Busting The Credit Card Myth

Misinformation is misfortune, so arm yourself with The truth before you tackle the credit card demons! You can find lots of misinformation about money and credit and especially credit cards.

Myth #1: ???It???s all my fault I got into this credit card mess!???

The truth: It may not be your fault at all. Credit card companies really are out to get us. You probably just got caught in the trap.

Myth #2: ???Credit Cards are what got me into debt.???

The truth: Spending is what got you into debt. The credit cards just made it easier.

Myth #3: ???My credit rating is destroyed forever and there is nothing I can do about it.???

The truth: If you have a job and are willing to work at it, you can get your credit under control and your credit rating restored. Rebuilding your credit requires that you do three things; pay your bills on time, look for better options and learn about money and credit.

Myth #4: ???It???s fine to give my credit card number for identification as long as I don???t authorize a charge.???

The truth: NEVER give your credit card number for identification purposes. For that matter, you need to guard all of your personal information like a ferocious tiger.

Unless you initiate the phone call, do not give your name, address, phone number, social security number, credit card number or driver???s license number to anybody. All of this information can cause your identity to be stolen or worse.

Myth #5: ???If I pay off a debt or cut up a credit card, this information is removed from my credit report.???

The truth: When you pay off a past due debt it actually restarts the time period that it can be reported in your credit history. Cutting up a credit card does not close the account. You must call the credit card bank to close an account under all circumstances.

Then There???s the Urban Credit Legend

Urban legends are just a fact of computer life. There are the old ones that have been around for years and new ones that pop up everyday. It???s the modern version of gossiping over the back yard fence and most of them are false but harmless. When it comes to the urban legends about credit they really, however, they are harmful.

???You can pick a lock with a credit card??? may be true but it???s a bad idea???you could mess up the card. Use a butter knife or a piece from a plastic milk bottle. But what were you trying to pick a lock for anyway?

These are a few urban legends that can hurt you.

Legend: Cutting up a credit card closes the account.

Wrong! You must call the lenders phone number on the back of the card to cancel the account???so piece that card back together and get the phone number, make the call and cancel the account.

Legend: Closing an account removes it from your record.

Wrong! Credit reporting agencies are a rather unforgiving lot and they have memories like proverbial elephants. Accounts remain on your credit report for seven years even the ones you have closed.

Legend: Even good credit information drops off your report after seven years.

Wrong! Unlike humans, credit reporting agencies remember the good stuff forever (even if the accounts are closed) and forget the bad stuff after seven years. Unless, of course, you believe this

Legend: Paying off an old delinquent account improves your credit.

Wrong! Paying off an old delinquent debt actually starts that seven year clock ticking again.

Legend: Car dealers need to run your credit before you take a test drive.

Wrong! This is a fast one pulled by those super duper 60-day wonder salesmen. Don???t believe a word of it. You have not yet applied to buy anything and there is no reason for to check your credit until or IF that time comes.

Credit Card Banks Really are Out to Get You

Their objective is to make as much money off you as they possibly can legally. It isn???t your imagination and you aren???t being cynical. They are out to get you and it???s getting worse by the day.

In 1978 there were fifty credit card issuing companies that accounted for 50% of the credit card market. Today there are only four companies that control 65% of the same market. Those four are American Express, Bank of America, Citigroup, and JP Morgan Chase. MBNA was the fifth but it has just been gobbled up by Bank of America. Less competition is never good news for consumers. Already these giants sign you up for card with a 0% introductory offer and then that rate goes up quickly and steeply. In that itty-bitty fine print you didn???t read it says that the credit card company can do that with only a 15day notice. The period between a purchase and the time your interest starts is no longer 30 days either.

It???s been shrinking at an alarming rate. The fees you are charged for paying the bill late or going over your credit limit have exploded. The average penalty rate is around 24% but some are as high as 35%. Yes, the lack of any serious competition between credit card companies is hurting all of us.

We need to break this bad habit, over-come this addiction and start using our credit cards wisely. We use them to buy groceries, pick up our laundry and buy a hamburger. When we make a purchase we just automatically reach for a credit card to pay for it. We are a nation addicted to plastic spending.

What is a consumer to do?

Use your credit cards only when necessary and avoid paying high interest and fees. Suggestion: cash a check at the bank and pay cash for everyday purchases.

10 Surefire Ways To Make An Investment Fortune, Part II

Below, I present Part II of my original article, "10 Surefire Ways to Make an Investment Fortune."

