Money Blue Book

I think it’s time all market investors learn to turn their backs on the daily stock ticker blips coming out of Wall Street – not completely, but just enough to regain their emotional composure so they can properly implement the correct long term investment strategy.

Don’t Gamble Your Money Away – Invest For the Long Term

Not too long ago, I wrote about one of the biggest dangers to rational investing – emotional trading based on panic buying and selling. The wise and prudent investor should put aside irrational emotions, and always invest for the long term if they can help it. Unless you are very close to retirement, your investment plan should be to hold for the long haul. When you invest for the short term and try to make some fast money, you cease to become an investor and transform into a gambling market timer. But financially, day traders and gamblers live and die by the sword. Yes it is certainly exciting when you occasionally can make a quick 50% profit in one fell swoop, but like all gamblers, their desire to constantly make fast money inevitably causes fatal missteps that will ultimately result in financially devastating losses.

Years ago I tried out the gambling day trading strategy. It was during the dot com boom. Yes I made quite a bit from very short term trading bursts, but overall, my losses outnumbered my gains. My short term investing strategy led me to essentially buy high and sell low. My emotions caused me to jump aboard a skyrocketing stock price run when it was actively soaring, and the same emotions caused me to bail quickly but prematurely when prices were actively plummeting. I still regret those fledgling investment days when I was still a naive college student who knew nothing about the stability and wisdom of long term investing. Even if you want to invest in the stock of a riskier company, you should still invest for the long term. In the long run, most stock prices do usually rebound so long as the market sector and the underlying company’s financials remain healthy.

Try To Follow Business News Regularly, But Don’t Obsess About Changes In Individual Stock Price

The easiest way to avoid trading on emotions and irrational exuberance is to simply stop obsessively and compulsively tracking your portfolio’s stock prices every moment of the day. Back when I started stock trading in 1999, I used a fledgling brokerage firm called Datek (company has since been acquired by TD Ameritade). At the time I used their service, the company introduced a revolutionary and neat little online stock price streamer tool that fed my tracking obsession. I used to love sitting in front of my computer screen and watch the green and red ticker numbers cycle up and down hypnotically. Because my trading account was linked to those numbers, I was able to to see how much I was making or losing in paper gains and losses on a real time basis. This real time convenience did nothing but cause me to unnecessarily panic when prices went down, and become irrationally confidant when markets soared, during a period when day-to-day stock market prices were dangerously volatile.

Since then, I’ve learned that the smartest thing any investor can do is to avoid looking at one’s investment portfolio numbers so frequently. It’s important to know where your financial portfolio stands, but don’t make it a habit of tracking every tick and number change. This has permitted me to become more relaxed and confident in executing trades based on my long term investment strategy. I don’t get too bogged down by short term dips anymore as I’ve weaned the real-time technological temptations out of the investing picture. Once you stop checking your stock prices all the time, you’ll be able to invest with more confidence and with a more sound and stable long term horizon.

As always, all well informed investors should make it a habit of following and reading daily business news articles as well as paying attention to current event developments. It’s important to know how the markets as a whole are doing and to be aware of which sectors are healthy and which are not. I still track financial statistics, but I pay more attention now to broad market and economic indicators than anything else. I am more concerned about long term market health than individual stock prices and performance on a day to day basis. That’s what all prudent investors should learn to do if they truly want to invest and grow their nest egg for the long term. If you are a new investor, you should also stay away from investment message boards and forums. Peer pressure has a way of greatly distorting and messing with one’s investment mind.

There’s no denying that we are in a major real estate funk right now. Housing prices have plummeted and the real estate housing successes enjoyed by many in years past are long gone, despite the blinded and self-motivated views of some. But yet, home sellers are still putting their homes up for sale and there are still buyers roaming the streets looking to snap up their future homes. If you are a seller, here are some reasons why your home may not be selling well, and some things you should look at to ensure you are truly maximizing your home’s value and chances. Some factors like broad housing conditions are beyond your control, but others you can personally change to improve your selling advantage.

1) Your Home Asking Price May Be Set Too High

As much as you’d like to think that you or your real agent determine the market value of your home, at the end of the day, it’s the market and the buyer that set the price. They determine how much your home is worth and how much they are willing to pay for it. Overpricing your home is the number one reason why homes don’t sell. Much of the interest in a home is generated within the first 30 days it is placed for sale. By overinflating your asking price, you price out many prospective buyers, particularly if they feel you have no intention of budging or negotiating lower.

