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Deke's Investment Blog - September 2014

On stock market investing, look for quality businesses that you want to own and wait until they are cheap. When conditions are right, you can catch some really big fish. Go into all positions with a long term horizon, typically three to five years or more.

The retail component of our economy, about two-thirds of GDP, has been moving from cash to credit cards purchases for two decades.

From mid-year 2014 economists expect stock market returns to be slower over the next five years averaging around 8% annually. The S&P 500 has returned over 15% annually over the past five years. The index’s 10-year average is 7.4%. Investors are now advised to temper their expectations, but don’t stop looking for opportunities. The US is a stronghold of economic power compared with the rest of the world.

It is common that a lot of people are unsure about investing in the stock market. They don’t have a good sense of what or when to buy and when to sell. Furthermore some of their previous ventures into the stock market have not gone well. For such people regular monthly contributions into a mutual fund over time works well. Getting an investment manager is another good possibility.

American business schools focus largely on the importance of returns on equity and assets. Learning a sense of market cycles, i.e. ups and downs, is lacking. Your investment strategy must add value. It must avoid loss.

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