For a much higher level of premium information and specific guidance about how to achieve financial freedom with our PROPRIETARY investment system, consider our subscription services. Learn more about our premier investment research and education services, the SmartKnowledgeU™ Investment Education System here, and our premier stock research newsletter,the Global Stock Picker, a newsletter where the return of our Model Portfolio is 21.68% just 12-1/2 months after our launch, a figure that is outperforming U.S. and U.K. markets by nearly 40%, the Chinese Shanghai SSE index by more than 63.03%, and the India BSESN index by more than 24.41%!

Most Read Posts (64 articles) – Discover which articles Underground Investor™ readers are most interested in. See the full database, including the most recent articles that may not be listed below,  by clicking the link above.

Sept. 27, 2007 – 101 Reasons Why Managing Your Money is the Quickest Way to Build Wealth
Sept. 25, 2007 – 10 Surefire Ways to Make an Investment Fortune
Sept. 15, 2007 – Why the U.S. Feds 0.50% Rate Cut Won’t Save the Markets
Sept. 15, 2007 – U.S. Interest Rate Cut to Have Little Long-Term Positive Effect
Aug. 20, 2007 – How Much Does the Gov’t Really Manipulate Markets
Aug. 9, 2007 – More Gov’t Foolishness (or Lies) Again: Markets are Sound…NOT!
Aug. 9, 2007 – Chinese Tariffs and the Nuclear Option
Jul. 24, 2007 – How to Invest Like the World’s Greatest Investors
Jun. 17, 2007 – Get Out of Dollar-Denominated Bonds While You Still Can!
May 1, 2007 – Uranium Stocks are Finally Getting the Attention They Deserve
Apr. 23, 2007 – The Emperor’s New Clothes Abound in the Investment Industry. Don’t Get Cheated by Your Advisor
Apr. 20, 2007 – Use Intelligent Strategies to Push Risk Back onto Investment Firms
Apr. 19, 2007 – In Risky Markets, Follow the Behavior of the Ultra-Rich, Not the Rich
Apr. 12, 2007 – The Secret to Investing

Gold Investments (37 articles) - Use traditional rules to invest in gold stocks and you’ll lose money hand over fist with this asset class. Learn more about one of the most important components of every portfolio for future years to come. See the full database, including the most recent articles that may not be listed below, by clicking the above link.

April 23, 2008 – Will U.S. Markets Crash Now or Later?
Feb. 4, 2008 – Could Chinese New Year’s Fuel the Next Rally Higher for Gold Stocks?
Jan. 29, 2008 – Even After This Strong Run, Gold Stocks are Still a Bargain Today. Here’s Why.
Jan. 5, 2008 – A Sneak Peak at Our Premium Level Information
Nov. 4, 2007 – Is Hyperinflation Coming to the U.S.? It’s Time to Stock Up on Gold.
Nov. 4. 2007 – Gold is the Best Investment Today, History Tells Us So.
Nov. 2, 3007 – Gold Expensive at $791/oz.? Not by a Longshot
Jun. 5, 2007 – Learn How NOT to Invest in Gold
Mar. 30, 2007 – Navigate the Minefields of the Investment Information Highway
Mar. 7, 2007 – This Bounce in Gold Markets Merits a Cautious Approach
Mar. 6, 2007 – Gold Stocks Correction – What it Means?
Feb. 28, 2007 – How to Profit from a Weakening Market, Gold Stocks, & More, Part II
Feb. 28, 2007 – Buying Opportunity in Gold Stocks
Feb. 28, 2007 – How to Profit from a Weakening Market, Gold Stocks, & More, Part I
Feb. 23, 2007 – Uncover the Ignored Asset Classes
Feb. 12, 2007 – How Do I Know that Institutional Money is Still Not on Board with Gold?
Jan. 25, 2007 – If You Don’t Own Gold Stocks, You Need To
Jan. 23, 2007 – Building Wealth Requires More than Just Contrarian Investing
Jan. 14, 2007 – Use the Long Tail of Investing to Accurately Predict the Price of Gold
Jan. 11, 2007 – The REAL DEAL about Gold and Energy
Dec. 13, 2007 – Commodities and Asians: Apparently We All Look Alike
Nov. 6, 2006 – Sometimes Silence is Golden
Oct. 10, 2006 – Shock and Awe Awaits Global Markets
Oct. 4, 2006 – Is Gold’s Correction Over Yet?
Oct. 2, 2006 – Fiat Currency Concerns Give Rise to a Gold & Silver Backed Currency System
Oct. 1, 2006 – The Gold Timeline – A History of Gold Prices
Sept. 16, 2006 – Has the Commodities Bubble Burst? No, No, No!
Sept. 13, 2006 – Sell the Rumor, Buy the News
Sept. 11, 2006 – Gold’s Speculative Stigma is Unwarranted
Sept. 3, 2006 – Gold’s Glitter is Genuine
Aug. 14, 2006- Knowing Your History is More Important to Creating Wealth than Fundamental Analysis

Financial Crisis, Dollar Crisis & Recession Proof Investing (30 articles) – Foolish investors’ eyes lit up as New Century Financial dropped from $30 to $20 a share during the recent subprime mortgage fiasco. Their hearts thumped with excitement as shares dropped from $20 to $10 and they doubled down. When shares dropped to $5 they thought it had to be the bottom and put their last remaining money into New Century. A month later, they lost everything. There is similar optimism surrounding the dollar today from self-declared currency experts. Discover why the dollar is much more likely to go the way of New Century than experience a comeback like Muhammad Ali’s Rumble in the Jungle. For the most recent articles, perhaps not listed below, click the above category link.

June 26, 2008 – The One Question That Will Have the Greatest Impact on Your Financial Future
May 14, 2008 – What’s Driving the Price of Oil Higher? It’s the Dollar, Stupid!
April 30, 2008 - How Low Will the Feds Go?
April 17, 2008 – Monetary Inflation. How Increased Paper Wealth Can Translate into a Lower Standard of Living
March 3, 2008 – Why Investors Will Never Make Money in this Bear Market
Feb. 20, 2008 – The Secret to Building Wealth in Volatile Markets
Feb. 6, 2008 – Is Recession in the U.S. Coming? We’re Already in One.
Jan. 28, 2008 – The Outcome of the Fed’s Interest Rate Cuts? History is the Best Oracle.
Jan. 24, 2008 – The Fed’s 0.75% Interest Rate Cut – A Recipe for Future Disaster
Dec. 7, 2007 – The Dollar Panic. Is it Real?
Sept. 19, 2007 – Signs of a Peak Investment Crisis Keep Coming
June 18, 2007 – Alan Greenspan’s Call of Checkmate on China is Premature
June 17, 2007 – PIMCO’s Bill Gross and the Economist Agree with SmartKnowledgeU 6 Months After the Fact!
May 28, 2007 – The Politics of Higher Oil Prices
May 26, 2007 – Asian Countries Pooling Reserves to Protect Themselves from the Incredible Shrinking Dollar, Part II
May 25, 2007 – Asian Countries Pooling Reserves, Part I
May 3, 2007 – The Death of the 3-Year Treasury Note
Apr. 1, 2007 – The Next Cold War Will be an Economic One
Jan. 25, 2007 – Dollar-Denominated Bonds Faltering
Jan. 9, 2007 – Use the Longtail of Investing to Accurately Predict Dollar Behavior
Jan 7, 2007 – 10 Reasons Why Dollar-Denominate Bonds Aren’t Safe
Dec. 21, 2006 – Iran Presents More Trouble for the U.S. Dollar
Dec. 7, 2006 – The U.S. has Perfected the Incredible Shrinking Dollar

Free Stock Picks (24 articles) – While our top-shelf stock picks and ideas that have since returned 100% to 200% returns are reserved for our members only, here read articles about some mid-shelf stock picks and ideas that have already returned 30% returns in less than a year. Access the full database, including the most recent articles that may not be listed below,  by clicking the topic link above.

Jun. 4, 2007 – To Prove the Effectiveness of Our SmartKnowledgeU™ Investment System, Even Our Weakest Picks that We’ve Given Away for FREE Have Soared
Apr. 29, 2007 – After BAIDU, Possibly Focus Media
Apr. 2, 2007 – Profit, Don’t Lose From Market Corrections
Apr. 2, 2007 – Global Warming Presents Easy 30% Gains for Underground Investor Readers
Mar. 13, 2007 – Beware the Perpetual Bulls, Part II
Feb. 18, 2007 – Banking Sector FY 2008 – Positive for Japan & India, Negative for China
Jan. 4, 2007 – Chinese Technology Companies to Watch in 2007
Dec. 19, 2007 – MSFT and Internet Protocol Version 6
Dec. 12, 2006 – It’s Time to Keep a Close Eye on Indian Stocks ICICI & HDFC
Dec. 7, 2006 – The Ocean Becomes a New Growth Point in the World Economy
Oct. 30, 2006 – What’s the Safest Place to Invest in the Oil Industry Now?
Oct. 30, 2006 – You’ll Find Ignored Investment Opportunities in the DRC & Libya
Oct. 23, 2006 – Indian Banks Anyone? Four Letters: HDFC
Oct. 9, 2006 – Don’t Believe the Hype – Avoid Chinese Bank Stocks

The Peak Investment Crisis & Stock Market Crash (57 articles) – Bubbling underneath the surface, there lies a peak investment crisis. When it hits, savvy investors will build a fortune. Unfortunately, most investors will be blindsided and lose great fortunes instead. Access the entire database, including the most recent articles that may not be listed below,  by clicking on the above category link.

