| In my previous message about investing
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| | a couple that I bought years ago.
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| for beginners, I tried to convey some of
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| | Broadly, I was right to buy. Of all the
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| the realisations that a new investor
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| | development stocks I could have bought,
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| needs to make to help him or her become
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| | these actually did develop and do make
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| successful.This time, I am going to offer
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| | products. They just don't make profits
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| a few thoughts on what I believe helps me
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| | yet - years after I bought.One of my
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| to be successful and a few examples of
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| | development picks actually dominates the
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| what can and may go wrong. As ever, I
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| | bluetooth market. That's right, I
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| hope that this isn't below your level of
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| | invested in the company that developed
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| either confidence or competence as I
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| | much of the bluetooth technology we use
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| don't wish to insult. However, I have
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| | today! How could it not make a bundle of
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| found that there seem to be far more
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| | money? Am I a genius or what? Years
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| people that want to understand finance 'a
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| | later, I am still down 65%.Another has an
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| little better' than there are people who
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| | amazing fuel saving device for gear boxes
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| can lecture on the subject.Firstly to an
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| | in cars, lorries and off-road vehicles.
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| example. Back in the mid 90's I joined an
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| | In this age, you'd think that fuel saving
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| Investment club in the UK. I knew a
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| | technology would be all the rage. Over
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| couple of the members from a local health
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| | the years, I have bought more shares in
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| club I was a member at. Knowing that I
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| | the lows and sold them in the highs to
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| was (a) keenly interested in investment
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| | make some 'trading' profits. But still my
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| and (b) more knowledgeable than most of
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| | initial investment (I think 8 years ago)
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| them, I was invited along.Suffice to say
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| | is down.Though I may not have realised it
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| that on the first evening, I realised
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| | at the time, these were not investments,
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| that I had been invited along to do all
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| | they were gambles. So is the stock
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| the work! I enjoyed the work so that
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| | exchange really a place for beginners?An
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| didn't actually bother me. I also could
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| | investment is in a company that has
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| purchase some additional investment tools
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| | products, a defined market and notable
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| 'for the club' which I couldn't justify
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| | market share, profits, a track record and
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| for myself.The main work of analysis was
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| | much more. Remember that. Think about
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| carried out by myself and another member
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| | Warren Buffett - he makes investments,
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| who is a long-time friend and no mug in
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| | good ones at that.I'm also quite
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| the world of shares and investment
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| | traditional about investing. I have never
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| himself. We were using as our template a
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| | spread bet, used an option or future or
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| theory offered by Jim Slater which
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| | sold short. I don't use leverage. If I
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| centred around price / earnings growth
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| | can't figure out what might go wrong, FOR
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| ratios. In short, it was highly
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| | CERTAIN, I'd rather not do it. I buy, I
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| successful.At the end of the first year,
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| | hold and I sell. That's it.I have no
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| we were 'up' by around 80%. Admittedly,
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| | doubt that these admissions mean that I
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| this was during the tech-boom bull and
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| | miss out on all sorts of possible
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| any idiot could get 30% pa without
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| | investment opportunities. There are all
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| trouble or effort, but still we were very
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| | sorts of weird and wonderful investments
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| impressed. The second year started well
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| | out there, but I invest and I don't like
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| too and within 6 months of year two, our
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| | to gamble.If you think about it though,
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| small company growth share portfolio (the
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| | what I just said doesn't really hold me
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| only portfolio) was up comfortably over
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| | back. I own some coins, stamps, comics,
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| 100%. Nice work if you can get it.For
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| | unit funds, shares, books and art - I did
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| those of you that haven't been a member
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| | mention that I speculate didn't I? And if
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| of an investment club and don't know,
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| | the world suddenly has a crisis, it means
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| they are a democracy. Every opinion
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| | that I own actual, physical assets as
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| counts equal in a vote to buy or sell,
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| | well as just share certificates.So that
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| whether they understand investment - or
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| | brings me to another point ... can you
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| not. Here was our trouble. If you can
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| | focus?Ideally, you need to know quite a
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| believe it, making an enormous profit was
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| | lot about certain areas and use that
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| 'boring' and they needed 'excitement'. To
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| | knowledge for your investment benefit.
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| me, making money as quickly as we did was
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| | The art and books I own are mostly
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| not merely exciting - it was thrilling!!
