Your Best Investing Questions

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This week we're taking a look at four of your most perceptive investing questions and my replies to them.

We're also going to cover a question I was asked on FOX Business recently that has immediate bearing on your money and your investments at the moment.

investing questionsSo let's get rolling...

Earlier this week, FOX Business anchor Stuart Varney (himself a London School of Economics Graduate) noted that Goldman Sachs came out with a new report and said:

"Oh, you're going to get no money out of the stock market [over the next 12 months]. I think there's a few of our viewers who are thinking of just getting out of stocks completely. Would you advise that?" ~ Stuart Varney, Varney & Co., FOX Business Network

Not on your life. I told Stuart that I think you've got to do anything but get out.

Then I noted investors needed to remember who's delivering the message. Goldman has been involved in several blatant cases of market manipulation in recent years - namely FX, currencies, and commodities - and has a history of trading against its own clients.

But in the interest of time, I couldn't tell Stuart and millions of FOX viewers why I believe we've still got 5% to 8% before the end of the year.

Earnings have been better than expected and will continue to be as the must-haves we follow expand margins further, albeit from terribly low levels. At the same time, we're heading into an election cycle, and while that's contentious, the promises will be bigger than ever this cycle. That's usually an upward influence. And finally, corporate buybacks typically accelerate during Q4, which is a good thing after the summer doldrums and immediate-term volatility I think we'll see this summer.

In the meantime, your best actions are twofold at the moment...

First, take profits off the table. Many investors - including you if you've been following along as I hope you have - are sitting on some juicy gains. So harvest them and use that to minimize risk at the same time.

Second, use the current lull to rebalance. Buy some of your underperformers and set yourself up for the inevitable rotation that always happens as summer draws to a close.

Q: I hear you talk about "core" and speculative" positions frequently... how do you tell the two apart? ~ Brandon L.

A: That's a great question, Brandon, and one that most investors would be wise to revisit.

When I talk about a core position, I am referring to something that you buy and intend to hold for a long time because it forms the base around which you build the rest of your portfolio. I call these "Base Builders" in the Money Map Report because that's what they are: a base around which other investments are built. For income, for appreciation, to capture specific trends, etc.

Speculative positions, on the other hand, are usually company-specific, more opportunistically focused, and more volatile. Contrary to what the public often thinks, speculative investments are NOT a gamble.

They typically have shorter holdings periods and involve smaller amounts of money (typically 2% to 5% of your investable assets). That way you don't blow up your portfolio if something goes wrong.

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The Vanguard Wellington Fund (MUTF: VWELX), for example, is a core recommendation, while Gilead Sciences Inc. (Nasdaq: GILD) is a speculative one. The latter has returned 520.3% since I recommended it, while the former has generated nearly 70% to date.

Q: An article I came across on Ekso Bionics (OTCBB: EKSO) pointed out some interesting things Ekso is trying to do to show a profit. It notes a high burn rate of cash and reasons why a profit hasn't been achieved and some things management will try and do to turn things around. Can you comment? ~ Barry S.

A: I'd be happy to. The article you referenced raises more questions than answers.

For example, the author observes that "management is changing its focus in attempt to generate profitability" and implies that's a bad omen. I find that curious, because EKSO has always intended to enter the industrial markets, but needed to cross critical technical milestones with its medical and military projects first that gave it the technical know-how required. I am also curious that the author finds management changes to be problematic. Any good CEO regularly changes focus as part of the business process and in response to constantly changing market conditions. Apple, Tesla, and Google come to mind. They're all wildly successful because they changed and continue to adapt. To me those are huge pluses.

The other thing to think about is that small-cap companies can take a while to really get rolling. Having a high burn rate is absolutely typical for a company that's still in its early days, especially when it comes to tech. Ekso is no different.

Still, if any stock (including EKSO) keeps you up at night, perhaps it's better to move on. Or lighten up.

Q: I bet the market indexes will first break down before it continues back to its long-term upward trend or bias. What's your take? ~ Craig H.

A: I certainly hope so.

We've been several years without a meaningful correction and that'd be a welcome pipe cleaner because it would weed out weak hands. The fact that we haven't had one is an expensive anomaly because it limits upside potential.

The media isn't helping with its focus on short-term noise. In the words of BlackRock CEO Larry Fink, who is also the world's biggest single investor with some $4.6 trillion under management, they're doing so when they should be focusing on "long-term outcomes and long-term strategy."

Still, that's an investing opportunity in and of itself, especially where our long-term Unstoppable Trends are concerned. So get your short list ready.

Buy low and sell high is how the game is played.

Q: I find it better to buy and hold dividend-paying stocks/funds that pay you to hang on during dips in the market. Some guy named Buffett does this, and he seems to be doing pretty good. ~ Robert B.

A: Some guy named Buffett, indeed! Love your wit.

You raise an important point and an important distinction. You can use buying at a deep discount and reinvestment to offset some of the "risk" that comes with trailing stops for exactly the reasons you outline. Options and inverse funds are terrific alternatives, too. Seems to me there's an article in here somewhere. Stay tuned.

Editor's Note: Keith has helped more than a million investors navigate some of the most complicated markets in history - but he's never seen an opportunity like this. In fact, the small cap he recommended to readers in his first Total Wealth recommendation saw gains of 100% within six weeks - and Keith foresees plenty of upside to come. For a full and free report on the company set to conquer a human augmentation revolution, sign up for Total Wealth here - it's free!

About the Author

Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.

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