Nov. 4, 2007 – Is Hyperinflation Coming to the U.S.? It’s Time to Stock Up on Gold.
Nov. 4. 2007 – Gold is the Best Investment Today, Part II
Oct. 15, 2007 – Our New Forum on Facebook: Crisis Investing
Oct. 9, 2007 – Beware the Turbulence that Lies Beneath the Surface, Part I
Sept. 20, 2007 -The Signs of a Peak Investment Crisis Keep Coming
Sept. 19, 2007 -Why the U.S. Fed’s 0.50% Rate Cut Won’t Save the Markets
Aug. 9, 2007 – More Gov’t Foolishness Again
Jun. 29, 2007 – Don’t Let the Strength of the U.S. Markets in the First Half of 2007 Fool You
Mar. 11, 2007 – It’s the Difference Between Chasing & Building Wealth
Mar. 6, 2007 – What this Correction Means for Gold Stocks
Feb. 28, 2007 – How to Profit From a Weakening Market & Gold Stocks
Sept. 9, 2006 – The Peak Investment Crisis
Aug. 11, 2006 – How to Protect Your Portfolio During Turbulent Markets

A New Investment Paradigm for the 21st Century (11 articles) – Fundamental and Value investing may take years of patience to pay off (i.e. Apple Computers was a huge value stock at $13 a share and took more than four years of waiting to pay off huge), Growth investing often leads to chasing hot sectors that correct rapidly. Discover why changing conditions in today’s global market has created a new investment paradigm that is hands down the best way to invest today. Click the link above to see all articles, including the most recent articles that may not be listed below,  in this category.

Jul. 24, 2007 – How to Invest Like the World’s Greatest Investors
Feb. 25, 2007 – Frontrunning Can Make You a Fortune
Jan. 30, 2007 – The New Paradigm of Successful Investment Strategies
Jan. 21, 2007 – 10 Reasons the Longtail of Investing is the Only Way to Build Wealth
Jan. 16, 2007 – Use the Longtail of Investing to Predict Major Market Events with High Accuracy
Jan. 9, 2007 – Accurately Predict U.S. Dollar Behavior
Sept. 1, 2006 – What Mark Cuban Failed to Realize About Investing

The Biggest Investment Myths (62 articles) – All investment professionals, from investment firms to financial consultants to the financial journal purposely spread tales of lies and deception. Jim Cramer, an investment professional that amassed a fortune as a hedge fund manager, recently stated that the last thing he ever wanted to do is to tell the truth. Find out why deception is part of the game in the investment industry.  Click the category link above to access the full database, including the most recent articles that may not be listed below.

Oct. 25, 2007 – New Home Sales Went Up. So What?
Oct. 15, 2007 – Beware the Turbulence that Lies Beneath the Surface, II
May 6, 2007 – Economic Reports Drive Short-Term Behavior, but Hardly Represent the Truth
Mar. 21, 2007 – The Short-Term May be Rosy, but Beware the Financial Crisis that is Building Steam
Mar. 4, 2007 – Foreign Markets aren’t as Risky as the Pundits Say
Feb. 23, 3007 – Evolve Your Investment Strategies with Evolving Technology
Feb. 6, 2007 – My Problem with Investment Newsletters (except ours, of course!)
Feb. 4, 2007 – 10 Questions to Help You Find a Superior Financial Consultant
Jan. 30, 2007 – A New Paradigm of Successful Investment Strategies
Jan. 25, 2007 – Despite Evidence to the Contrary, Millions of Investors Will Believe Whatever they Want to Believe
Jan. 7, 2007 – 10 Reasons Why Dollar Denominated Bonds Aren’t as Safe as You Think
Jan. 5, 2007 – How Understanding MMA Champions will Make You a Better Investor
Dec. 18, 2006 – The True Determinants of Wealth Have Nothing to do with Asset Allocation
Nov. 12, 2006 – The Greatest Investment Myth Exposed: Why Modern Portfolio Theory WILL NEVER Make You Rich.

Wealth Literacy (88 articles) – Wealth Literacy is the new Financial Literacy. Financial Literacy may teach you to be fiscally responsible but you can still be financially literate and remain poor. Wealth Literacy fills in all the holes of Financial Literacy and teaches you how to build wealth today. Click the category link above to see new articles that may not be listed below.

Oct. 15, 2007 – Our New Facebook Investment Group – Crisis Investing
Oct. 9, 2007 – Beware the Turbulence that Lies Beneath the Surface, I
Apr. 23, 2007 – Beware the Emperor’s New Clothes -Don’t Get Cheated by Your Adviser
Apr. 20, 2007 – Intelligent Investment Strategies Push Risk Off of You & Back onto Investment Firms
Apr. 19, 2007 – In Risky Markets, Follow the Behavior of the Ultra-Rich, Not the Rich
Apr. 17, 2007 – Why Wealth Literacy is More Important than Financial Literacy, Part II
Apr. 15, 2007 – Why Wealth Literacy is More Important than Financial Literacy, Part I
Apr. 13, 2007 – Pop Investing is All the Rage, but it’s a Loser’s Game
Apr. 12, 2007 – The Secret to Investing in 3 Easy Rules
Apr. 10, 2007 – Build Wealth by Answering These 5 Questions
Mar. 30, 2007 - How to Navigate the Minefields of the Investment Information Highway
Mar. 12, 2007 – The Short-Term May be Rosy, But Beware the Financial Crisis that is Building Steam
Mar. 11, 2007 – The Difference Between Chasing Wealth and Building Wealth
Feb 23, 2007 – Uncover the Ignored Asset Classes
Feb. 21, 2007 – Why Traditional Education Stifles Your Ability to Build Wealth
Feb. 15, 2007 – 7 Habits of Highly Effective Investors
Feb. 8, 2007 – 10 Reasons Why a Professional Athlete’s Best Friend Needs to be his Financial Adviser

Politics and Stocks (30 articles) – Think you don’t need to understand politics to be a good investor? Think again. If you don’t understand politics, you’ll never fully understand the most likely future direction of global stock markets, oil, gold, and currency markets. Click the above category link to see the full database of articles, including the most recent articles that may not be listed below.

Apr. 11, 2007 – Building Great Wealth in Stocks Requires Understanding Politics
Apr. 1, 2007 – The Next Cold War will be an Economic One
Apr. 1, 2007 – Possible U.S. Military Intervention in Iran
Mar. 13, 2007 – To Err on the Subject of Chinese Tariffs May Expedite a Shakespearean Tragedy
Dec. 17, 2007 – Do Free Markets and Free Trade Exist?

Oil Crisis (15 articles) – Think oil prices are controlled by supply and demand, futures traders, or Peak Oil Theory? Think again. Discover the true determinants of oil price behavior, primarily dollar devaluation. Click the above category link to see the full database of articles, including the most recent articles that may not be listed below.

May 14, 2009 – What’s Driving the Price of Oil Higher? It’s the Dollar, Stupid!
May 28, 2007 – The Politics of Higher Oil Prices
Nov. 26, 2006 – Does the end of Mid-Term Elections Mean Higher Gas Prices Again?
Nov. 8, 2006 – The Peak Oil Theory was Created by – You Guessed it – Big Oil!
Oct. 30, 2006 – The Safest Place to Invest in the Oil Industry Now? – Oil Refiners, Pipeline Manufacturers, Deep Sea Platform & Drilling Manufacturers, and 4D Imaging Companies
Oct. 30, 2006 – You’ll Find Ignored Investment Opportunities in the DRC and Libya
Oct. 12, 2006 – How Has Prince Bandar bin Sultan Affected Oil Prices in Years Past?

Uranium Investments (3 articles)– The bulk of this information is contained within our members only area, but you’ll find an article or two here. Click the above category link to see the full database of articles, including the most recent articles that may not be listed below.

May 1, 2007 – Uranium Stocks are Finally Getting Some Attention. Better Late than Never.
May 1, 2007 – What Does Uranium Futures Mean for the Future of Uranium Stocks?

Africa Investments (5 articles) – For the more daring investor willing to place small bets for HUGE returns, Africa awaits.

Canada Investments (4 articles) – Articles about Canada and the Canadian stock market and hands down some of the best opportunities in ANY global stock market.

China Investments (21 articles) – Articles about Chinese stocks and the Chinese stock market.

India Investments (4 articles) – Articles about Indian stocks and the Indian stock market.

Japan Investments (4 articles) – Articles about the Japanese economy and stock market.

Russia Investments (1 articles) – Articles about the Russian economy and stock market

U.S. Stocks (25 articles) – Articles about U.S. stocks and the American stock market.

Vietnam Investments (3 article) – Articles about Vietnam and the explosive yet unregulated Vietnamese market.

Investment Psychology (22 articles) – One of the most important but yet most overlooked and ignored aspects of investing is psychology. Discover how an improper mindset can be the difference between huge losses and huge gains in your portfolio. Click the above category link to see the full database of articles, including the most recent articles that may not be listed below.

Feb. 7, 2007 – Investors Should Apply the Rule of Shopping 101 to Buying Stocks
Jan. 3, 2007 – Will the 2006 Year End Rally Continue into 2007?
Dec. 21, 2006 - Perception Can Overrule Reality in Driving Behavior but Reality Will Overrule Perceptions in Driving Outcome
Nov. 30, 2006 – The Recency Effect Hurts Investment Decisions
Nov. 2, 2006- Canadian PM Stephen Harper & Hungarian PM Ferenc Gyurcsany – the More Things Change the More They Stay the Same
Nov. 2, 2006 – Irrational, Not Rational, Behavior Often Drives Markets
Oct. 24, 2006 – The Financial Media are Like Bad Weatherman
Oct. 8, 2006 – The SmartKnowledgeU Reader’s List
Oct. 4, 2006 – Hungarian PM Ferenc Gyurcsany: We LIED Morning, Noon, & Night!
Sept. 26, 2007 – Move Over Harry Potter! The Deceptive Wizardry of Fund Managers
Sept. 17, 2006 – When it Comes to Investing, You Get What You Pay For
Sept. 16, 2006 – Why Do People Believe One of the Dumbest, Most Flawed & Deceptive Measures of Economic Conditions?
Sept. 13, 2006 – Why Book Smarts Won’t Help You Build Wealth
Sept. 10, 2006 – Investment Psychology 101
Aug. 24, 2006 – To Become Wealthy, Abandon Widespread Beliefs About Investing
Aug. 18, 2006 – Following Mainstream Media Will Lead You Down a Disastrous Investment Road
Aug. 3, 2006 – Following Short-Term Fluctuations Will Create Poor Investment Decisions

Options Investing (10 articles) – We don’t discuss options much here but occasionally, if there is a compelling play, we’ll write an article or two.