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| | related to cricket. I love cricket and
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| But, when we wanted to sell they wouldn't
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| | know a lot about the game and it's
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| and when we offered rock solid buy
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| | history - which means that I know when I
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| predictions they disliked something and
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| | see something of value. If it has value
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| again, we wouldn't.I think our lowest
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| | now, it probably will have for some time
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| point was not buying shares in a UK pizza
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| | to come. Whether I buy at a good price or
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| delivery firm (that was growing very
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| | not, value and scarcity count.Who'd
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| quickly and would have turned into a
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| | imagine ME telling you that the stock
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| great investment) because (and I kid you
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| | market isn't everything?Investment risk
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| not) one of the founding members didn't
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| | is lowered by knowledge. Every time. If
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| like 'Italian food'. Who cares?The club
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| | you are buying shares on the stock
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| ended rather badly with arguments and
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| | exchange, what does the seller know that
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| falling outs. Several years later it
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| | you don't? What do you know that the
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| still has a couple of holdings in shares
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| | seller does not? You can bet your life
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| that might 'one day turn around'. Fat
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| | that the buyer or seller opposite you in
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| chance!!!!So here is the tip: why do you
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| | any transaction has done some serious
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| want to invest? This needs analysis.My
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| | research. If you don't do yours, who do
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| friend and I invested because we were
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| | you think will win? You or the market?So
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| willing to put in the effort, wanted to
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| | of all the things that I might have said
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| increase our holdings, make money and
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| | about investing, I haven't really made it
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| frankly, we like winning in a global
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| | sound 'sexy' yet. Have I? The truth is,
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| market against the nation's smartest
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| | investing isn't really very sexy. Pop
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| minds!!Our other members however, were
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| | stars are sexy. Carmen Electra is sexy.
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| there to gamble. It was just fun. Who
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| | Investing is graphs, moving averages,
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| cares about the result? We all meet in a
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| | annual reports, company statements,
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| pub, have a meal, chat about shares and
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| | calculators and work. Not so sexy. It's
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| throw some money at the market. We wanted
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| | kind of like being an accountant but with
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| profits, they wanted a social group.After
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| | marginally more life and a few graphs.But
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| being up by over 100% after 18 months, we
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| | the great thing about investment is that
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| closed the club at a loss of both money
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| | in the long run, you decide whether
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| and friendship. Ridiculous.What about
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| | you'll be successful or not. The harder
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| you? Why do you want to invest? If you
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| | you work at it, the luckier you will be.
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| want to gamble, take up sports betting.
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| | If you are just starting out, think about
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| You get to watch a game as well as be
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| | YOU first, not the market or companies.
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| financially involved - that sounds much
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| | Decide on what you want to specialise on,
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| better.Do you plan to follow the market?
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| | whether the stock market for beginners is
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| If you don't, best to keep away.I'm not
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| | a place to invest and how you will
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| the world's greatest at tracking a market
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| | approach it.It might help to find areas
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| - I can admit it. Each day, I look at the
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| | in which you have useful knowledge
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| shares in my portfolio, funds I advise
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| | already. Either that or decide on an area
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| clients about, prospective investments I
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| | and slowly become an expert. What do I
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| am mulling over, general financial news
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| | mean? Well, if you worked in a bank for
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| and read a few posts by other advisers /
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| | 10 years, you must know something about
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| analysts online. And yet, if I'm honest,
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| | banking. When you read an annual report
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| I worry that don't pay enough time each
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| | from a bank, do you laugh and see through
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| day to the markets.If you want to make
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| | the waffle or does it make real sense? If
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| serious decisions, with serious amounts
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| | you can see through the waffle of some
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| of money and (hopefully) make serious
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| | far off CEO and CFO, you can start to
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| amounts of profit, you need to be -
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| | compare the relative prospects in the
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| SERIOUS!!!Personally, I don't like the
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| | same market of competing firms. Hey -
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| idea of gambling much. I consider myself
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| | that could be an opportunity!If you
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| to be either a speculator or an investor,
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| | really know about banking, you can
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| not a gambler. When I first started
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| | compare the product offerings and service
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| investing, I didn't know the difference
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| | as well as the annual reports. You might
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| (though I started at 18 and had no-one to
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| | still know some bank staff that are happy
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| guide me). That meant that all my
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| | to tell you honestly that they are being
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| investments were gambles. Mostly, they
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| | 'creamed' in the market or whatever.
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| weren't so hot.These days, I assess and
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| | Before you know it, you have a picture
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| analyse much more. I avoid 'turnarounds',
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| | building of a competitive market. Before
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| since I don't think they turn around too
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| | long, you will REALLY understand the
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| often. Greater life experience has taught
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| | investment potential of several
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| me to recognise that most companies that
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| | companies. That will put you far ahead of
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| need to turn, or might turn, are already
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| | many other investors.As I said earlier,
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| dead - they just don't know it yet.I also
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| | investment risk is lowered by knowledge -
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| have learned my lesson with 'development'
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| | EVERY TIME.Stuart Langridge is a
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| companies. You know the thing, one great
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| | financial and investment adviser and an
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| idea that 'if' they get to market will
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| | investor. He works with expatriates in
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| make 'tens of millions'. I own shares in
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| | the Benelux region.
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