Investing Principles

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.

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.

Are your investing decisions primarily driven by outside influences? Or do you make them based on a predetermined plan stemming from your unique situation? Here's a four-point checklist based on "inside-out" thinking to help evaluate your investing options.

Your investing decisions should be made on the basis of a personalized, written strategy. As an example, we offer a written plan for making the transition from Level 3 to Level 4.

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.

Plenty of parents have made these common mistakes. There's no reason for you to make them too.

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."

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.

The Madoff scandal has many investors rightly wondering, "Can I really trust the people handling my money?"

The "right" investment choices are the ones that have a high probability of getting you: (1) where you want to go, (2) when you want to get there.

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.

Generations of readers have discovered the secrets of building wealth from the wise teacher Arkad, Babylon's richest man — as imagined by George S. Clason in his classic 1926 book.

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.

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.

One of the most important attributes for an investor to develop is the ability to think long-term. When the market corrects, as it has recently, are you ready to take advantage? Or are you part of the fearful herd asking each other all the wrong questions?

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.

For the benefit of newcomers, we offer an explanation of SMI's highly successful Upgrading strategy — and why it leads to superior returns.

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.

The biggest obstacles to successful investing often involve our own emotions. Logically, we know that buying stocks when prices are low makes sense. But we feel so much better about investing when the market is going up! As a result, many investors buy near market tops and stop buying during bear markets, exactly the opposite of what they should do. Dollar-cost-averaging is a mechanical strategy that helps avoid these pitfalls by removing emotion from the investing process. Here you'll learn five specific benefits of DCA and see how to implement a DCA investing plan of your own.

Austin shares four things that encourage and comfort him when periods of distressing stock market losses suddenly arrive.

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

When markets get as volatile as they've been lately, many investors consider heading for the sidelines. That usually ends up being counterproductive and hurting their long-term returns. We've got information to help you face your fears and stay the course.

A personalized financial plan is the foundation of a successful investing strategy. It's the compass by which you set your investing sails as the currents of life change. Sadly, most investors never complete this crucial step. This article walks through the process of creating a personal financial plan by highlighting important items to consider at each stage of life. Make 2007 the year you replace good intentions with action — create a financial plan of your own!

Successful investing can be tough. Not only do you need to know what to do, but you have to actually do it, often at times when everything within you is screaming to do the opposite. That's why SMI tries to create strategies that minimize the internal conflict between knowing and doing. Consider these seven ways SMI's investing strategies make it easy on you to do the right thing.

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.

Lurking in the portfolios of millions of investors is a time-bomb threatening their financial security. This threat comes from the most unlikely of sources: your employer's stock. We explain the risk and offer guidelines to determine how much is too much.

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".

Mustering the courage to start investing is a difficult hurdle for many people. We have encouraging news to report in this regard. By carefully adjusting your asset allocation and time horizon, you can stack the odds dramatically in your favor.