Let’s say you are interested in this one company. You read its annual report, like what you see and your calculation indicates that the stock is trading way below its fair value. You are excited. It is time to buy! Hang on for a second. There are several techniques of buying stocks out there. Some are better than the other. Let me explore several useful ones.

Buy all at limit price. Assume that we have done our research and we want to invest $ 2000 to buy stock XYZ at $ 12/share. We can do this by setting a limit order of $ 12/share to buy 166 shares of XYZ. The advantage for this method is that we will not pay more than $ 12 for our XYZ share. If you use market order, instead of limit order, XYZ might run up to $ 13/share and execute your order at $ 12.50. Fifty cents may not sound a lot, but in this case, you just saves $ 83 for using limit order. Any better methods? Check out this next one.

Buying half at $12. Buying half when it drops. Stock market is volatile. It goes up and down due to various reasons. In this case, we set a limit order to buy $ 1000 worth of XYZ at $ 12/share. When XYZ drops lower, and if you think that the reason that you initially bought it is still valid, then you can buy more XYZ at a lower price. If XYZ drops by $ 1, you already save $ 83 off the bag. What else is there?

Dollar Cost Averaging (DCA). With DCA, investors normally buy a specified dollar of stock at regular intervals. In this case, you can decide to invest $ 500 monthly in XYZ stock. If the XYZ stock falls, you can buy more shares next month. If XYZ stock rises, you would buy less. But it is ok. You already made money on XYZ stocks that you bought at a lower price.

Which method is the best? There is no clear cut answer on this. Personally, I will never use market order when buying a stock. Commission for buying a limit order is not as expensive as it used to be. My favorite methods is by buying half position initially and then add half more when the share price drops. If you have done your research and you feel that $ 12 per share is a good buy, then why won’t you buy some more if it goes down to $ 10? Just make sure that the fundamental remains the same when the stock drops.

While knowing how to initiate your position is important, I am more inclined in focusing on how to calculate fair value of a stock. This is where the bulk of your investment return comes from.

Curious about fair value calculation? At http://www.noviceinvesting.com, these analysis are shown for free. No String Attached. No fee to be paid. You just need to put some time and effort into it. Honest.

Hari wrote regular commentary about stock investing. He is always on the lookout for stocks that match his buying criteria. You can share your ideas or questions in our discussion board. He would be more than willing to assist.

Pretend, for a moment, that you have a gut feeling the market will be falling. You think that oil, the hurricane, the economy, whatever, is going to ultimately bring down the market.

Should you get out of the market entirely?

Making a decision to “get out of the market” and sell all your stocks is an incredibly risky wager! You are essentially drawing a line in the sand and deciding the market will never again go higher. I say this is a risky bet because, historically, the market goes up two thirds of the time and down one third of the time.

Which would be the better direction to go?

Well, Step One would be to determine if we are currently on “offense” or “defense” in the market. Markets go up and down whether or not there is an oil crisis, a war, or economic hard times.

Knowing who has control of the football allows you to run the proper plays in your portfolio. You wouldn’t punt and give the ball away on first down in football; likewise you would not want to sell everything while on offense in the market either. When we are on offense, we want to run plays (use strategies) that will help build the value of our accounts.

Now, when the market is on defense, the play-calling changes. On defense, we’ll use strategies that will help us protect our investment. We do this so we can be ready to play when we regain control of the football.

Step Two would be to examine which sectors are currently in favor and where our investments stand in relation to this analysis.

These two steps are crucial to determining whether the odds (the risk) are with you or against you. They must not be skipped!

Let’s say the market is moving from offense to defense. What would be the next step? Sell everything? As we said earlier, we know the market goes up two thirds of the time and down one third of the time. Selling everything implies a doomsday scenario and is usually a bad idea.

If you’ve completed the first two steps, go to step three.

Step Three, sell any stocks (or mutual funds) that have poor relative strength. What is relative strength? How a stock (or fund) performs compared to the overall market.

Stocks are either on a relative strength BUY signal or a relative strength SELL signal. Did you know that relative strength signals (buy and sell) last, on average, for TWO YEARS? Meaning a stock that gives a relative strength buy signal today will usually outperform the overall market for (on average) two years. That’s a long time!

