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Chuck Hughes International Trading Champion

How an Investment Advisory Service Can Help

July 26th, 2013

Our investment advisory service helps clients achieve a 4-to-1 Reward to Risk Ratio—which is the optimal ratio to achieve long-term financial independence. The formula compares expected returns to the amount of risk undertaken in order to capture returns.

To help clients achieve this, Chuck Hughes’ has offered investment advisory services since 1999 around three key areas: Wealth, Stock, and Options advice. Chuck’s advice is based upon years of historical data and percentages, plus proven trading profits.

Investment Advisory Services Can Help

Each service is highlighted below:

Wealth Advisory Services – Will educate you on how to build a low risk portfolio—and, show you how to manage it more confidently using our proven techniques.

Stock Advisory Services
– Here you’ll gain access to stock tips and learn ways to build your wealth by identifying stocks with positive trends, even during down markets.

Options Advisory Services – Will aid you in selecting the right stock mix for your portfolio, which is key to minimize risk over the long-haul.

All of these investment advisory services are designed to take the guesswork out of investing, and let you gain a more consistent track-record.

Learn more about our advisory services here.

Posted by smartadmin at 10:43 am

Stock Selection Criteria

July 3rd, 2013

A smart stock selection criteria and process focuses on a disciplined and systematic approach to investing, so that you come out ahead more times than not in the investing game. At Chuck Hughes, our stock advisory service believes in simple rules that tell you, the investor, when to buy and when to sell. Even novice investors can follow our basic rules and learn how to become successful.

A smart stock selection criteriaThe goal of our stock advisory service is to provide you with thoughtful option trading strategies that will enable you to become a profitable trader and maintain at least a 4 to 1 Reward to Risk Ratio (RRR). This formula calculates the best overall measure of any trading program. While the optimal risk/reward ratio can differ widely among stock advisory services, our firm recommends striving for a 4 to 1 ratio, which is calculated by dividing total profits by total losses.

Sell at the Right Time

To keep the recommended ratio will require you to sell your losing trades before they develop into big losses and maintain your winning trades. Even Chuck, the brains behind our stock selection criteria, practices what he preaches and sells a stock trade if it develops into a 7 to 15% loss. He also routinely sells option trades if they develop into a 20 to 30% loss.

To learn more advice, check out our Inner Circle Trading Strategies.

Posted by smartadmin at 2:48 pm

How to Build an Investment Portfolio

May 22nd, 2013

Investments are divided into income assets and growth assets. We suggest you lean toward income assets if your primary investment portfolio objective is for income and you need quick access to your money. On the other hand, think growth assets for higher growth and for less value erosion due to rising inflation.

While growth assets, including shares and property securities, tend to have varied returns over the shorter-term, they do have the potential to produce higher returns over the longer-term timeframe. Whatever balance between the two you choose for your investment portfolio, remember that time has a moderating effect on market risk. Several factors drive market risk—and many are out of your control as noted below.

How to build an investment portfolioEconomic and political factors – can play an important role in the performance of one’s investment portfolio. Economic factors including national growth, inflation, and employment all impact markets. Also political changes and uncertainty aboard can impact markets—and in turn, your investment portfolio.

Credit fund investments – are subject to credit risk factors and the timely repayment of outstanding principal and interest. There is the possibility that issuers will fail to repay.

Active fund managers – can outperform the market based on their philosophy and research. Sometimes this works in their favor and sometimes it doesn’t. Which, is another factor tied to the performance of your investment portfolio.

When constructing your investment portfolio, it is just as important to know of the risks, as well as the potential rewards. Risk is measured with the likelihood of achieving a negative return in any one year. It’s important to view your higher risk asset classes (such as shares) as long-term investments. The longer you hold these wise investments comes the likelihood that the value of the investments will not fall.

Feel free to contact us for more investment portfolio advice—or tap into our Inner Circle Trading Strategies built on 25 years of experience.

Posted by smartadmin at 8:38 am

How to Trade

May 6th, 2013

Trading for income can be both an exciting and nerve-racking endeavor because no one can predict what future returns will be. The only certainty of investing and learning how to trade is the fact that markets will go up and markets will go down. Before you begin, better prepare yourself by reviewing our wise investment advice below, so you can be in the right frame of mind and can more easily swallow the good with the bad.

How to trade advice from a proYour first step to figuring out how to trade is to know when you will need to access the money. Is it for the long- or short-term?

Long-Term Investing

When you’re saving for a long-term goal, time can smooth returns of volatile investments. Volatility (or swings of an asset) can be a plus when one’s holdings are going up and can be scary as they go down. If you have the luxury of investing for the long-term consider trading in volatile assets, such as small-cap stocks or commodities.

