Stock Market

Selecting the right brokerage firm is more than just a start-up exercise for launching an investing strategy. Your choice likely will play a key role in whether you faithfully implement your strategy. While there's no one-size-fits-all choice, some companies are better suited than others to meet the specific needs of SMI investors. We take an in-depth look at several of the top contenders — and offer our recommendations.

New investors are often paralyzed by all the decisions necessary to begin an investing program. It doesn't need to be that way. We detail the essential ground rules to begin, as well as how to invest those first dollars and where to open your account.

The past few years have been scary for many stock investors. It's easy to question whether putting money into stocks is a good idea when markets are lower now than they were five years ago. Here we review how an investor would have fared starting an investment program just as the “Great Recession” was beginning in late 2006. We think you'll be encouraged when you see how the powerful combination of dollar-cost-averaging and SMI's Upgrading strategy have successfully counteracted even those worst of market conditions.

SMI's Just-the-Basics strategy is the epitome of simplicity and low maintenance. This month, we're tweaking the strategy to make that even more true.

With the markets unsettled and world events worrisome, many investors are having a tough time remaining optimistic about the long-term success of their retirement planning strategies. This article, by respected Christian teacher and financial planner Ron Blue, reminds us that uncertainties are nothing new. There are always economic or political negatives that can distract us from our intended course. In this antidote to fear, Ron explains how to stay focused and he offers suggestions on how to build a strategy based on biblical truths rather than secular myths.

The market has been flat for the past 11 years. It's tough accumulating investment gains in that type of environment, but it can still be done. We discuss two key investing tools, which when combined, have proven a potent combination.

Market corrections are almost always very unpleasant emotionally for investors. The eight keys highlighted here can help you remain calm even in the midst of stomach-churning stock declines.

Exchange-traded funds offer several advantages over traditional mutual funds. But how compelling are these advantages for investors following SMI's strategies?

Similarities abound between the stock market's performance in the first half of 2011 and the first half of 2010. But don't be surprised if a significant divergence is ahead.

Choosing a fund investment isn't only a question of how much a fund returns. It's also important to consider how much risk a fund takes to produce that return. This SMI risk measure helps you do just that.

SMI's Fund Upgrading strategy has been able to outperform the market because its composition is quite different from that of the overall market. But this same factor can also cause Upgrading to lag the market in the short term.

SMI's Sector Rotation advanced strategy comes with a strong warning label: The short-term performance rockets all over the place. But, so far, the longer-term results have soared.

During the first three months of 2011, our two primary investment strategies rose at annualized rates of 28.2% (Just-the-Basics) and 25.9% (Upgrading). Not too shabby. But delving into those numbers is a mixed bag. Here's our "coulda, woulda, shoulda" analysis of the first quarter.

SMI's Upgrading strategy provides clear-cut buying and selling guidelines that protect investors from their worst investing enemy — themselves. Most readers do well when they "follow the plan," but unfortunately during severe bear markets many investors toss their plan aside. So our cover story this month offers a new set of allocation suggestions for those times when the bear is on the prowl. This "emotional escape valve" should help you stick with Upgrading through the worst of times.

You can be a successful long-term investor simply by using a solid core strategy, such as our Just-the-Basics or Upgrading approaches. But you may be able to smooth out your investing journey with supporting strategies that make it more likely that you'll always own something that's performing well.

Does the idea that a new market high might be just around the corner seem a bit too rosy? Consider the evidence.

The 2010 market started strong, stumbled, then got back on its feet and finished well — chalking up an overall gain of 17.2%. But the final tallies show that SMI's core strategies did better than that. See what worked, and what didn't, in this year-in-review.

Small and medium-sized company stocks have been leading the pack for several years now. Meanwhile, growth-oriented stocks have had the upper hand over so-called "value" stocks the past few years. What do these trends tell us about the future?

Which investments will pay off most handsomely in 2011? No one knows for sure, of course. But a careful look at the economic landscape suggests where the opportunities lie. Here is our annual guide to allocating your investments among various stock and bond categories over the next 12 months.

Many readers have asked how returns from the Sound Mind Investing Fund (SMIFX) have compared to "do-it-yourself" Upgrading using our newsletter recommendations. As SMIFX celebrates its fifth anniversary, it's time for an in-depth comparison: the SMI Fund vs. newsletter Upgrading.

We've just concluded the worst decade for momentum investing in the past 80 years. Even so, SMI's momentum-based Upgrading strategy handily outperformed the overall market. And a recent study suggests momentum investors are likely to see much brighter days are ahead.

Want higher returns with less risk? Sure you do. Strategic diversification is the key — as a quick review of the past 15 years makes abundantly clear.

The stock market's sharp twists and turns made for a bumpy ride from July-September. But the eventual destination turned out to be rather pleasing.

Pricing innovations are coming fast and furious as discount brokers try to grab market share among ETF investors. Better pricing for traditional mutual funds may not be far behind.

Even more than seeing large gains, risk-averse investors want to eliminate large losses. Happily, our analysis of the past eight decades suggests there is a "sweet spot" for such investors.