Next, Step Four. Examine the stocks or funds that have good relative strength. Stocks (and mutual funds) with good relative strength tend to snap back quickly when the market rebounds.

On the flipside, stocks with poor relative strength tend to fall with the market (and many times will fall further than the overall market).

Relative strength is a very important part of the decision process we use at Mullooly Asset Management. Knowing the relative strength of a stock or a fund will clue you in on its potential performance during rough times.

Let’s take relative strength two steps farther. We now know we can measure relative strength for an individual stock (or mutual fund) versus the market. But did you also know that we can measure a stock (or mutual fund’s) relative strength against its peer group too? That would help us decide if we should jump over to another horse in the race. Perhaps you have money in a stock that is in a favored sector; but the stock you own has poor relative strength. You want to stay in the sector. Moving within the sector to another stock in the group with better relative strength is a smart way to go.

We can also plot the relative strength of a sector compared to the market as well. Knowing a sector’s relative strength versus the market is VERY important! Often times, when a sector turns up, it can be like watching a school of fish move…they all move at once. And today, you can instantly have money in that sector through buying an exchange traded fund (ETF).

Likewise, when a sector gives a relative strength sell signal versus the market overall, the whole group usually moves again. You’d want to reduce the amount of money in that sector as soon as possible, and perhaps get out of the group entirely.

Thomas P. Mullooly, President of Mullooly Asset Management, LLC (http://www.mullooly.net) has spent over twenty years in the investment industry, as a broker and as an investment advisor. Mullooly Asset Management is a fee-only registered investment advisory firm based in New Jersey, specializing in retirement plan accounts, particularly managing 401k, 403b, and deferred compensation accounts for individuals. Feel free to contact us to check out the relative strength of your portfolio by sending an email to tom@mullooly.net or visiting http://www.mullooly.net/403b-plan.html or sign up to receive the market report and tips on how you can soundly invest your money at http://www.mullooly.net

This is an excellent question, if fact, it’s the toughest question that I face with every stock that I own.

If I own a stock and it immediately goes down, this is the easiest decision I must make – SELL and sell fast. I know how to cut my losses and have been doing it for years. Yes, it’s a blow to my self esteem but I always feel better when I see that particular stock several dollars lower a few weeks later. This is when I feel good about the insurance policy I have (sell rules) to protect my capital.

Take Accuride (ACW) for example: I recently purchased the stock on a “three weeks tight pattern”, a pattern that is familiar with O’Neil and CANSLIM. I placed a market order as the stock started to move towards the breakout level of $15.00 and was filled at $14.99.

For a lower priced stock such as ACW, I give it about 8% breathing room which brings my sell point to $13.79. I will not place a physical sell stop because I don’t want to be taken out of the position on false market maker moves. I reevaluate my position every night and decide if I need to sell “at the market” the next morning if it is below $13.79 or nearing the sell point that I established. Last week, the stock fell to $14.11 intraday giving most investors a scare but managed to close up at $15.18. This is the exact reason why I keep mental stops instead of physical stops. I only place physical stops when I will be away from a computer for an extended period of time or if my gains are sufficient and I want to protect them at a specific number, then I don’t care if the stop is triggered intraday.

I will not change my mental sell stop of $13.79 until ACW gains at least 20% from my buy point. If that time arrives, I will move my sell stop about 12% below the current levels. In this case, the numbers would read like this: ACW would be up 20% near $18 and my trailing mental stop would be $15.84. If the stock approaches this area or violates the number, I will sell “at the market” the following morning. Remember, circumstances play a big role in each decision. If outside events are influencing the stock, I must take that into consideration and base my decision on the additional information.

If ACW starts to use a moving average as support, my mental sell stop will always be slightly below the moving average, again giving it room to breathe. If any of my stocks gain 50%, I start to place a physical stop about 10%-12% below the current levels to protect the gains.

Finally, if I have not been sold out of a stock but I start to see the stock act in different ways than it was while up-trending, I will sell immediately (examples can be a climax run, slicing a major moving average, breaking a strong trend-line or possibly a string of weaker earnings reports). Use discretion and develop a feel for what works best for you.

