New monthly newsletter from TheMarket.co.za for investors:

THE BIG PICTURE

What many traders don't realise is that the really big money is made by catching the big trends of the market. The kind of trends that go on for months and sometimes for a few years.

Granted, short-term trading if done correctly will provide a steady stream of day to day income. But the really big money, the creation of real wealth i.e. the kind of wealth that is passed down from generation to generation in families (what I call "generational wealth") is made by catching the big trends in the market place.

Jesse Livermore, who is regarded as the best trader of all time, made this point very clearly in his classic biography, "Reminiscences of a Stock Operator". The really big money is not made in catching small day to day fluctuations in the market; it's in catching the large overriding trends.

With this in mind, TheMarket.co.za has decided to start a new newsletter (in addition to the weekly newsletter) called The Big Picture monthly newsletter.

AIM OF THE BIG PICTURE NEWSLETTER:

Its aim is quite simply to:

1. Identify the start of a new bull market.

2. Ride that bull market to completion (while interfering as little as possible with it).

3. Once we have a clear signal that the bull market is over, to then either exit completely, or to hedge ones portfolio with Alsi futures or options. (Until the next bull market begins).

4. There will be times along the way up where one should add (buy) more shares i.e. after large corrections. And there will be times to partially reduce long-term holdings e.g., after climactic moves up. These are really the only times one will "interfere" with the bull market.

In a nutshell, this is the way to create real, long-term wealth from the stock market.

Does this mean one shouldn't be a trader? Not at all. As mentioned, trading is a good way of making short-term income that can supplement one's regular day job. But we firmly believe the majority of one's stock market funds should be in a longer-term portfolio, in order to create real, sustainable wealth. The kind of wealth you can retire on, and far more - that is passed down for many generations. Even full time traders should have a large chunk (i.e. the majority) of their money in a long-term portfolio.

WHY NOT JUST INVEST IN UNIT TRUSTS THEN?

Managing your own long-term wealth portfolio, if done correctly will vastly outperform unit trusts. The reasons are:

1. Asset Management companies (unit trusts) charge significant annual fees to manage your money.

2. Their performance is mediocre, at best.

3. They are restricted by the specific mandates of their fund e.g. to always be at least 40% invested in stocks; or to always own the 10 largest industrial stocks (regardless of market direction); or to never have more than a certain percentage in cash etc. etc.

4. DID YOU KNOW: The REAL benchmark of a unit trust manger is not the stated JSE All Share/Top 40 index. It's actually how other, rival, fund managers are doing. So, if the unit trust you own is down 40% in 2008 (for example), but it's still in the top quartile of funds in that category (e.g. other funds are down 43%), the fund manger 'pats' himself on the back and receives a huge performance bonus. However, the man in the street is still down 40% on his portfolio!

THE SOLUTION: We have been working on long-term techniques with technical analysis for many years. The Big Picture newsletter is the culmination of this work.

Each issue of the monthly The Big Picture report contains:

  • About 16 longer-term charts.

  • Different asset classes are compared, and asset allocation advised.

  • Individual stocks recommended.

  • A Model Portfolio: each issue contains our model portfolio for investors, as well as changes to this portfolio when made.

  • Educational insight into the investing (as opposed to 'trading') method, and frame of mind.

  • ... and more

The Big Picture newsletter is available on the first Monday of each month.


Independent, Unbiased Analysis:

TheMarket.co.za research is always independent. All recommendations and forecasts made, therefore, are objective and unbiased.

We do the research for you.