Water Investing (1 article) – Read articles about investing in water as a commodity as the world’s fresh water supply becomes more scarce.

The Zen of Investing (42 posts) – Read articles from our resident martial arts expert regarding how understanding principles of martial arts can make you a much better investor. A combination of “The Art of War” and “The Art of Investing” if you will. Click the above category link to see the full database of articles, including the most recent articles that may not be listed below.

Technorati Tags: investment blog, investment strategies, dollar crisis, financial crisis, oil crisis, stock market crash, howto invest gold, recession proof, best ways to invest, Wall Street bailout

(1) Buy When Fear is Rampant, Sell When Mania is the Greatest

Every investing course should be accompanied by a psychology course as well. The most difficult thing to do in investing is to buy more when fear and panic is rampant and to sell when mania is the highest. Stock markets and asset classes cycle in peaks and troughs. Most people will not buy stocks until after stocks are plastered all over the news and after they have just risen by 30%, 40%, 50% or more, believing that they will rise higher forever. Buying at the troughs when nobody is talking about a stock or during steep corrections provides a low-risk/high-reward setup for your portfolio.

(2) Learn What Your Neighbor is Doing, Watch Investment Shows on MSNBC and Bloomberg on TV, Listen to the Recommendations of Your Financial Consultant – Then Make Sure that You Don’t Have a Single Thing in Common With Their Strategies

If you are one of the thundering sheep herd and perpetually follow the mindless actions of others, you are virtually guaranteed to lose money or forever relegate your portfolio to average to below-average returns. The surest way to build an investment fortune is to buy asset classes and stocks when nobody is discussing them and to sell them when everyone is talking about them. This requires a nose for market timing. Is market timing impossible as all the global investment firms always tell you? Hardly. Learning what asset classes and individual stocks are poised to skyrocket every year just takes a little bit of time, but is really not that difficult. Since time is a commodity that Private Wealth Managers and Financial Consultants employed by large commercial investment houses lack, they tell you that market timing is impossible merely because they don’t have the time to perform the necessary research.

However, purchasing stocks that are likely close to cyclical bottoms instead of believing that market timing is impossible and indiscriminately buying stocks will easily add another 10% in returns to your portfolio per year. Do you really believe that you can make a fortune by buying any stock that is advertised on a TV program watched by millions of investors worldwide? Ultimately, if you own the same stocks as your neighbor to the right, your neighbor to the left, the talking head on TV, and the talking head at your commercial investment firm, then you are not engaging in the proper activities to build an investment fortune.

If you don’t seek out stocks and asset classes at times when nobody is considering them, you will never make serious money in investing. You may make 10% a year or maybe even 15% a year but if you want to enter the world of the big boys and earn 25% or more in annual returns, you have to dig a lot deeper than your investment peers. Just a couple of months ago (June 25, 2007) this email landed in my inbox from a big investment newsletter publisher. “Over the past week, I’ve crisscrossed northwestern Canada looking for the next great investment. I’m up here to find out what everyone’s invested in. And after attending an investment conference in Vancouver last week, I can tell you absolutely that no one is interested in gold…Base and minor metals will continue to be the best place to have your money over the next few years. Gold, as a virtually useless metal that has few industrial uses, appears to have hit its peak and could be running sideways for years like it has many times in the past.”

Then, in August, when the HUI (the major AMEX gold index) took a sharp hit in response to global market corrections, everyone proclaimed that gold was no longer a safe haven and that gold was “done”. Now, just a one-month later, on September 26, 2007, a lot of people are talking about gold’s strong rapid surge. So was the newsletter that ended up in my mailbox that proclaimed gold as dead in June right in June but terribly wrong in September? The answer is neither. The only person that is wrong is you if you blindly listen to talking heads that end up in your inbox or that you watch on TV. The fact is that little-discussed asset classes and stocks are ignored because perhaps 1 out of 1000 investors truly understand them, and even the ones that parade as experts on TV have been more terribly wrong about their calls than right. So it’s up to you to get off your proverbial bum and learn how to invest for yourself. Chasing stocks higher and buying when everyone else is speaking about them is a sure way to lose money. And so is listening to talking heads. Learn a system that teaches you to buy assets when everyone is ignoring them and you’ll outperform everyone else.

(3) Concentrate, Don’t Diversify

If you’ve read the paragraph above, you already realize that Private Wealth Managers and Financial Consultants are in short supply of time as they partake in the race to gather as many assets as possible for their respective firms. Thus, this is the reason they employ the rule of diversification for your portfolio. U.S. Navy SEALs will tell you that during an operation exfil exercise, the easiest way out is rarely the safest way out. The same holds true in investing, yet diversification is by far and away, the easiest investment strategy that anyone could possibly teach to tens of thousands of financial consultants. Certainly, diversification cannot be a complex strategy if tens of thousand consultants from varied backgrounds and industries can all efficiently apply this concept to their clients’ portfolios with very little training. Diversification is the biggest cop-out investment strategy of all time. It screams of incompetence and lack of skill – “I have no idea what asset classes are going to perform well this year so I’m going to invest you in everything under the sun.”

Assume everyday, a NBA coach looked at his active roster of 12 players and said, “I have no idea who are the best players. Because I don’t know, and don’t care to take the time to figure it out, I’m going to ensure that all 12 players share equal time every game.” This coach is unlikely to win many games versus the coach that takes the time in training camp to assess who his best 5 players are and then consequently plays these 5 players the majority of minutes during every game. This is the difference between diversification and concentration. The coach that diversifies may win some games based upon pure luck because maybe he has a couple great players that can make up for the deficiencies of the poor players he puts on the court every night. Still, most nights, the deficiencies of the poor players will drag down the performance of the excellent players.

However, the coach that concentrates and puts his best players on the court every night will be able to field a team every night that has an excellent chance of winning. This is why we concentrate in investing. To give us the best possible chance of winning. Diversification will never achieve this. Study the best investors in the world. The best investors in the world always manage their own money and they concentrate their portfolios in the best asset classes every year. Don’t believe the hype about diversification – diversification stinks, it doesn’t protect your portfolio, and it certainly will never make you wealthy.

(4) Learn Everything You Can About the Relationship Between Politics and Stocks

On September 18, 2007, the U.S. Federal Reserve cut the Federal Funds Rate (the rates banks borrow from each other and the rates the rates banks loan to customers) by 50 basis points. The U.S. stock markets soared that day, followed by strong surges in Asian markets the following morning. The interest rate cut undoubtedly was not just motivated by a desire to manufacture stability and confidence in the U.S. economy, but also motivated by politics. If you don’t understand what I mean by this, then you have homework to do.

Governments and corporations in every major global economy in the world have formed relationships that have since been coined as “corporatocracies”. Politics has a major hand in all of the following: interest rate cuts, interest rate increases, the price of oil, the price of gold, the valuation of the Euro, the valuation of the dollar, the valuation of the Pound Sterling, permits to mine uranium in Australia, defense spending for national security, decisions to go to war, and contracts awarded to corporations. If you don’t understand politics, you cannot possibly understand global macro-economic trends and what asset classes and stocks offer the best low-risk, high-reward opportunities year after year. The lack of understanding of politics is what causes Chief Investment Officers of major commercial investment houses to make poor calls in the direction of commodity prices and the direction of global economies. Understand politics and your investment returns should increase tremendously.

(5) Learn Everything You Can About Gold as an Investment.

Gold, as an investment, is perhaps the most misunderstood and poorest understood asset class in the world. Some people believe that the physical commodity is the only way to invest in this asset, and as such, only put money into the paper gold ETFs. Other people that invest in gold stocks don’t understand the differences in price behaviour between the juniors and majors; explorers, developers, and producers; hedged and unhedged companies; and the political risk of operating in different countries. Therefore, they never understand the risk-reward quotient of their gold portfolio, sell out during steep corrections, always lose money, and think that gold investments are speculative and stink. Furthermore, they don’t understand that short-term manipulation of prices of the underlying commodity and stocks can’t change the long-term outlook and performance. However, learn how to buy and sell this asset class properly and you will be rewarded as no other asset class can reward you.

(6) Understand Why You Own Everything You Own, Then Stand Firm in Your Convictions

Since most people never take the time to learn how to invest properly, or are fed a bunch of misinformation by the so-called industry professionals, they waffle as much as a shady politician when making investment decisions. They don’t know if they should hold, sell or buy during corrections, or hold or sell during steep runs higher. Primarily they don’t know because they don’t understand what they own because they have allowed someone else to make those decisions. I’ve always found it odd how people will refuse to allow other people to do the most trivial of things for their companies, preferring to take care of them him or herself, or will consult 20 people before buying a car, but will gladly hand over $2 million in cash to a stranger to manage.

Yet, just having conviction is not enough. Being wrong in your convictions can be just as devastating to your portfolio performance than having no conviction at all. For example, in June, July, and August of 2007, many housing analysts repeatedly called bottoms in housing stocks, and many investors, just like sheep, jumped in and bought up shares in housing related stocks. Some even kept increasing position in shares of sub-prime mortgage companies that had plummeted 70% believing they were acquiring the stock for pennies on the dollar. Most of these investors, instead of profiting, lost a great deal of money from stocks that did not stop hemorrhaging and some lost 100% of their money from investing in companies that eventually went bankrupt. This is the lazy man or woman’s way out and almost never ends up well.

When I say “Stand Firm in Your Conviction”, do so only after gaining expertise in a subject matter. Do not blindly follow someone else’s advice just because they appear on Bloomberg, the Wall Street Journal or Reuters. Just because someone has the appearance of an “authority” does not make him or her one. In fact, often there are shameless self-promotion reasons behind media appearances and the only person that is bound to get hurt by blindly listening to these people is you. Only after you take the time to truly learn everything you need to know to become an expert in a particular industry or asset class, then don’t be afraid of going against the grain of the majority opinion. You’ve taken the time to become an expert, so utilize your knowledge in how you manage your portfolio. More times than not, you will be correct when everyone else is wrong.

