Whether we are talking about the stock markets, real estate, currencies, even our own lives, things tend to move in cycles. Identifying the cycle early on and capitalizing on that trend can lead to a very successful investment strategy. Many times easier said than done.

It is obvious that short term movements in the markets are motivated by emotion, fear and greed, with knee jerk reactions to news, while the longer term market moves are typified by cycles/trends. And once a trend is established, it takes a long time for it to exhaust itself. It seems almost too simple. And it is. The hard part is having the ability and good fortune to identify that long term trend early on. Within that trend will be many opportunities for investors to do the right thing and position themselves on the opposite side of current "wisdom". There will be periods of dislocation, corrections, and swings in the markets within the longer term established cycles. But as a former associate of mine whom I have tremendous respect for said to me one time. "Ron, volatility is our friend."

And within that lies tremendous opportunities for those that are willing to go against the herd mentality. The Contrarian Theory.

I am by nature a risk taker. And it shows in my choice of investments. I guess you could call me a speculative investor. There are those that say speculating and investing are not congruent or that they are diametrically opposed philosophies, but I disagree. Although I invest in what are admittedly high risk ventures I try to take as much of the risk out of it as I can. Pure speculation is akin to throwing darts at a wall of stocks. But by applying certain criteria and principles I try to take the fringes of speculation out of the equation. Call it a calculated risk.

An often used but rarely practiced maxim of investing is that in order to make money you have to buy low and sell high. The thing that I find amazing is that everyone can recite that little ditty, but very few have the ability to actually put it into practice. Why? Because as human beings we are psychological animals and therefore dominated by our emotions, again fear and greed motivating the short term movements of the markets. And don't be fooled folks, MOST people operate in this way, I don't care if they are brokers, financial planners or yes, even analysts. It takes a very seasoned and experienced investor to be able to make decisions without emotions playing a part. But therein lies the opportunity for those of us that are willing to stand by our convictions. When everyone else is telling you that you are wrong, then chances are that you might be on to something significant. Cycles start quietly, almost imperceptively, building stronger and stronger until reason no longer plays a part in the decision making process of the mass of investors sophisticated or otherwise.

As you can tell by the makeup of this site, I like to focus on junior company's that will benefit by the longer term trend that I have identified. Please don't let there be any misunderstanding. These are HIGH RISK ventures. That being said, nothing is without risk. Whether it is purchasing power risk in money market investments, specific country or currency risk, industry risk, dishonest or fraudulent management risk that we have all been witness to in the last few years, there are many types of risks associated with investing. Those that try to take the high road and only invest in "blue chip safe" investments are doing so under false illusions. As we have seen within the last few years, nothing is safe from potential fallout. Look at the scrutiny and the investigations that the mutual fund and insurance industries went through in the last few years.

So whether you invest in small cap, mid cap or large cap companies Paul van Eeden said it best. "Buying good companies at over-inflated prices cannot be regarded as investing no matter how good the companies, or their prospects are".

Click here to visit The Paul van Eeden Website.

Remember:
1. Have a strategy.
2. Take emotion out of your decision making.
3. As long as the fundamentals that influenced your investment decisions haven't changed, don't let short term movements in the markets force you to alter your strategy.
4. Understand how selective information gathering works, and always be aware of it.
5. Stay on top of what you own.

This is about using all of the information that you have available on a particular investment, applying all of the experience that you have, and then staying on top of what is happening. This will determine your degree of success regardless of the type of asset you invest in.

At its core, investing is an information business.