The appeal of market timing is obvious: be invested when the market is rising; be out of the market when it is falling. It's a simple idea, but one that's anything but simple to execute. Effective market timing is extremely difficult to pull off consistently, and the process is emotionally gut-wrenching. In this month's cover story, Austin discusses the ins and outs of market timing — gleaned from his decade of experience as a professional timer — and he explains why avoiding a timing approach is likely to be more profitable for most investors over the long haul.

"Yes, they're cheap!" "No, they're expensive!" "Actually, they're priced just right!" We explain why the experts currently disagree.

Research shows the best and worst periods for the stock market often coincide with particular times on the U.S. election calendar. And the most positive stretch of the election cycle is just ahead for the stock market.

SMI's Upgrading strategy does a great job positioning investors for the dominant trend of the market, whether bullish or bearish. But when the market trend reverses, it takes time for Upgrading to adjust. That process appears to be underway right now.

Your most important long-term investing decision isn't choosing which specific stocks or mutual funds to buy. Rather, it's deciding how much of your portfolio to invest in stocks vs. fixed-income (typically bonds). William Bernstein explains why this is the case in this month's cover story — an excerpt from his recent book, The Investor's Manifesto. He also offers a framework to help you make this key decision, based on how you reacted to the 2007-2009 bear market.

SMI's "Bear Alert" indicator recently triggered, meaning that a bear market appears likely (the indicator has been accurate 11 out of the 12 times it has sounded in the past 50 years). How should you respond to a possible market reversal? Do you need to respond at all? The answer depends on several factors. This month, we discuss these factors — and help you work through an objective process for making a "sound mind" decision about your investing strategy.

Though the reasons remain debatable, the evidence strongly suggests that you can boost your returns by investing at a particular time of the month.

Giving your broker ahead-of-time orders can help you buy at better prices and protect your profits. But watch out — sometimes automated orders can work against you.

In a lingering low-interest rate environment, preferred stocks offer a way for yield-hungry investors to boost their income.

Price-to-earnings ratios can be helpful in understanding how reasonable (or unreasonable) stock or mutual fund prices are. But not all P/E ratios are created equally, so it's crucial to know which type of P/E you're dealing with.

How much risk are you taking on when you buy a certain stock or mutual fund? There's no foolproof way to know, but the price/earnings ratio can offer some good clues.

The market continued to post big and widely distributed gains in the first three months of 2010 — good news for investors following SMI's model portfolios. And a closer look at the last decade reveals that overall market performance wasn't as bad as you may have been led to believe.

Contrary to the conventional wisdom, we think investors should be more concerned about overall performance than fund costs.

The 21st century is bringing a reshaping of the worldwide investing landscape, driven by the globalization of financial markets, a rapidly expanding global middle class, and a long-term downward trend in the value of the U.S. dollar. To be sure, the United States remains the world's largest and strongest investing market. But other nations and regions are becoming increasingly attractive, as investors see greater growth opportunities beyond America's shores.

Ideally, SMI Upgraders would own as many of our "recommended funds" as possible. But suppose you can afford only the top-ranked fund in each Upgrading category? Can you upgrade effectively with a portfolio of just five funds? We've run the numbers and have the results.

Want to know how your results compared to the overall market? Here's a simple way to do the math.

If you're an Upgrader, the Recommended Funds report offers key information that can help you make good decisions when selecting mutual funds. Depending on your preference, the report allows you to keep things simple or go deep.

Selecting the right brokerage firm is more than just a start-up exercise for launching an investing strategy. Your choice likely will play a key role in whether you faithfully implement your strategy. While there's no one-size-fits-all choice, some companies are better suited than others to meet the specific needs of SMI investors. We take an in-depth look at several of the top contenders — and offer our recommendations.

By rolling out a line of exchange-traded funds that can be bought and sold without commissions, Schwab is erasing the cost difference between ETFs and index funds. That bodes well for the average investor.

Like other segments of the market, REITs have rallied vigorously this year — and they have attractive characteristics for inflation-wary investors. But before signing on, be sure you understand where the landmines are.

Bad news for the U.S. dollar is usually good news for your overseas investments. We explain why.

As the economy returns to health, certain types of stock funds are likely to perform best. Be sure they're well-represented in your portfolio.

Most of us don't have the stomach for a lot of volatility in our stock investing. Fortunately, there's a way to smooth out the ride.

As much as 90% of your long-term investing results can be traced to one fundamental decision — and you need to understand why.

Without a plan, it's easy to be blown about by the current emotions of the market. That's hardly a formula for long-term success.

Could hyperinflation ever take hold the U.S.? Until recently, it's been difficult to imagine such a scenario. But given the massive amount of money being pumped into the economy and the clear spending ambitions of the president and congressional leaders, we can no longer rule out the possibility. For investors, preparation for a potential surge in inflation begins by understanding the nature of money, and why tangible assets such as gold offer a reliable store of value.

If rapid inflation is in our future, as some economists predict, how can you protect the value of your investments? Historically, investors have turned to assets that have proven to be reliable stores of value due to their physical attributes. Gold is one popular example of these sorts of "tangible" assets. This month, we look at five ways to invest in this precious metal, including gold coins, bars, and "digital gold currency."