(7) Make Volatility Your Friend

Most people have been taught that volatility equals risk. Baloney. If you remember that market timing in asset class cycles is possible, then you can basically negate much of the risk of volatility by buying close to the troughs instead of close to the peaks. Furthermore, you can never make any money by buying a bunch of stocks that plod along at 6% to 10% growth a year. Thus, you need volatility in your portfolio in order to make money. In fact, I advocate even owning some speculative stocks to boost the performance of your portfolio. Again, with due diligence, a fair batting average with speculative stocks is not only feasible but very likely. I’ve only been able to obtain 25% to 35% annual gains in stock portfolios by devoting a percentage of my portfolio to speculative stocks that have returned 280%, 260% and 190% a year. At the end of the day I don’t care if I have some speculative stocks that go belly up (meaning they got stopped out at 40% losses) if I have enough stocks that earn several hundred percent that significantly add to the absolute return of my portfolio. Like I said, make volatility your friend.

(8) Never Listen to the Government

The release of government statistics move the market. But that doesn’t make the statistics right or truthful. The Consumer Price Index, Housing Starts, Job Growth, the Consumer Confidence Index, and so on all influence the markets. Markets always await with bated breath for the release of these numbers, then are accordingly swayed higher or lower depending upon whether the reported numbers miss or exceed analysts’ targets. Knowing that these government statistics affect market movements, why would I say disregard them? Here’s the answer.

Rarely are these statistics every forthcoming and aboveboard. Instead they are manufactured to sway markets to react in certain ways. For example, the formula to determine the CPI in the U.S. was tinkered with greatly under President Clinton. Current U.S. Federal Reserve Chairman Ben Bernanke has been reported to be tinkering with the formula even more. If the CPI formula used 15 years ago would report a drastically different number than the CPI formula used today simple due to significant differences in how the CPI is now calculated, how much confidence doest that grant you in the validity of this statistic? Other major benchmark government statistics aren’t even based upon real surveys of actual transactions, but rely heavily on government estimates. Thus, the government just estimates the statistic to be whatever they want it to be so that it will serve their purposes and will steer the economy and the stock markets in the desired direction.

This is why when stock markets turn abruptly and experience sharp corrections, everyone states, “we never saw it coming”. Disregard government statistics, do your own digging to understand the true economic conditions of whatever market you are planning to invest in, and you’ll never suffer destruction of wealth due to unforeseen surprises. Instead, you’ll see the surprises coming from miles away. Especially today (September 2007), with an imminent global economic crisis on the way, it is especially important to disregard the government and prepare accordingly. If you do, you’ll make a fortune while your neighbors will be rocked by “shocking” and “surprise” downturns in stock markets.

(9) Follow the Money Trail

As a means of validation, but certainly not as a primary strategy, occasionally dig down deep and see where the elite money in your country is heading. For example, in early 2006, you would have discovered that Bill Gates and George Soros were shorting the dollar tremendously, a good sign to get rid of any dollars you had and to diversify into Euros, Sterling and gold. With gold mining companies, if you discover that the best, most successful companies in the industry are buying 3 million shares of a speculative stock, well, basically you know that the best minds in the business would never just dump millions into a stock without performing their due diligence. So if your own personal due diligence tells you the stock is a buy, then certainly the discovery of this additional information is reassuring.

However, the number one rule, Rule (6), is always to understand what you own. Thus, you can’t just look at the equity portfolio of Warren Buffet and think that you can duplicate his returns without understanding why you would buy the same stocks he holds. If you don’t understand, you won’t know whether to buy more, sell everything, or hold on to your current position during market downturns and what to do during strong runs higher. If you don’t understand this, you just can’t make money.

(10) Expand Your Investment Horizons Across Global Borders

Too many investors suffer from myopia. They think that if the markets in their country are bad, that they must suffer losses as well too. Often, one market may be down in one region of the world but soaring in another. Broaden your investment borders and you greatly increase your chances of being highly profitable every year. Sometimes, you won’t even have to look outside your country, but just look where no one else is looking. When one of the major indexes in the U.S., the S&P 500 shed 49% of its value from 200-2003, there was another little followed index in the same country that gained 58% during this time. But it was ignored, un-researched, and I doubt if more than 1% of all investors in America benefited from the tremendous run of this asset class.

One last word. All the rules above demand a certain level of creativity. Before I employed the 10 rules above five years ago, I never made much more than 10% a year when investing in stocks. After I started employing the rules above years ago, 20% annual returns a year started seeming like poor returns. Realize that investing is not a science, but an art. All the number crunching, fundamental analysis, and technical analysis in the world will not provide you with better returns than simply being creative with the 10 rules above. So change not only your investment life today with the application of the above rules, but forever change your beliefs about the types of investment returns that are possible and achievable.

Technorati Tags: how to make an investment fortune, wealth literacy

investment strategies wealth building gold stocks

The article further stated that the world’s most successful investors “didn’t follow in the footsteps of others or copy wholesale the investing styles of others” and “perhaps this is why any list of the world’s top investors represents a vast array of political beliefs, personality quirks, and strange hobbies.” In the article, John Merrill, chief investment officer for Tanglewood Capital Management, stated that sometimes top investors’ quirks can make the rest of the market doubt their judgment. “They’re out of sync with markets very often,” Merrill says. “They don’t get buffeted by the news or the noise,” says Georges Yared, chief investment strategist at Yared Investment Research. Finally the article discussed George Soros, another one of the top investors in the world that occasionally profits on the perfectly timed trade. However, timing the market necessitates independent thinking as well because conventional wisdom in the investment industry is that market timing is impossible. Obviously Soros has proven conventional wisdom wrong. Top investors not only challenge conventional wisdom, but challenge and prove it wrong with their unique investment systems.

The above paragraph should sound extremely familiar to all of our SmartKnowledgeU members. They know that our SmartKnowledgeU strategies do not rely on either fundamental or technical analyses as our primary screening tools. They know that our proprietary strategies that rely on the strength of banking-government-corporate relationships to identify the best stocks in the world are years ahead of current conventional thinking in the investment industry. Our strategies are very often out of sync with the market and rely on having unwavering commitment and courage when other investors waver in uncertainty. Furthermore, our strategies frequently utilize market timing strategies to enter positions in stocks at very low-risk, high-reward points in share-price. I firmly believe that all of our members will eventually become extremely successful portfolio managers if they can learn all of our lessons, many of which are counter-intuitive given the horrible advice most investors are bombarded with everyday.

Sometimes I would wonder why I didn’t hear more from our SmartKnowledgeU blog readers regarding the free advice we granted last year, considering that there was not just one, two, or three pieces of information investors could have utilized to earn significant profits, but literally tens upon tens of different articles that contained advice that would have led to significant profits. Only once, a reader contacted us and thanked us for a tip on Chinese internet stock BIDU that earned him $25,000 in a couple of weeks. I used to think that people were in general just too lazy to even take a minute to write a note of thanks in which they used a specific piece of advice from us to make lots of money. But then I realized that this was not the case. Though substantial numbers of readers were accessing our blog everyday, I realized that hardly any of them were taking our advice to heart, even if it was free, and even it was solid advice. Why? Because the advice I posted on my blog was frequently out of sync with general market beliefs at the time, and most investors were unwilling to break free of the thundering sheep herd and act in opposition to the rest of the herd. The few that were made some tidy profits from our advice, such as the reader that made $25,000. But from the rarity of such emails, I’m guessing that the few were extremely few.

Sometimes, my clients embody the behavior of the average investor that directly opposes all the behaviors I discussed above that are required to become one of the world’s top investors. As a perfect example of this, years ago, one of my clients used to consistently question my strategies with the management of his portfolio even when it was on pace to earn 40% to 50% annual returns. You see, the complaints did not arise when his portfolio was running higher. The problems occurred just during the downturns in the natural ebb and flow of his portfolio valuation. Every time there was a dip (as I had significantly concentrated his portfolio in a volatile –but not risky- investment sector ), my client listened to MSNBC and Bloomberg and immediately called me saying that we should sell and that he didn’t want to lose everything and that all the experts say that I’m doing the wrong thing for him.

I inevitably and repeatedly told him to stop watching the “cartoon channels”, which are what every major financial and investment TV shows are, and asked him to listen to me instead. I had gone through this client uncertainty & worry/ manager assurance cycle multiple times and knew that each time his portfolio cycled down, I could expect a panicked, unreasonable phone call even when his portfolio was sitting on substantial gains in spite of these downturns. In response to my assurances, this particular client, though he always stuck with my strategy, always voiced his lack of confidence with a reply of, “We’ll see”. In response, I always replied, “No. It’s not we’ll see. I know,” to which he again would reply, “We’ll see.”

Upon hearing his responses, I could only smile to myself, because I knew that my client’s behavior typified the behavior of 99.9% of investors- behavior that has been shaped, molded and hard-wired into every investor’s synapses , behavior that causes them to do the exact opposite of the correct thing 100% of the time. 99.9% of investors’ decision-making behavior has been conditioned by the investment industry and media in erroneous ways so much so that they put much more faith in horrible advice than rock-solid advice, and they can not recognize rock-solid advice even when it stares them in the face. They have been pre-conditioned to dispute, argue against, and cry like infants when told to behave differently than the rest of the thundering sheep herd in their investment decisions. Maybe this is a sub-conscious reason as to why I am more interested in teaching trail-blazing investment strategies to people rather than in taking on more clients at this point in my life.

