IS YOUR PLAN FREEDOM 45?

I find it so odd that young people don't have a plan. Even some mid 30 traders I know still live day to day and just hope for the best. The markets can look very daunting from time to time but with specific goals and targets you have half the battle won. Set up some realistic time lines on your plan for success. Do you have something to start with? Did you know an easy way to start is to ask for an RRSP loan and get the benefits on your tax filing and the funds can be made self directed. You can play the markets sooner on some great stocks you have researched without waiting.

I just gave you one example but there are a lot of ways to get creative to jump start your investing and get active on the markets. If you can't picture yourself behind the wheel of that new Audi R8 or sailing around the world one day then how can you get yourself motivated to start. I am always hunting for the next 10-bagger. If you haven't had one your not alone. If you don't know what one is well its an investment that yields 10 times your initial investment. I have seen this happen in 2 years, 1 year and even weeks and days. Seriously the markets can be a wild ride. The ones that run like crazy in days will probably retreat in hours and leave you in their wake. The smart investor was selling during the bull run and the junior investor was stunned and was so excited he forgot to sell.

Ask yourself some serious questions when you put your plan in motion. Where will you start? What sector is the best for your risk level, Should you diversify a bit so that if your first pick crashes, pick 2 and 3 may be floating or running.

Here's what I would do:

Study the flow of business news and make sure your in something that is about to trend into the main stream. Don't be in something that's already had a couple of good years. Things run in cycles and you want to be at the start or in the middle of the bubble not the end.

Study a few sector active issues and find out why they are active. Investigate their cash position and outstanding shares. An over diluted company with a low share price and no money in the bank is not a deal just because its cheap. Its probably holding onto it last assets before packing it in. Don't be a bag holder.

Low floats are good but under about 20 million can mean it has no liquidity. That means its hard for you to get a position and its hard to get out when you want out. I like 20-60 million shares outstanding. Usually in that count is an insider holding and institutional holding and its nice to see who is invested with you.

Next make sure they have cash. If they don't there is probably a private placement in the works and that could mean a small sell-off is imminent as people in the know want the warrants that come along with the discounted shares in the placement.

Lets also make sure its an active issue. Check the bullboards and see if active traders are on the boards talking about the company. Don't get caught up in what they say because every post has a hidden agenda. The longs may be pumping it up to push up the price and the guys who have been shorting it want it to pull back so they can cover and pay their bills this month. The boards are full of sharks and the sooner you understand how the game is played the better off you will be. Its not all bad but make sure you verify everything you read and don't take anyone's word for it. I can't tell you how many times I have had in boxes from posters claiming to work for the company or their brother knows the CEO. Its all a bit like poker and if you can't tell who the sucker is in the first 30 minutes it must be you.

So you've picked your 3 stocks in your favorite sector. They all have some cash, they are active. They have good size floats relative to the junior market your playing, lets face it that's where the serious fast money is IMHO. I like the venture. Its highly regulated but its full of high paced companies flying under the radar and some are about to explode. You can go pick some blue chip stocks and make a nice 5% a year but that won't get you the Porsche 911 will it?
So your picks are doing well, they are drilling or whatever they do and along comes amazing news and you have a 5- bagger, maybe a 10-bagger. Don't forget to the pull the trigger. Its like a deer frozen in headlights as the price sets new highs and closes at a new 52 week high. There is a good chance this will retrace. Always say that over in your head. About 1 out of 10 times you will sell with those great profits and the next day the company explodes again and you left a fortune on the table. So what, don't look back, its all part of survival and you have already beaten the odds with your other winners.

Always remember to protect your money, don't buy because someone said buy, and don't sell because someone is spreading fear and you will be just fine.