Bottom Line/Personal interviewed Barbara Moses, PhD, president of BBM Human Resource Consultants Inc., in Toronto. Her books include What Next? The Complete Guide to Taking Control of Your Working Life (Dorling Kindersley). She writes a column for Canada’s The Globe and Mail. www.BBMCareerDev.com

Warren Buffett ranks as one of the greatest investors of all time. Over more than three decades, his Berkshire Hathaway Inc. has purchased dozens of stocks and businesses. During that time, the company has outperformed the Standard & Poor’s 500 Index by a wide margin. Buffett achieved his record by following a disciplined investment strategy. He waits years for stocks to sell at discounts. Buffett does not hesitate to hold cash if nothing meets his exacting standards.

Seeing his record, many investors seek to mimic Buffett’s style. When the master buys a stock, the imitators also make the purchase. While there is much to learn from Buffett, those who seek to copy him should beware. Buffett’s approach is difficult to implement, and even the master himself has made mistakes while using the strategy. Some trademark Buffett tactics that most investors should avoid…

Mistake: Holding a concentrated portfolio. Academics have long argued that investors should own a wide variety of stocks and other assets. That way, if some holdings fall, others may rise. Buffett understands the scholarly research, but prefers to hold “concentrated” positions, keeping big stakes in just a few industries. Altogether, Berkshire derived one-fourth of its revenue and half its profit from one industry — insurance.

Buffett’s success can be traced to his concentrated approach. But most investors should tread more carefully. In fact, Buffett says most investors should diversify extensively. Many part-time investors should stick with mutual funds. A sound approach is to buy an index fund, such as one that tracks the S&P 500. While funds may never outpace the best stock pickers, the index trackers never finish at the bottom of the standings.

Mistake: Buying nothing but cheap stocks. Stocks are often thought of as being from one of two categories — growth stocks, which have growing earnings and price multiples that are higher than average… and value stocks, which have little or no earnings growth and relatively low prices. Buffett does not fit neatly into any one camp. His portfolio includes some stocks that may be considered “growth” and others that fit into the value category.

Some investors may want to follow his example of holding growth and value. By owning both, you can diversify a portfolio because growth and value sometimes move in different directions. But for long-term investments, I prefer putting more than 50% of assets in value stocks. According to research by Eugene Fama, PhD, professor of finance at the University of Chicago, and Kenneth French, PhD, professor of finance at Dartmouth, value stocks tend to outperform growth over long periods. The best performance comes from stocks that are in the cheapest 10% of the market as indicated by their price-to-book ratios (p/b). This is the share price divided by the book value, a measure of a company’s assets minus its liabilities. Fama and French found that during the 27 years ending in 1990, the cheapest 10% of stocks returned 21% annually, compared with the most expensive 10%, which returned 8% annually.

Mistake: Investing only in big companies. Because his company is huge, Buffett finds it more convenient to buy big companies. Otherwise, to put Berkshire’s assets to use, he would need to own a great many small companies and it would be difficult to watch so many as closely as he would like. The result would be an unwieldy portfolio that would be too hard to manage. But ordinary investors should hold at least some small-company stocks. According to Fama and French, the smallest stocks in the market produce the biggest returns. During the 27-year study, the smallest 10% of stocks grew more than six times, while the largest 10% returned less than half as much.

Mistake: Favoring losers. As a value investor, Buffett often buys unloved stocks, picking up shares that have fallen. He shuns growth stocks that have been embraced by the markets. But investors seeking to build diverse portfolios should include at least some growth stars as short-term holdings.

When stocks have climbed for six months, they have tended on average to continue climbing for the next 12 months, according to a study by Narasimhan Jegadeesh, PhD, professor of finance at Emory University, and Sheridan Titman, PhD, professor of finance at the University of Texas.

Investors who take advantage of the short-term moves of growth stocks must be prepared to trade quickly. Studies indicate that after 12 months, the growth stars begin to lag.

Mistake: Holding for life. After buying a stock, Buffett holds it indefinitely. If the shares climb sharply, he still won’t sell. And if the company doesn’t show earnings growth, he still hesitates to sell. Buffett often refrains from selling because he believes that it is difficult to tell the right time for unloading a stock. Rather than making mistimed moves, he holds.

Because most investors, especially those near retirement age, can’t wait the decades that Buffett is prepared to wait, they can’t be so patient. Expensive shares with shaky earnings can deliver disastrous short-term results.

Before buying a stock, Buffett estimates its intrinsic or fair value. This requires projecting the company’s cash flow into the future and then “discounting” it to the present using an appropriate interest rate that takes the risk of the investment into consideration.