I have discovered that the overwhelming majority of investors are sheep that are ALWAYS afraid of breaking away from the pack and thinking independently even if I am doing their thinking for them. And that is why there are always just a handful of superior investors in this world. My client’s incessant questioning of my strategies originates from a comment Warren Buffet once made of “risk comes from not knowing what you are doing.” Because my style of management is so different than anyone else this client had ever used, he believed that my style was risky. The risk in his mind originated entirely from his lack of understanding and his 30 years of being brainwashed by the investment industry to believe in investment concepts that would cause him to dwell in mediocrity for the rest of his life. Undoubtedly, the greatest obstacle that every average Joe investor has to overcome in order to become a superior investor is a losing investor psychology. It is this unwillingness to question the investment “authorities” and to break away from the thundering sheep herd that continually prevents the average investor from not only attaining, but from ever approaching, superior investment results.

As a further example of some of the principles above, let’s examine one of my favorite topics – gold. In my SmartKnowledgeU Issue #046, June 26, 2007, I stated “I can assure you that the gold bears are wrong. This doesn’t mean that this correction is necessarily over. In fact, with so much uncertainty and volatility in the gold market today, it certainly is very unpopular to have conviction that gold prices will start edging their way much higher again sometime in the not so distant future, and possibly as early as the end of this summer. The trend is, as demonstrated by the commentaries in this newsletter, is to jump firmly on the trend bandwagon, and that trend is decidedly gloomy now.” Back then, I didn’t state, “I think”, “I would guess”, “I believe”, but my exact words were: “I CAN ASSURE YOU that the gold bears are wrong” even as the majority of experts that demand the financial media spotlight at the time were decidedly gloomy about gold’s outlook, including one expert that warned of a potential drop to $510 an ounce in the very near future. Again, my confidence was not simply a contrarian viewpoint, but it was based upon my understanding of the underlying fundamental economics that drive the price of gold long term and not an unyielding adherence to silly gold:oil ratios or even gold:dollar strength relationships.

In fact, www.marketwatch.com , a website that fairly regularly offers opinions about gold had offered several doomsday outlooks on gold from various journalists not less than four weeks ago. Do you want to know what headlines it ran this week regarding gold? – “Gold’s on a roll (again)”! And again, I was able to find very faulty information even in this article. The author of the article wrote: “Most of the junior gold shares, which historically far outperform the big gold companies in serious gold moves, have not budged yet.” Tell that to most of my clients, who have seen their investment portfolios recently soar specifically on the strength of junior gold shares. If you are invested in the wrong junior gold shares, perhaps they haven’t budged. And this is not even mentioning silver stocks, which in many cases have outperformed gold stocks at this juncture. So the important lesson if you desire to achieve returns on par with the world’s best investors is this – don’t ever turn to the mass media or the investment industry for advice. Perform your own research and think for yourself – unless of course you are satisfied with the path of mediocrity.

Famously successful investor Ben Graham once stated, “To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.” However, I would add a qualifier to this statement. “To achieve superior results is much harder than it looks, but it is not as hard as you might think.” What do I mean by this? Throughout my investment career, I have always discovered that there are Monday morning quarterbacks out there – people that believe they could be superior investors because they utilize 20/20 hindsight to discuss things they could’ve done, but in reality, never did. For example, I’ve heard time and time again from other people, “Well I could’ve matched your 18% gains in the last quarter if I had just __________ (fill in the blank here with “bought Hong Kong real estate, purchased Tokyo office space, bought New Zealand dollars, etc.)”. Of course, all these people that always bring up these points, in reality, never achieved any of the things, but only spoke of them with the benefit of hindsight as things “they could have achieved.” With the benefit of information that many times seems obvious in hindsight, every investor in the world is a George Soros. If I used the same hole-filled argument as these investors, I could look at portfolios I manage, find a stock that has appreciated by 260% in a year and counter with the argument, “If only I had invested my client’s entire portfolio in just this one stock, he or she would know have $4 million gains now instead of the actual gains.”

So back to Warren Buffet’s statement of “risk only comes from not knowing what you are doing.” Obviously, had the Monday morning quarterbacks knew what they were doing, they would have actually invested money in the opportunities that they claimed were “easy money” instead of just discussing them in hindsight. And this is precisely what I mean when I say “to achieve superior results is much harder than it looks, but not as hard as you think.” It is only hard when one doesn’t know what he or she is doing, and thus becomes risky. If you pursue your own strategies, think independently, ALWAYS challenge the thundering sheep herd, form your own conclusions and do not ever waver from them unless there is sufficient reason to do so, then you effectively remove much of the risk from investing. With a solid investment system, this is not nearly as difficult as it sounds. In fact, once you re-wire your brain to stop paying attention to the actions of the thundering sheep herd, these actions become like second nature. Should you take these steps, you will find yourself firmly on a pathway towards a portfolio comprised entirely of low-risk, high-reward stocks and superior returns.

Technorati Tags: wealth literacy, investment strategies, word’s greatest investors, George Soros, Warren Buffet, gold, blue ocean investment strategies

“The Securities and Exchange Commission has begun a broad investigation into whether Wall Street bank employees are leaking information about big trades to favored clients, such as hedge funds, in an effort to curry favor and has requested a wide range of information from at least four major banks” including Merrill Lynch, UBS, Deutsche Bank and JP Morgan. The SEC sought records regarding all stock and option trading data for themselves and their customers for the last two weeks of September. Basically the SEC said that they wanted to discover the extent of “front running” that exists, the act of insiders buying or selling stocks and options ahead of major large volume institutional purchases or sales that virtually guarantees profits.

Without knowing the results of this investigation, I can already tell you the answer to this question, regardless of what the SEC will finally report. It happens, and it happens on a widespread basis. If the SEC really wanted to be thorough in their investigation, they would also investigate all the “front running” activity that powerful politicians obviously engage in and the loose collusion that likely exists among the major Wall Street institutions when their “coincidental” purchases and sales of the same blue chip stocks constitute such a high percentage of the float that they actually move the markets for these stocks.

Insider trading has always existed at the highest levels of what I call the three-headed despot– Government, Banking, and Corporations – and it will never stop. I have always maintained that the most powerful persons in the world are not legislators, but bankers. Bankers pay the legislators’ paychecks so given that the whole checks and balances system of almost every governments is a mere façade that truly does no longer exists, every time the legislators come down too hard on the bankers, the bankers will tighten the leashes that they hold around the legislators’ throats until they back off.

Inexplicable actions happen all the time in the market and it is highly likely that many of the ones that turn enormous profits for large global institutions are a result of front running. For example, during the past couple of decades, almost all of the major global bullion banks had enormous bets placed in gold derivatives at one time or another, from which astronomical profits were made. Interestingly enough, if one studies the behavior of these institutions, some in particular refrained from making any bets in gold derivatives until very high ranking members of the U.S. Department of Treasury left the government to join their company’s executive boards. The level of other institutional bets in gold derivatives seemed to be directly correlated to the strength of political connections these corporations had with the U.S. Treasury. The greater their connections, the greater their bets.

Front running happens in so many different areas of the global markets that besides it is just too widespread for any regulatory agency to entirely abolish. In addition, the people that engage in front running are some of the wealthiest individuals and institutions in the world, with way too many resources at their disposal to crush such investigations. So in the end, can the average investor benefit from all this front running in an absolutely legal manner? Most definitely yes. The key is to follow the trails of money. Because the information world has flattened, finding the trails of money has become 100 times easier than it was even a decade ago. If you can find instances where enormous investments are being made in corporations without any significant news on the frontline, you can be assured that some front running is occurring and you can piggyback along for the ride up. In the past six to nine months alone, I’ve used this strategy to gain triple digit returns several times in mid-cap to large-cap companies that were far removed from the volatile nature of micro cap companies that most investors believe are necessary to attain triple digit gains. Keep this in mind and it’s not only the most powerful people in the world that can benefit from front running. They do it illegally but for the average investor, it’s possible to do it legally.

Technorati Tags: Merrill Lynch, UBS, Deutsche Bank, JP Morgan, insider trading, investment strategies, frontrunning

__________________

J.S. Kim is the founder and Managing Director of SmartKnowledgeU™, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.

The long tail of investment strategies involves heavily right-brained concepts. Today, left-brained strategies dominate stock picking. People think that the more book smarts they have, the more success they will have in stock picking, so they take all kinds of courses with limited utility such as intensive corporate valuation classes, accounting classes. I used to work at a Wall Street firm with a guy that graduated from Harvard that would always tell clients to trust him with their money because he was smart.

Well, just being smart doesn’t cut it in today’s investment world. In fact, being much “smarter” than the next guy doesn’t even guarantee that you’ll be able to achieve better returns than a high school graduate. I finished advanced calculus by the time I was 14 years old, achieved a perfect score on the Math portion of the SATs and could perform complicated statistical calculations in my sleep, but all of that never once helped me become a better investor later in life. Success in investing lies in the creative arena of the right hemisphere of the brain.

Anybody can crunch numbers so that will never give you an edge against your neighbor or Wall Street broker when it comes to performance. Although the information world is “flattening”, at the same time, it is ironically becoming increasingly non-linear. Yet investors and big-shot analysts at Wall Street firms continue to approach this non-linear world with a linear process. Numbers in, numbers out yield the pool of stocks that they choose to invest in. You can take two people with almost the exact same position in life – similar job, similar salaries, similar material wealth, similar leisure time – yet one will view the glass half-empty while the other will view the glass as half-full. Why is that?

It has to do with how one processes information.In the vast sea of information that exists today, how an investor processes information will be the difference between gaining 6% annual returns and 30% annual returns. No longer does the average investor have to wait to read the Wall Street Journal or the Bloomberg Report to learn what is happening in the investment world. He or she can grab this information long before it hits the pages of the Wall Street Journal or the television screen. But just grabbing this information long before it reaches the masses is just a tiny fraction of the entire picture. You have to know what information to grab that has a strong correlation to achieving 25% or better gains in the stock market.

When I look at how Wall Street and how the largest global investment firms process information, I see an outdated, inefficient process. They take large pools of stocks and then use linear statistics like P/E to growth ratios, earnings growth, working capital, dividend growth, etc. to funnel down the pool into a stock portfolio. The technological advancements that have allowed advanced software programs to whittle down a pool of thousands of stocks to just a handful based upon the above parameters is irrelevant. It is irrelevant because when you are using the wrong, inefficient linear parameters as your information funnel, the output though highly efficient, is still going to produce garbage.