If Accuride (ACW) tanks today and I am forced to sell even though I only purchased the stock in the past week, I will not allow it to hurt my emotional balance and I will move on to the next opportunity because I know investing is about percentages and NOT about being right on every trade.

Below are some basic sell rules that I follow:

Sell all stocks that fall 7-10% below your purchase price. Don’t ever allow a 10% loss double into a 20% loss because of stubbornness or the emotion of hope (hoping the stock will rebound). It is perfectly fine if the stock is sold out for a 7% loss and then it rebounds and you feel you would like to take another position in this stock.

If you feel something is wrong with your stock and the action looks odd but you are only down a few percent, sell anyway, why take a chance, especially in a bad market environment. This is the only form of insurance in the stock market.

When a stock has been is a solid up-trend and then it starts to move sideways, this is referred to as churning. This can be the first signal to the end of the run. This may serve as the perfect time to lock in your profits and watch from the sideline, remember, you can always get back in.

Learn to sell into strength; you can never go wrong by selling into strength before the stock peaks. No one and I mean NO ONE gets out at the top and if they do, they were lucky. No one and I mean NO ONE goes broke by taking a profit after an extended run or up-trend! Don’t allow the emotion of GREED to steer your ship, take profits when necessary, don’t get greedy.

Stop Loss, Trailing Stops and Market Makers:

Many investors try to lock in gains or prevent losses with a predetermined stop loss or trailing stop loss. This is an excellent tool but has become an easy target for market makers and program traders to manipulate.

For example: You buy XYZ stock at $50 and enter an automatic stop loss at $45 to protect your portfolio from extensive losses.

Market makers can see this entered stop loss and play the market in order to wipe out your shares and pick them up at cheaper prices. They can bid down the price to $44.50 or so and grab your shares and then bid up the price back to the $50 range – all in one day. I have personally seen intraday manipulation of stocks being bid down, only to close for minor losses or slight gains. Accuride is a great example from last Thursday as it was down over 6% intraday and then closed up over 1%.

A trailing stop is a feature that allows the investor to determine a % point at which their stock is sold.

Example: If you buy 100 shares of a stock at $50, you can select a percentage at which your stock is sold, this percentage follows the stock up in price. So if you bought 100 shares of XYZ at $50 and put your percentage at 8%, your stock will be sold at $46…BUT, if your stock advances to $60, then you will have a new sell point at $55.20 (8% below the high of $60). In other words, your sell stop trails or follows your stock without you having to cancel out and resetting a new sell stop each time your stock goes up in price.

How do you protect your portfolio without letting market makers trip your stop loss for a premature exit?

I use a predetermined mental stop loss that is only implemented after the market is closed for the day. I take a look at each holding and determine if it should be sold at the market or intraday the next trading day. I predetermined my sell level when I bought the stock, so most emotions are already taken out of the equation.

If you invest in quality stocks with solid fundamentals and technicals, there is no need to constantly worry about huge losses in the matter of one or two days, barring a tragic event within that particular company.

Finally, Post Trade Analysis:

Post trade analysis could possibly be the most important key to unlocking your investment potential. Every investor must analyze their past trades. By analyzing your past trades, you can focus in on your mistakes and pinpoint the downfalls in your methods.

Ask yourself:

How many stocks have you bought in the past 12 months?
How many went up?
How many went down?
How long did you hold these stocks?
Why did the stock work?
Where did it go wrong?
Did the fundamentals breakdown?
Did the stock send key technical red flags before a major collapse?

Most investors skip post analysis and consider it a waste of time to look at the past. Many investors are scared to look at past trades; they don’t want to see the extent of the damage. An investor will never be able to take a step forward without looking over the past success and failures in their portfolio. In order to focus on weak areas in your investing methods, post analysis is the place to start. Post analysis with the aid of charts will show you if you bought too soon, sold too late, sold too early or bought the wrong stock all together. Print out a chart of all stocks that you sold and plot your key entry and exit points. Look for base building, accumulation, distribution or any other components that help shape your final decisions. Compare your stocks to sister stocks and see if similar patterns occurred. Did any sister stocks start to rise or fall before your stock? Post analysis is like looking in the mirror; you have no where to hide and only the truth to seek.