Measuring fair value precisely isn’t easy, but there are ways to estimate when a stock’s price has become too rich. Start by comparing the stock’s p/b to those of the company’s competitors. If the stock commands a relatively high multiple, then it could be priced above fair value. Additional check: Compare the stock’s current p/b to those from the past. When a stock’s p/b exceeds its typical historical level, it is another sign that the price may be too high.

Mistake: Sticking with what you know. Buffett prefers buying companies that are easy to understand. Until recently, he bought only US companies. He still has very little international diversification.

Unlike Buffett, most investors should use more international diversification. Their portfolios should include shares from the emerging markets of Asia and Latin America. Overseas markets don’t always move in lockstep with Wall Street.

For convenience, consider owning foreign shares by buying mutual funds or American Depositary Receipts (ADRs), foreign issues that trade on US exchanges.

Do Buy Utilities Like Buffett

Until recently, Buffett rarely bought utilities. Now he’s beginning to invest in power companies. You should, too. Utility companies should be a core holding in most investors’ portfolios.

Reasons: The best utility companies can generate steady cash flow. Companies with strong cash flows are able to pay their bills and invest in expanding their businesses. Many utility companies also provide solid dividends. These can provide investors with steady income, an important consideration during times when share prices are falling and portfolios are not producing capital gains.

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Bottom Line/Retirement interviewed Vahan Janjigian, editor, Forbes Growth Investor, 60 Fifth Ave., New York City 10011. 12 issues. $197/yr. He is author of Even Buffett Isn’t Perfect (Portfolio). From its inception October 6, 2000, through December 31, 2009, the Forbes Growth Investor model portfolio returned 74.78%, compared with -20.87% for the S&P 500.

Truth #1 – It is going to take some work on your part to succeed. If you have done some research into tax lien certificates and tax deeds you may have heard some so called “gurus” bragging about how easy it is to make a fortune. While it is easier and safer than many investments, it doesn’t come without some work on your part. You need to learn about the business and you need to invest some of your time to succeed. The good news is that with less work than most traditional investments you can get substantially higher returns while exposing yourself to less risk.

Truth #2 – There are hidden treasures for those that are persistent. You’ve heard the stories I’m sure. An investor buys a tax lien certificate at auction, the owner doesn’t redeem, and the investor ends up with 25 acres of land for the low price of 68 dollars.

First let me say that these sorts of things do happen and more often than you think. I personally know the gentlemen who bought the previous piece of land for 68 dollars. But you can be sure that it did not happen the first time at the auction. With some persistence and a little bit of experience you can get better at finding the jackpots.

Truth #3 – Most properties at auction do have real value. There are a lot of reasons that a property can end up at auction. The common misconception is that most of the properties do not have any real value. True – there are properties on the auction that seem worthless, and to many, they are – but to the creative investor they are literal gold mines.

Think outside the box. Put your mind to work and you’ll discover that there are a lot of things you can do with the property that no one else wants. By being creative you give yourself an advantage over 99% of the people at the auction. Now cash in on it!

Invest some time and money into the business and you will discover that there are huge returns waiting.

For more Investing tips & info visit:
http://www.bruisedonion.com/guide/investing/

Making money on the Internet is invigorating, challenging, rewarding, and flat out addictive. Knowing you can reach millions of people and sell them what they want without having to spend large sums of money is simply an awesome feeling when you know how to leverage ‘money making’ knowledge.

So, what things do you need to understand before you can take your leap into Internet marketing and begin making money on the Internet?

Well, there’s quite a few answers to that question, here’s 5 of them.

Make Money On The Internet, Concept 1:
Be ready, it isn’t easy. You need to have perseverance and smarts.
Not everyone who makes money on the Internet just woke up one day and said, “You know what, I think I’m going to build a product and sell it to get rich, and I’m going to use the Internet to do it, I’ll learn as I go.”

Wrong! Not going to happen.

It takes work and education to make money on the Internet and the hype that floats around the Internet can be extremely distracting. It also takes patience to make money on the Internet and you need to be ready to dive in full tilt if you’re going to be successful. You should understand that you will fail on more than one occasion but that’s OK, you learn from your failures.

And one tough failure will force you to do more research and testing, 2 integral parts of making money in the Internet.

Make Money On The Internet, Concept 2:
Free sustainable targeted traffic can take time.

The most valuable targeted traffic comes from PPC SE’s, joint ventures, and SE’s via content and links. PPC SE’s aren’t free and joint ventures take networking. But, search engine traffic via content and SEO is free and easy. But, getting a flood of targeted traffic via the search engines isn’t exactly a one day or one week or even one month thing.