A new information funnel, one that is right-brained, and depends upon identifying non-linear relationships that are highly predictive of stock performance is what is needed. The best portfolio managers in the United States, hands down, year after year are the most powerful U.S. Senators that head up important committees and have access to some of the best information in the world. Do you really believe that these U.S. Senators are using some silly, number crunching information funnel to make their decisions about what stocks to buy are do you believe that they are using other highly predictive factors of stock price appreciation instead?

A cynic may say, sure these Senators have inside information and that is why they can outperform the average investor by 20% a year (this is the actual outperformance of U.S. Senators of the market index in a five year study performed by Brigitte J. Ziobrowski, Alan J. Ziobrowski, Ping Cheng, and James W, Boyd between 1994-1998). I would argue that what makes an average investor average is his or her lack of vision.

The average investor may not have access to the exact high level of information that U.S. Senators have and this information may not be handed to him or her as freely, but comparable information highly predictive of stock price appreciation is available. If the average investor just knew how, when, where and why to look for it, he or she could find it, and would no longer be an average investor.

If it seems like I’m still a little bit vague about exactly how to do this, it’s because I reserve the very specific information for subscribers to the SmartKnowledgeU curriculum. After all, it took me five years to perfect many of my proprietary strategies, including an information funnel that is very similar to the ones U.S. Senators employ, and at least one of my strategies was not even possible to use until just last year! In any event, I hope that you understand that given the evolution of our information age, that those that apply non-linear, right brain strategies will achieve returns that will leave the returns of those that continue to apply traditional, linear strategies in the dust.

Happy investing.

______________________________

J.S. Kim is the founder and Managing Director of SmartKnowledgeU™, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.

However, almost no one speaks of the long tail of investing. The long tail of investment strategies are the strategies that do not heavily rely on fundamental or technical analysis, but exploit other strongly predictive factors to produce not only superior returns to traditional investment strategies but also investment opportunities with far better risk-reward paradigms than those produced by traditional investment strategies. Here are 10 reasons why the long tail of investing is the only way to build wealth.

(1)You will never achieve the level of wealth you desire by handing your money over to a large investment firm. The vast majority of private investors hand their money to large institutions and allow them to invest their money for them. If this were truly the best way to achieve financial freedom, then almost every one you know would be ecstatic with their financial consultant.

Think of how many people you know that absolutely rave about their financial consultant. The fact that 90% of people you know do not rave about their financial consultant should tell you that niche investment strategies, or longtail investment strategies, are far superior. The ones that are happy with the large investment houses already were independently wealthy before they sought out their help. Think about how many people you know that have ever told you, “I wasn’t wealthy before, but thanks to my investment firm, I am wealthy beyond my dreams now.”

(2) Thanks to evolving information technology, there are many other means of making investment decisions than just utilizing fundamental and technical analysis. Though people have been really slow to grasp this, once they do, long tail investment strategies, like those invented by SmartKnowledgeU, will boom. There is no doubt that the level of top-notch financial, political and corporate information available to the average investor has increased by leaps and bounds within the past decade.

There is a virtual treasure map that was created by the flattening of the world over the past decade to selecting stocks that are poised to explode. However, because the largest, most powerful investment institutions in the world have kept the masses of investors fixated on traditional investment techniques such as value and fundamental analysis, the long tail of investment strategies is currently much further behind in its developmental phases than it should be.

The best analogy I can use when explaining why people have ignored the longtail of investing is to analyze the adoption of the United States of Internet Protocol Version 6 (Ipv6). When China started preparing its country for Ipv6 a decade ago, the benefits in increased security and its added value properties in e-commerce were evident even back then.

However, people in the U.S. were comfortable with the lesser Ipv4 so did not take any action until China, Korea, Taiwan, and Hong Kong embarrassed the U.S. to move forward and catch up with Asia. I see the same thing happening in the educational realm of investing. Everyone is comfortable with the traditional investment strategies that have been propagated for the last several decades so nobody sees a need to move forward even though much better strategies exist today.

Just as people have finally realized how superior IPv6 is to IPv4, the world will eventually realize that the safest and best means of investing money reside in the long tail, and they will eventually adopt strategies that reside in the long tail of investing.

With so much investor skepticism of corporate integrity sparked by past accounting scandals at Enron, WorldCom, General Motors and the like, and the current, ongoing backdating option scandals, investors will increasingly seek alternate means of making investment decisions other than crunching numbers that they feel are untrustworthy.

Furthermore, technical anlaysis often yields false positives as well. A chart will show indexes that appear bullish having just broken through a ceiling of resistance only to have the index turn back downward for a prolonged period of time, or a chart will appear bearish having just broken through a floor of resistance only to turn around and begin anothe bullish ascent. In fact, you have seen some of these turnaround trends with some of the technical posts that I’ve placed on my blog in previous months. In fact, that is why I always state that I never rely solely on technical indicators to make my decisions.

I rely only on technical indicators to confirm or dispell what my long tail investment strategies tell me. Of the three types of analysis, fundamental, technical and longtail, long tail investment strategies yielded by far the least amount of false negatives and false positives. That’s why I rely on them so heavily. To see the superiority of long tail analysis, just read my recent blogs about utilizing long tail analysis to call the price direction of the U.S. dollar and gold in 2006.

This sentiment will lead to an evolution of long tail investment strategies, and the discovery of more efficient and better predictive means of making investment decisions than even those that already exist. Even current longtail investment strategies, such as those utilized at SmartKnowledgeU™ are constantly evolving as access to reliable information increases every year. Making decisions as if you were a fly on the wall of boardrooms is no longer a fantasy. It is possible, thanks to the evolution of the information landscape.

(4) With the growth of blogs and pure information sites on the web, the stranglehold of global investment myths, including the Modern Portfolio Theory of diversification, will soon be exposed for what they are – cleverly disguised sales strategies posing as investment strategies. Once people realize this, long tail investment strategies will gain wider acceptance, much like acupuncture and herbal medicine eventually gained credibility as healing regimens in the schools of Western medicine.

(5) Wider acceptance of alternative, long tail investment strategies that far outperform those utilized by global investment firms will happen as word of successes via these strategies spread throughout the world via the internet. The internet distribution channel can and will be used to change the mindset of investors.

(6) The Do-It-Yourselfers are Growing – With the success of books such as Stephen Covey’s “The Eight Habit” that emphasize personal accountability to achieve excellence versus handing control over to someone else, cultural shifts will happen whereby people will seek to seize control over their own financial future versus just handing their money to a firm to manage. As this cultural shift happens, multitudes of people will realize that they are shorting their returns significantly every single year by handing their money to global investment houses.

(7) The flattening of the world and accessibility to previously inaccessible investment information will undoubtedly yield an increasing amount of investment strategies that reside in the long tail. People will realize the foolishness of believing in the one investment strategy thrust upon them by global investment houses for the past half of century as “the only viable and safe way to invest.” If the younger generation takes an interest in investing, adding their creativity to the investment arena will result in explosive growth in the long tail of investment strategies. However, since the odds of this occurrence are quite low, a more gradual shift towards niche investment strategies is much more likely.

(8) The explosion of social networking sites like YouTube, MySpace, Friendster, and so forth, will amplify the viral marketing of long tail investment concepts. Again, ignorance of long tail investment strategies causes fear and hesitancy to use them. Viral marketing of long tail investment concepts will increase millions of investors’ comfort level with these different and unique concepts.

(9) People are ultimately interested in returns, no matter how much global investment firms try to separate themselves from their competitors with smoke and mirror service claims. All the gratitude for luxury box suites at Los Angeles Lakers games, suites at the Four Seasons Hotel, conferences at world-class golf courses and resorts will quickly wither once people realize how much more money they are earning with long tail investment strategies.

(10) Again, because people will readily abandon all the perks they get as a preferred client at a large investment firm for far superior returns on their portfolios, the long tail of investing will eventually reach a critical mass. Eventually the long tail of investing will migrate towards the center and become the mainstream methods of investing, though this may take several decades to occur.

Here’s another article that offers a slightly different perspective on the long tail of investing that you might find interesting from Mark Cuban, the outspoken billionaire owner of the NBA franchise Dallas Mavericks.

__________________

J.S. Kim is the founder and Managing Director of SmartKnowledgeU™, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.

This is Part III, the final segment of the reasons why the long tail of investing will make you far wealthier than any traditional strategy or analysis.

How I Use the Long Tail of Investing to Predict Major Market Events with High Accuracy

In a June/July newsletter, I posted this statement:

“And now we at SmartKnowledgeU™ are almost certain of another inevitable economic crisis that will hit the global markets in the very near future that will make the May corrections look like a tiny blip. And regarding this crisis, there is an eerie total lack of coverage at Reuters, Bloomberg, the BBC, MSNBC, and the Wall Street Journal. That’s why it’s best as we advocate, to keep digging down that rabbit hole.”

So far the crisis is still building up steam, (though all the components of this crisis have yet to be discussed in the mainstream media) just as we foresaw six months ago. We extensively write about this crisis inside our Members Only SmartKnowledgeU campus grounds, so unfortunately this is one area that I am reserving only for members as I have granted extremely accurate assessments of the U.S. dollar and gold for free over the last six months. Furthermore, with the long tail of investment analysis, anyone can learn to replicate my prediction accuracy.

On September 12^th, I wrote:

“So back to my point about how I knew with a fair amount of confidence that the price of gold was going to drop shortly and the U.S. dollar was going to rally is because I ignore government and central bank lies and perform my own research to root out the truth in making my investment decisions for myself and my clients. Such analysis has also led me to believe that though people typically associate bonds as “safer” investments that U.S. treasury bonds in the future may all fall within the “junk” bond category.”