(6)Understand Why You Own Everything You Own, Then Stand Firm in Your Convictions

Since most people never take the time to learn how to invest properly, or are fed a bunch of misinformation by the so-called industry professionals, they waffle as much as a shady politician when making investment decisions. They don???t know if they should hold, sell or buy during corrections, or hold or sell during steep runs higher. Primarily they don???t know because they don???t understand what they own because they have allowed someone else to make those decisions. I???ve always found it odd how people will refuse to allow other people to do the most trivial of things for their companies, preferring to take care of them him or herself, or will consult 20 people before buying a car, but will gladly hand over $2 million in cash to a stranger to manage.

Yet, just having conviction is not enough. Being wrong in your convictions can be just as devastating to your portfolio performance than having no conviction at all. For example, in June, July, and August of 2007, many housing analysts repeatedly called bottoms in housing stocks, and many investors, just like sheep, jumped in and bought up shares in housing related stocks. Some even kept increasing position in shares of sub-prime mortgage companies that had plummeted 70% believing they were acquiring the stock for pennies on the dollar. Most of these investors, instead of profiting, lost a great deal of money from stocks that did not stop hemorrhaging and some lost 100% of their money from investing in companies that eventually went bankrupt. This is the lazy man or woman???s way out and almost never ends up well.

When I say ???Stand Firm in Your Conviction???, do so only after gaining expertise in a subject matter. Do not blindly follow someone else???s advice just because they appear on Bloomberg, the Wall Street Journal or Reuters. Just because someone has the appearance of an ???authority??? does not make him or her one. In fact, often there are shameless self-promotion reasons behind media appearances and the only person that is bound to get hurt by blindly listening to these people is you. Only after you take the time to truly learn everything you need to know to become an expert in a particular industry or asset class, then don???t be afraid of going against the grain of the majority opinion. You???ve taken the time to become an expert, so utilize your knowledge in how you manage your portfolio. More times than not, you will be correct when everyone else is wrong.

(7)Make Volatility Your Friend

Most people have been taught that volatility equals risk. Baloney. If you remember that market timing in asset class cycles is possible, then you can basically negate much of the risk of volatility by buying close to the troughs instead of close to the peaks. Furthermore, you can never make any money by buying a bunch of stocks that plod along at 6% to 10% growth a year. Thus, you need volatility in your portfolio in order to make money. In fact, I advocate even owning some speculative stocks to boost the performance of your portfolio. Again, with due diligence, a fair batting average with speculative stocks is not only feasible but very likely. I???ve only been able to obtain 25% to 35% annual gains in stock portfolios by devoting a percentage of my portfolio to speculative stocks that have returned 280%, 260% and 190% a year. At the end of the day I don???t care if I have some speculative stocks that go belly up (meaning they got stopped out at 40% losses) if I have enough stocks that earn several hundred percent that significantly add to the absolute return of my portfolio. Like I said, make volatility your friend.

(8)Never Listen to the Government

Government statistics do move the market. But that doesn???t make the statistics right or truthful. The Consumer Price Index, Housing Starts, Job Growth, the Consumer Confidence Index, and so on all influence the markets. Markets always await with bated breath for the release of these numbers, then are accordingly swayed higher or lower depending upon whether the reported numbers miss or exceed analysts??? targets. Knowing that these government statistics affect market movements, why would I say disregard them? Here???s the answer.

Rarely are these statistics every forthcoming and aboveboard. Instead they are manufactured to sway markets to react in certain ways. For example, the formula to determine the CPI in the U.S. was tinkered with greatly under President Clinton. Current U.S. Federal Reserve Chairman Ben Bernanke has been reported to be tinkering with the formula even more. If the CPI formula used 15 years ago would report a drastically different number than the CPI formula used today simple due to significant differences in how the CPI is now calculated, how much confidence doest that grant you in the validity of this statistic? Other major benchmark government statistics aren???t even based upon real surveys of actual transactions, but rely heavily on government estimates. Thus, the government just estimates the statistic to be whatever they want it to be so that it will serve their purposes and will steer the economy and the stock markets in the desired direction.

This is why when stock markets turn abruptly and experience sharp corrections, everyone states, ???we never saw it coming???. Disregard government statistics, do your own digging to understand the true economic conditions of whatever market you are planning to invest in, and you???ll never suffer destruction of wealth due to unforeseen surprises. Instead, you???ll see the surprises coming from miles away. Especially today (September 2007), with an imminent global economic crisis on the way, it is especially important to disregard the government and prepare accordingly. If you do, you???ll make a fortune while your neighbors will be rocked by ???shocking??? and ???surprise??? downturns in stock markets.

