I have been known to talk about suspiciously asocial concepts, financial crash, depression, psychological influence, the alternative investing and economic manipulation. They are all buzz words that arouse vivid images and emotions. Perhaps the most powerful word of all, however, is " speculator " It sounds so irresponsible, opportunistic and dangerous. 

Politicians and the media throw the word speculator about so abusively. I believe few people have ever dared to what one really is. In the popular mind a speculator is someone associated with shortage, price hike, hoarding, wars, natural disasters and other calamities. A speculator is simply someone who sees and anticipates distortions in the marketplace and position himself to take advantage of them. He can do that because he understands the causes and their effects. This doesn't mean the speculator is predatory, paradoxically, he is a humanitarian. When people are desperate to sell their possessions, he appears with cash-- the very thing they want most. When they change their minds and clamour to buy the things from him back during good times, he graciously accedes to the desires of the majority.

The speculator, like any other worker, tries to give his employers, what they want. Value is subjective and the price
at which something voluntarily trades hands is exactly what it's worth at that time. The speculator simply gives value for value. If he wasn't there to buy, perhaps no one would be, and the sellers would be really in trouble. 

Somehow, speculators have gotten the image of careless gamblers charging about in wild, frenzied activity. To me 
it is totally inaccurate image, at least where successful speculators are concerned. Good speculations are often low risk speculations. Far from taking risk. Speculators always go for sure things. They are rational and unemotional if they are successful. The irrational and emotional who like to gamble and take changes won't last long playing the game and they soon become ex - speculators. 

If you're the least bit attentive, the longer term risk reward profile for the speculator is in an entirely different league than that of the conservative investor. These days,.while the chattering masses are frantically looking safe harbours against the gathering storm, the speculator is accumulating positions in stealth quality companies. 

Investing for income is the kiss of financial death. Why haven't many of the great millionaires in the past taken advantage of the simple gimmick of compound to eventually take over the world.  It isn't because they haven't tried. 
I am sure. Because no investment will give you a true ten percent for even the length of a lifetime. In fact, there's probably rare that can be relied upon even yield five percent over more than forty or fifty years. It does make a difference, because it shows a futility of trying to stay ahead of any type of secure investment. Everything is a speculation, whether people know it or not.

When you settle for a conservative return, any slight miscalculation, bad luck or government stupidity can wipe you out. Taxes will always erode your capital, directly or indirectly. Especially given the current scenario of all time high and overvaluation of most asset classes and the underlying fragile economy and low commodity prices. 

If we invest for income, we are handling over the responsibility to others. You don't know what they're doing with our money. You can't know how intelligent, they are going to conduct themselves in the future. How they fare in a real downturn cycle. And you don't even know how sound their capital position is. That is bad enough set of fundamentals for madcap gamble, but in return for a simple yield, it's absurd. 

What then to do? What's the method to overcome this madness?  To me, the only answer this year is to lay a solid financial foundation and then gather up my cash and my courage and learn more about the art of speculation. To prepare myself, sure I need to learn and practice. And there are no certain way to gauge the proper time to enter a market, but there are certain rules that will likely just as good in the future as they have in the past because they're based on human nature, and that hasn't changed much over the thousands of years.

I will list a few signals that should present before entering the market. You may never find a situation where they 
are all there, but the more that are, the more the odds are tilted in your favour. 

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1. Climactic bottom. --  People tend to get carried away with greed after an investment have treated them well and by fear if the market's been bad. Blood in the streets selling climax aren't the only time to buy, and manic blow off aren't the only time to sell. But they are certainly the best time. Climactic bottoms, in particular, are often followed by a period of exhaustion, which will give you a chance to appraise the market coolly.

2. Period of accumulation ---  After a climactic blow off, a market become exhausted. With prices low, a lot of money has either been wiped out or has left the market. It takes a sharp and a lucky trader to catch a market that turns on a dime and heads on the other way. The plateau is often characterized as a low volume of trading. 

3. Relatively low volume  --- Low volume, with few buyers and sellers means few people are really interested in what's going on. A good speculator looks where nobody does, to afford a better chance of finding bargains. Successful speculator never allow themselves to be rushed or panicked, and a low volume assets offers leisure to make up one's mind.

4. Historically low price --- Nothing is eternal in the markets. What seems to be high price one year might turn out to be low price the next. It's all very relative. The bottom of the bear market comes about cyclically. With years or decades, between peaks. Smart buyers sit tight until the odds are loaded in their favor. Only amateurs, pathological losers, and bank trust departments are in the market all the time. There are plenty of exceptions around all the time. It's play a waiting game, blood isn't on the streets every day.

5. Persimism in the market --  After a long bear market, the assets have established a poor track record and perceive as a bad investment with no future. That is the view of mainstream investors. That is of course another good opportunity to load a bargain. Buying when no one is interested or other hidden issues that can be solved, is hard on the nerves. But rewarding. 

If it were easy, everyone would be a professional speculator and that obviously wouldn't do. Of course this is meant to be a quick summary. It's not easy to lay down hard and fast rules for successful speculations. Done right, which today which means building positions in the quality good beaten down assets, can result in returns that will surprise even you on the upside in the months ahead.

Signals detected, 0021, Seadrill? Herbaliffe? All maybe?
Sure...why not?

Till then, trade wisely.