During the first week of 2007, I read headlines about an “unexpected sharp retreat” in the U.S. bond markets. Utilizing long tail investment strategies, I could have told you 3 months ago of that this retreat was inevitable and that it only foreshadows a greater retreat sometime in the near future. Again using traditional analysis, you will be blindsided by “unexpected” market shifts all the time.

Using the long tail of investing to guide your investment analysis and strategies, you will be expecting the market shifts the mainstream media reports as unexpected. Because I know financial consultants all over America are advising their older clients to shift money out of the stock market into “safer” bond investments, I’ve already told you why you don’t want to own dollar denominated bonds in a previous blog.

On my September 26^th blog, I wrote, “As I sit here this morning and watch the markets rise in the first two hours of trading, I must admit that although all this “feel-good” economic news, low inflation, high consumer confidence and low gas prices have been artificially manufactured by the U.S. Treasury, the Federal Reserve, and various Bush administration offices like the OMB, I am still astounded at how naive and gullible the average investor can be at times. When the mid-term election cooking of the books ceases, and someone finally has the sense to start peeling away the layers of the economy like an onion, I guarantee you, what they see will make them cry.

As I’ve stated a hundred times here, short-term lies and artificial propping up of the economy can only fight an uphill battle for so long before the walls come tumbling down.”

On that same day in a separate blog entry, to clarify the above, I wrote, “As I looked at some of the daily trading volumes of some U.S. stocks this past week that have hit 52-week highs, I noticed an unusually large daily buying volume this week, some with volumes so exaggerated that it is safe to assume that institutional buying is responsible for the lion’s share of these unusually high buying volume days. I thought, “Why in the world would people be dumping tons of money into these stocks at their 52-week highs? That’s just moronic.” And then I remembered why.

In order to support my point back then, I compiled the table above. Back then, I wrote: “All of these stocks have hit 52-week highs within the past week and look at the percentages over the 3mo average daily trading volume for the highest volume days for the past week: McDonalds (160%), Priceline (160%), Harley Davidson (57%), Verizon (136%, Unilever (39%). All of these spikes in daily trading volume were almost surely attributable to fund managers scrambling to add these positions to their portfolios before quarter end this week as they dumped their worst performers. This is a practice that happens close to every quarter end.”

So at quarter end in December, 2006 when the situation above replicated itself, I was not surprised. In fact I recommended that people start taking profits.

To address the government manipulation of oil prices I spoke of in Part II of this series, I found these several paragraphs that I wrote in an October 12^th blog entry:

“In fact, earlier I blogged about how Goldman Sachs was most likely also asked, through former Goldman CEO and now current U.S. Secretary of Treasury, Hank Paulson, to help out in the upcoming U.S. mid-term re-elections. In turn, I speculated that they responded to this request by dumping 73% of their unleaded gas positions in their Goldman Sachs Commodity Index. (by the way, back then, I blogged about this before the New York Times reported the very same theory I proposed several days later).

Now I know a lot of people don’t believe that such collusion occurs on the political-economic front, but as I have stated repeatedly, it is irrelevant whether you believe certain market behavior is triggered by “cause and effect” collusion-driven events or merely just a series of innocent coincidences. Whether or not you attribute political scheming to be the cause of abnormal market behavior is insignificant as long as you dig deep enough down the rabbit hole to uncover certain events that will “trigger” market consequences.

Woodward’s claim that the Saudi’s deliberately interfered in the sovereign affairs of the United States and helped Bush become re-elected in 2004, to his former opposition candidate, John Kerrey, was “shocking” and “outrageous”.

The only problem with Kerrey’s narrow-minded assessment of the situation was that if this happened once, surely it wasn’t the only time that such an arrangement between the U.S. government and the Saudi Royal Family was struck. Surely Democrats must have asked for similar assistance in the past, right? So I dug down the rabbit hole. Sure enough, I discovered, according to Prince Bandar himself, that former U.S. Presidents have been asking for his country assistance in manipulating oil prices for ages.

On CNN’s TV program Larry King Live, Saudi Ambassador Prince Bandar stated. “President Clinton asked us to keep the prices down in the year 2000.” Bandar further stated that President Carter also had asked the Saudis to help keep oil prices in order to save his reelection bid in 1979. If Prince Bandar is telling the truth, government manipulation of commodity prices is obviously not a partisan issue.”

Knowing that the U.S. government would exercise their power to drive oil prices down in response to questions about inflation problems and a faltering economy, I wrote a blog on October 12^th entitled “Q: Where is the Safest Place to Be Invested in the Oil Industry?” with the answer given as “Oil Refiners, Pipeline Manufacturers, Deep Sea Platform & Drilling Manufacturers, and 4-D Imaging Companies”.

Back then, I wrote:

“But long term, I think the much better way to play these markets is not with the major players such as Exxon, British Petroleum and the like, but either with junior companies that have more room to grow both in market share and in price appreciation, and with those companies that will benefit from the inevitable capex spending that big oil will now engage in to sustain future revenues.”

I know that there are those out there that predicted $20 and $30 the last time oil showed weakness and are now saying “I told you so” but the fact is, there are too many unknowns for anyone to know exactly where oil will end up. A United States –Iranian conflict with Iran where Iran shuts down the Straights of Hormuz would send oil sky- high again. In any event, in January of this year, the oil majors have been tanking, and I still stand by my above assessment.

To summarize this blog series, the great majority of investors continue to be misled about investment opportunities because they listen to the talking heads in the mainstream media, the great majority of whom perform terrible analysis and are nothing but bandwagon jumpers.

When I speak of the long tail of investing’s place in developing strategies, I speak not of any traditional strategy that involves technical or fundamental analysis to drive investment decisions. I speak of highly specialized strategies that leverage the flattening of the world and increasing accessibility to top-shelf financial information to drive predictions of market behavior and investment decisions. The problem right now is with hundreds of millions of websites, and many sites that contain suspect information, though there is a treasure map, the great majority of investors still have no clue where to look.

On occasions when I have spoken in more detail to interested parties about what type of information is available, people have shaken their heads in amazement, exclaiming in disbelief, “That level of information is publicly accessible?” With the detailed level of information I provided for free in my newsletters and my blog in 2006 regarding gold and the U.S. dollar, wealthy individuals that followed my opinions could have made a fortune.

The information I blog about is just the tip of iceberg regarding the amount of information I make freely accessible inside the learning modules of SmartKnowledgeU. This is why I so fiercely believe that the long tail of investing is the only place every investor should reside and never leave for the greater comfort of mainstream opinions, strategies and analysis. Remember, the businessman I spoke of in my blog about the U.S. dollar chose to reside in the comfort of mainstream analysis against my very adamant opposition view, and I’m sure it turned out to be a very painful financial choice for him. Residing in the long tail of investing would have left zero doubt as to the long-term direction of the U.S. dollar.

It’s important to note that I haven’t been right 100% of the time in my predictions using the long tail of investing. These strategies aren’t an infallible crystal ball into the future, but they are piercingly accurate at a high rate and infinitely better than the overwhelming methods of analysis currently utilized by analysts and economists that seem to get the media spotlight. For example, I have been wrong about the direction of interest rates taken by the U.S. Federal Reserve before. However, the long tail of investment analysis is great for cutting to the core of the underlying reality of global economic situations. It is knowing this that is most valuable in making the proper investment decisions.

In future blogs, I’ll address the concept of the long tail of investment analysis and strategies in greater detail.

___________________________________
J.S. Kim is the founder and Managing Director of SmartKnowledgeU™, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.

How I’ve Used the Long Tail of Investing to Repeatedly Predict the Price Behavior of the Gold

In the SmartKnowledgeU™ newsletter I delivered to subscribers on July 25^th, I stated “We believe gold is a great asset to own as you all know by now. In an article you all received several weeks ago, I mentioned that it was a great time to consider buying gold. And while the U.S. HUI gold bug index looks like it’s primed for a sharp decline, you can choose to liquidate gold stocks you own now and buy back at a lower price in the near future if indeed this materializes. But even if it does, this won’t shake our confidence in our long-term outlook for gold because we know short term fluctuations hold no meaning for the long-term outlook. And because short term fluctuations tend to make no sense, don’t let it shake your long term convictions as well.”

I further stated that “I believe that we would see another sharp correction” and that I “would not chase gold higher even as it rose higher every day because I knew a correction was coming.”

Well, I had purchased into gold stocks about June 5, so I had been fortunate enough to buy in at almost the exact bottom for the period between April and September, 2006.

I have indicated exactly at what points I made my predictions about the direction of gold’s price behavior in the above chart.

Most times my predictions were in opposition to 99% of the sentiment being reported in the major media, as you will see if you finish reading this post. But my ability to do this is not just taking a contrarian viewpoint of the overwhelming sentiment on Wall Street and in the mass media and of the many experts that are quoted in the mass media. It 100% depends on the long tail of investing analysis techniques that I utilize. So let’s explore how my comments in past newsletters and blogs relate to the above chart.

In my August 22^nd newsletter, I stated, “Well the correction has come, and I believe that gold will head below $600.” I made this statement when gold was still trading at $625 an ounce and this belief was based on my niche, long tail of investing strategies that I utilize.

In my September 12^th newsletter, I stated, “This week gold sharply retreated to about $592 an ounce. In fact, I have good reason to believe that gold will challenge its June lows of $570 and move possibly even lower before heading sharply and steeply higher once again.” I followed that up with a quick comment the next day on my blog: “I recently blogged about gold’s sharp decline but wanted to follow up with another blog so people don’t get my message twisted. I am still very confident that after this correction ends that gold will go much much higher.”

On my October 1^st newsletter, I stated, “The recent sharp decline in gold has shaken a lot of gold bulls out of the market with many people exiting and cutting their losses. And as steep, quick and brutal as this last correction has been, we may still be in a consolidation phase where gold may dip even lower before starting its next leg higher. But that leg higher I’m convinced will start very soon.”

On October 4^th, on my blog, to clarify what I meant by “soon”, I stated, “I still believe that gold will go lower before starting a historic leg up. Stay tuned and I’ll tell you when I think gold has reached the bottom of this current correction.”