(9)Follow the Money Trail

As a means of validation, but certainly not as a primary strategy, occasionally dig down deep and see where the elite money in your country is heading. For example, in early 2006, you would have discovered that Bill Gates and George Soros were shorting the dollar tremendously, a good sign to get rid of any dollars you had and to diversify into Euros, Sterling and gold. With gold mining companies, if you discover that the best, most successful companies in the industry are buying 3 million shares of a speculative stock, well, basically you know that the best minds in the business would never just dump millions into a stock without performing their due diligence. So if your own personal due diligence tells you the stock is a buy, then certainly the discovery of this additional information is reassuring.

However, the number one rule, Rule (6), is always to understand what you own. Thus, you can???t just look at the equity portfolio of Warren Buffet and think that you can duplicate his returns without understanding why you would buy the same stocks he holds. If you don???t understand, you won???t know whether to buy more, sell everything, or hold on to your current position during market downturns and what to do during strong runs higher. If you don???t understand this, you just can???t make money.

(10) Expand Your Investment Horizons Across Global Borders

But it was ignored, un-researched, and I doubt if more than 1% of all investors in America benefited from the tremendous run of this asset class. When one of the major indexes in the U.S., the S&P; 500 shed 49% of its value from 200-2003, there was another little followed index in the same country that gained 58% during this time. Sometimes, you won???t even have to look outside your country, but just look where no one else is looking. Broaden your investment borders and you greatly increase your chances of being highly profitable every year.

Often, one market may be down in one region of the world but soaring in another. They think that if the markets in their country are bad, that they must suffer losses as well too. Too many investors suffer from myopia.

So change not only your investment life today with the application of the above rules, but forever change your beliefs about the types of investment returns that are possible and achievable. All the number crunching, fundamental analysis, and technical analysis in the world will not provide you with better returns than simply being creative with the 10 rules above. Realize that investing is not a science, but an art.

After I started employing the rules above, 20% annual returns a year started seeming like poor returns. Before I employed the 10 rules above five years ago, I never made much more than 10% a year when investing in stocks. All the rules above demand a certain level of creativity. One last word.

Common Manipulations Of Consumer Investors

Dont be scammed out of your money read this article and avoid the pitfalls. The process of manipulating potential investors to scam them out of their money has followed the stock market into the 21st century and online. The process requires a lot of misinformation out there regarding investing in the stock market and in reference to specific stocks.

This has enticed many people to give investing a try even if they have no idea what theyre doing. Online brokerages have revolutionised the investing industry.

Pump And Dump 1.

In this scam, you are misled about the projected earnings and growth of a company. Uninformed investors purchase the stock. The price tends to rise, and as it does, the original scammers sell the stock off to new uninformed investors and take the profits. Once all the hype drives up the price high enough and the accumulation pressure disappears, the stock crashes and the investors lose money.

2. Avoid Penny Stocks

Penny stocks are stocks less than $5. 00 in value. The reason they are so low is because the company is probably going bankrupt. To avoid the majority of these scams, avoid investing in penny stocks. The hype associated with pump and dump scams is similar between scams. The fake press releases and research reports always tout the given company as being on the verge of a world changing technology, cure for a disease or fantastic new product. The focus is always on the glorious future of the company, but very little information is given about the current status of the company in question.

3. Rumors

The second type of stock market scam is characterized by rumors and traders tricks. Manipulations of stock price can be achieved in subtle ways. Money managers have the ability to start rumors about stocks that they would like to move without paying a large price. The rumor works to lower the price of the stock and create liquidity in that company (TM)s stock. The rumors run unchecked and spread through the market like wildfire.

For example, if a money manager wants to purchase some stock in Company A, they can start a rumor that the company is on the verge of bankruptcy. This lowers the price of the stock and allows the manager to purchase it at the desired rate. This works in the opposite way as well. If the manager wants to sell stock for Company B, a rumor can be started about an emerging invention from that company in order to inflate the stock price. These subtle attempts at manipulation can be the hardest for investors to spot, and therefore the most difficult to avoid. Since rumors are part of the business of the stock market it is hard to track down where the rumors started.

Additionally, there is no paper trail to track down the money managers who practice this sort of manipulation. Fortunately, these inflations or devaluing of stocks are very short lived. Within a short period of time the rumors are proved untrue and the stocks bounce back to their true value. These schemes fortunately never have any long term impact on the market. Maintaining a long term investment focus of owning good companies for long periods of time will offset any of these manipulative rumors.

Manipulation 4.

Having a diverse portfolio of stocks can surely save you from losses that would otherwise hurt you financially. Cheaters and manipulators exist in every industry, and are especially concentrated in an industry that is full of money like the stock market. If you want to play with the big boys, you have to be able to take a little bit of risk when you invest.