After several post analysis sessions, you will notice similarities in your buying and selling patterns. Similar mistakes or successes will become apparent. Focus on both the good and the bad. This post analysis allows the educated investor to suck in their pride and take responsibility for their own actions.

This is the starting point to correcting mistakes and growing your strengths!

Chris Perruna - http://www.marketstockwatch.com

Chris is the founder and president of MarketStockWatch.com, an internet community that teaches you how to invest your money with solid rules. We offer an extended no obligation monthly trial period starting immediately with two free weeks. We don’t stop at just showing you our daily and weekly screens, we teach you how to make you own screens through education. Through our philosophy, you will be able to create your own methods and styles to become successful.

Many investors are interested in revenues that a Corporation generates. Yet if you really are concerned with performance, you will look at only the earnings. If you are especially savvy you only care about winning or profit, cash flow and on-going customer base. Do not be dazzled or baffled. I only care about winning, which means customers lined up at the door with real money, low overheads, total efficiency, work ethic from management to line worker, no one is living on the fat.

A company’s job is to make money, keep customers happy and spending and coming back until the end of time. When customer buying behavior changes so do we. It has to be that way, bullshit has to walk, read Warren Buffet essays, to get an idea of my thinking. Many investors and even financial journalists think a company with robust revenues are healthy, growing and a bucks up company. Yet, I have always believed in the term "Professional Parasites" Accountants, attorneys, etc. always trying to get us to believe some dump reality for some other mile marker. Look I am reality based and only care about winning, not any of the other. With all the BS forms, tax papers, audits and all the over abundance of data you might actually start to believe such crap, yet those are not real. If you are doing everything right, your numbers will be good, not need to fake it and shout about revenue from the tallest mountain. Many an executive will their numbers look just as they are suppose too, like everyone else’s chicken scratch, thanks to some maneuvering by their accountants and lawyers. Do not get me wrong accountants are a necessary evil in the game of it all, but only because the game is messed up. I think I liked Rockefellers accounting best. I am so unimpressed with accountants I cannot tell you. These accountants walk around like Gods because of their elevation by government regulators and their perceived mandate via Sarbanes Oxley. Until someone is the best in the world at what they do, they do not have any business telling me how to run my company. So, if one runs their company solely for the accountants point of view or solely for the attorneys point of view they have added way too many factors for long term compromises between customers, shareholders and franchisees (in my company). More people should be thinking here.

"Lance Winslow" - Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance in the Online Think Tank and solve the problems of the World; www.WorldThinkTank.net/

This week we were asked why we tend to look for breakouts versus buying dips or "weakness?"

First let us say flat out that we are not against buying dips at all. It’s just that every trader tends to find a niche that he fits in better. We have found over the years that we’re better at judging when a stock might make it through a resistance level, than we are figuring out what technical level might hold for support and a bounce.

But we do want to make a point about the term "breakouts" that might be misleading to you. We are rarely if ever looking for breakouts to all new highs on stocks. Sure they occur, but that’s almost never our focus. In today’s market, some stocks would have to gain 100 points to be near a true "breakout!".

What we have found to be the most accurate gauge for us is a 6 month chart. We look at the stock’s trading activity over that time period and base our "breakout" buys on what we see. For instance lets say XYZ was moving up and ran out of gas at $50 in February. It slipped a few notches, bounced, slid, popped and now after all that wiggling around, it’s back to $49.50. Do we think it’s important for XYZ to clear that $50 level?" You bet. Despite the fact that maybe in October of last year it was 80 bucks, that 50 level it hovered around in February is now a line in the short term sand that’s been drawn, and getting over it will probably invite a flurry of new buying for a bit.

So, when we say we look mainly at breakouts and busting overhead resistance, don’t presume we mean "blue sky, all time breakouts". That’s a true rarity for us, we don’t even hunt for them much. We are looking to bust resistance lines formed in the past four to six months as short term buy signals for us.

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One of the touted advantages of owning a corporation is the ease in transferring shares. In many cases, this assumed benefit is simply wrong.

Transfer Shares

According to “experts”, using a corporation has one bid advantage over other entities. The advantage is the ability to freely transfer shares without impacting the business or viability of the corporate structure. Consider the following example.