You want to make money on the Internet?

Then I urge you to learn SEO and plan to market via content in some fashion. Don’t expect to be #1 or on page 1 of the SERPs for every keyword phrase that you think is attainable. Don’t put rose colored glasses on when you’re reading sales letters about making money on the Internet by using the latest page generation software. Getting sustainable targeted traffic via content and links takes time and is prefaced by solid keyword research.

If you write articles you’re creating a viral mechanism to assist with your SEO efforts if you implement the right strategy.

Make Money On The Internet, Concept 3:
Take the time to fully know who is in your target market and understand the psychology behind the way they think.

This concept is really one of the “keys to the castle” for making money on the Internet. Thousands if not millions of web sites have failed because the owners didn’t fully understand the psychology the people in their target market use to make buying decisions. Hence, the failed webmasters didn’t know how to reach those people, instill trust and establish credibility with them, and they certainly didn’t know what triggers were needed to make them buy what was offered!

Don’t be fool enough to think that you already know how the people in your target market think, chances are good that you don’t. Simple solution? Ask them.

Make Money On The Internet, Concept 4:
Learn conversion tactics and build your web site to be a virtual and high caliber salesman.

Build your site so that the main goal is obtained, sales. You’re in this for the money, after all, don’t ever forget that fact. Don’t you want to avoid being a statistic and actually make money on the Internet? Then for your own sake and the sake of your business, build your site as a sales site and get the name and email of your visitors and learn as many conversion tactics as you can to close the sale!

Use words that instill passion and emotion. Offer solutions to real world problems. Alleviate the pain that your web site visitors are feeling! And don’t be afraid to lead them where they really want to go. If your traffic is targeted and your offer is solid, the place that your visitors really want to go is to your download page!

Make Money On The Internet, Concept 5:
Use effective keyword research to enter and dominate unsaturated hot markets.

Be smart, learn how to research viable keyword phrases for your business and don’t aim for outer space when you’re evaluating keyword searches. Do you really think you can optimize your web page to be listed on the first page of Google for a keyword that gets 10,000 searches per day?

Not possible without laying out a fortune. You won’t make money on the Internet unless you change your thought process.

Here’s another “key to the castle” for making money on the Internet; Don’t build or develop a product until you have proven that the people in the market that the product serves are in a HOT market.

Why?

Because you won’t make any money. One of the traits of a HOT market is that that the people in the market have proven that they are willing to spend money to solve their problem. If this trait doesn’t exist, don’t spend another second thinking how you can enter this market because there isn’t a “money making” market there!

Making money on the Internet is truly a wonderful experience. In order to make sure that you enjoy that experience you need to learn these basic principles

Enjoy making money on the Internet!

For more info & tips on Internet Marketing visit:
http://www.bruisedonion.com/guide/internet%20marketing/

One of the most common causes of failures of work at home businesses is the fact the person operating the business should never have started in the first place. Not everyone has the dedication and, more importantly, the discipline needed to run their own business out of their home and will quickly find that setting their own hours and being at home all day, everyday is the rosy picture painted by the stories about self-employment.

Running your own business involves someone to handle sales, production, orders, billing and all of the other departments necessary to keep a business operating. When you first start out in a home business, the people that do the work will most likely be you and it will not take long to realize just how many hours are required to get everything done.

Then there’s the promise that often comes with home business opportunities about having the time and money to spend on vacations and having more time with the family. While the business is in its infancy, that is just not going to happen. There will be time spent with the family, but usually it is while you remind them that you are working and need to be left alone. The biggest adjustment when you start a home-based business is having family and friends understand that while you are at home, you are still working.

If your new business can be done completely from home, it is better to have a separate office area in which to work. An area that is off limits to other family members during your business hours, during which you can concentrate on the task at hand without interruption. One suggestion made by successful home business operators is to get a watchdog to sit at the door of your office to keep interruptions to a minimum. While this tip is given in jest, it is important to make sure your home office is treated as though you were working for someone else.

With most work at home businesses, you can set your own hours and, if possible, it will make your home life easier if you establish work hours around your family’s schedule. If there are hours when no one else is home, that should be time in which the bulk of your work is done.

You have probably heard the stories about people working at home in their pajamas and while this opportunity may be available, it probably isn’t a good idea. You will need to establish your work schedule, just as you would if someone else was writing your checks and then work your schedule. Your clients or customers are paying you to deliver a product or service in a timely manner and you will have to present professionalism to yourself as well as potential customers. By being at work when you are scheduled, you can get the promised work done on time and gain new clients based on your reputation.

For more Home Business tips & info visit:
http://www.bruisedonion.com/guide/home%20business/