Cindy Diccianni, Financial Advisor.
Wondering what to do and what time frame to do your investing in? Here are some ideas to assist you in your investments.

Stick with stock funds
As long as you have five or more years until you need the money, stock funds will likely provide you with superior returns over any other investment. But you have to be patient. In the short term, the market is very volatile, so don't fret when the market drops 10 percent in a week, or your account seems to be worth a lot less than it was last month. Over five, ten, or 20 years, you'll come out much further ahead by sticking with stock funds.

Get friendly with the 800lb Gorilla’s
When you invest in the big American companies, companies like Microsoft, Intel, Citigroup, Merck, Proctor & Gamble, and General Electric, you don't have to worry much about whether they will be going out of business any time soon. What's more, these industry leaders have generated outsized returns for their shareholders over the past decades. Bigger isn't always better, of course, but "large-cap" stocks like these provide plenty of solid returns (over the long-term, of course). Invest in these stocks by buying large cap stock funds.

Options are flexible derivative securities that can enable an investor to successfully hedge against price movement, or speculate a move on stocks and commodities. Here are some of the most common option strategies;

Protective Put
If you were to purchase a stock, you could theoretically lose all of your investment if the price were to go to zero. But we know that a put option increases in value as the price of the underlying security decreases. Therefore one could consider a transaction where the stock is purchased along with put options. Whatever happens to the stock price, you are guaranteed a payoff equal to the put option's exercise price because the put gives you the right to sell the underlying security for a given price, even if its market value is less than the exercise price. Protective puts can therefore manage your downside risk and are often referred to as portfolio insurance. The downside to a protective put is the case where the stock would increase in value. Here your profits would be decreased by the cost of the put.

Derivatives are a relatively new and growlingly important class of financial assets. They are securities that provide payoffs depending on the value of the underlying assets. Futures and options are two examples of derivative securities. Options are written on common stock, stock indicies, foreign currencies, interest rates, precious metals, weather, and agricultural commodities.

A call option gives its holder the right to purchase the underlying asset for a sepcified price, also referred to as strike price or exercise price, prior to the expiration of the contract. For example, a November call option on IBM's stock with a strike price of $100 entitles the owner to purchase IBM stock for $100 up until the expiry date of the contract. The holder is not obligated to exercise the option and can let it expire.

A recent cartoon in my daily newspaper showed two guys sitting in a bar. One is saying to the other: “I did learn something from my broker...how to diversify my investment losses.”

While this struck me as funny, there is certainly an element of truth to it judging by the number of tragic e-mails and phone calls I have received over the past couple of years.

This was brought home even more so by a reader who responded with strong disagreement to one of my articles. I advocate a methodical, disciplined approach to investing in no-load mutual funds. It keeps me invested during up markets and on the sidelines during down markets. It was exactly this approach that got me and my clients out of the market in October, 2000 and put us back in to take advantage of the April, 2003 upswing.

Judging from the reader’s e-mail it appears that he works for a major bank and is adamant about Buy & Hold and Dollar Cost Averaging. Maybe it's the approach he has chosen and he doesn't like hearing that the emperor is wearing no clothes. Nothing personal, honestly, but I find it incomprehensible that anyone, after the bear market and the financial disasters most people experienced, can even consider such theories. The results are just too black & white.

It has been said that "money makes the world go around." Is this really true? Lets examine this saying a little bit further. The truth about money is this. Money has absolutely no value what so ever and I can prove it. Money or the numbers that you see on your account balance are worthless. They have no real value in and of themselves. The physical object (Money) and the physical numbers you see in your bank account do not have any real value at all. If your scratching your head right now and thinking to yourself, "this is absurd, of course money has real value, I use it everyday to get the things I want." Well, yes and no. Yes, you use money in exchange as a way to purchase something that you want. And no, it is not the money itself that enables you to get the things you really want. The problem is, that we have been spending money our entire lives and it honestly seems like it’s the money that give us what we want, but its not.

The scary thing about this is this; we walk around spending money and making money thinking that it actually has value. Unfortunately, the mass majority of us (I would say 95.75%) actually believe that money has real value. I would say that this same majority (95.75%) believes that money does make the world go around. We go around making this statement to each other without giving it any thought. We hear that statement and accept it as the truth. When we look around us it seems to be the truth. After all, you can not do anything in this world, or get anything done without money, right? Wrong!

A lot has been written about financial planning and financial planners. Although no legal definition of the term exists, financial planning generally involves evaluating and recommending strategies to achieve your financial goals. Planning advice should be objective and comprehensive. It should coordinate your investment purchases with other aspects of your financial life. For instance, you may want advice about employee benefits, college costs, taxes, retirement, and estate planning. The title, "financial planner," also not legally defined, is used by a variety of individuals _ accountants, brokers, insurance agents, for example -- to imply they offer comprehensive financial planning services.