If I own a 60 percent interest in a general partnership, I can’t just sell it to someone else. In most states, the transfer of more than 50 percent of an interest in a partnership automatically terminates it. With a corporation, however, there is no such prohibition. Instead, I am free to transfer shares without restriction and the business just purrs along without any interruption.

As with many assumptions, the “free transferability” assumption runs into problems in the real world. This is particularly true if the corporation has entered into contracts with other large companies.

Accidentally Terminating Contracts

State laws govern the formation and running of most business entities. These laws, however, do not trump general contract law. Instead, deference is given to the terms two or more parties agree upon in the formation of a contract and this is where the free transferability experts fall on their faces.

In our modern economy, a majority of companies will require language in a contract stating that any transfer of more than “xxx” percentage of shares automatically voids the contract between the parties. The reason for this is parties want to know whom they are doing business with at all times. Assume I want to do business with a corporation that has three engineers who are the best in their field. I don’t want to sign a five-year contract with them only to see the three engineers sell their shares and leave the company during the term of the contract. In requiring the language restricting share transfers, I am making sure I will benefit from their expertise.

Many shareholders in small businesses fail to take into account share restriction language in contracts. Instead, they go out and sell their shares to a third party with dreams of retirement on a white beach somewhere. They are more than a little surprised when served with a lawsuit by the share buyer who is angry because a number of contracts for the corporation have been terminated. In Seinfeld terminology, “No white beaches FOR YOU!”

Before you get excited about selling your shares in a corporation make sure you check the language of all contracts with third parties. You don’t want to have to come back from that white beach.

Richard A. Chapo is a San Diego business lawyer with http://www.sandiegobusinesslawfirm.com - providing legal services and legal advice to businesses in San Diego, California.

If I could put my finger on the one solitary thing I dislike the most, it’s getting whipsawed. Nothing in this wild game we play bugs me as much as being up 50 cents or a buck one day, only to have to decide what to do the next day as the stock is back down to my buy in price. Do I let it wiggle lower? Should I hold tight to some imaginary stop? Will it shake me out, only to roar higher?

Yet it’s undeniable. It’s part of this game and it’s something each and every one of you are going to have to deal with at some point. If you get involved in any type of investing there are times when a stock is going to confound you like that. The big question is this: Do you stand on some silly principal, or do you take matters into your own hands and do something?

I think you have to move more times than not. Let me explain. Suppose you buy XYZ at 50.50 and it closes at 51.00. You feel good, things went your way. But the next day the futures are down because of excess dryer lint, locusts, floods, hurricanes, oil, hangnails, Martians, or what have you. So, your stock opens at 50.65 and looks to fall from there. Sure enough ten minutes later it’s at 50.50. Do you sell or hold????

My theory is that you look around the market. Nothing’s going to swim upstream unless it really has the momentum or some form of news to propel it. So, if the overall market is fading, chances are your stock is going to fade too. More times than not the best thing to do is bail out, and if you like the darned thing, go back in the next time it runs up over 50.50.

Sure you’re going to eat up commissions, but please don’t be foolish. Take the hit and move on with your life. I’d rather bail out flat five times, than take a 1 dollar hit on a 1000 shares of stock.

Now, if your stock is fading, but you see signs that the market is starting to perk up, maybe it’s worth holding on a bit. Maybe it’s worth holding to your stock right down to your stop, so that if the market turns everything higher, yours will turn with it.

The choice isn’t easy and you’re not going to get it right all the time. There are times you’ll sell flat, at the very low of the day and kick yourself. There are times you’ll hold to your stop, and realize you should have sold flat. But then again, there are times it all works and you feel like a million bucks because you didn’t get shook out and the stock recovered.

There is no easy answer to this and I don’t care what market guru tells you there is. I struggle with it daily, and you will too. Try and use your best judgment, don’t be afraid to pull out flat, and don’t be afraid to go right back in if you have to. It’s all part of trading a market, so don’t let it throw you. Yes it stinks, and usually a trend will develop. Hang in there.

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The first thing you have to decide when you are going to buy a stock is "what price are you comfy with buying it at?" In other words, let’s say you like the idea of buying XYZ and with XYZ trading at 50, you think it has 5 or 6 points of profit in it. Well, that would be great if you could buy it at 50 wouldn’t it? But as experience will show you, very often when you go to buy XYZ it has already moved up a few points. Are you still willing to buy it at 53? See the point?