Remember to price your house similarly enough with the other comparables in your market as you are competing with these other houses. You want to generate buzz – so pricing it slightly below market may help generate sufficient interest to encourage higher bids later on. Houses that sit too long on the market tend to turn off potential buyers and make them wonder if there are other hidden reasons why the house isn’t selling.

2) The Real Estate Market Is Very Slow And Conditions For Selling Are Bad

When the housing market is slow, there is usually an overabundance of housing supply with too many sellers and not enough serious prospective buyers. The real estate market tends to operate in local pockets, but frequently the national housing sentiment can put a drag on valuation and drag down prices. In such a slow bear housing market, the only way to sell your home fast is to price it at a slight discount and sell it at a lower asking price. Buyers during a slow market want bargains or seller concessions such as waived fees, upgrades, or freebies like plasma TV’s. However, if you are simply unwilling to drop prices, one ultimate solution is to wait it out, although that can last months or even years.

3) Your Home Is Located In a Poor Location

When it comes to selling your home, price and location go hand in hand. Homes located in low crime safe neighborhoods, with easy access to public transportation and highways, proximity to job abundant city hubs, and located near good schools will always be easier to sell. Particularly in a slow housing market, homes located in comparatively less convenient and attractive neighborhoods will find stiffer competition from better located houses. Your recourse is to try lowering the home price further to match the market perception, or to spend more money on additional home improvements to make it more attractive.

4) Your Home Isn’t Maximizing Its First Impression Through Curb Appeal and Home Staging

First impressions are important as buyers need to be wowed and be able to imagine themselves living in the house they are looking at. Try putting yourself in the perspective of a potential buyer and dress up your home accordingly. Repainting your home is the easiest, most cost efficient way to get the most bang for your buck. A new fresh coat of paint does wonders to improve the interior of any home. Putting out new carpet, cutting the grass, and trimming the hedges are also very impactful ways to maximize curb appeal.

Your objective should be to make your house look like a model home – filled with pleasant furniture but not actually lived in. It’s best if you aren’t living in your home while it is being shown to the public if you can help it. But if you must, be sure to hide and clean up all trash containers, random boxers, and junk clutter. Keep your beds made and all dishes washed. Keep your lights on and stock your home with fresh cut flowers to enhance its appeal and impression.

5) Your Home Is Not Easily Accessible Or Convenient Enough For Agents And Buyers

To maximize the speed and price of your home sale, you want as many agents in the area to show the home off to their clients as possible. Thus you want to make it easy and convenient for them to do that. Make sure your home entrance is equipped with a real estate lock box that holds your house key for agents and prospective buyers to use. Try not to make agents have to call you for permission to enter as that only creates delays and hassles, and makes them turn elsewhere.

The best thing you can do is not to be around when your home is being shown. If you are home, let the prospective buyers and agents in but take yourself out of the picture by staying out of their way – I suggest staying in one room. Let them roam freely on their own but make it known you are available later on for questions. Your hovering presence in your own home only crowds it, making the home seem smaller to buyers. Being around will only make your prospective buyers feel like they are intruders – instead you want them to freely envision themselves one day living in the home. Besides, if you are tagging along with the buyer and the agent, they will feel uncomfortable and unable to talk freely among themselves. Even if they don’t exactly know their way around your house, let them wander on their own.

6) Your Real Estate Agent Isn’t Doing A Good Job Of Marketing Your Home For Sale

These days, selling a home goes beyond simply having your agent place your home in the local Multiple Listing Service (MLS). If your agent isn’t actively going out there promoting and marketing your home through networking with other agents, or posting advertisements in newspapers and on the web, then she or he isn’t doing a good particularly good job for you. Today the internet is a great source of marketing as many computer tech savvy agents use housing newsletters to promote their properties.

A real estate agent is essentially a sales job that requires an appearance that conveys a pleasant, honest, and responsible demeanor. Make sure your selected agent has these positive qualities and is attentive to your needs and isn’t abrasive or constantly feeding you with erroneous advice when it comes to pricing your home. If all your real estate agent does is stick a For Sale sign on your front lawn, while that might have worked years ago when the housing market was burning hot, that’s a clear indicator today that you might want to find a more pro-active real estate agent.