On October 6^th, gold, as I had predicted in my September 12^th newsletter, challenged its June loss of $570 an ounce and in fact went to about $560 an ounce.

How Learning the Long Tail of Investment Analysis Will Prevent the Mistakes Experts and the Mass Media Make Every Time There is a Short-Term Reversal in the Precious Metals Markets

Then as gold climbed higher in early November to about $630 an ounce, at a time when again the bandwagon analysts started to tout $700-$850 gold by year end, I blogged on November 6^th, “Yes, I know that I’ve been silent about gold’s bottom but that’s because I don’t think we’ve reached it yet. I’ve merely just been very patiently waiting for the consolidation phase to run its course, but that doesn’t mean I haven’t been taking some strategic actions. So I’ll break my silence to let you know my thoughts. Yes, I realize that it seems that gold has bottomed as it has been steadily rising for the past couple of weeks. Still, certain indicators I track seem to point to the fact that we will see one last major correction before the true gold bull finally starts its run.”

And this is where I stand right now. I still believe that Gold will start a run considerably higher as soon as the current downleg finishes but the downleg we are experiencing now may be the “one last major correction” I was expecting on September 12^th.

Every single time there is a reversal in the precious metal markets, every single pundit chips in and says gold is going to soar if the reversal is an uptick or gold is doomed if the reversal is a downward trend. However, gold is an asset where short-term reversals are historically sharp and rapid, so the only way to know what to do is to use the longtail of investment anlaysis to get an accurate read on what are the long-term trends. Period. Otherwise you will drive yourself insane if you listen to the major media as the majority of the reports disseminated through the mass media demonstrate zero understanding of the forces that drive this market and where it is ultimately headed. I compare the shoddy analysis of gold’s behavior in the mass media, even by large global firm’s chief economists, to the current analysis that extremely warm winter weather is causing energy prices to dive. Sure, that’s an important factor, but only one of a multitude of factors. Yes, only one of many.

If you’re thinking, “Ok, even if you predicted all the rises and dips of gold for the past six months almost exactly as they played out before they happened, the volatility would drive me crazy,” you must remember that volatility DOES NOT equal risk. Just read my Nov. 20^th blog “Does Volatility Equal Risk?” here to understand why the long tail investment analysis I utilize minimizes the relevance of these short term dips and rises. Even if you don’t want to play the dips and rises, if you understand the long term behavior of gold (which you NEVER will if you rely on the faulty analysis of mainstream analysts), you will be fine as long as you remain firm during the choppy short-term behavior.

Finally, when gold started rising higher at the end of the year, in the December 28^th, password protected blog, I wrote, “With the price of gold, I’m not yet 100% convinced yet that this uptick we’re seeing is the beginning of the next bull leg for gold. I still need to see some type of sustained movement higher in gold stocks to indicate that perhaps a true bull leg is forming.”

Sure enough just days later, gold started to take a dive. In response to the dive gold is taking, again I’ll show you the difference between traditional analysis and the long tail of investment analysis that I utilize in predicting gold’s behavior. Mainstream financial news service Reuters stated, “Gold futures plunged more than 3 percent in heavy trade Friday to their lowest level in more than two months, and silver tumbled almost 5 percent, as funds bailed out on the precious metals after the dollar surged on a surprisingly strong U.S. jobs report…George Gero, senior vice president at RBC Capital Markets, attributed gold’s decline to weakening oil prices, strong U.S. jobs data that pushed the dollar to a new high, and profit taking ahead of the weekend.

“When all the negatives come together at once, the funds pull the trigger,” Gero said. “The funds hate uncertainty. Always, it’s easier to just sell and then take a second look.” The dollar rallied for a third day after the Labor Department said the U.S. economy generated 167,000 new jobs in December, well above market expectations for a rise of 100,000, leading investors to scale back expectations of a Federal Reserve interest rate cut in the near future.”

So here’s why so much of that analysis is wrong. On September 13^th, on my blog, I wrote this, “Gold has increased volatility these days because of all the morons that run hedge funds that pump and dump commodities such as gold. Recently I’ve already read of numerous hedge funds that were forced to close due to millions of dollars they have lost for investors based on their speculative bets. Prior to the Gold ETF coming into existence just a couple of years ago in the U.S., it was difficult for hedge funds to speculate on gold in huge positions. Unfortunately, now it is not. And unfortunately, gold, already a traditionally volatile asset, has become more volatile because of this.”

So in that respect, OK, I’ll acknowledge the Reuter’s report for realizing that the skittishness of funds helped drive down the price of gold in the beginning of January. Of course, gold’s sharp decline to begin 2007 produced reports everywhere that speak of the demise of gold. Just as we saw many experts calling for $700 to $850 gold by the end of the year every time gold had a short-term rise in 2006, we see the same doom and gloom when gold retraces. When I performed a Google search for 2006 year end gold predictions:

I saw that Citigroup metal analysts predicted gold would end up at $700 at the end of 2006, and a professional newsletter that touted $850 gold sometime in 2006, whereas gold ended up at about $630 at year end 2006.

At the end of 2005, UBS, a top global financial firm, raised its 2006 forecast for gold to $520 an ounce, and Graham Birch, who manages a Merrill Lynch & Co fund stated, “The price of gold may rise to $725 an ounce by 2010 as surging economic growth turns China into the world’s biggest jewelry consumer.”

Obviously all of those statements were way off, as gold hit a high of $725 an ounce in May, 2006, not needing until 2010 to reach this level as predicted by the Merrill analyst, and exceeding the high water mark predicted by UBS by more than $200 an ounce. Though I will concede that predicting the top price of gold for the year at the year’s start is incredibly difficult, I will still take my predictions from the point forward when they are actually in writing through my newsletters and blogs and stack them up against any of the analysts and the chief economists at the world’s leading investment firms.

If someone had followed my analysis in gold and the dollar since I had been so specific in my calls since mid-2006, they could have made a fortune with large enough investments. The same would not have been true if they were following the opinions of the million dollar men – the chief analysts and economists at the world’s top investment firms. So what is the secret?

There’s no magic. It’s just my analysis methods. I use niche, propietary investment strategies where I seek to leverage the flattening of the world and the resultant increased accessibility to never before available information to make my calls. They do not. I call these strategies the long tail of investing and investment strategies.

My review of my calls should ably illustrate the power of seeking the longtail of investment analysis and investment strategies. Furthermore, if anyone wants to learn, it is quite simple as all the methods for doing so are contained within the curriculum of the SmartKnowledgeU course.

My point in this argument is this: When analysts in the mainstream media chime in with their analysis, since the majority of fund managers that invest in the gold ETF have no understanding of the metal they invest in and merely just ride trends, they all bail at the first sign of short-term weakness. That is why I hated the day the gold ETF and silver ETF started to trade in the U.S. markets. The short term actions of these clueless fund managers won’t change the long-term course of gold, but their ignorance introduces a ton more volatility to this asset class than is necessary.

Furthermore, I always see newsletters advise buying the gold ETF as the “conservative” approach to investing in gold. As you can see from the above paragraph, there is not much conservative about the behavior of the gold ETF. In addition, most people that desire to invest in gold don’t know the multitude of ways to purchase gold. There are different ways to buy physical gold in different forms; if one wishes to buy paper gold, there is the gold ETF; for gold stocks, there are gold indexes that are hedged and unhedged, options on gold indexes, and gold mining companies, many of which vary immensely in risk/reward setups. I very rarely ever see the best ways to invest in gold discussed anywhere (though we do let you know in great detail what they are inside our SmartKnowledgeU online campus).

But returning to the Reuter’s report that “funds bailed out on the precious metals after the dollar surged on a surprisingly strong U.S. jobs report”, if you have read any of my previously posted blogs on the failures of the CPI inflation index to present an accurate picture of inflation rates, then you already know that jobs reports can also be manipulated by governments to present misleading representations of reality as well. How can there be so much chatter of a faltering U.S. economy yet have a strong jobs report?

If your business was making less money, your profit margins were shrinking, and future growth prospects looked bleak, would your response be to hire more personnel and increase your overhead so you can further cut into decreasing profit margins? But this is what the government wishes for us to believe.

So why would the government want a “surprisingly” strong U.S. jobs report? For the same reason they want low oil prices now. The U.S. government knows inflation is much worse than the “official” figures that they report, and they know that faltering energy prices will help ease the rate of inflation. They know that they wouldn’t be able to fool everyone with their statements of inflation is under control as people keep checking their wallets and watch their money disappear. Furthermore, a stronger dollar will help ease the rate of inflation. How do they achieve that through the jobs report? Release a surprisingly strong report to increase global confidence in the U.S. economy which in turn will prop up the U.S. dollar temporarily.

As far as people that will respond, “unseasonably warm winter weather has driven oil and natural gas futures down, and are you going to tell me that the government can control the weather? That’s ridiculous!” My response is this. Sure, warm weather has definitely played a role in driving energy prices down. But it is not the ONLY factor. There are a multitude of factors that cause energy prices to drop, among them, government and state-sponsored collusion and manipulation. To believe only unseasonably warm weather is the only factor that had led to energy prices being driven lower is naïve, though I know by now, we as a society are used to the pundits telling us to believe why things happen, and we will believe them without question.

As far as this being the beginning of a bear market in gold as the bandwagon analysts are now predicting, that’s rubbish. Recall one more time that on November 6, I told SmartKnowledgeU readers “Still, certain indicators I track seem to point to the fact that we will see one last major correction before the true gold bull finally starts its run.” I haven’t checked these longtail investment indicators yet so I don’t want to give a specific prediction yet but let’s just say that it won’t surprise me at all if this is the middle of the major correction I expected and if gold continues to fall sharply some more. (for more details on what point I look at to determine whether gold has bottomed or if we are indeed in the middle of a further downward slide, read my previous posts) Again, remember that I have expected this and this does not change my long term outlook on gold one bit.

To get the longtail view of oil and global markets behavior, read part III of this series.

______________________________
J.S. Kim is the founder and Managing Director of SmartKnowledgeU™, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.