Short-Term Investing

If you want to learn how to trade for a short-term goal, like a teenager’s college education, contact us. Because volatile investments have their place if risk is managed well.

Of course, the most wise investment for the short-term—especially if you don’t want to lose a penny of your money—is to put it in an FDIC-insured product such as a savings account or a certificate of deposit.

Manage Volatility

How to trade while managing volatility is to add some alternative assets like commodities or real estate, which don’t generally track with stock and bond markets. For those of you who want low risk, a market-neutral fund is a good idea because it strives to make a profit in both bull and bear markets.

We leave you these final thoughts as you’re learning how to trade: If you are investing for the long-term, don’t make your investment decisions based on short-term performance studies. Taking the “set-it-and-forget-it” mentality is also not a good idea. What’s most important is to review your portfolio regularly (annually, quarterly or monthly) with the right mind-set.

Hope we helped you on your investment path. To learn more, check out our Inner Circle Trading Strategies.

Posted by smartadmin at 8:57 am

High Probability Trading Strategies

April 22nd, 2013

Two of the best high probability trading strategies are diversification and buy and hold in order to achieve long-term growth.

Diversification – Finds the right combination of stocks, bonds and cash to allow an investor’s portfolio to grow as a low risk investment more than if it is invested completely in stocks. It works well because when one asset is performing poorly, another is usually doing well.

Buy and Hold – Provides the simplest way to achieve high probability trading—and the most effective over time. Here an investor will buy stocks and keep them in their portfolio with only minor monitoring.

However, there are other short-term strategies worth mentioning as well.

Market Timing – Follows the market closely and consistently buys when prices are low and sells when they are high. Not all investors can do this.

Option Investing – Offers two types of options: calls and puts. A call option gives an investor the right to buy a stock at a specified price. Whereas, a put option gives an investor the chance to buy low and sell high because the option increases as the price of the underlying stock decreases.

Unlike stock that derives its value from the underlying stock, options derive their value from another source. Options are considered low risk investments, as well as part of high probability trading strategies because they are traded on major exchanges and issued, guaranteed and cleared by the Options Clearing Corporation (OCC).

High Probability Trading Strategies

Selling an option is similar to “shorting” a stock—and the opposite of buying a stock. When you short a stock or option, you sell first and buy later at a lower price to realize a profit. In Chuck’s many years, he’s learned that trading options, when done correctly, can offer huge opportunities as high probability trading strategies teamed with limited risk. Making it—a versatile vehicle for low risk investments, with the other strategies noted in this blog post.

There has never been a better time to trade options than right now. Contact us for more information.

Posted by smartadmin at 3:17 pm

Momentum Trading: Things to Consider

April 2nd, 2013

Stock momentum trading can build greater wealth than any other traditional investing method. But, learning to select most profitable stocks is the key. As an investor, we suggest you look at a company’s earnings’ growth, sales growth, cash flow, return on equity and low debt-to-equity ratios. We also suggest you consider which industries—because each offers different degrees of momentum trading and low risk portfolio opportunities.

You may want to start with mature industries because of the wide selection of blue-chip stocks available. If you are an investor who is looking for more risk, look to growth industries. If you want even more risk, look to emerging industries. Summaries are below:

Mature industries – experience growth that resembles the overall rate of growth of the economy (the GDP). Companies’ earnings and cash flow are still positive, but their products and services may be less distinguishable from those of their competitors. Oftentimes, share prices can be predicted with some degree of accuracy based on historical trends. Ideal investors for mature industries are those who want to enjoy the potential for stability.

Momentum Trading PracticesEmerging industries – are higher risk and are recommended for investors with a very high-risk momentum trading tolerance.

Rapid growth industries – have sales and earnings that expand at a faster rate than companies in other industries. The companies might display an above average rate of earnings on invested capital for an extended period of time. Publicly traded companies, in rapid growth industries, can be lucrative investments for sustained growth over the long haul.

Declining industries – can be poor places to seek momentum trading opportunities, but some individual companies within these industries may still have investment merit.

Choose your industries and companies carefully. Contact us if you need further assistance with stock strategies.

Posted by smartadmin at 8:42 am

Ways to Increase Returns

March 19th, 2013

Are you taking a second look at out-of-favor companies of late?  Thinking about shifting from safer fixed-income securities into stocks or equity-linked alternatives? Many are doing the same because they want to increase returns and gain an edge with their portfolio management. Before you do this, we suggest you consider these less risky measures first.