Well, this is a big problem and it only gets worse with "market orders". Because of that, we are really against anyone placing a market order to buy a stock, before the market opens. Here is why: Let’s say you call your broker at 8:30 am and tell him you want to buy 500 shares of XYZ "at the market". You are telling him that 1) you are willing to take XYZ at whatever price it is trading at when your order comes up. Therein lies the problem. Remember we are at the mercy of the market makers (the guys who make a market, or warehouse the stock for us to buy). They are privy to a lot of information folks and one of the biggest advantages they have is that they see all the orders for the particular stock.

So here is a very typical situation. When you told the broker (or placed your online order) to buy XYZ "at the market" you have given the market maker the ability to "fill" you (or in other words execute your order) basically whenever they want. So let’s suppose XYZ opens the next day at 52 (remember you liked it at 50) and instantly runs to 53.50 on all the orders that are getting filled. Now that market maker has your order in his book and you have agreed to let him fill you at "wherever the market is trading". Let’s say the market maker sees the new orders starting to dry up. So what do you think he will do when the new orders stop coming in?? He will fill your market order is what he will do! So you will get filled at 53.50 even though that is the exact high of the morning and it’s already pulling back. So in a matter of a few minutes, XYZ can be back to 51. but guess what? You own it at 53.50, meaning you are in the hole already. This is unacceptable.

When you place a market order you are putting yourself on the "wheel", you might call it the "wheel of unfortune". Basically, the rules state that your order will go on a numerical "wheel" and your order goes on the wheel at the bottom, and one by one as the wheel rotates towards the top, orders are removed and filled. The idea is a "first come,first served" concept like standing in line. But in the real world, it doesn’t work that way all the time. A certain amount of "market orders" are reserved for order execution at the "discretion of the market maker". Now if he has your order in his hand and he sees a lot of demand for the stock, do you think he will put you in at 52 while he has all these new orders flooding his books, or will he fill them first and when they dry up, use yours? We suggest you know the answer.

So, remember these lessons. First never ever place a stock order "at the market" before the market is open for trading. Your chances of getting the stock you want, even remotely close to where it’s trading is poor at best. We don’t even suggest it while the market is open, but at least you have a "fighting chance" then. Next, buying a stock without getting a "feel" for the trading day is often suicide. In other words, if you send in a market order to buy a stock before the market is open, you are going to get that stock even if the market is in pull back mode and your stock falls like a rock. This is not a wise idea friends.

So we will leave you with this: trying to buy a stock before the market even gives us a clue as to which way its going to go is a bad idea. Sending in a market order to buy a stock compounds the problem and assures you that you will be pretty disappointed! Next time we will look at the remedy for this problem.

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The other day, there was a guy on CNBC hyping his style of investing. He seems like a nice guy, but his theory was a bit hard to swallow. He said that if you have money, you should just buy the market and average down. Hold it for ten years. Doing that he says will beat the market.

We agree. It will beat the market. But that’s not the same as making money. Depending on when you start your ten year hold period, there are many times when your total returns will be negative. Yes, you might beat the market, but is that anything to write home about? Say the DOW is off 25% and you’re down just 15. Is this great? No!

Buy and hold for the long term only truly works if you are smart enough to have bought at a major low and the market rose from there. If on the other hand you’ve bought at the highs, it can be a painful lesson. Look at the those that bought in January of 2000. It’s now 2005 and if you were in the NASDAQ, you are still down over 30% even if you’ve averaged down.

Don’t buy the standard fare. It’s just not good. You might beat the averages, but you still could be red.

Now, as you read this part, please take into consideration that any type of financial planning is a "one on one" situation.

First things first, whether you were looking for an estate planner or a plumber, we would ask friends, relatives, or neighbors who they would recommend. If they have had great success with someone in the past, the chances of you having the same luck are pretty good. Networking is a lot better than picking names out of the phone book. It might save you a bunch of time and maybe even regret later on. Once you have made contact with someone in the financial field find out if there are any fees in having a consultation with them. Some people may have a small fee that they charge but will return it to you if you do business with them in the near future. If everything seems reasonable to you set an appointment up with them. Your first appointment should be to get introduced and have your goals evaluated and a needs analysis completed.