The U.S. has enjoyed relatively low inflation for so long that the inflationary economic pain of the 1970s has been largely forgotten. But many economists say current government policy is a recipe for renewed inflation — perhaps at a level rivaling or exceeding the 70s. If high inflation returns, what kind of investments will offer the greatest degree of protection? Which are most likely to suffer loss? We evaluate the likely winners and losers of a potentially inflationary future.

The prospect of doubling your returns by using leverage seems enticing. There's only one problem: leverage tends to work against you harder than it works for you.

The most common bear market mistake investors make is selling when stocks have already fallen significantly, rather than hanging on for the rebound. But what if this isn't a "normal" bear market? What if this one turns out to be much more destructive than normal? Should you act now to protect yourself against continuing large losses? This month we focus on this "what-if" scenario and suggest specific steps for investors willing to make the tradeoffs necessary to defend against potentially significant further losses.

When a newscaster says, "The stock market was down today," what does that mean in relation to your investments? Perhaps less than you think.

Virtually all stocks seemed to move in unison last year — downward. Now, some categories of stock are starting to break out of the pack. That's good news for Upgraders.

At a time when investors are desperate for advice, the approach of an unassuming man from Omaha (who also happens to be one of the world's most successful investors) is worth heeding.

The stock market returns about 11% a year — on average. But behind that average are plenty of year-to-year extremes.

The longer you're willing to keep your money in the market, the greater the likelihood of success. Not convinced? Look at the evidence.

Despite outperforming the market averages in four-out-of-five risk categories, SMI's Upgrading strategy trailed the overall market in '08. Is there any hope for better days ahead?

Many Upgraders own just one fund in each risk category. Want to diversify? Here's how to choose a complementary second fund.

TD Ameritrade is changing its required holding period from 90 days to 180 days. If you're an Upgrader with an account at TDA, should you change brokers?

As we survey the massive damage inflicted by the financial tsunami of 2008, one thing is clear: biblical financial principles offered significant protection to those who've been living by them.

The way you divide your portfolio between stocks and bonds has a bigger impact on your eventual returns than any other single decision. Has the difficult first half of 2008 driven you out of stocks? Or are you persevering, trusting the traditional superiority of stocks will once again reassert itself? In this article, we look at historical patterns and how they can be used to guide your portfolio allocations as you plan for retirement.

Knowing when to sell your mutual funds is just as important as buying good funds in the first place. There are four specific criteria that tell you it's time to sell. Unfortunately, even when investors understand the theory of why they should sell, too often they still fail to act — because of fear, lack of confidence, or simple inattention. To encourage a tough-minded look at your current holdings, we've studied thousands of funds and present a "Laggards List" of more than 950 that should be replaced without delay.

Sitting on the sidelines and waiting until the worst is over? Our time-tested "all-clear" signal will help you know when the market has reached a turning point.

Two large investment banks implode; an ailing insurance company almost collapses; the government acts to bail out the two companies that hold roughly half of America's home mortgages. No doubt about it. Recent headlines have been dire. But investing history suggests this may be just the time to face the future with confidence.

Relentlessly rising oil prices. Inflationary pressures building. Slow economic growth. And a stock market stuck in neutral. To veteran investors, it's starting to feel like the 1970s again. What should you do if the market repeats its 1966-1982 experience and stays stuck in the same range for several more years? Two simple questions can reveal the answer.

Making investment decisions based on an emotional response to market events could undermine your long-term gains. Here's one way to keep your emotions in check.

With the stock market showing meager gains over the past 10 years, many are talking about it having been a "lost decade" for investors. Sound like bad news? Dig beneath the surface and you'll find the seed of some very promising news for the next 10 years.

With so many different types of stock funds out there, how do you even begin to sort them all? SMI's approach is to categorize them first by the size of the companies they focus on, and secondly based on the style they follow. Combining these two risk frameworks establishes a useful "risk ladder" to work with.

Putting this market ideal into practice is tough on the emotions, but ultimately rewarding for your pocketbook

If you're interested in investing directly in individual stocks, dividend reinvestment plans are a great way to get started. Here's a primer on how to build a portfolio of stocks one "drip" at a time.

Load vs. No-Load. Class A, B, C, R, Y, Z…what does all this mean? Selecting mutual funds can be confusing, but by learning just a few key principles, you can cut through the maze of confusion and find exactly the right funds for you. We deliver the basics you need to know about mutual fund types and share classes.

One of the many benefits of dollar-cost-averaging is it frees you from the worry of whether you're buying at the "wrong" time. But what impact does DCA have on your long-term investing returns? The results of our recent research may surprise you.

Many investors try to beat the market rather than simply match the market. That's fine. But often, it's the market matchers who actually come out ahead.

One feature brokers promote to unwitting customers is access to the supposedly valuable research their firm's analysts produce. But is brokerage research actually worth much at all? Come along for a peek behind Wall Street's curtain — a place where "Buy" sometimes actually means "Sell".

In investing, as in relationships, you're more likely to make serious progress if you're willing to make a commitment. Here are 7 advantages of automating your investing with a systematic investing plan.