Cutting Your Losses

You, and every other investor, don’t want to sell at a loss. We understand this because no one wants to feel like a loser. But this is why some investors lose money and find it difficult to increase returns. By applying the very simple rule of cutting your losses, you will be able to focus on bigger portfolio management goals and protect your capital from further shrinking.

Ways to increase return from trading

Some purchased stocks may not go up as planned. And, they may go down 5%, 10%, 15% or heaven forbid 50%. If you don’t cut your losses when it is imperative that you do so, you can lose your hard-earned money.

A Balanced Approach to Increase Returns

Diversification is another important strategy to increase returns. Trading advisors, like us, recommend portfolio management that emphasizes plain-vanilla U.S. stocks and bonds and follows this type of diversification:

  • 33% of your portfolio in U.S. stocks
  • 37% in bonds and cash
  • 16% in alternatives, and
  • 15% in foreign stocks

Need more advice, check out one of our webinars.

Posted by smartadmin at 4:53 pm

Ways to Protect Capital

March 6th, 2013

As you are reviewing your personal financial circumstances and determining the length of time you plan to keep your money invested and how much risk you’re comfortable taking, consider applying the stop loss principal early on. This is a very simple wealth building strategy that will protect your capital.

Apply Stop Loss Rule

The concept behind stop loss is similar to buying your house fire insurance. Monthly or annually, you pay a small premium to protect capital (your house). You will get paid in full if your house burns down. Similarly, in the stock market, you pay a small premium to protect capital (your investment). If you properly protect capital, you’ll be able to take advantage of other investment opportunities. If you don’t, you’ll only be able to sit on the sidelines and watch other investors prosper.

Protect capital when investingIt is also important not to lead with emotion when choosing to buy and when to hold-on. Investments are only business products—or vehicles—that allow you to make money. While you can fall in love with a new puppy, you don’t want to fall in love with a new investments. Because when the time comes to cut your losses, you’ll have to quickly sell stock or bonds off without emotion or afterthought–in order to protect your capital.

We hope these insights and recommendations have helped. Please contact us with additional questions.

Posted by smartadmin at 10:54 am

Exchange Traded Funds: Still Viable?

February 18th, 2013

Exchange traded funds have experienced the most closures in 2012 than in the past three years according to Thomson Reuters Corp.’s Lipper unit. And last year’s ETF slowdown affected both percentage terms and the number of funds. Then begs the question, why? Well, we believe that the ETFs are showing signs that are consistent with a maturing industry. For many exchange traded funds, it takes time to build a decent track record. For other ETFs, they strengthen a cluster of similar exchange products rather than stand alone.

Comparing Mutual Funds with ETFs

Exchange traded funds are a good optionEven with this news and the fact that there are 1,400 exchange traded funds (ETFS) already in the market, exchange traded funds are still a good investment. Here’s why:

Unlike a mutual fund, ETFs can be bought and sold anytime because they all trade on an exchange. Where mutual fund shares can only be redeemed at one price daily, the closing net asset value (NAV), index ETFs can be bought and sold throughout the day on exchanges. Exchange traded funds follow a specific benchmark index and are constructed to mirror the performance of the index (selected and based on certain characteristics).The overarching goal of ETFs is to match the performance of the index as closely as possible with a narrow spread.

While it’s true that most ETFs offer low turnover and are a tax efficient investment product, some ETFs shuffle their components extensively, which can lead to higher expenses that can reduce your returns. So learn the trading philosophy of your exchange traded funds, and get some additional advice from us.

Posted by smartadmin at 4:28 pm

Tech ETFs Mature

February 4th, 2013

Tech companies have long been leaders of the market and powered portfolios for quite some time. Even some Tech leaders, such as Apple, are having to accept the fact that the slow global economy is offering fewer avenues for growth. And a number of other tech-oriented mutual funds and Tech ETFs have joined the ranks of dividend players.

As a technology ETF investor, we suggest that you don’t look at dividends negatively. Rather than looking at dividends as the company throwing in the towel and backing away from achieving a higher rate of return, look at it as a fact ETF trading builds momentumsof a maturing market. More ETF market maturity doesn’t mean that the prospects of a technology ETF have ended, more likely some leadership shuffling has taken place. But opportunity still exists. Per NASDAQ, the three best performing segments in the tech world are focused into a few sectors. These include social firms, the broad Internet space, and emerging market technology. Most of these sectors have crushed broad market expectations and a few have actually added more than double digits to start the year.

So don’t lose heart. Remember that as a technology ETF investor, you don’t buy technology exchange products because of the dividend. In technology ETFs, the dividend is an extra amenity.

Need more advice, don’t hesitate to contact us, or sign up for our weekly options trading advisory service.

Posted by smartadmin at 11:15 am