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Tags: Confidence | Mistaken | Arrogance | market

Confidence Is Often Mistaken for Arrogance

By    |   Friday, 09 March 2012 07:37 AM

Only two kinds of people can predict the short-term moves in the markets: liars and fools.

Elliott Wave, breadth, stochastics, volume, beta, mean reversion, secular bull, bear market rally.

I don’t study any of those theories.

One of my investment forum members told everyone she was going to cash and would reenter the market when the S&P went to 850. She claimed to be a retired trader from the Chicago Board of Trade and she dismissed me as reckless and arrogant.

Editor's Note: Inside the World’s Greatest Retirement Lie
Find Out the Truth, See the Details.

Well, she was half right. I am very arrogant, but those who have the responsibility of managing money need to feel extremely confident. Often that is mistaken for arrogance.

Do you want your surgeon or airplane pilot to tell you “maybe” you will be safe under their watch? Of course not.

However, that poor woman who decided to “leave” my website should be ashamed that she misled others, right?

Wrong. Like most pundits, they keep offering up more and more short-term market predictions.

And the S&P has gone from 1,020 when she said this to 1,365 and never closed below 1,000, let alone 850.

In this supposed “lost decade,” when the Dow Jones Industrial Average is about the same as it was 11 years ago, my personal stock portfolio has compounded at almost 19 percent annually.

Recently, we were recognized in the Hulbert Financial Digest for our almost 20 percent annual return in our conservative portfolio. How could that be when most stocks in that span are either lower or even?

Simple, I don’t own every stock. But, by combining the power of compound interest and reinvested dividends on quality companies at excellent entry points one gets a powerful Dividend Machine.

After studying Warren Buffett, Charlie Munger, John Paulson, Phil Fisher, and Ben Graham, I decided on about a dozen filters and formulas which help me enter low-risk, high-reward common stocks near or around their 52-week lows.

Many market gurus will try and predict what’s going to happen in 2012 to the overall market. I don’t know and neither do they. What I do know is that many quality stocks will at some point reach the proper entry point.

Last year, I chose a stock near the high point for the S&P in 2011. Despite the overall market being flat in the past year, my selection is up almost 58 percent in one year.

Remember it is always a stockpicker's market and if you aren’t a stockpicker, then find someone who is.

About the Author: Bill Spetrino

Bill Spetrino is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the Dividend Machine. Discover more by Clicking Here Now.

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Friday, 09 March 2012 07:37 AM
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