strongest right now? Close your eyes if it helps and just for a moment imagine how you are feeling. How full of the right emotions are you right now?

Do you feel happy when you think of your ultimate activity? My guess is that you are smiling and that by the way is a huge clue.

You're ultimate goal should make you smile instantly and uncontrollably every time you close your eyes and think of it. It should be a natural reaction.

Now, remove all the money from your pockets and it should feel the same.

You're ultimate feeling of happiness should not be about money. It might require money to get there but once you are there you should feel a separate joy.

It is ok to want to have things but not just for the sake of being able to buy them. They must have their own emotional payoff. You must love to do them naturally.

You Don't Want A Ferrari!

You want the feeling that your Ferrari gives you when you floor it or when you drive really (way too) fast into a corner and come out feeling like you could have gone around twice as fast.

There is an exhilaration that comes with force and power and it can be felt by sports car drivers just as much as it can be felt by plummeting sky divers, fascinated travellers, hopeful (cashed up) volunteers and anyone and everyone who has a passion about anything.

You don't want a million dollars!

You want the feeling of freedom and safety that having a $1,000,000 in cash would give you. You want to relax into the arms of feeling sure about your future.

You want to feel the relief of not having to worry all the time about having enough money to survive in the style to which you have become accustomed. You've worked hard to get here and you want to improve not deteriorate. True?

There are many things that drive us and I want to make sure you are crystal clear in your head exactly WHY you are investing. It's not about cash. It's about the power to live your life on your own terms that having cash can give you.

What Do You Want?

Write down your goals.

Please don't mistake knowing them in your head for writing them down. That's a big loser trap and you're not a loser (I know that because you signed up for my newsletter - see?)

Writing them down requires that you go down to the newsagent, buying at least 3-5 of those palm sized hard back notebooks with the red covers and black triangular corners and maybe even a nice special "goal writing gold (coloured) pen" to give you that special feeling (stack everything in your favour) and coming home and actually writing them down!

Long term, medium term and short term and immediate. A new book for each term. I don't care what you write or how you arrange your goals put the bloody effort in!

If you don't know what you want (remember, money is NOT what you really want!!). What you want is power over your own life. Writing down exactly what you are going to do with that power is essential if you are going to succeed in investing.

Do you want to know why it is so important that you know exactly why you are investing? Because you are going to lose money and when you do you are going to question your actions and you are going to ask "[sigh]...why am I bothering with all this?"

You need to have the answer to that powerful (and rightly asked) question right there on the tip of your tongue at all times! It must be part of who you are and who you want to become. It must be driven by a desire much much stronger than just to "have more money".

KNOW WHY YOU ARE INVESTING!


2) HOW are you investing?

Master Your Strategy!
(for crying out loud!)

You must become an expert in your chosen investment strategy. You must MASTER(!!) the strategy. Do everything you can to learn it inside and out.

Practice, Practice, Practice...
and then practice a LOT more!

Let me take the strategy that I will teach you to master as an example. How well do you know how to sell Put Spreads? I mean how well do you know it REALLY? Could you pass an examination?

Could you teach every single aspect of it to someone who had no experience with the stock market at all? Like you're Mother/Father grand parents or work mates perhaps? Are you really that good at it? You're future depends on it so you bloody well better be!

I suggest that everyone does at least 100-200 paper trades with historical data. How many people do you think actually even bother to do a dozen? I can tell you it's not many at all. Later on you will be able to count the losers among them I can guarantee you.

Master your particular investment strategy. I mean really master it. Exhaust ALL possible avenues of learning and become intimate in all it's moves and manoeuvres so that when it comes to time to act quickly in the market (as you will inevitably need to do) the actions will be second nature to you.

You will not roll out blindly, you will not panic and tell the broker to do whatever they think is best, you will not make decisions when you are unaware of all the facts and you will not guess at your mathematics.

Ask me how I know.

You will know exactly what to do because you practiced it hundreds of time on paper. Losers think that paper trading is lame. Winners know that intense and saturated paper trading is essential. Which will you be?

By the way, that's where I fit into the picture. I sell these DVDs because of the passion I have for teaching people exactly how to trade Put Spreads successfully in different market conditions. My role is to help you with step 2...

KNOW EXACTLY HOW TO INVEST!


3) WHEN will you invest?

Learn and Use Analysis!
(It's not as difficult as you think!)

Being crystal clear as to the exact reason why you are investing and mastering the skills and techniques of your strategy isn't enough though is it? You must also know when to apply your strategy.

It is absolutely useless being able to rattle off your goals and their timelines with infinite accuracy and amazing detail and being an absolute master at the mechanics of your strategy if you don't pay any attention to when you will use it. Isn't it?

I mean what's the point of having all that drive and knowledge if you think that right now is the best time to use your strategy (no matter what time it is or what the stock is doing)?

If you just chuck your hard earned or nervously borrowed money at any old spread at any old time or just keep rolling out time after time after time without any view on the stock how long do you think you are going to last? Not long - I can tell you from both anecdotal and personal experience.

Arguably I know this strategy as well as anyone can reasonably be expected to. I can tell you exactly what my goals are and when I plan to achieve them and yet I have still lost money using this strategy. How is that possible? Easily.

I didn't use it at the right time!

So how do you know when the right time to apply your strategy is?

Analysis of the stock market is the key. You must learn to place Credit Put Spreads on stock that have an excellent chance of staying above your exercise price or at least rising up from their current price or at the very least stay at their current price.

Even if the stock channels near the current price time decay will do it's thing and you will make money. A rising stock creates a "surfable" wave but a falling stock is not the best for anyone using this strategy.

Yes, it can fall a little and then recover and then fall again and recover but as long as it stays above the price at which you sold insurance at you will make money.

Do everything you can to learn the timing of this strategy. It is not ok to have all your available or allocated risk capital in this strategy all the time. This strategy should only be a (powerful) tool in your tool box.

You must know WHY you are investing:
to keep you strong in times of doubt.


You must know HOW to invest:
to safeguard against stupid mistakes.


You must know WHEN to invest:
so you don't invest at the wrong time.

[Bill Stacy]

TTT