Not everyone needs the advice of a financial planner. By doing your own homework (such as reading the many publications geared to helping you make the best use of your money and/or taking objective financial education courses), you can undertake your own financial planning. Even if you decide to hire a financial planner, you still need to know as much as you can about your own individual financial situation. Without that knowledge, it's nearly impossible to evaluate whether a planner's recommendations make sense for you. A good financial planner will review your total financial picture and offer advice about what might make your money work for you in the most advantageous ways -- given your income, goals, objectives, and attitudes toward financial risk. Between 250,000 and 400,000 people in this country call themselves financial planners.

If you are fed up with early redemption charges and ever increasing mutual fund management fees on top of bad-performing fund managers, read on. There is a quiet revolution going on in the no-load mutual fund industry and you, the individual investor, may benefit from it greatly.

I am referring to Exchange Traded Funds (ETFs), which have been around for years, but have grown tremendously since their inception. There are currently over 100 choices with around $10 billion in assets.

In a nutshell, an ETF is a specific kind of no-load mutual fund that you might consider to be a basket of stocks. ETFs are diversified like mutual funds, only they trade like stocks. They are cheap to trade (as low as $8.00) and don’t hit you with any short-term redemption fees. And they offer investing opportunities across the board.

ETFs track every index under the sun including the S&P 500, the Nasdaq 100, The Russell 2000 and many others. Available through any discount broker, they basically fall into one of three categories: broad-based U.S. indexes, sectors and international.

The have esoteric names such as iShares, StreetTracks, HOLDRs and SPYDRs. The difference is in the index they are tracking and the company marketing them. You will see big name companies offering them, like the American Stock Exchange, Barclay’s Global Investors, Vanguard, and State Street Global Investors.

When it comes to mutual funds, there is a lot more to success than just finding a good one. Sad investment stories like the following are all too common. I hope my sharing it with you will help you avoid making the same devastating financial mistake one of my former clients made.

This story begins during the height of the investment madness in 2000, just prior to the bear market. I had been managing an IRA account for "Bob" for around six years, with a better than average record of success. So I was surprised when Bob sheepishly called in July, 2000 to let me know he was transferring his IRA account, which had done particularly well during our latest Buy cycle going into the year 2000.

However, his tax preparer, a long time personal friend of Bob's wife’s, was now also offering investment services, having recently received his Registered Representative’s license.

Fast forward to the end of September. It had become increasingly clear to me that the Bull market had run its course. So, in accordance with the Sell signal from our trend tracking methodology, we sold all of our mutual fund positions on October 13, 2000 and went 100% into money market. (See my article “How we eluded the Bear in 2000” at http://www.successful-investment.com/articles12.htm). From our safe haven we watched the market crash and burn, causing most other investors to sustain double digit losses eventually reaching as high as 50 - 60% of their assets.

When it comes to 401k's there is an overabundance of sad stories. Here is one that at least has a happy ending—and it's getting happier all the time.

Last year (in 2002) a friend of mine—let’s call him Jack—phoned and asked if I could help him with his 401k. Jack works for a large company as Senior VP of lending and is financially pretty astute. However, when it came to his 401k mutual fund decisions, he had repeatedly made the same mistake most people were making. As a result, he saw his account drop in value substantially.

At the time we were in the midst of the 2000 bear market, which showed no sign of letting up. Jack had purchased into a Lifestyle fund because someone recommended it. By the time he finally bailed out, it cost him dearly. However, he continued to make the same mistake by reinvesting.

He checked with the 401k representative and subsequently switched to a variety of mutual funds ranging from World Stock to Domestic Hybrids, Large and Small Value as well as Growth. But nothing worked and his portfolio value headed further south.

What are you thinking when it comes to your no load mutual fund selections? Are you saving pennies and sacrificing dollars?

Are you spending your time looking at expense ratios, analyzing Morningstar ratings and searching for funds with low fees and no 12b1 charges? If you are like most people, you know these things in and out. You've spent hours evaluating them, and your chosen mutual funds cost little to purchase and maintain. But they still don't perform to your hopes and expectations.

So, why is this happening? Because this kind of investing focuses on cost as opposed to value.

Investors with this philosophy have usually interviewed numerous advisors. But instead of trying to find someone suitable with a sensible approach, they only want to know who has the lowest fees. That's like going to the cheapest auto repair shop and getting the best price, but your car still doesn't run well.