What are your present needs and future needs, along with your dreams and desires? You should be having this type of discussion. Not what is the hottest product on the market talk. If they there trying to sell you something upfront on the first meeting, there probably not worth your time nor money.

Many readers are at different stages in their lives so here is a little time line that we would go by.

Young families, make sure you have a proper life insurance plan in place, disability insurance to protect your income and at least 10% going towards a retirement fund. Yes, we know you may not be able to due everything at once, but make sure you are going over your plans every year or 2 to make sure you are growing closer to your goals. Above and beyond that we love stocks and real estate investments for more of a short term to pre retirement pick. We figure that those investments could either make you or break you, but you’ll still have your retirement funds when you need them and by providing proper insurances your family is taken care of in the event something bad happens.

Once the wealth is accumulated it’s time for the big guns. Estate planning provides the means to clearly define how you want your assets to endure after your have and to whom they should go to. To accomplish this we would gather a team of individuals such as an attorney for legality issues, an accountant for the tax implications, an insurance advisor to handle the insurances and an investment advisor, if the insurance agent does not handle all your investments. Out of all the categories of finances estate planning can be the most difficult because of the in depth planning that is required. It seems that with each new president, the tax codes get rewritten all over again making long range planning terrible. But remember, once you’ve accumulated your fortune, it could take just as long to preserve it so having people you can trust and build a relationship with is vital.

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Before you jump into following Jim Cramer’s Mad Money stock picks, it would be very insightful to track his picks so that you can have a detailed and unbiased record of how well they perform, both short-term and long-term. This is also important in order to assess the best strategies to use when considering either a trade or an investment from one of his suggestions.

What one must really understand when looking to invest in Jim Cramer’s picks is that although most of his picks are meant as longer term opportunities, however, in the short-term, many of these picks can easily get overbought - especially when all his followers decide impulsively to buy at the same time. This is absolutely the WORST time to consider buying the stock! Although Cramer may be right longer term, the only reason it moved that day is because of his many followers jumping aboard hoping to make a quick buck, and unless new buyers come in very soon for some other reason, the stock will likely trade right back down to where it started.

Consider what Jim Cramer himself is telling you. He will not buy or sell a stock within 5 days of mentioning it on the show. Now, inherent in that statement what he’s also telling you is that for a long-term portfolio he doesn’t need to act any faster than that. In fact, he can gain valuable insight into the stock based on how it performs after it is mentioned on the show. For example, if a stock jumps after he mentions it, and every time it does try to dip back new buyers come in and bring the stock back up, that is an indication that his thesis - possibly long-term - but now more importantly in the shorter term - may very well be "right on the money", and possibly a good time to initiate a position.

If, however, the stock merely jumps and falls right back with little or no new buying interest coming into the stock, that is also just as telling that perhaps this stock is just not ready yet, and now anyone who jumped aboard into the spike will bring the stock lower as they all liquidate their positions at increasingly losing prices. These will likely be the same people who the go on to send Cramer hate-mail. When all of this pressure capitulates into a panic in the stock, THAT is the time to consider your long term stock purchase/investment!

Through analysis of his picks at sites such as http://www.booyahboyaudit.com and http://www.madmoneyrecap.com, combined with the right shorter-term tools and analytics (try the free alert and charting tools at http://www.yourika.com/tymAlertsMadMoney.html and http://www.yourika.com/MadMoneyCharts.html), you’ll discover that it’s best to wait for the dust to settle after a stock gets pumped up and watch for a few days to see how trading unfolds. In fact, it may even set up an excellent shorting opportunity for more advanced traders to consider.

Cramer does have many good ideas and he definitely knows about stocks, and for that I too enjoy watching him and listening for new ideas that may interest me. But add a little common sense to the equation and you are on your way to a real winning plan.

Alexander Paul Morris, the designer and creator of tymoraPRO, serves as President of Yourika Corp. He is a trader, programmer, and mentor widely renowned for his ability to analyze market behavior and to program systems and alerts that assist in capturing trading opportunities based on patterns of fear and greed that continually repeat themselves in the marketplace. A 14-day free trial of the platform is available to those visiting http://www.yourika.com.